Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") made and entered into this 17th day of
June, 1999, by and between XXXXXXXXXXX.XXX, INC., a Delaware corporation
("Company") and XXXXXXX XXXXXX ("Employee").
BACKGROUND
Employee is employed by Company as its executive vice-president and
chief operating officer. The parties desire to enter into a formal employment
agreement covering the terms and conditions of such employment.
TERMS AND CONDITIONS
Employment. Company hereby employs Employee, and Employee hereby
accepts such employment by Company, on
the terms and conditions set forth below.
Capacity. Employee shall serve as Company's executive vice-president
and chief operating officer. Employee shall perform such services for Company as
Company's board of directors ("Board") and chief executive office shall direct
from time to time. However, no such services shall be of a nature which are not
commensurate with, and/or are beneath the dignity of, Employee's position
described in the first sentence of this paragraph or are not of an executive or
managerial nature.
Term. Company's employment of Employee under this Agreement shall be
for an initial term of five years commencing on July 1, 1999 and ending on June
30, 2004. Notwithstanding the foregoing, the term of this Agreement may end
prior to the termination date determined under this paragraph 3 as provided in
paragraphs 8, 9, 10, and 11.
Service While Employed. Employee agrees to devote his best efforts, his
full diligence and substantially all of his business time to his duties
hereunder and shall not engage, either directly or indirectly, in any business
or other activity which is competitive with or adverse to the interests or the
business of Company.
Items Furnished and Relocation. Company shall furnish Employee with
such private office, secretarial assistance, and such other facilities,
equipment and services suitable to his position and adequate to perform his
duties hereunder. Employee shall not be relocated by Company without his consent
to any area other than Palm Beach County, Florida or the metropolitan areas of
Lincoln Park or Burlington, New Jersey.
Compensation, Vacations and Reimbursement. As partial compensation for
his services to Company, Company agrees to pay Employee an annual salary in
regular monthly or other agreed upon installments of not less than $280,000.00
and an annual bonus computed in accordance with Exhibit A which is attached and
is a part of this Agreement. In addition, Employee shall be entitled to receive
such bonuses (in addition to that required under the preceding sentence),
incentive compensation, and other compensation, if any, as the Board, executive
committee, compensation committee, or other designated committee shall award
Employee from time to time whether in cash, Company stock, stock options, other
stock based compensation, other form of remuneration, or any combination of the
foregoing. All such compensation shall be subject to legally required income and
employment tax withholding. Employee shall be entitled to paid vacations and
reimbursement for all reasonable business expenses in accordance with Company's
policies for executive officers.
Pension, Welfare and Related Benefits. In addition to the compensation
described in paragraph 6 above, Employee shall be entitled to participate in
such bonus, profit sharing, deferred compensation and pension plans of Company
for which he is eligible and such welfare and fringe benefits plans and programs
of the Company for which he is eligible.
Death and Disability. If Employee dies during the term of this
Agreement, his employment shall be deemed to have been terminated as of the last
day of the month in which his death occurs, and Company will pay to Employee's
personal representative all salary and any other compensation due Employee
through the end of such month. If Employee becomes permanently disabled so that
he cannot perform his duties , as determined by a physician selected by or
acceptable to Company, his employment shall be deemed to have been terminated as
of the last day of the month in which such determination is made, and he will
receive his salary and any other compensation due him through the end of such
month.
Termination Upon Retirement or Notice. From and after the time Employee
attains age 65, he may retire at any time by notifying Company at least 120 days
prior to his intended retirement date or be retired by Company upon at least two
years notice. In addition, Employee may terminate his employment at any time
upon one year's notice. If a notice of termination has been given under this
paragraph 9, and the Agreement is terminated under another provision if this
Agreement, such as by death ("Other Termination Provision") prior to the date of
such termination under this paragraph 9, then the Agreement shall be deemed to
have been terminated pursuant to the Other Termination Provision.
Default. In the event that either party fails to perform material
provision of this Agreement and such failure continues for 15 days after
notification from the nonbreaching party, the nonbreaching party may terminate
this Agreement by notice to the breaching party. Such termination shall be
without prejudice to any rights or remedies which the nonbreaching party may
have.
Change in Control and CEO. Notwithstanding any other provision of this
Agreement, should Xxxx Xxxxxxx cease to be chief executive officer of Employer
and should a "change of control" occur, Employee, at his sole option and
discretion, may terminate his employment under this Agreement at any time within
one year after such change of control upon 15 days notice. In the event of such
termination, Company shall pay to Employee a severance payment ("Severance
Payment") equal to three times the base amount as defined in Section 280G(b)(3)
of the Internal Revenue Code of 1986, as amended ("Code") minus $1.00.
Notwithstanding the foregoing, (a) if the Severance Payment and any other
amounts payable by Company to Employee are parachute payments under Code Section
280G (collectively, "Parachute Payments") and, (b), if reducing the Severance
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Payment would eliminate the tax provided for in Code Section 4999 ("Section 4999
Tax") which would otherwise be applicable to the Parachute Payments, and (c) if,
because of such elimination, the net amount of the Parachute Payments (total
payments minus Section 4999 Tax) would be greater than such net amount without
reduction, then the Severance Payment shall be reduced by the smallest amount
required to eliminate the imposition of the Section 4999 Tax. The foregoing
determination shall be made by Company's general counsel, and his determination
shall be binding upon Company and Employee. The amount determined under the
foregoing provisions of this paragraph 12 shall be payable no later than one
month after the effective date of the Employee's termination of employment. A
change in control means: (a) the acquisition by any person or entity, other than
Company or a "related entity," of (i) more than 20% without the approval of the
Board or (ii) more than 50% with the approval of the Board of the outstanding
shares of Company's voting stock on a diluted and/or converted basis through a
tender offer, exchange offer or otherwise; (b) the sale or other disposition of
all or substantially all of Company's assets unless shareholders of Company
prior to such sale or disposition own at least 50% of the voting stock on a
diluted and/or converted basis of the purchaser, and the purchaser assumes
Company's obligations under this Agreement; (c) a merger of consolidation
involving Company which results in Company not being the surviving parent
corporation or after which shareholders of the Company own less than 50% of the
voting stock on a diluted and/or converted basis of the surviving entity; or (d)
any time during any two-year period in which individuals who constituted the
Board at the start of such period (or, except in the case of a transaction
described in a(i) or (c), whose election was approved by at least two-thirds of
the then members of the Board who were members at the start of the two-year
period) do not constitute at least 50% of the Board for any reason. A related
entity is the parent, a subsidiary or any employee benefit plan (including a
trust forming a part of such a plan) maintained by Company, its parent or a
subsidiary. Notwithstanding the foregoing, any changes in stock ownership
resulting from the initial public offering of the Company's shares (("IPO") or a
change in the Board within two years of the IPO and resulting from a change in
stock ownership effected by the IPO shall not be considered a change of control.
Nondisclosure; Return of Records. Employee will not, except as
authorized by Company, publish or disclose to others, or use for his own
benefit, or authorize anyone else to publish or disclose or use, or copy or make
notes of any secret, proprietary, or confidential information or knowledge of
data or trade secrets of or relating to the business activities of Company which
may come to Employee's knowledge during his employment with the Company. Upon
termination of Employee's employment for any reason, Employee will deliver to
Company, without retaining any copies, notes or excerpts, all records, notes,
data, memoranda, and all other documents or materials made or compiled by
Employee, or made available to him by Company during his employment, which are
in Employee's possession and/or control and which are the property of Company
and/or which relate to Employee's employment or the business activities of
Company.
Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Company and any successors or assigns of Company, and Employee, his
heirs, personal representatives and assigns, except that Employee's obligations
to perform services and rights to receive payment therefore shall be
nonassignable and nontransferable.
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Entire Agreement: Modification. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter and supersedes
all prior or contemporaneous agreements not set forth in this agreement. This
Agreement may not be modified other than by an agreement in writing signed by
each of the parties.
Waiver. Any failure by either party to enforce any provision of this
Agreement shall not operate as a waiver of such provision or any other
provision. Any waiver by either party of any breach of any provision of this
Agreement shall not operate as a waiver of any other breach of such provision or
any other provision of this agreement.
Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not effect the other provisions of this
Agreement, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.
Paragraph Headings. Paragraph headings throughout this Agreement are
solely for the convenience of the parties and shall not be construed as a part
of any section or as modifying the contents of any section.
Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.
Notices. All notices under this Agreement shall be personally
delivered, sent certified mail, postage prepaid, to Company at its corporate
office and to Employee at his principal residence, or sent by telecopy.
Non-Competition. For a three year period from and after termination of
Employee's employment for any reason other than death, Employee shall not
engage, directly or indirectly, either on his own behalf or on behalf of any
other person, firm, corporation or other entity, in any business competitive
with the business of Company, in the geographic area in which Company is
conducting business at the time of termination of Employee's employment, or own
more than 5% of any such firm, corporation or other entity. In addition,
Employee must furnish Company with such information as Company shall from time
to time request in order to determine that Employee is in compliance with the
requirements of the preceding provisions of this paragraph 20. In the event that
such provisions are not complied with, Employee agrees that Company's remedies
shall include equitable relief. Employee agrees that the restrictions of this
paragraph 21 are reasonable and required to protect the legitimate business
interests of Company.
Modification. In the event that any provision of this Agreement is
invalid or unenforceable, it shall be modified to the extent required to be
valid and enforceable and only to such extent. If it cannot be so modified, then
it shall be deemed to have been deleted from this Agreement but such deletion
shall not affect the remaining terms and provisions of this Agreement.
Company. For purposes of paragraphs 4, 12, and 20 of this Agreement,
the Company means Xxxxxxxxxxx.xxx, Inc. and all subsidiaries and affiliates of
it.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXXXXXXX.XXX, INC.
"Company"
By: /s/ Xxxxxxx Xxxxxxx
---------------------------
Title: Vice President
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
"Employee"
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EXHIBIT A TO
EMPLOYMENT AGREEMENT
BETWEEN XXXXXXXXXXX.XXX, INC.
AND XXXXXXX XXXXXX
A. Current Annual Bonus Formula.
For each fiscal year, Employee's bonus (if any) shall be 0.7%
of the consolidated earnings of Company and subsidiaries before interest, taxes,
depreciation and amortization. The computation of the bonus, if any, to which
Employee is entitled shall be made by Company's chief financial officer in
accordance with generally accepted accounting principles consistently applied.
Any bonus to which Employee is entitled shall be paid as soon as practicable but
in no event later than the 15th day of the third month after the end of the
fiscal year for which the bonus was earned. In the event Employee's employment
terminates prior to the end of the fiscal year, Employee or his personal
representative shall be entitled to a pro rata portion of the bonus for such
fiscal year unless his employment was terminated pursuant to paragraph 10, in
which event no bonus shall be payable. Employee's pro rata portion of his bonus
shall be the same percentage of the bonus as the number of days for which he was
employed for such fiscal year is of 365.
B. Modified Annual Bonus Formula.
If Company adopts a bonus plan or program intended to meet the
requirements for "other performance-based compensation" under Code Section
162(m) (4) ("162(m) Plan") pursuant to which the bonus, if any, to which one or
more of its employees may be determined, if the provisions of the 162 (m) Plan
are applicable to Employee, and if the annual bonus for Employee under the
162(m) Plan can, in the Company's good faith belief, reasonably be expected to
be substantially similar in amount to that determined under A above over the
remaining term of this Agreement, then the provisions of the 162(m) Plan shall
supersede and replace the provisions of A above from and after the first day of
Company's fiscal year for which the 162 (m) Plan is effective.
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