1
EXHIBIT 10.31
EMPLOYMENT AGREEMENT
(XXXXXX X. XXXXX)
This Employment Agreement (the "Agreement") is made to be effective as
of the 1st day of June, 1997 and is by and between Xxxxxx X. Xxxxx, whose
address is 0000 Xxxxxxxxxx Xxxxxxx, Xxxxxx, Xxxx 00000 ("You" or the
"Executive") and Xxxxx Systems, Inc., a Delaware corporation with its principal
office at 0000 Xxxxxxx Xxxxxx, X.X., Xxxxxx, Xxxx (the "Company" or "Xxxxx'x").
Where appropriate in the context, the term "Company" shall also mean and include
the Company and its parents, subsidiaries and affiliates.
In consideration of the mutual agreements and promises hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company agrees to employ You and You agree
to serve as an employee of the Company upon the following terms and conditions:
1. Condition Precedent.
This Agreement and the parties respective rights and
obligations set forth herein are conditioned in their entirety
on the filing of Articles of Merger in the State of Delaware
by Company and Xxxxx Merger Corp. ("SMC"), pursuant to which
SMC shall merge with and into Company in a tax free
reorganization pursuant to Section 368(a) of the Internal
Revenue Code of 1986, as amended.
2. Term.
Subject to the other terms and conditions of this Agreement,
the initial term of Your employment hereunder (the "Term")
will be for the five (5) year period commencing June 1, 1997
and ending May 31, 2002, unless earlier terminated in
accordance with this Agreement. Notwithstanding the foregoing,
Your obligations under Section 8(b) and 9 below shall survive
the expiration or termination of this Agreement.
3. Position; Duties; etc.
(a) Your title shall be President and Chief Executive
Officer and it shall be Your responsibility to
perform all functions generally appropriate to such a
position at all times in a lawful and professional
manner which reflects positively upon the Company and
serves its best interests, and such other reasonable
duties as may be assigned by the Company's Board of
Directors. In this capacity, You shall report to the
Company's Board of Directors. You shall perform
substantially all of Your duties at the Xxxxx'x
office located as set forth above, or at such other
location as is mutually agreed to by You and the
Company. The Company reserves the right to change
Your duties (provided such changes are reasonably
consistent with Your prior duties), Your position and
the person(s) to whom You report, as may be necessary
or appropriate and in the best interests of the
Company. Nothing contained herein shall in any way
prohibit or otherwise restrict Your ability to
continue as an officer, director and shareholder of
RSMG, Inc.
(b) You will, to the best of Your abilities, effectively,
diligently, in good faith and with integrity, devote
Your full time, attention, energy and skill to the
fulfillment of Your duties hereunder and shall at all
times be promotive and supportive of the Company, its
products, services, management and other employees,
at a level of competence and effectiveness consistent
with the position occupied.
(c) You will be subject to and will comply with such
policies and procedures as are from time to time
established for employees of the Company generally,
except to the extent that such policies or procedures
are inconsistent with the express terms of this
Agreement, and in those instances, the terms of this
Agreement shall control.
1
2
(d) You shall carefully monitor all aspects of the
business, properties and affairs of the Company.
Without limiting the generality of the foregoing, it
shall be Your duty to notify the Company promptly
upon becoming aware of any matter which constitutes
or which might constitute a breach of any
representation, warranty or covenant of the Company
and/or the Managing Stockholders (as such terms are
defined in the Merger Agreement) under that certain
Agreement and Plan of Merger, dated April 3, 1997, by
and among Bristol Technology Systems, Inc., a
Delaware corporation ("Bristol"), the Company, the
Managing Stockholders, and SMC (the "Merger
Agreement"). Nothing herein shall in any manner be
construed to limit the duties and obligations that
You have as a director and an officer of the Company
under applicable State law or the applicable articles
of incorporation or bylaws of the Company.
4. Compensation and Benefits
(a) Salary. As remuneration for Your services and
provided You remain employed and are fulfilling Your
duties hereunder, during the Term the Company will
pay You, in accordance with Company policies, a gross
salary calculated at the rate of One Hundred Thirty
Thousand Dollars ($130,000) per year, payable in
arrears in substantially equal installments on the
Company's regular pay days, less any withholding of
tax or any amounts required by law to be withheld and
less any payments for fringe benefits or payments and
contributions as may otherwise be authorized by You
or required under employee benefit plans maintained
from time to time by the Company. Your annual salary
shall automatically be increased by five percent (5%)
at the beginning of each fiscal year during the Term.
(b) Bonus. With respect to each year of the Term, and
provided, in the sole discretion of the Board of
Directors of the Company, You have been employed and
have satisfactorily performed Your duties during the
entire year, You shall be eligible to earn an annual
bonus, payable in arrears, determined as of the end
of the Company's fiscal year, in an amount equal to
9.75% of the Company's pretax profits for each year
which are in excess of $524,000 (the "Baseline"). For
this purpose, pre-tax profits shall be calculated in
accordance with generally accepted accounting
principles and reduced for all interest expense paid
by Xxxxx'x but shall not be reduced by (i) bonuses
paid pursuant to this Agreement or the Employment
Agreements with any of the other Managing
Stockholders, or (ii) in the current fiscal year
only, expenses paid by the Company pursuant to
Section 9.9 of the Merger Agreement, or (iii) any
management fee or similar expense paid to or charged
by Bristol. If the Board of Directors of the Company
reorganizes the Company into specific departments
and/or divisions, then the Baseline shall be
recalculated to reasonably account for such
reorganization. Notwithstanding anything to the
contrary above, the Baseline for the fiscal period
commencing June 1, 1997 through December 31, 1997,
shall be $306,250.
5. Expenses.
The Company will reimburse You for all reasonable, ordinary
and necessary travel (except normal travel between home and
office) and other out-of-pocket expenses incurred by You for
the purpose of and in connection with performing Your duties,
subject to proper submission of substantiating documentation,
and subject further to all Company policies respecting expense
reimbursement, as the same may vary from time to time.
6. Employee Benefit Programs.
(a) Benefit Programs. You shall be entitled to
participate in or receive benefits under all benefit
programs, arrangements or perquisites which the
Company maintains generally from time to time for its
executive employees, which benefits shall be
substantially similar to those benefits maintained by
the Company prior to the merger of SMC with and into
the Company.
2
3
(b) Vacation. You shall be entitled to a reasonable
number of paid vacation days, but in any case not
more than four (4) weeks per year during the Term.
7. Consequences of Termination of Employment.
(a) Death/Disability. In the event of Your death during
the Term, Your employment hereunder shall be
terminated as of the date of Your death and Your
designated beneficiary, or, in the absence of such
designation, Your estate or other legal
representative (collectively, the "Estate") shall be
paid Your unpaid salary through the date occurring on
the earlier of three (3) months from the date of
death or the expiration of the Term of this
Agreement. Other death benefits that do not overlap
the foregoing will be determined in accordance with
the terms of the Company's benefits programs and
plans maintained from time to time by the Company for
its executive employees. In the event You are
mentally or physically disabled for a period of four
or more consecutive months ("disability" being
defined as a mental or physical impairment or
condition which substantially and effectively
prevents You from performing Your duties hereunder),
or for any 120 days during any twelve month period
during the Term, Your employment may be terminated on
written notice to You. In such event, Your salary
shall be continued for a period of two (2) months
following the effective date of termination. Other
than the salary set forth in this subsection (a), You
or Your estate shall not be entitled to any other
payment or benefit by reason of Your death or
disability.
(b) Termination of Employment by the Company for Cause.
The Company shall have the right to terminate Your
employment and this Agreement for Cause and nothing
herein, or in any other agreement between You and the
Company shall prevent the Company from terminating
Your employment for Cause. In the event You are
terminated for Cause, You shall be paid Your salary
through the date of termination and shall be entitled
to those rights and benefits You may have earned
through the date of termination in respect of
benefits under any employee benefit plans or programs
of the Company maintained from time to time by the
Company for its executive employees as determined in
accordance with the terms of such plans or programs,
as the case may be. In addition, if You are
terminated for Cause pursuant to the provisions of
Section 7(c)(ii), below, then You shall also be
entitled to a one time severance payment due within
thirty (30) days of such termination, equal to Your
annual salary at the time of such termination, as set
forth in Section 4(a), above.
(c) Cause Defined. The Company shall have "Cause" to
terminate Your employment hereunder prior to the end
of Term for the following reasons:
(i) If You commit an act of gross negligence or
willful misconduct, or breach Your fiduciary
duty to the Company;
(ii) If the Company fails to achieve for any (2)
consecutive quarters certain quarterly
performance criteria (A) reasonably set by
the Board of Directors of the Company at the
beginning of each fiscal year, and (B) based
upon the Company's performance in the prior
fiscal year, which failure is not cured
within the four (4) month period immediately
following the second consecutive quarter;
(iii) If You engage in drug or alcohol use or
addiction which materially interferes with
the performance of Your duties at any time;
(iv) If You engage in illegal, immoral or
dishonest conduct;
(v) If You breach or fail to substantially
perform any of the provisions of this
Agreement, the Merger Agreement, ancillary
or related agreements thereto, or any
present or future agreement between You and
the Company respecting non-competition or
the ownership or protection of confidential
information, inventions, patents,
trademarks, copyrights or other
intellectual properties; or
(vi) Your voluntary termination of employment
prior to expiration of the Term.
3
4
8. Covenants Regarding Confidential Information and Proprietary
Rights.
(a) Confidential Information Defined. As used herein,
"Confidential Information" means all proprietary
information, trade secrets and any non-public
information, oral and written, and any document or
media containing such information, concerning the
Company or used by the Company in the operation of
its business, including, without limitation, any of
the Company's actual or prospective customers,
suppliers, contractors and co-venturers or concerning
any actual or planned discoveries, inventions,
developments, improvements, technology, know-how,
processes, products, services, businesses, business
opportunities, operations, activities or plans of or
belonging to the Company (including, without
limitation, technical formulae and designs, computer
hardware and software, databases, original works of
authorship, customer lists, bills of material,
business plans, financial information, trade secrets
and other proprietary information) provided that
Confidential Information shall not include such
portion of the aforesaid information which has become
of hereafter becomes public knowledge within the
business equipment industry through no fault of Your
own.
(b) Confidentiality. It is understood and agreed that
prior to and during the Term You have, and will
become aware of, Confidential Information, the
unauthorized disclosure of which may harm the
Company. Accordingly, You agree that, except as
expressly authorized by the Company or as reasonably
necessary in order to fulfill Your duties under this
Agreement, both during and after the Term, You will
never communicate, divulge or use for the benefit of
Yourself or any other person or entity, directly or
indirectly, any Confidential Information discovered,
conceived of, or disclosed, communicated or in any
manner obtained by You or coming into Your possession
prior to or during the Term. Upon termination of this
Agreement for whatever reason or whenever requested
by the Company, You will promptly deliver to the
Company, and shall retain no copies of, all
documents, media, records or other materials
containing Confidential Information which are in Your
possession or under Your control. Further, You agree
that You will not, during Your employment with the
Company, improperly use or disclose any proprietary
information or trade secret of any former or
concurrent employer, and that You will not bring onto
the premises of the Company any unpublished document
or any property belonging to any such former or
concurrent employer unless consented to in writing by
such former or concurrent employer.
9. Covenant Not to Compete.
For a period of two (2) years from and after the expiration or
earlier termination of this Agreement, You will not, for any
reason whatsoever, directly or indirectly, for Yourself or on
behalf of or in conjunction with any other person, persons,
company, partnership, corporation or business of whatever
nature:
(a) engage, as an officer, director, stockholder, owner,
partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor,
consultant or advisor, or as a sales representative, in
any business selling any products or services in direct
competition with the current business or any related
business of the Company, or any business to which it is
reasonably foreseeable that the Company will enter,
within 100 miles of where the Company anywhere conducts
such business (the "Territory");
(b) call upon any person who is, at that time, within the
Territory, an employee of the Company in a managerial
capacity for the purpose or with the intent of enticing
such employee away from or out of the employ of the
Company;
(c) call upon any person or entity which is, at that time,
or which has been, within one (1) year prior to that
time, a customer of the Company within the Territory
for the purpose of soliciting or selling products or
services in competition with the Company within the
Territory; or
(d) call upon any prospective acquisition candidate, on
Your own behalf or on behalf of any competitor, which
candidate was either called upon by the Company or for
which the
4
5
Company made an acquisition analysis, for any purpose
other than providing products or services of the
Company.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit You from acquiring as an investment not
more than one percent (1%) of the capital stock of a competing
business whose stock is traded on a national securities
exchange or over-the-counter.
You expressly agree that the foregoing covenants impose a
reasonable restraint on You in light of the activities and
business of the Company on the date of the execution of this
Agreement and the current plans of the Company; but it is also
the intent of the Company and You that such covenants be
construed and enforced in accordance with the changing
activities and business of the Company throughout the term of
the covenants. The covenants in this Section 9 are severable
and separate, and the unenforceability of any specific
covenant shall not affect the provisions of any other
covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it
is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems
reasonable, and this Section 9 shall thereby be reformed. All
of the covenants in this section 9 shall be construed as an
agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action
by You against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of such covenants. You specifically
agree that the period of two (2) years stated at the beginning
of this Section 9 shall be computed by excluding from such
computation any time during which You are found by a court of
competent jurisdiction to have been in violation of any
provision of this Section 9. You expressly agree that the
covenants set forth in this Section 9 are a material and
substantial part of this Agreement.
10. The Company.
For purposes of Sections 8 and 9, above, the term "Company"
shall include any parent, subsidiary, affiliated company or
business predecessor to the Company.
11. Equitable Relief.
You expressly agree that the Company may not be adequately
compensated by damages for a breach by You of any of the
covenants contained in Sections 8 and 9, and You further agree
that, in the event of a breach or threatened breach by You of
any provision of Section 8 or 9 below, the Company shall be
entitled to enforce the covenants contained in Section 8 or 9
by specific performance and to enjoin or restrain any such
breach or threatened breach (without the necessity of posting
a bond or other security in any action initiated for such
relief), but nothing herein shall be construed as prohibiting
the Company from pursuing any remedy available to the Company
for such breach or threatened breach.
12. Notices.
Any notice to be given under this Agreement by either party
shall be in writing and hand delivered (by courier or
otherwise) or mailed via first class mail and by certified or
registered mail with return receipt requested, and addressed
to the other party at its address at the head of this
Agreement or at such other address as such other party shall
have given notice to the first party in accordance with the
provisions of this Section.
13. Non-Waiver of Rights.
The failure to enforce, at any time, any of the provisions of
this Agreement or to require, at any time, performance by the
other party of any of the provisions hereof shall in no way be
construed to be a waiver of such provisions or to affect
either the validity of this Agreement, or any part hereof, or
the right of either party thereafter to enforce each and every
provision in accordance with the terms of this Agreement. Any
waiver of any provision of this Agreement shall be valid only
if in writing signed by the party so waiving, and no waiver of
a provision hereof in any given instance shall operate as a
waiver of such provision in any other instance or the waiver
of any other provision of this Agreement.
14. Severability.
5
6
The invalidity or inability to enforce any particular
provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in
all respects as if such invalid or unenforceable provision
were omitted.
15. Assignment.
This Agreement shall be binding upon, and shall inure to the
benefit of, You and the Company and their respective
executors, administrators, heirs, successors and permitted
assigns. This Agreement shall not be assignable by You, in
whole, or in part, without the written consent of the Company.
16. Governing Law.
The validity, interpretation and construction hereof shall be
governed by and construed and enforced in accordance with the
laws of the State of Delaware, excepting any rule thereof
which would refer such matters to the law of any other
jurisdiction.
17. Miscellaneous.
This Agreement embodies the entire agreement of the parties
with respect to the matters within its scope and supersedes
any prior oral or written agreements and understandings of the
parties respecting same. This Agreement shall not be
modifiable except in writing signed by both parties hereto,
and the provisions hereof shall override any contrary or
conflicting provisions in any acknowledgment, invoice or other
document unilaterally issued by either party. The headings
contained in this Agreement have been inserted solely for
convenience of reference and shall be of no force or effect in
the construction or interpretation of the provisions of this
Agreement. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument. The remedies available to the Company for breach
of this Agreement shall be cumulative, and nothing herein
shall prevent the Company from pursuing any such remedies,
whether inconsistent or otherwise.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized representative, and You have
signed this Agreement, as of the day and year first above written.
__________________________________________
Xxxxxx X. Xxxxx
XXXXX SYSTEMS, INC., a
Delaware corporation
By: _______________________________________
Its: ______________________________________
6
7
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
(XXXXXX X. XXXXX)
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") is made
and entered into as of this 22nd day of May, 1997, by and between Xxxxxx X.
Xxxxx, whose address is 0000 Xxxxxxxxxx Xxxxxxx, Xxxxxx, Xxxx 00000 ("You" or
the "Executive") and Xxxxx Systems, Inc., a Delaware corporation with its
principal office at 0000 Xxxxxxx Xxxxxx, X.X., Xxxxxx, Xxxx (the "Company" or
"Xxxxx'x").
RECITALS
WHEREAS, You and the Company entered into that certain Employment
Agreement on April 3, 1997 (the "Employment Agreement").
WHEREAS, You and the Company each now desire to amend the Employment
Agreement pursuant to the terms and conditions provided below.
NOW THEREFORE, In consideration of the mutual agreements and promises
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the You and the Company agree
to amend the Employment Agreement as follows:
1. Compensation and Benefits - Bonus. The first sentence of
Section 4(b) of the Employment Agreement shall be amended and
restated in its entirety, as follows:
"With respect to each year during the Term, and provided, in
the sole discretion of the Board of Directors of the Company,
You have been employed and have satisfactorily performed Your
duties during the entire year, You shall be eligible to earn
an annual bonus, payable in arrears, determined as of the end
of the Companys fiscal year, in an amount equal to fifteen
percent (15%) of the Company's pre-tax profits for each year
which are in excess of $524,000 (the "Baseline")."
2. The Employment Agreement. Except as expressly amended herein,
the terms and conditions of the Employment Agreement shall
remain in full force and effect.
1
8
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed on its behalf by its duly authorized representative, and You have
signed this Amendment, as of the day and year first above written.
__________________________________________
Xxxxxx X. Xxxxx
XXXXX SYSTEMS, INC., a
Delaware corporation
By: _______________________________________
Its: ______________________________________
2
