AGREEMENT made this 18th day of October 1997 by and between NEW
PARADIGM SOFTWARE CORPORATION, a New York Corporation, having its
principal place of business located at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000
(hereinafter referred to as "COMPANY") and XXXX X. XXXXXXXX residing at 00
Xxxxxxx Xxxx, Xxxxxx, XX 00000 (hereinafter referred to as "EXECUTIVE").
WITNESSETH
WHEREAS, the COMPANY is a public reporting company engaged in the
development and marketing of Internet products and services, and
WHEREAS, the EXECUTIVE is Chief Executive Officer and a Director, and
WHEREAS, in the opinion of the Board of Directors of COMPANY, the success
of the business operations of COMPANY is contingent upon the performance
of the EXECUTIVE and in order to ensure and provide for the terms and
conditions of EXECUTIVE's employment:
WHEREAS, pursuant to Section 13 of the EXECUTIVE's agreement with the
COMPANY dated July 14, 1993 ("Agreement"), upon the transfer of
substantially all of the COMPANY's assets, the COMPANY shall accept the
EXECUTIVE's resignation and shall pay the EXECUTIVE certain termination
benefits being not less than $414,000 in cash pursuant to paragraph 13 of
such contract and certain other benefits (referred to collectively herein
as "Termination Benefits");
WHEREAS, the sale by the Company of the Copernicus Products and its
related assets to VIE Systems, Inc. on July 23, 1997 constituted a
transfer of substantially all of the COMPANY's assets;
WHEREAS, the COMPANY is not in a position to pay the Termination Benefits
to EXECUTIVE;
WHEREAS, in the interest of the COMPANY, the EXECUTIVE has agreed to
forego the Termination Benefits in return for (i) a loan from the COMPANY
in the amount of One Hundred Fourteen Thousand U.S. Dollars
($114,000.00 US) at an interest rate of six percent (6%) per annum,
subject to setoff for bonuses, future termination payments and stock
sales of the EXECUTIVE;
WHEREAS, the Board of Directors believes it is in the best interest of the
COMPANY to enter into this Employment Agreement with the EXECUTIVE;
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS
AND CONDITIONS HEREAFTER SET FORTH, THE PARTIES AGREE AS
FOLLOWS:
FIRST All prior understandings and/or agreements between the parties are
hereby deemed superseded and incorporated into the provisions of this
Agreement.
SECOND The COMPANY does hereby employ, engage and hire the EXECUTIVE
as Chief Executive Officer of the COMPANY for a period of three years from the
date hereof and such period shall be automatically extended by one year on the
third and each subsequent anniversary of the date hereof unless 90 days
advance written notice is given by COMPANY to EXECUTIVE or by EXECUTIVE to
COMPANY.
THIRD The EXECUTIVE agrees that he will at all times faithfully, industriously
and to the best of his ability, experience and talent, perform all of the
duties that may be required of and from him pursuant to the expressed and
implicit terms hereof.
FOURTH (a) The COMPANY shall pay the EXECUTIVE a minimum base salary of
$200,000 per year ("Minimum Base Salary") in equal semi-monthly installments.
During the term of this Agreement, EXECUTIVE's base salary shall be reviewed
at least annually; the first such review shall be no later than September 30,
1998. Such review shall be conducted by the Board of Directors of the
COMPANY, or a committee designated by the Board of Directors, and such Board
or committee may increase, but not decrease said salary.
(b) Additionally, EXECUTIVE shall be further entitled to an expense allowance
of $4,000 per month. EXECUTIVE further understands and recognizes that he will
be responsible for tax on this amount unless he keeps and maintains adequate
records of expenses and allowances.
(c) In addition to the foregoing, the COMPANY shall loan the EXECUTIVE One
Hundred Fourteen Thousand U.S. Dollars ($114,000.00 US) on the terms set out in
Exhibit A, to be repaid by the COMPANY offsetting the EXECUTIVE's bonuses,
termination payments and stock sales against the amounts due under such Note.
FIFTH The COMPANY shall pay or reimburse EXECUTIVE for all reasonable
travel and other business expenses incurred by EXECUTIVE in performing his
obligations under this Employment Agreement. The COMPANY further agrees to
furnish EXECUTIVE with a private office and such other assistance and
accommodations as shall be suitable to the character of EXECUTIVE's
position with the COMPANY and adequate for the performance of his duties
hereunder.
SIXTH EXECUTIVE shall receive the use of a company car or a $750.00 per month
allowance to be applied by EXECUTIVE as the EXECUTIVE deems appropriate.
SEVENTH COMPANY has granted EXECUTIVE options to purchase shares of the
COMPANY's Common Stock at the dates and amounts as shown in Exhibit B.
EIGHTH EXECUTIVE expressly agrees that he will not during the term hereof, be
interested directly or indirectly in any form fashion or manner, as a partner,
officer, director, stockholder, advisor or executive in any other business
similar to the business of COMPANY unless agreed to by COMPANY. Nothing herein
contained, shall however, limit the rights of the EXECUTIVE to own up to 5% of
the capital stock or other securities of any corporation whose stock or
securities are publicly owned or regularly traded on a public exchange or in
the over-the-counter market. This paragraph 8, is not intended to restrict
EXECUTIVE from profits or revenues resulting from any publications, lectures,
tours, or consulting which EXECUTIVE undertakes in his own time or with
permission from the COMPANY, provided that such work does not conflict
with the interests of the COMPANY.
NINTH EXECUTIVE hereby agrees to be bound by the non-disclosure agreement, a
copy of which is annexed hereto and made a part of hereof and marked
Exhibit "C".
TENTH The payments provided for elsewhere in this Employment Agreement are
in addition to any benefits to which EXECUTIVE may be, or may become entitled
under any group hospitalization, health, dental care, or sick-leave plan, life
or other insurance or death benefit plan, travel or accident insurance, auto
allowance or auto lease plan, or executive contingent compensation plan,
including, without limitation, capital accumulation and termination pay
programs, restricted or stock purchase plan, stock option plan, retirement
income or pension plan, or other present or future group executive benefit
plan or program of the COMPANY for which key executives are or shall become
eligible, and EXECUTIVE shall be eligible to receive during the period of
his employment under this Employment Agreement, all benefits and emoluments for
which key executives are eligible under every such plan or program to the
extent permissible taking to account the relative position of the EXECUTIVE
under the general terms and provisions of such plans or programs and in
accordance with the provisions thereof.
ELEVENTH (a) In the event of the disability (as hereinafter defined) of
EXECUTIVE, the COMPANY shall, continue to pay EXECUTIVE the monthly
compensation provided in Section 4 hereof during the period of his disability;
provided however, that, in the event the EXECUTIVE is disabled for a
continuous period exceeding twelve (12) calendar months, the COMPANY may, at
its election, terminate this Employment Agreement, in which event EXECUTIVE
shall be entitled to receive the benefits described in paragraph 12(c) and
12(d).
As used in this Employment Agreement, the term "disability" shall mean the
inability of EXECUTIVE to perform all or substantially all of his duties under
this Employment Agreement as determined by an independent physician selected
with the approval of the COMPANY and the EXECUTIVE.
(b) During the period EXECUTIVE shall be entitled to receive payments under
paragraph 4, 5, and 6 above, to the extent that he is physically and mentally
able to do so, he shall furnish information and assistance to the COMPANY and
comply with the provisions of Paragraph 9 hereof.
(c) In the event of the death of EXECUTIVE either during his disability or
otherwise during the term of this Agreement, the COMPANY shall pay, or cause
to be paid, to EXECUTIVE's designated beneficiary or beneficiaries or legal
representative a death benefit of $1,000,000.00 Such death benefit may be
payable in one lump cash sum or installments, as determined by the COMPANY,
taking into account any request of EXECUTIVE and his beneficiary or
beneficiaries. The COMPANY may purchase one or more term or other life or
similar insurance policies in amounts to provide for its obligations under
this Paragraph 11(c), and if no adverse tax consequences would result to
EXECUTIVE and his designated beneficiary or beneficiaries, the ownership of
said policy or policies shall be transferred to EXECUTIVE, such transfer to
constitute, to the extent of such transfer, compliance with the COMPANY's
obligations under this Paragraph 11(c).
TWELFTH (a) The EXECUTIVE's employment shall not be terminated without
good cause shown. Dismissal for cause is limited to material, willful and
intentional misconduct on the part of the EXECUTIVE. Under no circumstances
shall EXECUTIVE be terminated if EXECUTIVE reasonably claims that an act is
a breach of his fiduciary responsibilities.
(b) Upon the occurrence of any event described in clauses (i) - (v) below,
EXECUTIVE shall have the right to elect to terminate his employment under this
Employment Agreement by resignation upon not less than ten (10) days prior
written notice, given within a reasonable period of time not to exceed, except
in the case of a continuing breach, ninety (90) days after the event giving
rises to said right to elect. The events are as follows: (i) the COMPANY's
failure to elect or re-elect or to appoint or re-appoint EXECUTIVE to the
offices of President, Chief Executive Officer and Director (including the
giving of notice pursuant to paragraph 2 hereof); or (ii) material change by
the COMPANY in the EXECUTIVE's functions, duties or responsibilities which
change would cause EXECUTIVE's position with the COMPANY to become less
responsible or important and any such material change shall be deemed a
continuing breach of this Employment Agreement; (iii) liquidation, dissolution,
consolidation, acquisition or merger of the COMPANY or transfer of all or
substantially all of its assets; (iv) if the COMPANY requires EXECUTIVE to
work at a facility outside Manhattan or Westchester County, New York, except
by mutual agreement; or (v) other breach of this Employment Agreement by the
COMPANY.
(c) Upon the occurrence of any event of resignation as in 12(b), the COMPANY
shall pay the EXECUTIVE immediately, or in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate as the case may be, as
severance pay or liquidated damages, or both, for the period described below
a sum equal to the total of the highest monthly rate of salary paid to
EXECUTIVE at any time under this Agreement, the Expense Allowance set out in
Paragraph 4 hereof and the Car Allowance set out in Paragraph 7 hereof. Such
payments shall be calculated for a period of twenty-four months.
(d) Upon the occurrence of an event of resignation as in 12(b), any unvested
shares under the Executive Stock Option Plan provided by COMPANY pursuant to
Exhibit "B" (or any other incentive plan) will become fully vested.
THIRTEENTH In the event of a merger, acquisition or consolidation of the
COMPANY with any corporation or a change in the control of the COMPANY, the
EXECUTIVE may at any time, but no later than ninety (90) days after
consummation of such merger, acquisition, consolidation or change of control,
elect to have his employment relationship with the COMPANY terminated, in
which event EXECUTIVE shall be entitled to receive the benefits described in
Paragraphs 10, 12(c) and 12(d). For purposes of this paragraph, "change of
control" shall be deemed to have occurred, without limitation, if and when
(i) any person (as that term is used in Sections 13(d) and 14(d) (2) of the
Securities and Exchange Act of 1934), other than a person who at the time of
execution of this Agreement is a shareholder of the COMPANY, is or becomes a
beneficial owner, directly or indirectly, of securities of the COMPANY
representing forty (40%) percent or more of the combined voting power of the
COMPANY's then outstanding securities; or (ii) there shall occur a sale of
all, or a substantial part, of the assets of the COMPANY. Notwithstanding
anything in the foregoing to the contrary, no change in the control of the
COMPANY shall be deemed to have occurred for purposes of this Agreement by
virtue of any transaction which results in the EXECUTIVE, or a group of
persons which includes the EXECUTIVE, acquiring, directly or indirectly, more
than forty (40%) percent of the combined voting power of the COMPANY's
outstanding securities.
FOURTEENTH In the event of termination without cause (as herein defined) of
the EXECUTIVE during the Employment Period, the EXECUTIVE may elect, within
ninety (90) days after such termination, to be paid immediately a lump sum
severance allowance, in an amount equivalent to the total of his Minimum Base
Salary payments, the Expense Allowance and the Car Allowance for the remainder
of the contract or 24 calendar months, which ever is the greater, together
with a reasonable estimate of any bonus or incentive payments which would have
been paid to EXECUTIVE in this period.
FIFTEENTH It is expressly agreed that COMPANY may apply a proportion of any
termination payment under paragraphs 12, 13 or 14 hereof to the repayment of
the loan which the COMPANY has extended to EXECUTIVE on the terms set out in
Exhibit A.
SIXTEENTH This Employment Agreement contains the total and entire agreement
between the parties and shall as of the effective date hereof, supersede any
and all other agreements between the parties. The parties acknowledge and
agree that neither of them has made any representations that are not
specifically set forth herein and each of the parties hereto acknowledge that
he or it has relied upon his or its own judgment in entering the same.
SEVENTEENTH The parties hereto do further agree that no waiver or modification
of this Employment Agreement or of any covenant, condition or limitation herein
contained, shall be valid, unless in writing and duly executed by the party to
be charged therewith and that no evidence of any proceedings or litigation
between either or the parties arising out of or affecting this agreement or the
rights or obligations of any party hereunder shall be valid and binding unless
such waiver or modification is in writing, duly executed, and the parties
further agree that the provisions of this paragraph may not be waived except as
herein set forth.
EIGHTEENTH The parties hereto agree that it is their intention and covenant
that this Employment Agreement and the performance hereunder shall be construed
in accordance with and under the laws of the State of New York and that the
terms hereof may be enforced in any court of competent jurisdiction in any
action for specific performance which may be instituted under this Employment
Agreement.
NINETEENTH The parties agree that in the event of any dispute arising out of
this Employment Agreement, they will submit to the jurisdiction of the New York
Supreme Court, New York County.
TWENTIETH All notices required or permitted to be given by either party
hereunder shall be in writing and sent by facsimile or mailed by registered
mail, return receipt requested or equivalentto the other party addressed as
follows:
If to COMPANY: The Compensation Committee
New Paradigm Software Corp.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000 or as amended by COMPANY in written
notice to EXECUTIVE.
If to EXECUTIVE: Xxxx Xxxxxxxx
00 Xxxxxxx Xxxx
Xxxxxx, XX 00000 or as amended by EXECUTIVE in written
notice to COMPANY.
Any notice mailed as provided above shall be deemed completed on the date of
receipt.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals the
day, month and year first above written.
NEW PARADIGM SOFTWARE CORPORATION
__________________________________
BY:
__________________________________
XXXX X. XXXXXXXX
00 Xxxxxxx Xxxx
Xxxxxx
Xxx Xxxx
00000
October 16, 1997
TO: BOARD OF NEW PARADIGM SOFTWARE CORPORATION
Dear Sirs:
Re: Waiver of part of base salary
I hereby agree that I will waive $50,000 per annum of base salary until such
time as the company first reports a pre tax profit for a fiscal year which,
but for this payment would have exceeded $75,000. At that time, the $50,000
for that year will become immediately due and payable and henceforth regular
payments will take place at the full rate.
Very truly yours,
Xxxx Xxxxxxxx
EXHIBIT C
CONFIDENTIALITY COVENANT AND NON-COMPETE
The Undersigned, XXXX X. XXXXXXXX ("EXECUTIVE"), hereby covenants,
warrants and agrees that in consideration of NEW PARADIGM SOFTWARE CORP.
("COMPANY") entering into a contract of employment by and between the
undersigned and COMPANY that all information, processes, plans, customer lists,
methods of operation and other related information, which information is
material to the business of the COMPANY, will be held strictly confidential
and only utilized during the course of employment at the COMPANY. The
undersigned further is aware that the COMPANY is relying on the within
representation in permitting and allowing the undersigning access to
information and that said information is considered proprietary and the
property of the COMPANY with the further understanding and agreement that in no
event will said proprietary information be utilized except with the express
written consent of the COMPANY.
During the course of EXECUTIVE's employment except in furtherance of his
duties under the terms and conditions of this contract, the EXECUTIVE
further specifically agrees he will not at any time, in any fashion, form
or manner, either directly or indirectly, divulge, disclose or communicate
to any person, firm, or corporation, in any matter, whatsoever, any
information of any kind, nature or description concerning any material
matters affecting or relating to the business of the COMPANY, including
without limiting the generality of the foregoing, any of its customers,
its manner of operations, its plans, processes, programs, or other data of
any kind, nature or description without regard to whether any or all of
the foregoing matter shall be deemed confidential, material or important,
that the parties hereto stipulating that as between them the same are
important, material, confidential and gravely affect the effective and
successful conduct of the business of the COMPANY and its good will and
that any breach of the terms of this paragraph is a material breach
thereof, except where the EXECUTIVE shall be acting on behalf of the
COMPANY.
EXECUTIVE specifically understands and agrees that the knowledge of
customer activities, information and related matters concerning COMPANY
and its customers are proprietary and are deemed the property of COMPANY
and that prior to the termination of the within agreement and for a
period of one year thereafter, EXECUTIVE understands and agrees that
said proprietary information shall not be utilized by EXECUTIVE in
connection with the COMPANY's existing customers without COMPANY's
consent. In addition thereto, EXECUTIVE recognizes and agrees that
should there be any violation of the within covenant that EXECUTIVE
consents to the jurisdiction of the New York State Supreme Court,
New York County, for any action requesting injunctive relief and damages
insofar as COMPANY is concerned should EXECUTIVE violate any part of the
within covenant.
EXECUTIVE further understands and agrees that COMPANY in entering into the
within agreement is relying upon EXECUTIVE's representation and warranty
that all trade secret and other proprietary information of COMPANY will be
kept strictly confidential by EXECUTIVE and not utilized by EXECUTIVE in
any manner whatsoever other than on COMPANY's behalf and during the course
of EXECUTIVE's employment with COMPANY.
____________________
Xxxx Xxxxxxxx
