EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made and entered into
this 1st day of March, 1999 by and between Xxxxxx.xxx Corporation, a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxxx ("Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to ensure that the unique experience,
qualifications and services of Employee will be available to the Company; and
WHEREAS, Employee desires to render services to the Company on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the Company and Employee agree as
follows:
1. Nature of Employment. The Company hereby agrees to employ Employee,
and Employee hereby agrees to be employed by the Company, as Executive
Vice-President of the Company. Employee agrees to perform all duties incident to
such office of the Company and such other duties as are assigned to Employee
from time to time by the Company.
2. Term of Employment. The initial term of Employee's employment
hereunder shall commence on the date hereof and continue for a period of five
years unless sooner terminated pursuant to Section 7 hereof (the "Initial
Term"). Thereafter, this Agreement shall automatically and without further
action be renewed for successive one year periods (each, a "Renewal Term") on
the same terms and conditions unless sooner terminated pursuant to Section 7
hereof or by either party upon written notice given not less than 60 days prior
to the expiration of the Initial Term or any Renewal Term. As used herein,
"Term" shall mean the Initial Term and any Renewal Term.
3. Compensation. As compensation for the services rendered by Employee
to the Company, the Company shall pay or grant, as the case may be, to Employee
the following:
(a) Base Salary. A base salary of $91,000 per annum, prorated
for any partial calendar year. All such amounts shall be referred to as
"Base Salary" and shall be payable in accordance with the Company's
customary payroll practices, less federal and state income tax
withholding, other deductions required by law and other customary
employee deductions. The Base Salary will be increased on an annual
basis in an amount determined by the Board
of Directors of the Company; provided, however, that in no event shall
the Base Salary for any year of the Term be less than 105% of the Base
Salary for the prior year of the Term.
(b) Incentive Bonus. An incentive cash bonus (the "Bonus") at
the end of each year of the Term in an amount equal to 2.25% of the
annual Operating Income (as defined below) of the Company in excess of
$1,000,000. For purposes of this Agreement, the term "Operating Income"
shall mean the net income from operations of the Company before
interest and taxes, at the close of the end of the Company's fiscal
year as determined by the Company's regularly retained certified public
accountants in accordance with generally accepted accounting principles
consistently applied.
4. Benefits. During the term hereof, Employee may participate, subject
to eligibility and other terms, in any employee benefits plans and programs from
time to time established by the Company including, without limitation, any group
health insurance plans, life insurance plans, profit sharing, vacation, pension
and other benefit programs adopted by the Company.
5. Vacation. Employee shall be eligible for six weeks of paid vacation
during each year of the Term.
6. Expenses. The Company shall pay all reasonable expenses which are
actually incurred by Employee on behalf of the Company incident to the discharge
and performance of Employee's duties hereunder including, but not limited to,
business expenses for travel, as evidenced by vouchers and such other reasonable
supporting materials as the Company may require. Reimbursement for such expenses
shall be made by the Company in accordance with the Company's expense
reimbursement policies in effect from time to time.
7. Termination. Employee's employment hereunder shall, at the election
of the Company, immediately terminate upon the occurrence of one of the
following events:
(a) Upon the last day of the Term upon not less than 60 days'
prior written notice.
(b) Upon the death of Employee.
(c) Upon written notice from the Company to Employee in the
event Employee is convicted of any act of embezzlement, theft or fraud,
provided, however, that Employee shall not be terminated pursuant to
this Section 7(c) unless Employee has been given written notice of the
violation forming the basis for Employee's termination and after a
reasonable time thereafter, Employee has failed to remedy such
violation.
(d) Upon written notice from the Company to Employee that
Employee is unable, by reason of physical or mental impairment for a
period of 90 days during any 12 month
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period, to carry out and perform the duties and obligations ordinarily
required of him as an employee of the Company.
(e) Upon 30 days written notice from the Company to Employee
or the Employee to the Company.
8. Compensation Upon Termination. In the event that Employee's
employment hereunder is terminated by the Company pursuant to Section 7(c)
above, the Company shall continue to pay to Employee or Employee's legal
representative, Employee's Base Salary in effect on the date of termination for
a period of 12 months following Employee's date of termination. In the event
Employee's employment hereunder is terminated by the Company pursuant to Section
7(e) above, the Company shall continue to pay to Employee or Employee's legal
representative, the Employee's Base Salary (including annual increases and
Bonus) each at a rate that is two times the amount set forth in Sections 3(a)
and (b) in effect on the date of termination for a period equal to the longer of
the unexpired duration of the Term or two years. In the event Employee
terminates his employment pursuant to Section 7(e) above, the Company shall pay
to Employee or Employee's legal representative, Employee's Base Salary and Bonus
which has accrued through the date of termination. All payments hereunder shall
be payable in accordance with the Company's customary payroll practices less
federal and state income tax withholding, other deductions required by law and
other customary employee deductions. In the event Employee's employment
hereunder is terminated by the Company pursuant to Section 7(e) above, Employee
shall have the option, upon written notice to the Company within 90 days of the
date of Employee's termination, to sell all, and not less than all, of the
common stock of the Company owned by the Employee (the "Stock") to the Company
and the Company shall have the obligation, if so requested by the Employee, to
purchase all, and not less than all, of the Stock owned by the Employee (the
"Put Right"). Any exercise of the Put Right must be by written notice by the
Employee to the Company within 90 days of the Employee's date of termination.
The price of the Stock sold under this Section 8 shall equal 90% of the average
closing price of the Stock for the 30 day period prior to the date of Employee's
termination. The entire purchase price for the Stock purchased under this
Section 8 shall be paid, at the Employee's option, by certified or cashier's
check, by wire transfer, or by a combination thereof.
9. Inventions and Innovations. Employee agrees that all right, title
and interest in and to any innovation, design, marketing program, idea or
improvement in the business of the Company, and all copyrights, trademarks and
trade names which are developed or created in whole or in part by Employee at
any time and at any place during the Term of his employment hereunder and
related to or usable in connection with the business activities of the Company
shall be and remain forever the sole and exclusive property of the Company.
Employee further agrees to promptly reveal all information relating to the same
to the Company and to cooperate with the Company and execute such documents as
may be necessary in the event that the Company desires to seek copyright, patent
or trademark protection thereafter.
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10. Protection of Confidential Information. Employee recognizes that
the Company has acquired and will be developing certain trade secrets, know-how,
client lists, Prospective Client (as hereinafter defined) lists, supplier lists,
files, rolodex cards, forms, leads, systems and marketing plans and financial
information and reports which the Company regards as confidential and
proprietary (collectively "Confidential Information"). Employee agrees that,
upon termination of his employment for any reason, including, without
limitation, the end of the Term, he will immediately deliver to the Company all
papers, books, manuals, lists, correspondence and documents, including, without
limitation, records and lists stored on computer, relating to Confidential
Information as well as any other matters which may involve the business of the
Company, together with all copies thereof, irrespective of whether he created
the same or was involved with the same and that he will neither copy nor take
any such material with him upon leaving the Company's employ. Employee further
agrees that he will not at any time either while employed by the Company or
after the termination of his employment use or disclose or authorize anyone else
to use or disclose Confidential Information without the prior express written
consent of the Company.
11. Non-Competition Covenants. Employee agrees that while employed
hereunder he will not compete with the Company in any manner, and that after
termination of his employment hereunder, he will not, directly or indirectly,
individually or as a shareholder, director or officer of any corporation, a
partner of any partnership, or as an employee, agent, consultant or advisor of
any entity, for a period of 12 months in the event his employment is terminated
by the Company pursuant to Section 7(e) above, and for a period of 24 months in
the event his employment is terminated pursuant to Section 7(c) above, (a)
recruit or hire any employee of the Company, or otherwise attempt to solicit or
induce any employee to leave the employment of the Company; (b) solicit any
client or Prospective Client (as hereinafter defined) of the Company or
otherwise interfere with the business relationships between the Company, its
clients, suppliers and others with whom the Company conducts its business; (c)
individually or through any entity perform any services for any client or
Prospective Client of the Company which are competitive in any manner with
services which the Company may perform for such clients and Prospective Clients,
regardless of whether or not the Company has or is now providing such services;
or (d) accept employment by any client or Prospective Client of the Company. For
the purposes of this Section 11, the term "Prospective Client" shall mean any
person or entity with whom the Company has contacted for services to be rendered
by the Company within 180 days of the earlier of the expiration of the Term or
the termination of this Agreement.
12. Enforcement by Injunction. Employee acknowledges that the
protections of the Company set forth in Sections 9, 10 and 11 of this Agreement
are of vital concern to the Company, that monetary damages for any violation
thereof would not adequately compensate the Company and that the Company is
engaged in a highly competitive business. Accordingly, Employee agrees that the
restrictions set forth in Sections 9, 10 and 11 may be enforced by injunction
proceedings (without the necessity of posting bond) whether or not his
employment hereunder has terminated.
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13. Partial Enforcement. If any term or condition of this Agreement
shall be invalid or unenforceable to any extent or in any application,
including, but not limited to the non-competition covenants in Section 11, then
the remainder of this Agreement, and such term or condition, except to such
extent or in such application, shall not be affected thereby, and each and every
term and condition of this Agreement shall be valid and enforced to the fullest
extent and in the broadest application permitted by law.
14. Notices. All notices and other communications required hereunder
shall be in writing and deemed to have been given when (i) personally delivered,
(ii) one business day after delivery to a nationally recognized overnight
courier service, or (iii) three days after being mailed by certified mail,
postage prepaid, addressed as follows:
If to Employee: 000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
If to the Company: Xxxxxx.xxx Corporation
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: President
With a copy to: Xxxxxxx Xxxxxx & Xxxx Chartered
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
or to such other address as either party hereto may request by notice given as
aforesaid to the other party hereto.
15. Merger or Reorganization. The Company may assign its rights under
this Agreement to any entity which may acquire all or substantially all of the
businesses which are currently conducted by the Company (or which have evolved
therefrom and are substantially similar thereto), or which may acquire
substantially all of the assets and businesses of the Company existing at the
time of such acquisition, or with or into which the Company may be consolidated
or merged, provided that any such assignment shall be subject to the express
terms and conditions of this Agreement.
16. Non-Assignability. This Agreement is personal as to Employee and
may not be assigned or transferred by Employee in any manner whatsoever.
17. Benefit. Subject to Sections 15 and 16 above, the rights and
covenants of this Agreement shall inure and extend to the parties hereto, their
respective heirs, administrators, executors, successors and assigns.
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18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois. The prevailing parties in any
litigation in connection with this Agreement shall be entitled to recover from
the non-prevailing parties all costs and expenses, including without limitation,
reasonable attorneys' and paralegals' fees and costs incurred by such party in
connection with any such litigation. It is the intent of the parties that this
Agreement be deemed to have been prepared by all of the parties and that no
party shall be entitled to the benefit of any favorable interpretation or
construction of any term or provision hereof under any rule or law.
19. Titles and Headings. Titles and headings to paragraphs hereof are
for the purpose of reference only and do not affect the provisions hereof or the
rights of the parties hereto.
20. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all understandings and agreements
between the parties with respect to the subject matter hereof. This Agreement
shall not be altered, modified, amended or terminated except by written
instrument executed by both parties hereto.
21. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be considered an original and all of which,
when taken together, shall be considered a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Employment
Agreement to be duly executed and delivered on the date first above written.
XXXXXX.XXX CORPORATION
By:_________________________________
Name:_______________________________
Its:________________________________
____________________________________
Xxxxx X. Xxxxxxxx
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