EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of October 1 1997, by and between Paramark
Enterprises, Inc. a Delaware corporation (the "Company") and Xxxx X. Xxxxxxxx
("Xxxxxxxx").
BACKGROUND
Xxxxxxxx is currently employed by the Company in the position of President
and Chief Financial Officer. In that position, the Xxxxxxxx has provided
valuable services to the Company and its affiliated companies (hereinafter, the
Company ).
The Company considers it essential and in its best interest to xxxxxx the
continued employment of Xxxxxxxx. In this connection, the Board of Directors of
the Company, (the "Board") has determined that Xxxxxxxx has served diligently.
capably and faithfully for many years, is an indispensable executive of the
Company and has determined that the future services of Xxxxxxxx in such capacity
will be of value to the Company. Therefore, in order to induce Xxxxxxxx to
remain in the employ of the Company, the Company and Xxxxxxxx desire to enter
this agreement to provide for the continued employment of Xxxxxxxx by the
Company.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
1. Employment. Company hereby employs Xxxxxxxx, and Xxxxxxxx hereby accepts
such employment, for the period stated in Section 3 and upon the other terms and
conditions herein provided.
2. Position and Duties. During the Term (as defined in Section 3), Xxxxxxxx
agrees to serve as President and Chief Financial Officer of the Company. In his
capacity as President and Chief Financial Officer of the Company, Xxxxxxxx shall
have supervision and control over and responsibility for the general management
and operations of Company, shall have final authority on all Company matters and
shall report directly to the Chairman and the Board. Xxxxxxxx will perform such
other duties as may from time to time be assigned to him by the Chairman and the
Board, provided such duties are consistent with and do not interfere with the
performance of the duties described herein and are of a type customarily
performed by persons of similar titles with similar corporations. Xxxxxxxx'x
duties shall not be altered except upon the agreement of the parties. Throughout
the Term, and except for illness, vacation periods and any leaves of absence
granted by Company, Xxxxxxxx shall devote the principal amount of his business
time, attention, skill and efforts to the faithful performance of his duties
hereunder, and shall accept such offices or directorships to which he may be
elected by the Board of the Company or its affiliates. Xxxxxxxx'x duties under
this Agreement will be performed primarily in and from the Company's principal
location in Secaucus, New Jersey.
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3. Term.
(a) Period of Employment. The period of Xxxxxxxx'x employment under
this Agreement shall commence as of the date hereof and shall, unless sooner
terminated pursuant to Section 5, continue for a period of three years therefrom
(such period being herein referred to as the "Term"), provided that, subject to
Section 3(b), and if the Term has not been terminated pursuant to Section 5, as
of each October 1 (the Anniversary Date") during the term , the term shall be
extended for one year, so that at all times the Term on each Anniversary Date
during the term of this Agreement shall be an unexpired period of three years.
(b) Termination of Automatic Extension by Notice. The Company or
Xxxxxxxx may elect to terminate the automatic extension of the Term set forth in
Section 3 (a) by giving written notice of such election. Any notice given
hereunder shall be effective with respect to the automatic extension scheduled
to occur on the next succeeding Anniversary Date following the date on which
notice is given, provided that such notice must precede such Anniversary Date by
a period of not less than 30 days.
4. Compensation.
(a) Salary and Incentive Compensation. For all services rendered by
Xxxxxxxx in any capacity during the Term, Xxxxxxxx shall be paid as compensation
a base annual salary of $125,000 per annum (of which an amount of $15,000
annually will accrue and will be paid on the earlier of the completion of a new
capital financing transaction by the Company which shall yield gross proceeds of
not less than $750,000, or such time when the Company achieves a positive cash
flow from operations), or such higher salary as may be agreed upon from time to
time by Company and Xxxxxxxx, provided that, after the first year of this
Agreement, at a minimum, Xxxxxxxx'x salary shall be increased by ten (10%) per
annum for each year thereafter. In addition, Xxxxxxxx shall receive such
incentive compensation and bonus as may be awarded to Xxxxxxxx from time to time
by the Board. Such salary shall be payable in accordance with the standard pay
schedule established for Company executives and any such incentive compensation
or bonus shall be payable in the manner and at the time specified by the Board.
(b) Reimbursement of Expenses. Company shall pay or reimburse Xxxxxxxx
in accordance with Company's policies and requirements, for all travel and other
expenses incurred by Xxxxxxxx in performing his duties under this Agreement. In
addition, the Company agrees to provide Xxxxxxxx with an automobile allowance
equal to $750 per month.
(c) Participation in Benefit Plans. In addition to the payments
provided under this Agreement. Xxxxxxxx shall be entitled to benefits under any
and all executive or contingent compensation plans, stock options, restricted
stock or stock purchase plans, retirement income or pension plans, supplemental
or excess benefit plans, group hospitalization disability, health care, or sick
leave plans, life or other insurance or death benefit plans, travel and accident
insurance vacation plans, or other present or future group employee benefit
plans or programs of for which executive employees of the Company are eligible,
and Xxxxxxxx may be eligible to receive all
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benefits for which he is eligible under any such benefit plan or program of the
Company in accordance with the provisions and requirements (including
discretionary authority where applicable) or any such plan or program.
(d) Vacation and Sick Leave. Xxxxxxxx shall be entitled to be
compensated for annual vacation, personal and sick leave in accordance with
established Company policy for executive employees.
5. Termination of Employment. The Executive's employment may be terminated
only under the following circumstances:
(a) Death. Xxxxxxxx'x employment shall terminate upon his death. After
Xxxxxxxx'x employment is terminated by his death, the Company shall pay to
Xxxxxxxx'x spouse, or if he leaves no spouse, to his estate, commencing on the
next succeeding day which is the 15th day or last day of the month, as the case
may be, and semimonthly thereafter on the 15th and last days of each month,
until a total of forty eight (48) payments have been made, an amount on each
payment date equal to the semimonthly salary payment payable to Xxxxxxxx
pursuant to Section 4 (a) at the time of his death.
(b) Disability. If, as a result of Xxxxxxxx'x incapacity due to
physical or mental illness, Xxxxxxxx shall have been absent from his duties with
the Company on a full-time basis for six consecutive months and, within 30 days
after written notice of termination is thereafter given by the Company, Xxxxxxxx
shall not have returned to the full-time performance of Xxxxxxxx'x duties, the
Company may terminate Xxxxxxxx'x employment for "Disability".
(c) Retirement. The term '"Retirement" as used in this Agreement shall
mean termination by the Company or Xxxxxxxx of Xxxxxxxx'x employment based on
Xxxxxxxx having reached age 65 or such other age as shall have been fixed in any
arrangement established with Xxxxxxxx'x consent with respect to Xxxxxxxx.
(d) Cause. The Company may terminate Xxxxxxxx'x employment for Cause.
For purposes of this Agreement, termination by the Company for "Cause" shall
mean termination upon (i) the willful and continued failure by Xxxxxxxx to
substantially perform his duties with the Company (other than (x) any such
failure resulting from Xxxxxxxx'x incapacity due to Disability or (y) any such
actual or anticipated failure resulting from the Xxxxxxxx'x termination for Good
Reason), after a demand for substantial performance is delivered to Xxxxxxxx by
the Board which specifically identifies the manner in which the Board believes
that Xxxxxxxx has not substantially performed his duties, or (ii) the willful
engaging by Xxxxxxxx in conduct which is demonstrably and materially injurious
to the Company, monetarily or otherwise. For purposes of this Section 5 (d), no
act or failure to act, on Xxxxxxxx'x part shall be considered "willful" unless
done, or omitted to be done, by Xxxxxxxx not in good faith and best interest of
the Company. Notwithstanding the foregoing, Xxxxxxxx shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Xxxxxxxx a copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds of the entire membership of the Board at a meeting of the Board
called and held for the purpose (after reasonable notice to Xxxxxxxx and an
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opportunity for Xxxxxxxx together with Xxxxxxxx'x counsel. to be heard before
the Board), finding that in the good faith opinion of the Board, Xxxxxxxx was
guilty of conduct set forth in the second sentence of this Section 5 (d) and
specifying the particulars thereof in detail. If Xxxxxxxx'x employment shall be
terminated for Cause, the Company shall pay Xxxxxxxx his full base salary
through the Date of Termination (as defined in Section 5 (g)) at the rate in
effect at the time Notice of Termination (as defined in Section 5 (f)) is given
and the Company shall have no further obligations to Xxxxxxxx under this
Agreement. If Xxxxxxxx disputes the validity of the termination pursuant to this
section 5(d), then the burden of proof as to said issue shall be borne by the
Company. During the pendency of such dispute, all payments owed by the Company
to Xxxxxxxx, as if this agreement had not been terminated, shall be deposited
into an independent third party escrow account until a final resolution of the
dispute, at which time said funds will be delivered to the party that is
entitled to same.
(e) Good Reason. Xxxxxxxx may terminate Xxxxxxxx'x employment for Good
Reason at any time during the term of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean any of the following (without Xxxxxxxx'x
express written consent):
(i) the assignment to Xxxxxxxx by the Company of any duties
inconsistent with Xxxxxxxx'x status with the Company or a substantial
alteration in the nature of status of Xxxxxxxx'x responsibilities from
those in effect immediately prior to the date hereof, or a reduction
in Xxxxxxxx'x titles or offices as in effect immediately prior to the
date hereof, or any removal of Xxxxxxxx'x from, or any failure to
reelect Xxxxxxxx to, any of such positions, except in connection with
the termination of his employment for Disability, Retirement of Cause
or as a result of Xxxxxxxx'x death or by Xxxxxxxx other than for Good
Reason:
(ii) a reduction by the Company in Xxxxxxxx'x base salary as
in effect on the date hereof or as the same may be increased from time
to time during the term of this Agreement:
(iii) Any failure by the Company to continue in effect any
incentive, compensation or benefit plan or arrangement (including,
without limitation, any of the Company's pension and profit sharing
plans, life insurance, medical, dental, accident and disability plans,
bonus plans and stock option plans) in which Xxxxxxxx is participating
at the date hereof (or any other plans providing Xxxxxxxx with
substantially similar benefits) (hereinafter collectively referred to
as "Benefits Plans"), the taking of any action by the Company which
would directly or indirectly materially reduce Xxxxxxxx of any
material fringe benefit enjoyed by Xxxxxxxx at the date hereof, or the
failure by the Company to provide Xxxxxxxx with the number of paid
vacation days to which Xxxxxxxx is entitled at the date hereof;
(iv) a relocation of the Company's principal executive
offices to a location outside the New York metropolitan area, or the
Company's requiring principal executive offices, except for required
travel by Xxxxxxxx on the
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Company's business to an extent substantially consistent with Xxxxxxxx'x
business travel obligations at the date hereof,
(v) any "Change in Control", which for purposes of this
Agreement, shall mean a change in control of a nature that would be
required to be reported in response to Item 6 (e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), whether or not the Company is then
subject to such reporting requirement, provided that, without
limitation, such a change in control shall be deemed to have occurred
if (x) any person (as such term is used in Sections 13 (d) and 14
(d)(2) of the Exchange Act), other than those persons in control of
the company on the date hereof, shall acquire the power, directly or
indirectly , to direct the management or policies of the Company or
shall become the beneficial owner (within the meaning of Rule l3d-3)
under the Exchange Act), directly or indirectly, of 25% or more of the
combined voting power of then outstanding securities, or (y) during
any period of two consecutive years, individuals who at the beginning
of such period constitute the entire Board of Directors of the Company
shall cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by the Company's
shareholders of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at
the beginning of the period.
(vi) any material breach by the Company of any provisions of
this Agreement; or
(vii) any purported termination of Xxxxxxxx'x employment
which is not effected pursuant to a Notice of Termination satisfying
the requirement of Section 5(f), and for purposes of this Agreement,
no such purported termination shall be effective.
(f) Notice of Termination. Any termination pursuant to Sections 5(b),
5(c) or 5(e) shall be communicated by a Notice of Termination. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate those specific termination provisions in this Agreement relied
upon and which sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Xxxxxxxx'x employment under the
provision so indicated.
(g) Date of Termination. "Date of Termination" shall mean (i) if this
Agreement is terminated by the Company for Disability, 30 days after Notice of
Termination is given to Xxxxxxxx (provided that Xxxxxxxx shall not have returned
to the performance of Xxxxxxxx'x duties on a full-time basis during such 30-day
period), or (ii) if Xxxxxxxx'x employment is terminated for any other reason,
the date specified in the Notice of Termination (which shall not be less than 30
nor more than 60 days from the date such Notice of Termination is given);
provided that if within 30 days after any Notice of Termination is given, the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination.
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the Date of Termination if the Company prevails in such dispute or the date the
dispute is finally determined, whether by mutual agreement by the parties or
upon a binding arbitration award, or a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected), if Xxxxxxxx prevails in such dispute. Any
party giving notice of a dispute shall pursue the resolution of such dispute
with reasonable diligence.
6. Compensation upon Termination of Employment. If, either the Company
shall terminate Xxxxxxxx'x employment without Cause or for Disability or
Xxxxxxxx shall terminate his employment for Good Reason, then Xxxxxxxx shall be
entitled to the compensation and benefits provided below:
(a) The Company shall pay Xxxxxxxx his full base salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given.
(b) Except in a Termination for Disability where the Company has a
disability insurance policy in favor of Xxxxxxxx) in lieu of any further salary
payments to Xxxxxxxx for periods subsequent to the Date of Termination, the
Company shall pay to Xxxxxxxx as severance pay in a lump sum, in cash, an amount
equal to the sum of (i) an amount equal to two (2) times Xxxxxxxx'x full base
annual salary in effect immediately prior to the occurrence of the circumstance
giving rise to the Notice of Termination given in respect thereof, and (ii) an
amount equal to one-half of the aggregate bonuses paid to Xxxxxxxx during the
three full fiscal years preceding the Notice of Termination.
(c) In a Termination for Disability where the Company has a disability
insurance policy in favor of Xxxxxxxx, in lieu of any further salary payments to
Xxxxxxxx for periods subsequent to the Date of Termination, the Company shall
pay to Xxxxxxxx as xxxxxxxxx pay in a lump sum, in cash, an amount equal to the
sum of (i) an amount equal to Xxxxxxxx'x full base annual salary in effect
immediately prior to the occurrence of the circumstance giving rise to the
Notice of Termination given in respect thereof, and (ii) an amount equal to
one-third of the aggregate bonuses paid to Xxxxxxxx during the three full fiscal
years preceding the Notice of Termination.
(d) At the sole option of Xxxxxxxx, and in lieu of ordinary shares of
the Company ("Shares") issuable upon exercise of outstanding options
("Options"), if any, granted to Xxxxxxxx under the 1993 Stock option Plan or the
1996 Stock Option Plan or any other stock option plan entered during the term of
this agreement (which Options shall be canceled upon the making of the payment
referred to below), Xxxxxxxx shall receive an amount in cash equal to the
product of (i) the difference (to the extent that such difference is a positive
number) obtained by subtracting the per share exercise price of each Option held
by Xxxxxxxx, whether or not then fully exercisable, from the higher of (x) the
closing price of the Shares on the date of Termination (or if not traded on the
Date of Termination, the closing price on the next preceding business day on
which they were traded), or (y) the highest price per Share actually paid in
connection with any Change in Control of the company and (ii) the number of
Shares covered by each such Option. Xxxxxxxx may exercise his right to have the
options redeemed by the Company at any time after
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the termination of his employment, but if he does not exercise said right, the
options shall remain in full force and effect.
(e) The Company shall also pay to Xxxxxxxx an amount in cash equal to
all unvested Company contributions credited to Xxxxxxxx'x account under the
Company's pension and profit sharing plan(s) as of the Date of Termination.
(f) For a 12 months period after the Date of Termination, the Company
shall provide Xxxxxxxx with life, disability, accident and health insurance
benefits substantially similar to those which Xxxxxxxx is receiving immediately
prior to the Notice of Termination. Benefits otherwise receivable by Xxxxxxxx
pursuant to this Section 6(e) shall be reduced to the extent comparable benefits
are actually received by Xxxxxxxx during the 12 month period following
Xxxxxxxx'x termination, and any such benefits actually received by Xxxxxxxx
shall be reported to the Company.
(g) In the event Xxxxxxxx becomes entitled to any payment ("Severance
Payments") from the Company under this Agreement or otherwise which are subject
to the tax (the "Exercise Tax") imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended. Company shall pay to Xxxxxxxx an amount (the "Gross-up
Payment") within 60 days after the end of the calendar year during which any
Severance Payments are subject to the Excise Tax, such that the net amount
retained by Xxxxxxxx, after deduction of any Excise Tax on the Severance
Payments and any Excise Tax and any federal, state and local income tax upon the
Gross-up Payment, shall be equal to the Severance Payments before the imposition
of the Excise Tax.
(h) The payments provided for in subsections (a), (b), (c) and (d)
above shall be made not later than the 15th day following the Date of
Termination: provided that if the amount of such payments cannot be finally
determined on or before such day, the Company shall pay to Xxxxxxxx on such day
an estimate, as determined in good faith by the Company, of the minimum amount
of such payments and shall pay the remainder of such payments as soon as the
amount thereof can be determined but in no event later than the 30th day after
the Date of Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess shall
be repaid to the Company by Xxxxxxxx no later than the 5th day after demand by
the Company.
7. No Obligation to Mitigate Damages; No Effect on Other Contractual
Rights; Attachment.
(a) Xxxxxxxx shall not be required to mitigate damages or the amount
of any payment provided for under this Agreement by seeking other employment or
other wise, nor shall the amount of payment provided for under this Agreement be
reduced by any compensation earned by Xxxxxxxx as the result of employment by
another employer after the Date of Termination, or otherwise.
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(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish Xxxxxxxx'x existing rights, or rights which would accrue solely as a
result of the passage of time, under any Benefit Plan, employment agreement or
other contract, plan or arrangement.
(c) Except as required by law, the right to receive payments under
this Agreement shall not be subject to anticipation, sale, encumbrance, charge,
levy, or similar process or assignment by operation of law.
8. Successors; Binding Agreements.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume and
agree to perform this Company would be required to perform it if no such
succession had take place. Any failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a material breach of
this Agreement and shall entitle Xxxxxxxx to terminate Xxxxxxxx'x employment for
Good Reason. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and /or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of, and be enforceable
by, the parties hereto and their respective successor, assigns, personal and
legal representatives, executors, administrators, successors, heirs.
distributes, devisees and legatees. If Xxxxxxxx should die while any amounts are
still payable to him hereunder, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
Xxxxxxxx'x devisee, legatee, or other designee or, if there be no such designee,
to Xxxxxxxx'x estate.
9. Notice. For purposes of this Agreement, all notices and other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid, as
follows:
If to the Company:
Paramark Enterprises, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxxxxx Xxxxxxxxx, CEO
If to the Executive:
Xxxx Xxxxxxxx
0 Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
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or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
10. Miscellaneous. No provisions of this Agreement may be modified,
amended, waived or discharged unless such modification. waiver, amendment or
discharge is agreed to in writing signed by Xxxxxxxx and the Company. No waiver
by either party hereto at any time of any breach by the other party hereto or,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. This Agreement sets forth the entire understanding
between the parties with respect to the subject matter hereof. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New Jersey applicable to contracts made and to be performed entirely within such
State with giving effect to conflicts of law principles.
11. Validity, The invalidity or unenforceablility of any provision of this
Agreement shall not effect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. Headings. The headings are included solely for convenience of reference
and shall not control the meaning or interpretation of any of the provisions of
this Agreement.
14. Interpretation. If any provision of this Agreement shall be the subject
of a dispute between Company and Xxxxxxxx and a court or arbitrator to which
such dispute has been brought shall be unable to resolve which of two reasonable
interpretations of such provisions is the proper interpretation thereof, then
the interpretation most favorable to Xxxxxxxx shall control.
15. Reimbursement of Expenses. Company shall reimburse Xxxxxxxx for any
costs and expenses including, without limitation, legal fees and costs, incurred
by Xxxxxxxx in connection with this Agreement including, with limitation, in
seeking to obtain or enforce any right or benefit provided by this Agreement or
to defend its validity.
16. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in New Jersey in
accordance with rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ATTEST: PARAMARK ENTERPRISES, INC.
By: By:
WITNESS: XXXX X. XXXXXXXX:
By: By:/s/ Xxxx X. Xxxxxxxx
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