EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") dated as of
October 1, 1998, is by and between COMTEX SCIENTIFIC
CORPORATION, a Delaware corporation, with its principal
executive offices at 0000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000 ("Company"), and XXXXXXX X. XXXXX,
whose address is 00000 Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000
("Employee").
W I T N E S S E T H:
WHEREAS, the Company and the Employee wish to provide for
the employment of the Employee in an executive capacity in
accordance with the provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
and agreements contained herein, the parties hereto agree as
follows:
1. Employment. The Company hereby employs Employee and
Employee hereby accepts employment with the Company on the
terms hereof.
2. Position and Duties. Employee hereby accepts
employment, and shall serve the Company as President and Chief
Executive Officer, and shall perform, faithfully and dili-
gently, the services and functions relating to the office or
otherwise reasonably incident to the office as may be desig-
nated in the bylaws of the Company and from time to time by
the Board of Directors of the Company. Employee shall report
to the Chairman of the Board of Directors of the Company.
Employee shall devote such time, attention, energies and
business efforts as an executive of the Company as are
reasonably necessary to perform his duties as specified above.
3. Compensation and Benefits. The compensation and
other benefits payable to Employee under this Agreement shall
constitute the full consideration to be paid to Employee for
all services to be rendered by Employee for the Company.
3.1 The Company will pay to Employee an initial
base annual salary of $152,900.00, payable bi-weekly, subject
to payroll and withholding deductions as may be required by
law and other deductions applied generally to employees of the
Company for insurance or other employee benefit plans.
Employee's base salary for the future years shall be
determined by the Compensation Committee of the Board in its
sole discretion.
3.2 During the term of Employee's employment,
Employee shall be entitled to participate, on the same terms
and conditions as other executive employees of the Company, in
such major medical, dental, life insurance, 401(k), and other
employee benefits which the Company now provides or in the
future may provide to its executive employees generally,
subject to the availability of such benefits at a reasonable
cost.
3.3 The Company shall grant to Employee
options in its Incentive Stock Option Plan in such amount as
determined by the Board. Such amount shall be commensurate
with the duties and responsibilities of Employee.
3.4 During the term of Employee's employment,
Employee shall be entitled (a) to reimbursement for any and
all reasonable expenses incurred by Employee in performance of
his duties under this Agreement, in accordance with the
Company's standard policy; and (b) to receive twenty (20) days
of fully paid vacation time and ten (10) days of sick leave
during each year of his employment. In addition, and as part
of Employee's compensation package, Employee shall receive a
car allowance in the amount of $300 per month.
3.5 Bonus compensation: The budget for each fiscal
year, as approved by the Board of Directors of the Company,
shall contain annual gross revenue goals and annual net income
goals for such fiscal year. The difference between the
projected budget revenue and net income numbers and the
revenue and net income numbers from the preceding fiscal year
will form the Target Revenue and Target Income Goals.
Employee shall be eligible to earn an annual bonus, in
accordance with such targets, and/or by action of the Board at
the recommendation of the Compensation Committee.
3.6 Provided Employee remains employed by the
Company at the end of the relevant fiscal year, (i) if the
Company fully achieves the Target Revenue Goals for the
relevant fiscal year, Employee shall be entitled to receive,
as additional cash compensation, an amount equal to thirty-
three percent (33%) of Employee's base annual salary for such
fiscal year; and (ii) if the Company fully achieves the Target
Income Goals for the relevant fiscal year, Employee shall be
entitled to receive, as additional cash compensation, an
amount equal to thirty-three percent (33%) of Employee's base
annual salary for such fiscal year; and (iii) if the Company
achieves only a percentage of either the Target Revenue Goals
or Target Income Goals for the relevant fiscal year, Employee
shall be entitled to receive, as additional cash compensation,
an amount equal to the same percentage of thirty-three percent
(33%) of Employee's base annual salary for such fiscal year.
Should Employee exceed both Target Goals, Employee is eligible
to earn additional bonus compensation. To the extent that
both the Actual Total Revenue and the Actual Total Net Income
for the relevant fiscal year maintain the Projected annual
Margin for that fiscal year (defined as FY Net Income divided
by FY Revenue), Employee can earn additional bonus
compensation. This additional bonus compensation will be
twenty percent (20%) of the overage of the incremental growth
in net income above the original Target Net Income Increase
Goal for such fiscal year.
3.7 To the extent payable, this additional
compensation shall be calculated quarterly (based on one-
fourth of the Target Revenue Goals and one-fourth of the
Target Income Goals) and paid quarterly following the filing
of the Company's quarterly reports on Form 10-Q; provided,
however, that twenty percent (20%) of each quarterly amount
due shall be withheld by the Company pending final calculation
at the end of the fiscal year and, if payable, shall be paid
along with the final quarterly payment to Employee following
the filing of the Company's annual report on Form 10-K with an
unqualified opinion from the Company's independent auditors.
4. Conflicts of Interests; Covenant Not to Compete.
4.1 During the term of his employment with the
Company, Employee shall not engage in any other business
activity (whether or not such business activity is pursued for
gain, profit or other pecuniary advantage) if such business
activity would conflict with the interests of the Company or
impair Employee's ability to carry out his duties hereunder or
any of its Subsidiaries. For the purposes of this Agreement,
the term "Subsidiary" shall mean any subsidiary, affiliate,
associate, or successor corporation of the Company. The terms
and provisions of this Agreement that relate to any of the
Subsidiaries of the Company shall inure to the benefit thereof
and shall be enforceable against Employee by such Subsidiary
or Subsidiaries.
4.2 To induce the Company to enter into this
Agreement, Employee agrees, during the term hereof and for a
period of one year after the termination of his employment for
any reason, not to directly or indirectly engage or be
interested (as owner, partner, shareholder, director, em-
ployee, agent, consultant or otherwise), with or without
compensation, in the rental, sale or service of products of
the type rented, sold or serviced by the Company or any of its
Subsidiaries during the period of Employee's employment with
the Company ("Products") within any geographical area in which
the Company or any of its Subsidiaries is conducting business
or actively planning to conduct business as of the date of
such termination ("Subject Area"). Employee acknowledges that
the provisions of this Section 4.2 are reasonable and
necessary for the protection of the Company and its
Subsidiaries and that the Company and its Subsidiaries will be
irrevocably damaged if such provisions are not specifically
enforced. Accordingly, Employee agrees that, in addition to
any other remedy to which the Company may be entitled, the
Company shall be entitled to seek and obtain injunctive relief
from a court of competent jurisdiction for the purposes of
restraining it from any actual or threatened breach of such
provisions, without bond or other security being required.
The provisions of this section shall survive the expiration or
earlier termination of this Agreement.
5. Confidential Information.
5.1 As used herein, "Confidential Information"
means all technical and business information (including
financial statements and related books and records, personnel
records, customer lists, arrangements with customers and
suppliers, manuals and reports) of the Company and its
Subsidiaries (whether such information is owned by, licensed
to or otherwise possessed by the Company or any Subsidiary),
whether patentable or not, which is of a confidential, trade
secret and/or proprietary character and which is either
developed by Employee (alone or with others) or to which
Employee has had access during his employment. "Confidential
Information" shall include, but is not limited to, information
of a technical or business nature such as ideas, discoveries,
inventions, improvements, trade secrets, know-how, manufactur-
ing processes, specifications, writings and other works of
authorship, computer programs, financial figures and reports,
marketing plans, customer lists and data, and/or business
plans or data which relate to the actual or anticipated
business of the Company or any subsidiary or its actual or
anticipated areas of research and development. "Confidential
Information" shall also include, but is not limited to, con-
fidential evaluations of, and the confidential use or non-use
by the Company or any of its Subsidiaries of, technical or
business information in the public domain.
5.2 Employee shall, both during and after his
employment with the Company, protect and maintain the con-
fidential, trade secret and/or proprietary character of all
Confidential Information. Employee shall not, during or after
termination of his employment, directly or indirectly, use
(for himself or another) or disclose any Confidential Informa-
tion, for so long as it shall remain proprietary or pro-
tectible as confidential or trade secret information, except
as may be necessary for the performance of his duties under
this Agreement.
5.3 Employee shall deliver promptly to the Company,
at the termination of his employment, or at any other time at
the Company's request, without retaining any copies, all
documents and other material in his possession relating,
directly or indirectly, to any Confidential Information.
5.4 Each of Employee's obligations in this Article
5 shall also apply to the confidential, trade secret and
proprietary information learned or acquired by him during his
employment from others with whom the Company or any Subsidiary
has a business relationship.
5.5 The provisions of this Article 5 shall survive
the expiration or earlier termination of this Agreement.
6. Term. Subject to earlier termination as provided in
Article 7, the initial term of this Agreement shall commence
on the date of this Agreement and end on the date twelve (12)
months thereafter; provided, however, this Agreement may be
renewed for two successive terms of twelve (12) months each,
commencing on the anniversary of the expiration of the
original term and each renewal term upon mutual agreement by
the parties. Either party shall notify the other in writing
of its election to renew this Agreement at least sixty (60)
days prior to the expiration of the original or any renewal
term. In the event this Agreement is renewed by mutual
agreement of the parties as aforesaid, Employee shall be
entitled to an increase in Employee's base annual salary for
the applicable renewal term in an amount which is
commensurate, on a percentage basis, with the increases, if
any, in the base annual salaries awarded to other executive
officers of the Company for such period, as determined by the
Board of Directors of the Company.
7. Termination.
7.1 The Company may terminate Employee's employment any
time during the employment period for "cause" (as hereinafter
defined) by action of the Board of Directors of the Company
upon giving Employee notice of such termination, which
termination shall take effect immediately. As used herein,
the term "cause" shall mean any of the following events:
(i) Employee's conviction of a felony or a conviction or plea
of guilty to a crime involving moral turpitude;
(ii) Employee's willful gross misconduct or willful gross
neglect of duties; or (iii) dishonesty by Employee in the
performance of his duties or misappropriation of funds or
property of the Company by Employee. If the Company
terminates Employee's employment in accordance with the
provisions of this Section 7.1, all compensation pursuant to
this Agreement shall cease as of the effective date of such
termination.
7.2 If Employee dies during the term of his employment,
this Agreement shall automatically terminate as of the date of
death and compensation due Employee hereunder shall be paid to
Employee's estate or legal representatives through the date of
death.
7.3 The Company may terminate Employee's employment any
time during the employment period other than for "cause" upon
giving Employee notice of such termination, which termination
shall be effective thirty (30) days after such notice. If the
Company shall terminate Employee's employment any time during
the employment period other than for "cause", or if a new
Agreement is not negotiated by the Company prior to the end of
the second renewal term (September 30, 2001), (a) all
compensation pursuant to this Agreement shall cease as of the
effective date of such termination or expiration, and (b)
Employee shall be entitled to receive, in full and complete
satisfaction of any claim Employee may have or make by virtue
of such termination of or failure to renew this Agreement, and
as Employee's exclusive consideration for the waiver of any
such claim, severance pay equal to six months of his base
salary payable monthly in six equal monthly installments, plus
any accrued additional compensation pursuant to Section 3.5
hereof.
8. Notices. Any notice under this Agreement must be in
writing and may be given by certified or registered mail,
postage prepaid, addressed to the party or parties to be
notified with return receipt requested, or by delivering the
notice in person. For purposes of notice, the address of
Employee or any administrator, executor or legal representa-
tive of Employee or his estate, as the case may be, shall be
the last address of the Employee on the records of the
Company. The address of the Company shall be its principal
business address. The Company and Employee shall have the
right from time to time and at any time to change their
respective addresses by giving at least ten days' written
notice to the other party.
9. Entire Agreement/Assignment/Governing Law. This
Agreement shall be binding upon and inure to the benefit of
the Company and its successors and assigns. This Agreement
shall not be assignable by either party hereto without the
written consent of the other party. This Agreement
constitutes the entire Agreement between the parties and shall
supersede all previous communications, representations,
understandings, and Agreements, either oral or written,
between the parties or any officials or representatives
thereof. This Agreement shall be governed by and interpreted
in accordance with the laws of the Commonwealth of Virginia.
The parties agree that any dispute arising under this
Agreement shall be resolved by arbitration under the rules of
the American Arbitration Association.
10. Remedies, Modification and Separability. Employee
and the Company agree that Employee's breach of Articles 4 or
5 of this Agreement will result in irreparable harm to the
Company, that no adequate remedy at law is available, and that
the Company shall be entitled to injunctive relief; however,
nothing herein shall prevent the Company from pursuing any
other remedies at law or at equity available to the Company.
Should a court of competent jurisdiction declare any of the
covenants set forth in Articles 4 or 5 unenforceable, the
court shall be empowered to modify or reform such covenants so
as to provide relief reasonably necessary to protect the
interests of the Company and Employee and to award injunctive
relief, or damages, or both, to which the Company may be
entitled. If any provision of this Agreement is declared by
a court of last resort to be invalid, the Company and Employee
agree that such declaration shall not affect the validity of
the other provisions of this Agreement. If any provision of
this Agreement is capable to two constructions, one of which
would render the provision void and the other of which would
render the provision valid, then the provision shall have the
construction which renders it valid.
11. Preservation of Business; Fiduciary Responsibility.
Employee shall use his best efforts to preserve the business
and organization of the Company, to keep available to the
Company the services of its present employees and to preserve
the business relations of the Company with customers and
others. Employee shall not commit any act which would injure
the Company. Employee shall observe and fulfill proper
standards of fiduciary responsibility attendant upon his
service and office.
12. Effect of Agreement. Subject to the provisions of
Article 9 with respect to assignment, this Agreement shall be
binding upon Employee and his heirs, executors, adminis-
trators, legal representatives, successors and assigns and
upon the Company and its successors and assigns.
13. Waiver of Breach. The waiver by the Company of a
breach of any provision of this Agreement by Employee shall
not operate or be construed as a waiver by the Company of any
subsequent breach of Employee.
14. Headings. The section headings in this Agreement
are for convenience of reference and shall not be used in the
interpretation or construction of this Agreement.
15. Execution. This Agreement may be executed in
multiple counterparts each of which shall be deemed an
original and all of which shall constitute one instrument.
Employee acknowledges that he has read this Agreement and
understands that signing this Agreement is a condition of
employment.
IN WITNESS WHEREOF, this Agreement is executed and
effective as of the day first above written.
COMTEX SCIENTIFIC CORPORATION ACCEPTED & AGREED TO:
/S/ X.X. XXXXXXX /S/ XXXXXXX X. XXXXX
By: __________________________ ____________________
X.X. Xxxxxxx, Ed.D. Xxxxxxx X. Xxxxx
Chairman
Board of Directors
