EMPLOYMENT AGREEMENT WITH XXXXX X. XXXXX
EMPLOYMENT AGREEMENT ("Agreement") made and entered into as of the 2nd
day of July, 1997 by and between Sigma Alpha Group, Ltd., a Delaware
corporation ("Company"), and Xxxxx X. Xxxxx ("Executive").
WHEREAS, Company desires to employ Executive as its Senior Vice
President/Chief Operating Officer and Executive desires to be employed by
Company, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth and the mutual benefits to be derived herefrom, and intending to be
legally bound hereby, the Company and the Executive agree as follows:
1. Employment and Term. Company hereby employs Executive and
Executive hereby accepts employment for a term commencing on July 18, 1997 and
continuing until July 18, 2000, unless sooner terminated as provided for in
this Agreement. Company and Executive have the option to renegotiate this
Agreement beyond the three-year period. Executive hereby warrants and
represents to Company that he is free to enter into this Agreement and is not a
party to any agreement, written or otherwise, or bound by any restrictions,
which limit or restrict him from entering into this Agreement or performing the
services, duties and responsibilities called for hereunder.
2. Duties.
2.1 Executive shall perform the duties of the Senior Vice
President/Chief Operating Officer of the Company and such additional executive
duties of Company and its affiliates as may be, from time to time, requested of
him by the Company's Board of Directors or the Chairman and/or Chief Executive
Officer of the Company.
2.2 Executive shall devote his full professional time and best
efforts to the performance of his duties and responsibilities hereunder to
advance the interests of the Company and shall not during the term of this
Agreement (as defined in Section 1 hereof) be employed, involved or otherwise
engaged in, either directly or indirectly, any other employment for gain,
profit or other pecuniary advantage, without prior written consent of Company.
At no time shall Executive engage in any activity that conflicts with the
business of the Company or its affiliates. Nothing set forth in this section
2.2 shall be construed to prevent Executive from (i) acting as a member of
Board of Trustees or a member of Board of Directors of any other corporation,
or as a member of the Board of Trustees of any organization or entity which is
not a competitor of the Company or (ii) devoting of such of Executive's time
and attention to philanthropic, charitable, civic, community or other
activities or endeavors as Executive shall reasonably determine but only to the
extent that Executive's pursuance of any activities or endeavors does not
materially and adversely effect the Executive's ability to perform and
discharge Executive's duties and objectives to the Company hereunder.
2.3 Except for required travel on Company business, Executive
shall perform his duties and responsibilities at the Company's principal
executive offices located in the greater Philadelphia area. The Company shall
furnish Executive with office space, secretarial assistance, a personal
computer, and such other facilities and services as shall be suitable to
Executive's position and adequate for the performance of his duties hereunder.
3. Compensation. For all duties and responsibilities to be performed
and/or assumed by Executive hereunder, Executive shall be entitled to receive
an annual salary as set forth below ("Base Salary"). The Base Salary, less any
sums required to be withheld by law, shall be payable in equal monthly
installments or such other more frequent regular installments as the Company
may, from time to time, determine. For purposes hereof, Base Salary shall be:
3.1.1 For the twelve-month period commencing with the date
hereof, the Base Salary shall be One Hundred Twenty and Five Thousand Dollars
($125,000).
3.1.2 For each year thereafter, the Base Salary shall be
increased by an amount determined by the Board of Directors but in no event
less than (i) five percent (5%) after the first year, six percent (6%) after
the second year and seven percent (7%) after the third year and each year
thereafter upon mutual agreement to extend the term. Each percentage increase
for a particular year shall be based on the Base Salary for the immediately
preceding year.
4. Fringe Benefits. Company shall pay for or provide Executive with
the following benefits:
4.1 For the first year, Executive shall be entitled to three (3)
weeks paid vacation to be used at the Executive's discretion. Thereafter,
Executive shall be entitled to four (4) weeks paid vacation during each full
year of this Agreement to be used at the Executives discretion. Vacation time
shall accrue on a pro-rata basis during each year of this Agreement. Any
unused vacation shall be cumulative from year to year unless otherwise agreed
upon by the parties.
4.2 Health and hospitalization insurance established and
maintained by the Company for its senior executives and key management
personnel. Since the Company presently does not have, in effect, a plan for
health and hospitalization insurance, Company shall reimburse Executive for all
COBRA payments made by Executive to his previous employer for health and
hospitalization coverage for Executive and his family. Thereafter, Company
shall either secure and maintain health and hospitalization insurance for
Executive and his dependents or reimburse Executive for coverage comparable to
Pennsylvania Blue Shield/Blue Cross for Executive and his immediate family.
4.3 Such other employee benefits maintained by the Company for
its senior executives and key management employees, including, all pension,
profit sharing, retirement, stock bonus and stock option plans, to the extent
Executive is eligible to participate pursuant to the terms and conditions of
such plans.
4.4 Executive shall be reimbursed in a timely manner for all
items of travel, entertainment and miscellaneous expenses which Executive
reasonably incurs in connection with the performance of his duties hereunder,
provided that the Executive submits to the Company such statements and other
evidence supporting said expenses as the Company my reasonably require.
Executive, when traveling on Company business, shall be permitted to fly first
class on all domestic flights and business class on all international flights.
5. Stock Options.
5.1 As part of Executive's compensation for services to be
rendered hereunder, Executive shall have the right and option to purchase from
Company voting common stock in Company ("Option"). The total number of shares
available to Consultant under this Option is Three Hundred and Fifty Thousand
Shares (350,000) at a purchase price of Two Dollars ($2.00) per share ("Option
Shares"). The Option Shares are available for purchase in installments as
listed in Column A below and each installment shall become vested on the
corresponding date listed in Column B, as follows:
Column A Column B
Number of Shares Date Option Shares
Available for Purchase Become Vested
50,000 Upon the commencement of
Executive's employment
pursuant to the terms of
this Agreement
100,000 July 14, 1998
200,000 July 14, 1999
In order for the Option Shares to become vested as provided for above,
Executive must be employed by the Company under the terms of this Agreement as
of the vesting date set forth in Column B above.
5.2 Except as otherwise provided for below, the term of the
Option granted shall remain in effect for ten (10) years from the date on which
such Option Shares become vested. If the Executive's employment with the
Company is terminated by the Company for Cause (as defined herein) or by the
act of Executive, the Executive's right to exercise vested Option Shares shall
cease and become null and void within thirty (30) days of the date employment
terminated, except as otherwise provided in Section 5.3 hereof. All unvested
Option Shares will terminate immediately as of the date of such termination of
employment. In the event the Company receives, accepts and consummates a
tender offer for all of its outstanding common stock prior to the vesting of
the Option Shares, the vesting rights shall be accelerated so as to allow
Executive to exercise the Option to purchase all of the Option Shares
immediately prior to the consummation of such tender offer.
5.3 Notwithstanding anything in this Section 5 to the contrary,
if the Executive's employment is terminated for Cause, as set forth in Section
6.3, the Company shall have the right to terminate and withdraw any vested or
unvested Options under this Agreement.
5.4 The purchase price of the Option Shares shall be paid in full
upon the exercise of the Option, and Company shall not be required to deliver
certificates for such Option Shares until payment has been made. In addition
to, and at the time of payment of the purchase price for such Option Shares,
Executive shall be responsible for all federal and state withholding or other
employment taxes applicable to the taxable income of such Executive and any
other fees resulting from the exercise of the Executive.
5.5 Each share of Option Stock purchased pursuant to the terms
hereof shall carry all appropriate registration and/or restrictions on sale and
notices as determined from time to time by Company's securities counsel.
Executive shall cooperate with Company and Company's counsel in complying with
all applicable securities laws.
6. Termination of Employment. The employment of Executive and
Company's liability and obligations hereunder shall terminate as follows:
6.1 This Agreement shall terminate immediately upon the death of
Executive. In such event, Company shall pay to such person as Executive may
designate in a written notice filed with the Company, or if no such person
shall be designated, to Executive's estate, a lump sum death benefit in an
amount equal to twelve (12) months of Executive's Base Salary as in effect on
the date of Executive's death and double indemnity in event Executive's death
occurs while traveling on Company business.
6.2 This Agreement shall terminate immediately upon the
Disability of Executive. Disability shall exist if due to a mental or physical
condition, Executive is determined to be unable to perform his duties and
responsibilities hereunder for a continuous period of two (2) months.
Disability shall be conclusively established by written certification by two
(2) licensed, disinterested physicians selected as mutually agreed upon between
Company and Executive. In the event the two (2) physicians disagree, a third
physician shall be selected by the two physicians to break such impasse. The
costs associated with the determination of Disability shall be borne equally
between Company and Executive. In the event of Disability, Executive shall be
entitled to receive his Base Salary in accordance with Section 3 for a period
of six (6) months following the onset of Disability.
6.3 The Company may discharge the Executive for Cause and thereby
immediately terminate his employment under this Agreement. For purposes of
this Agreement, Company shall have "Cause" to terminate the Executive's
employment if the Executive, in the reasonable judgment of the Company:
6.3.1 Willfully fails to perform any reasonable directive of
the Company's Board of Directors, Chairman or Chief Executive Officer.
6.3.2 Materially breaches any of the agreements, duties,
responsibilities or obligations under this Agreement.
6.3.3 Embezzles or converts to his own use any funds or
property of the Company or any client or customer of the Company.
6.3.4 Is convicted of a felony or any crime involving
larceny, embezzlement or moral turpitude.
6.4 In the event that Executive's employment is terminated by the
Company without Cause, as defined in Section 6.3, above, for a reason other
than death or Disability, or Executive shall resign for "Good Reason", as
defined below, then, in such event:
6.4.1 Executive's Base Salary, as defined in Section 3 as
then in effect, shall continue to be paid for a period of six (6) months
("Payment Period").
6.4.2 Company shall maintain in effect during the Payment
Period, for the continued benefit of the Executive, all of the employee benefit
plans and programs in which the Executive was entitled to participate
immediately prior to the Executive's termination provided same is possible
under the general terms and provisions of such benefit plans and programs.
Moreover, during the Payment Period the Company shall provide the Executive
with such reasonable administrative and secretarial support services as may be
necessary or appropriate in order to assist Executive in finding new employment
or Executive may select an out-placement service to be paid for by the Company
at a cost not to exceed Five Thousand Dollars ($5,000).
For purposes of this Section 6.4, "Good Reason" shall mean:
(i) An assignment to the Executive of any duties inconsistent
with, or a material change in the nature or scope of, Executive's
responsibilities, authority or duties hereunder.
(ii) Failure by the Company to comply with the provisions of
this Agreement.
(iii) Ill health of Executive or a member of his family, or
any other compelling personal circumstance which, in the mutual discretion of
the Executive, and the Chairman of the Company makes the Executive's continued
employment hereunder impossible, or inappropriate.
6.5 Executive may voluntarily terminate his employment under this
Agreement without Good Reason, as defined in Section 6.4 above, by giving the
Company ninety (90) days prior written notice thereof, and upon the expiration
of such ninety (90) day period, Executive's employment under this Agreement
shall terminate, and Company shall have no further obligation or liabilities
under this Agreement except to pay the Executive the portion, if any, that
remains unpaid of the Base Salary and unpaid accrued prorated vacation for the
period up to the date of termination. Resignation as defined herein must be in
written form to the Board, witnessed and signed by the Executive.
7. Surrender of Books and Records. Executive acknowledges that all
lists, books, records, literature, products and any other materials owned by
Company or its affiliates or used by them in connection with the conduct of
their business, shall at all times remain the property of Company and its
affiliates and that upon termination of employment hereunder, irrespective of
the time, manner or cause of said termination, Executive will surrender to
Company and its affiliates all such lists, books, records, literature, products
and other materials.
8. Miscellaneous.
8.1 Any notice, demand or communication required or permitted
under this Agreement shall be in writing and shall be sufficient when delivered
personally, or three (3) days after mailing by registered or certified mail,
return receipt requested, or the next day if sent by nationally recognized
overnight courier with proof of delivery, in each case postage prepaid,
addressed as follows:
If to the Company:
Sigma Alpha Group, Ltd.
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn.: Xxxxx X. Xxxxxxx, Chairman/CEO
If to the Executive:
Xxxxx X. Xxxxx
000 Xxxxxxxxx Xxxxxx
Xx. Xxxxxx, XX 00000
The foregoing addressees may be changed at any time by notice given in the
manner herein provided.
8.2 This Agreement constitutes the entire understanding and
agreement between Company and Executive regarding its subject matter and
supersedes all prior negotiations and agreements, whether oral or written,
between them with respect to its subject matter. This Agreement may not be
modified except by a written agreement signed by the Executive and the Company.
8.3 This Agreement shall be binding upon and inure to the benefit
of the parties and their respective heirs, executors, successors and assigns,
except that this Agreement may not be assigned by the Executive.
8.4 No waiver by either party of any condition or of the breach
by the other of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed or construed
as a further or continuing waiver of any such condition or breach or a waiver
of any other condition, or the breach of any other term or covenant set forth
in this Agreement. Moreover, the failure of either party to exercise any right
hereunder shall not bar the later exercise thereof.
8.5 This Agreement shall be governed by the statutes and common
laws of the Commonwealth of Pennsylvania, excluding it's choice of law statutes
or common law.
8.6 The headings of the various sections and paragraphs have been
included herein for convenience only and shall not be construed in interpreting
this Agreement.
8.7 If any provision of this Agreement shall be held invalid or
unenforceable, the remainder of this Agreement shall, nevertheless, remain in
full force and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall, nevertheless, remain in full
force and effect in all other circumstances.
8.8 This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the Executive and
on behalf of the Company by its duly authorized officer on the date first above
written.
ATTEST: SIGMA ALPHA
GROUP, INC.
s/Xxxxxx Xxxxxxxxxx s/Xxxxx X. Xxxxxxx
By: _______________________ By: __________________________
Xxxxxx Xxxxxxxxxx Xxxxx X. Xxxxxxx
Secretary Chairman/CEO
s/Xxxxx X. Xxxxx
__________________________
Xxxxx X. Xxxxx
