EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of the 19th day of
March 2004, by and between INTEGRATED BUSINESS SYSTEMS & SERVICES, INC., a South
Carolina corporation (the "Company") and XXXXXXX X. XXXXXXX ("Employee").
WHEREAS, the Company desires to employ Employee, and Employee desires to
be employed by the Company, in accordance with the terms and conditions
hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual promises herein set forth,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. Employment. The Company hereby agrees to employ Employee to perform
the duties described below subject to and in accordance with the terms and
conditions hereof, and Employee hereby accepts such employment. In accepting
employment by the Company, Employee shall assume the responsibility of
performing for and on behalf of the Company the duties of Chief Financial
Officer of the Company.
2. Term. The term of employment hereunder shall commence on April 16,
2004 and unless earlier terminated in accordance with Section 5 hereof, shall
continue for a term of Three (3) years ending on April 15, 2007. This Agreement
shall be automatically renewed for additional terms of one (1) year, unless no
less than one hundred eighty (180) days prior to the end of the then current
term of this Agreement the Company notifies Employee in writing or Employee
notifies the Company in writing of the intention not to renew this Agreement.
References to this Agreement's term shall mean the initial term and all
successive terms unless the context clearly indicates otherwise.
3. Compensation. As compensation for the services to be rendered by the
Employee for the Company under this Agreement, Employee shall be compensated as
follows:
(a) Salary. Employee shall be compensated by the Company on the basis of
a minimum annual base salary ("Salary") of One Hundred Fifty Thousand ($150,000)
Dollars commencing on the effective date of this Agreement. Such Salary shall be
payable in pay periods as determined by the Company, but in no event less
frequently than semi-monthly. The Salary payable to Employee for each twelve
(12) month period during the term of this Agreement following the first
anniversary of the effective date of this Agreement shall be reviewed by the
Board of Directors (or an appropriate committee of the Board), and may be
increased if the Board of Directors (or such committee) determines that an
increase is appropriate.
(b) Bonuses. In addition to the Salary, Employee shall also be eligible
to receive one or more bonuses, annually or more frequently, the amount and
grant of which shall be at the direction of the Company.
(c) Vacation and Leaves of Absence. In addition to all regular Company
holidays, the Company shall provide Employee with twenty (20) business days of
paid vacation time during each calendar year during the term of employment
hereunder. Such vacation days and Professional Days are to be taken at such time
or times as Employee may reasonably request, subject to the Company's
convenience and prior approval, which approval shall not be unreasonably
withheld. The Company may grant additional vacation time and time off in its
sole discretion.
(d) Reimbursement for Expenses. The Company shall provide reimbursement
of all reasonable expenses incurred by Employee for the benefit of the Company
in the performance of Employee's duties hereunder including maintenance of
Professional Certification, provided that reasonable written documentation is
provided to the Company in support of such reimbursement.
(e) Other Benefits. The Company shall provide at its expense other
benefits (e.g., health insurance coverage (including payment of benefits under
COBRA), disability insurance coverage, retirement plan participation, etc.)
reasonably comparable to, and no less favorable to Employee than, those benefits
generally provided to other senior executives of the Company.
4. Stock Options. As a material inducement to Employee to enter into
this extended Agreement, the Company shall grant to Employee effective the date
hereof and pursuant to the Company's Stock Option Plan (the "Plan") or directly
outside of the Plan as set forth below:
(a) Incentive Stock Options: Incentive Stock options shall be provided to
Employee to purchase a total of Five Hundred Thousand (500,000) shares of
the Company's common stock at an exercise price per share of twenty-six
cents ($0.26) which is the closing stock price as of April 16, 2004, the
starting date of this agreement. These options shall have an exercise life
of five years and vest, so long as the person remains an Employee of the
company at the time of the vesting, as follows:
a. 75,000 shares on October 15, 2004
b. 100,000 shares on April 15, 2005
c. 75,000 shares on October 15, 2005
d. 100,000 shares on April 15, 2006 and
e. 150,000 shares on October 15, 2006
It is intended that such options shall be structured to satisfy the requirements
of Section 422A of the Internal Revenue Code and shall be designated as
incentive stock options.
(b) Agreements and Adjustments. The Company and Employee shall execute
and deliver appropriate Stock Option Agreements in the form contemplated by the
Plan or otherwise as necessary to reflect the grant of options hereunder.
Consistent with the adjustments contemplated with respect to options granted
under the Plan, all option amounts and exercise prices shall be adjusted for any
subsequent stock splits, stock dividends, recapitalizations or similar events.
(c) Change in Control. Notwithstanding any vesting provisions identified
in this Section 4, upon the occurrence of a "Change in Control" of the Company
as defined herein, all unvested options granted pursuant to this Section 4 shall
immediately vest and become fully exercisable and remain exercisable throughout
their entire term. For purposes of this Agreement, the term "Change in Control"
shall mean that any one of the following events shall have occurred: (i) a
person, partnership, joint venture, corporation or other entity, or two or more
of any of the foregoing acting as a group (or a "person" within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), other than the Company, a majority-owned subsidiary of the Company, an
employee benefit plan (or related trust) of the Company or such subsidiary, (A)
directly or indirectly become(s) after the effective date of grant of the stock
options hereunder the "beneficial owner" (as defined in Rule 13(d)(3) under the
0000 Xxx) of 15% or more of the then outstanding voting stock of the Company or
(B) makes a tender offer for 15% or more of the outstanding voting securities of
the Company; or (ii) individuals who constitute a majority of the Board of
Directors at the effective date hereof, or individuals elected or nominated
directly or indirectly by at least a majority of such current directors, no
longer constitute a majority of the Company's Board of Directors'; or (iii) the
Company enters into (A) a plan of complete liquidation of the Company or (B) an
agreement for the sale or disposition of all or substantially all of the
Company's assets (other than to a subsidiary of the Company); or (C) a merger,
consolidation, or reorganization of the Company with or involving any other
corporation, other than a merger, consolidation, or reorganization that would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least seventy-five
percent (75%) of the combined voting power of the voting securities of the
Company (or such surviving entity) outstanding immediately after such merger,
consolidation or reorganization.
5. Termination.
(a) For Cause by the Company. Notwithstanding any other provision
hereof, the Company may terminate Employee's employment under this Agreement at
any time "for cause." For purposes hereof, the term "for cause" means one of the
following acts by Employee: theft or embezzlement from the Company; knowingly
falsifying Company records; conviction for a felony; or a material violation of
the terms and provisions of this Agreement which remains uncured by the Employee
fifteen (15) days after notice from
the Company to Employee of such violation. All compensation (including, without
limitation the Salary and all perquisites and fringe benefits, but excluding
vested stock options) to which Employee would otherwise be entitled for periods
after the effective date of such termination shall be discontinued and forfeited
as of the effective date of such termination. Employee shall not be deemed to
have been terminated "for cause" without delivery to Employee of a written
notice of termination from the Company explaining the Company's intention to
terminate Employee "for cause" and specifying in reasonable detail the facts and
circumstances that are the basis for terminating Employee's employment; and
providing an opportunity for Employee to cure any curable default specified in
such notice of termination for a period of fifteen (15) days after Employee's
receipt of such notice.
(b) Without Cause By the Company/ For Good Reason by Employee. The
Company may voluntarily terminate this Agreement "without cause" upon sixty (60)
days prior written notice to Employee, and Employee may voluntarily terminate
this Agreement "for good reason" upon sixty (60) days prior written notice to
the Company. For purposes hereof, the term "for good reason" shall include, but
not be limited to, the commission of any of the following by the Company:
reduction of Employee's minimum base salary; assignment to Employee of duties
inconsistent with his duties, responsibilities or status with the Company as
Chief Financial Officer; material change in Employee's reporting
responsibilities, title or office; diminution in Employee's employee benefits;
failure to cure any Company breach of this Agreement within fifteen (15) days
following the Company's receipt from Employee of written notice of such breach.
In the event of such termination, all compensation (including without limitation
the Salary and any perquisites and fringe benefits, if any) to which Employee
would otherwise be entitled (for periods after the effective date of the
termination) shall be discontinued and forfeited as of the effective date of
such termination. Notwithstanding the foregoing, upon the occurrence of such
termination by the Company "without cause" or by Employee "for good reason" (as
such term is defined above) the following shall occur:
(i) Employee shall be paid any and all accrued and unpaid Salary,
bonuses and any and all unreimbursed expenses for periods prior and up to the
effective date of termination, and Employee shall be paid the aggregate Salary
that Employee would otherwise have been entitled to receive during the remaining
term of this Agreement had Employee's employment not terminated;
(ii) Employee shall be paid severance compensation equal to eighteen (18)
months of base Salary at the rate of base Salary in effect immediately preceding
the date of termination but never less than the base salary listed in 3 (a)
above;
(iii) all unvested options granted pursuant to Section 4 hereof and all
unvested options granted subsequent to the effective date of this Agreement
shall immediately vest; and
(iv) Employee shall receive from the Company, at the Company's expense,
all benefits set forth in Section 3 (e) for one (1) year following such
termination; provided
however, that during such period, should a third party provide any such
benefit(s) to Employee, the Company's obligation pursuant to this paragraph to
provide the benefit(s) being so provided by the third party shall be reduced by
the amount and to the extent such benefit(s) is (are) provided to Employee by
such third party.
The Company shall pay the amounts set forth under paragraphs 5(b)(i) and
5(b)(ii) above in a lump sum amount within thirty (30) days after Employee's
date of termination of employment under this Section 5(b). Termination of
Employee's employment hereunder by reason of the death of Employee or the
"permanent and total disability" (as that term is defined and construed under
Section 22 (e) (3) of the Internal Revenue Code of 1986, as amended, and any
regulations or rulings promulgated there under) of Employee shall be deemed
termination of this Agreement pursuant to this Section 5 (b).
(c) Termination Without Cause by Employee. Employee may voluntarily
without cause terminate this Agreement upon sixty (60) days prior written notice
to the Company. In the event of such termination (unless such termination is by
Employee "for good reason" as such term is defined above), all compensation
(including without limitation the Salary and all perquisites and fringe
benefits, but excluding any vested stock options) to which Employee would
otherwise be entitled for periods after the effective date of such termination
shall be discontinued and forfeited as of the effective date of such
termination.
(d) Change in Control. Notwithstanding the operation of the other
provisions of this Section 5, upon any termination of this Agreement by the
Company following the occurrence of a "Change in Control" as that term is
defined in Section 4 hereof, the Company shall be obligated to pay the amounts
and provide the benefits set forth in paragraphs (i) through (iv) of Section 5
(b) hereof in accordance with the terms of Section 5 (b).
The Company's obligations under Section 5 (b) hereunder shall survive the
expiration of and any earlier termination of Employee's employment hereunder.
6. Confidentiality and Secrecy. Employee acknowledges that in and as a
result of Employee's employment hereunder, Employee will be making use of,
acquiring and/or adding to confidential information of a special and unique
nature and value relating to the Company's business, including without
limitation technological know-how, copyrights, proprietary information, trade
secrets, systems, procedures, manuals, confidential reports, records, lists of
customers and projects, the nature and type of services rendered by the Company,
the equipment and methods used and preferred by the Company's customers, and the
fees paid by them (all of which are deemed for all purposes confidential and
proprietary). As a material inducement to the Company to enter into this
Agreement and to pay to Employee the compensation stated in Sections 3 and 4,
Employee covenants and agrees that during the term of Employee's employment
hereunder, and for two (2) years after the expiration or earlier termination of
Employee's employment hereunder, Employee shall not without the prior written
consent of the
Company, directly or indirectly, make use of, or disclose to any person, any
confidential information of the Company or its affiliates.
7. Covenants Against Competition. Employee acknowledges and understands
that during the term of this Agreement, the Company intends to conduct its
operations on a nationwide basis which may involve all or substantially all of
the United States of America and various foreign countries. In view of the
unique value to the Company of the services of Employee for which the Company
has contracted hereunder, because of the confidential information to be obtained
by or disclosed to Employee, as hereinabove set forth, and because Employee's
employment hereunder will result in Employee's development of a unique
relationship with customers, suppliers, service providers and employees, as a
material inducement to the Company to enter into this Agreement and to pay to
Employee the compensation stated in Sections 3 and 4, Employee covenants and
agrees as follows:
(a) During Employee's employment by the Company, and for a period
expiring on the date two (2) years after the earlier to occur of the expiration
of this Agreement or the earlier termination of Employee's employment hereunder
for any reason other than the Company's termination of Employee "without cause"
pursuant to Section 5 (b) hereof or Employee's termination "for good reason"
pursuant to Section 5 (b) hereof, Employee shall not directly or indirectly
solicit, divert or convert, or assist another person or entity to solicit,
divert or convert, customers or employees of the Company or an affiliate of the
Company to any other company or entity providing substantially the same or
competitive services or products as the Company or an affiliate of the Company.
(b) During Employee's employment by the Company, and for a period
expiring on the date two (2) years after the earlier to occur of the expiration
of this Agreement or the earlier termination of Employee's employment hereunder
for any reason other than the Company's termination of Employee "without cause"
pursuant to Section 5 (b) hereof or Employee's termination "for good reason"
pursuant to Section 5 (b) hereof, Employee shall not within the geographic area
specified below engage in any business or perform any services, directly or
indirectly in competition with the business of the Company or any affiliate of
the Company, or have any interest, whether as a proprietor, partner, employee,
controlling stockholder (directly or beneficially), principal, agent,
consultant, director, officer or in any other capacity or manner whatsoever, in
any enterprise that shall so engage, or otherwise be a controlling person of, or
a member of a group that controls, such enterprise or be otherwise affiliated in
any capacity with such enterprise. The restrictions of this Section 7 (b) shall
apply in every state, territory or other jurisdiction in which the Company is
conducting its operations or maintains an office or branch at any time during
the term of this Agreement.
8. Reasonableness, Enforceability and Remedies.
(a) Employee has carefully read and considered the provisions of
Sections 6, 7 and 8, and having done so, agrees that the restrictions set forth
in these Sections, including but not limited to, the time period of restriction
and geographic limitations set forth in Section 7, are fair and reasonable and
are reasonably required for the protection
of the interests of the Company and its officers, directors, shareholders,
employees, and affiliates.
(b) In the event that, notwithstanding the foregoing, any of the
provisions of Sections 6, 7 and 8 or any parts thereof shall be held to be
invalid or unenforceable, the remaining provisions or parts thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable portions or parts had not been included therein. In the event that
any provision of Sections 6 or 7 relating to the time period and/or geographic
restrictions and/or related aspects shall be declared by a court of competent
jurisdiction to exceed the maximum restrictiveness such court deems reasonable
and enforceable, the time period and/or geographic restrictions and/or related
aspects deemed reasonable and enforceable by the court shall become and
thereafter be the maximum restrictions in such regard, and the restriction shall
remain enforceable to the fullest extent deemed reasonable by such court.
(c) Employee acknowledges that the services Employee is to render are of
a special and unusual character with a unique value to the Company, the loss of
which cannot adequately be compensated by damages in an action at law. In the
event of a breach or threatened breach by Employee of any of the provisions of
Sections 6 and 7, the Company, in addition to and not in limitation of, any
other rights, remedies or damages available to the Company under this Agreement,
shall be entitled to a permanent injunction in order to prevent or restrain any
such breach by Employee or by Employee's partners, agents, representatives,
servants, employers, employees, consulting clients, and/or any and all persons
directly or indirectly acting for or with Employee.
(d) Employee's obligations under Sections 6 and 7 shall survive the
expiration of and any earlier termination of Employee's employment hereunder.
9. Notice. Any notice, request, approval, consent, demand or other
communication hereunder shall be effective in writing and upon the first to
occur of the following: (i) upon receipt by the party to whom such notice,
request, approval, consent, demand or other communication is being given; (ii)
three (3) business days after being duly deposited in the U. S. Mail, certified,
return receipt requested, and addressed as follows:
Employee: Xxxxxxx X. Xxxxxxx, CPA
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Employer: Integrated Business Systems & Services, Inc.
0000 Xxxx Xxxx, Xxxxx X
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
The parties hereto may change their respective addresses by notice in
writing given to the other party to this Agreement.
10. Waiver. Any waiver by either party of any breach or any term or
condition hereof shall be effective only if in writing and such writing shall
not be deemed to be a waiver of any subsequent or other breach, term or
condition of this Agreement.
11. Governing Law/Jurisdiction. The construction and interpretation of
this Agreement shall at all times and in all respects be governed by the laws of
the State of South Carolina. The parties hereby (i) agree that any litigation,
action or proceeding arising out of or relating to this Agreement may be
instituted in a state or federal court in the State of South Carolina, (ii)
waives any objection which it might have now or hereafter to any such
litigation, action or proceeding based upon improper venue or inconvenient
forum, and (iii) irrevocably submits to the jurisdiction of such courts in any
such litigation, action or proceeding. For all purposes of this Agreement, the
parties hereby further agree that service of process upon any party may be
effected pursuant to United States mail.
12. Burden and Benefit. This Agreement shall be binding upon, and shall
inure to the benefit of, the Company and Employee, and their respective heirs,
personal and legal representatives, successors and permitted assigns.
13. Assignment/Modification/Severability. This Agreement and rights
hereunder are personal to Employee and shall not be assigned or otherwise
transferred by Employee. Subject to the rights of Employee under Section 5
hereunder, the Company shall be entitled to assign this Agreement to any
corporation controlled by the Company. This Agreement can only be modified by a
written agreement duly signed by authorized representatives of the parties
hereto. The provisions of this Agreement shall be deemed severable, and the
invalidity or unenforceability of any one or more of the provisions of this
Agreement shall not affect the validity and enforceability of the other
provisions. Without limiting the generality of the foregoing or of Section 8,
each provision, sub-provision, part, and sub-part of Sections 7 and 8 shall be
deemed severable.
14. Usage. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Terms such as "hereof",
"hereunder", "hereto", "herein", and words of similar import shall refer to this
Agreement in its entirety and all references shall refer to specified portions
of this Agreement, unless the context clearly requires otherwise.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding by and between the Company and Employee with respect to the
subject matter hereof and supersedes all prior and contemporaneous written or
oral agreements (other than the agreements contemplated in Section 4 hereof) and
representations between the parties with respect thereto.
16. No Inference Against Author. No provision of this Agreement shall be
interpreted against any party because such party or its legal representative
drafted such provision.
IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement under seal to be effective as of the day and year first above written.
EMPLOYEE:
BY: /s/ Xxxxxxx X. Xxxxxxx (SEAL)
-----------------------
XXXXXXX X. XXXXXXX
INTEGRATED BUSINESS SYSTEMS & SERVICES, INC.
BY: /s/ Xxxxxx X. Xxxxxxxxxx (SEAL)
--------------------------
ITS: CHIEF EXECUTIVE OFFICER
APPROVED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
BY: /s/ Xxxx Xxxxxx Xxxxxx, Jr. (SEAL)
----------------------------
ITS: Chairperson
