EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of
the 25th day of April 2003 (the "Effective Date"), by and between
Comtex News Network, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxx ("Executive").
Recitals:
A. The Company desires to retain Executive as its
President and Chief Executive Officer on the terms and conditions
hereinafter set forth; and
B. Executive desires to commence such employment, on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the
mutual covenants set forth herein, the parties hereto agree as
follows:
1. Employment and Term.
a. Employment. The Company hereby agrees to employ
Executive and Executive hereby accepts employment as President
and Chief Executive Officer of the Company under the conditions
hereinafter specified.
b. Term. Subject to earlier termination as provided
in Paragraph 5, the initial term of this Agreement shall commence
on the Effective 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 first and second anniversary of the
Effective Date. The Board of Directors shall notify Executive 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.
2. Duties.
a. Executive shall serve as President and Chief
Executive Officer of the Company. Executive shall perform all of
his duties diligently and faithfully, and shall report to the
Chairman and the Board of Directors. Executive shall be invited
to attend all meetings of the Board of Directors of the Company.
Within ninety (90) days of the Effective Date of this Agreement,
Executive shall be appointed to the Board of Directors.
b. Executive shall at all times devote his entire
working time, attention, energies, efforts and skills to the
business of the Company, and shall not, directly or indirectly,
engage in any other business activity, whether or not for profit,
gain or other pecuniary advantages, without the express written
permission of the Company. Notwithstanding the foregoing,
Executive may serve on the board of directors of any non-
competing company and receive compensation therefore, provided he
obtains the advance written approval of the Board of Directors of
the Company.
3. Compensation.
a. Base Salary. The Company shall pay Executive
basic compensation of One Hundred Seventy-Five Thousand Dollars
($175,000) per year ("Base Salary"). Such Base Salary shall be
payable biweekly. In the event this Agreement is renewed,
Executive shall be entitled to an increase in Executive's Base
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 (and such increase in Base Salary shall
become the Base Salary). Any incentive compensation that may be
paid to Executive from time to time shall have no impact upon the
Base Salary.
b. Signing Bonus. As an incentive to enter into this
Agreement, the Company shall pay Executive a one-time signing
bonus of Ten Thousand Dollars ($10,000.00), less standard
withholdings and deductions, payable after thirty (30) days of
service under this Agreement.
c. Incentive Stock Options. The Company shall grant
Executive stock options ("Stock Options") to acquire Six-Hundred
Thousand (600,000) common shares of the Company's stock, in
accordance with the Company's Stock Option Plan (the "Plan"),
with an exercise price per share equal to the Fair Market Value
of the common shares as of the date of grant. For this purpose,
Fair Market Value equals the average of the trailing 10 day high
and low bids (as specified in the Plan). Provided Executive is
employed by the Company on the date of vesting, Executive shall
vest in such Stock Options pursuant to the following schedule:
Length of Service From Effective Date Number of Vested Options
90 Days 150,000 shares
12 Months 150,000 shares
24 Months 150,000 shares
36 Months 150,000 shares
Upon the occurrence of any of the following within one of
the time periods listed under Length of Service From Effective
Date in the table immediately above, the unvested options only
for the number of shares associated with such specific time
period shall accelerate as to vesting and shall be deemed vested
at the date of occurrence of said event:
(i) Executive is required to work more than 50
miles outside of the current Company headquarters, located at
Alexandria, Virginia, on a regular basis;
(ii) Change of Control: A "Change of Control"
shall have occurred if:
(a) Any "person" within the meaning of
Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than the Company, a subsidiary or
"affiliate" as defined under the Exchange Act, any employee
benefit plan sponsored by the Company or any subsidiary of the
Company, becomes the "beneficial owner" as defined in Rule 13d-3
under the Exchange Act, directly or indirectly, of 51% or more of
the combined voting power of the securities of the Company
entitled to vote in an election of directors to the Board, and
Executive's employment with the Company is terminated by the
Company at any time during the remainder of such period during
which vesting would otherwise have occurred but for such
termination (the "Protection Period"); or
(b) A merger or equivalent combination occurs
after which 51% or more of the voting stock of the surviving
Company is held by persons other than former stockholders of the
Company, and Executive's employment with the Company is
terminated by the Company at any time during the Protection
Period; or
(c) The sale, assignment, transfer or other
disposition of assets of the Company having a value in excess of
50% of the total assets of the Company, and Executive's
employment with the Company is terminated by the Company at any
time during the Protection Period.
d. Incentive Cash Bonus. The Company shall pay
Executive an annual incentive cash bonus pursuant to the formula
attached hereto as Schedule A. Within 45 days following each
fiscal quarter end, the Company will estimate the cumulative
incentive cash bonus due to Executive for the fiscal year-to-
date, less a reserve amount equal to 20% of such amount (the
"Estimated Cumulative Incentive Cash Payment"), except for the
fourth fiscal quarter whereupon no such reserve amount shall be
deducted. Within 10 days thereafter, the Company will pay to the
Executive the Estimated Cumulative Incentive Cash Payment, less
the total of all prior Estimated Cumulative Incentive Cash
Payments made thus far for the fiscal year in question.
For any year that does not fall entirely within the term of
employment, the bonus for that year shall be prorated according
to the following formula: the bonus for that entire year,
calculated according to the formula attached hereto as Schedule
A, multiplied by a fraction, the numerator of which shall be the
number of days in that year that fall within the term of
employment and the denominator of which shall be 365.
If Executive's employment be terminated at other than a
fiscal year end, the Incentive Cash Bonus due to Executive shall
be calculated by replacing the annual Plan amounts stipulated in
Schedule A with the year-to-date Plan amount that corresponds to
the month ended immediately preceding such date of termination
(the Year-to-Date Plan) and comparing such Year-to-Date Plan to
the Company's actual revenue and profitability performance, as
stipulated in Schedule A, through the comparable month end
immediately preceding such date of termination. The Executive
need not be employed by the Corporation at the time of payment in
order to receive any bonus to which the Executive is otherwise
entitled pursuant to the terms of this Paragraph 3d.
e. Reimbursement of Reasonable Expenses. The Company
shall pay or reimburse Executive for all reasonable travel and
other reasonable expenses incurred by Executive performing his
obligations under this Agreement.
4. Benefits.
a. Retirement and/or Pension Plan(s). Executive shall
be entitled to participate in any retirement and/or pension
plan(s) offered to the Company's employees generally in
accordance with the terms of such plan(s), as they may be
modified at the Company's discretion from time to time.
b. Insurance. Executive shall be entitled to
participate in any health, medical, life and disability insurance
plans offered to the Company's employees generally in accordance
with the terms of such plan(s), as they may be modified in their
application to all employees at the Company's discretion from
time to time.
c. Paid Sick and Personal Leave. Executive shall be
entitled to a maximum of ten (10) days of paid sick leave per
year, which shall accrue in accordance with the Company's policy
applicable to employees generally. Executive shall also accrue
two (2) additional personal days per calendar year.
d. Paid Vacation. Executive shall be entitled to four
(4) weeks of paid vacation during each calendar year; however, in
no event shall Executive use more than two contiguous weeks at
any one time. Accrued, but unused, vacation may be carried over
from one year to the next in accordance with the policy in effect
for the Company employees in general.
5. Termination of Employment by the Company.
a. Termination for Cause. The employment of Executive
under this Agreement may be terminated for "Cause" by the Company
at any time by action of the Board upon the occurrence of any one
or more of the following events: (i) Executive's fraud,
dishonesty, gross negligence or willful misconduct in the
performance of his duties hereunder, including willful failure to
perform such duties as may properly be assigned him hereunder; or
(ii) Executive's material breach of any provision of this
Agreement. Executive shall be notified in writing of such
termination, which notification shall specify the grounds cited
by the Board for such termination for cause. Any termination by
reason of the foregoing shall not be in limitation of any right
or remedy which the Company may have under this Agreement or
otherwise.
b. Termination Without Cause.
(i) The Company may terminate Executive's
employment without cause and at any time. Executive shall be
notified in writing of such termination on or prior to the
effective date of such termination.
(ii) If Executive's employment is terminated
without cause, and Executive waives all claims against the
Company relating to or arising out of his employment or the
termination of his employment by executing a general release of
such claims, Executive shall receive, as severance pay, an amount
equal to his Base Salary divided by twelve (12) (as defined, his
"Monthly Base Salary") and multiplied by the appropriate multiple
set forth below for Executive's length of service at time of
termination:
Length of Service Severance Compensation
Less than 90 Days Zero
90 Days to less than First 6 Months Two
First 6 Months to less than 12 Months Three
First Year to less than 24 Months Five
Second Year to less than 36 Months Six
Such amount shall represent the agreed-upon liquidated
damages for any loss, cost, expense or damages suffered as a
result of such termination, as well as consideration for
Executive's execution of a General Release of all claims against
the Company. The Company shall pay such amount to Executive on a
bi-weekly basis, less standard withholdings and deductions, and
in an amount equal to the Executive's then current rate of Base
Pay until such time as the severance obligation due to the
Executive by the Company has thereby been extinguished, with the
exception that the Executive may elect to receive up to 100% of
this payment in a lump sum not later than 30 days following the
date of termination, in the event that the lump-sum payment shall
be used exclusively for the purposes of exercising vested stock
options in the Corporation.
c. Resignation from Board. Executive agrees to
resign from the Board of Directors of the Company immediately
upon his termination of employment, whether such termination is
voluntary or involuntary, with or without cause.
6. Protection of the Company.
a. Non-Compete. To induce the Company to enter into
this Agreement, Executive 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, employee, 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 ("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"). Executive acknowledges
that the provisions of this Paragraph 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, Executive 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.
b. In the event that a court of competent
jurisdiction finds Paragraph 6a. or any of its restrictions, to
be ambiguous, unenforceable, and/or invalid, Executive and the
Corporation agree that such court shall read Paragraph 6a. as a
whole and interpret the restriction(s) at issue to be enforceable
and valid to the maximum extent as allowed by law for the
protection of the Corporation's business interests.
c. If the court declines to enforce this Agreement
pursuant to Paragraph 6b. above, the Corporation and Executive
agree that Paragraph 6a. will be automatically modified to
provide the Corporation with the maximum protection of the
Corporation's business interests as allowed by law and to be
bound by Paragraph 6a. as modified.
d. If any provision of Paragraph 6a. shall
nonetheless be declared ambiguous, unenforceable or invalid, the
remainder of Paragraph 6a. shall remain in full force and effect,
and Paragraph 6a. shall remain in full force and effect, and
Paragraph 6a. shall be read as if the ambiguous, unenforceable or
invalid provision was not contained herein.
e. Confidential Information. 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 confidential, trade secret
and/or proprietary character and which is either developed by
Executive (alone or with others) or to which Executive 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 secretes, know-how, manufacturing 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, confidential 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. Executive shall, both during and after his employment
with the Company, protect and maintain the confidential, trade
secret and/or proprietary character of all Confidential
Information. Executive shall not, during or after termination of
his employment, directly or indirectly, use (for himself or
another) or disclose any Confidential Information, for so long as
it shall remain proprietary or protectible as confidential or
trade secret information, except as may be necessary for the
performance of his duties under this Agreement. Executive 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. Each of Executive's obligations
hereunder 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.
f. The provisions of this Paragraph shall survive the
expiration or earlier termination of this Agreement.
7. Death or Incapacitation. In the event that Executive
dies or, due to a physical or mental impairment, becomes unable
to perform the essential functions of his position with or
without reasonable accommodation, this Agreement shall be deemed
terminated and Executive or his estate, as the case may be, shall
be entitled to no further salary, compensation or benefits
hereunder, except (i) any unpaid salary, incentive payments and
vacation accrued and earned by Executive up to and including the
date of such termination, and (ii) any disability, life insurance
or other benefits to which Executive or his estate may be
entitled on the date of such termination in accordance with the
terms and conditions of any applicable benefit plan(s) as set
forth in official plan documents.
8. Assignment. This Agreement is a personal service
agreement and neither party shall have the right to assign this
Agreement or any rights or obligations hereunder without the
prior written consent of the other party.
9. Notices. All notices required or permitted hereunder
shall be in writing and shall be deemed properly given if
delivered personally or sent by certified or registered mail,
postage prepaid, return receipt requested. If mailed to the
Company, such notices shall be sent to their principal place of
business, attention: Chairman of the Board, or at such other
address as the Company may hereafter designate in writing to
Executive. If mailed to Executive, such notices shall be
addressed to him at his home address last known on the records of
the Company, or at such other address as Executive may hereafter
designate in writing to the Company.
10. Successors Bound. This Agreement shall bind and inure
to the benefit of the parties hereto and their respective heirs,
personal representatives, estates and permitted successors and
assigns.
11. Waiver. No provision hereof may be waived, except by a
written instrument signed by the party against whom such waiver
is sought to be enforced. The failure or waiver of either party
hereto at any time, or from time to time, to require performance
by the other party of such other party's obligation hereunder,
shall not deprive that party of the right to insist upon strict
adherence to such obligation at any subsequent time. Each party
hereto agrees that any waiver of its rights arising out of any
breach of this Agreement by the other party shall not be
construed as a waiver of any subsequent breach.
12. Amendment. No provision hereof may be altered or
amended, except by a written instrument signed by the party
against whom such alteration or amendment is to be enforced.
13. Governing Law. The parties agree that this Agreement
shall in all respects be construed, interpreted and enforced in
accordance with and governed by the laws of the State of
Delaware, without regard to the principles of conflict of laws
thereof.
14. Arbitration. Whenever a "dispute" arises between the
parties concerning this Agreement or their employment
relationship (other than a dispute arising under Paragraph 6),
including without limitation the termination thereof, the parties
shall use their best efforts to resolve the "dispute" by mutual
agreement. If such a "dispute" cannot be so resolved, it shall
be submitted to final and binding arbitration to the exclusion of
all other avenues of relief. For the purposes of this paragraph,
the term "dispute" means all controversies or claims relating to
terms, conditions or privileges of employment, including without
limitation claims for breach of contract, discrimination,
harassment, wrongful discharge, misrepresentation, defamation,
emotional distress or any other personal injury, but excluding
claims for unemployment compensation or worker's compensation.
The dispute shall be submitted to the American Arbitration
Association ("AAA") at an office located in the Commonwealth of
Virginia and adjudicated in accordance with AAA's Rules for
Commercial Arbitration then in effect. The decision of the
Arbitrator must be in writing and shall be final and binding on
the parties, and judgment may be entered on the arbitrator's
award in any court having jurisdiction thereof. The expenses of
the arbitration shall be borne equally by the parties, and each
party shall be responsible for his or its own costs and
attorneys' fees. The Arbitrator shall be deemed to possess the
powers to issue mandatory orders and restraining orders in
connection with such arbitration; provided, however, that nothing
in this paragraph shall be construed so as to deny the Company
the right and power to seek and obtain injunctive relief in a
court of equity for any breach or threatened breach by Executive
of any of the provisions contained in Paragraph 6 of this
Agreement. This paragraph shall survive the termination of this
Agreement.
15. Severability. In the event that any provision of this
Agreement conflicts with the law under which this Agreement is to
be construed, or if any such provision is held invalid or
unenforceable by a court of competent jurisdiction or an
arbitrator, such provision shall be deleted from this Agreement
and the Agreement shall be construed to give full effect to the
remaining provisions thereof.
16. Headings and Captions. The paragraph headings and
captions contained in this Agreement are for convenience only and
shall not be construed to define, limit or affect the scope or
meaning of the provisions hereof.
17. Entire Agreement. This Agreement contains and
represents the entire agreement of the parties and supersedes all
representations or understandings, oral or written, express or
implied with respect to the subject matter hereof. This
Agreement may not be modified or amended in any way unless in
writing signed by both Executive and the Chairman of the Board of
the Company. No representation, promise or inducement has been
made by either party hereto that is not embodied in this
Agreement, and neither party shall be bound or liable for any
alleged representation, promise or inducement not specifically
set forth herein.
IN WITNESS WHEREOF, the parties have executed this
Employment Agreement effective on the date and year first written
above.
COMTEX NEWS NETWORK, INC.
By: /S/ XXXXXXX X. XXXXX
Xxxxxxx X. Xxxxx
Chairman of the Board
EXECUTIVE
By: /S/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Schedule A
Incentive Cash Components (where X, Y and Z are > 0 only): Payable within 30 days
Bonus Formula after FQE (20% reserve
withheld only for Q1 - Q3)
A. Where W = Total Revenue:
If Act. W = Plan W $65,000;
If 90% Plan W = Act. W < 100% Plan W $52,000 (80%);
If Act. W < 90% Plan Zero.
B. Revenue Above Plan from Existing Products: 2.0% times X
For X = Act. Rev. less Plan Rev.
C. Revenue Above Plan from New Products: 3.5% times Y
For Y = Act. Rev. less Plan Rev.
D. Total EBITDA: 4.5% times Z.
For Z = Act. EBITDA less Plan EBITDA.
