1
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this 1st day of January, 1996, by and between
XCEL CORPORATION, a New Jersey corporation with offices at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇ (the "Employer" or the "Company"), and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ who resides at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
("Employee").
W I T N E S S E T H
WHEREAS, the Employee desires to be employed by the Employer, and the
Employer desires to employ the Employee; upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
Promises, covenants and agreements hereinafter contained the parties hereto
agree as follows:
I. EMPLOYMENT
1.1 Employment. Subject to the provisions for termination as hereinafter
provided, the term of this agreement shall begin on the date first written above
and shall terminate on January 1, 2001, (the "Employment Period").
1.2 Renewal. Subject to the provisions for termination as hereinafter
provided, this agreement shall be automatically renewed for three (3) successive
two (2) year terms commencing on January 1, 2001, (the "Renewal Periods ")
unless, during the
2
- 2 -
following periods either party to this Agreement shall notify the other party in
writing of its desire not to renew this Agreement; provided, however, any action
required to be taken with respect to this Employment Agreement by the Employer
shall only be taken after the Management Development and Compensation Committee
of the Board of Directors of the Employer approves such action. The required
notice periods in order to prevent an automatic renewal of this Agreement shall
be as follows:
Period During Which Notice
Of Non-Renewal Must Be Given Renewal Period
---------------------------- --------------
11/1/99 to 1/1/00 1/1/01 to 1/1/03
11/1/01 to 1/1/02 1/1/03 to 1/1/05
11/1/03 to 1/1/04 1/1/05 to 1/1/07
1.3 Duties. Subject to Section 1.4, the Employee hereby promises to
perform and discharge well and favorably the duties of Chairman, President and
Chief Executive Officer and to perform services in such additional capacities as
may be directed by the Board of Directors (the "Board") in accordance herewith.
As Chairman, President and Chief Executive Officer, the Employee's duties shall
consist of the usual and customary duties of his position and he shall be
subject to the direction and control of the Board. Further the Employee shall at
all times have the authority as shall reasonably be required to enable him to
discharge such duties in an efficient manner.
3
- 3 -
1.4 Redesignation. The Board may, in its discretion, elect or appoint the
Employee to offices or positions other than, or in addition to, Chairman,
President and Chief Executive Officer (hereinafter the "Redesignation") by
providing the Employee with prompt written notice of the Redesignation. If any
Redesignation and related addition to and/or reduction of Employee's duties
results in a substantial net change in the scope of the Employee's
responsibilities, the Employee may elect, in his sole discretion, not to accept
such Redesignation and to resign upon providing written notice of his
resignation to the Employer not less than thirty (30) days after the Employee
has been provided with written notice of the Redesignation. In such event, the
Employer shall pay, if such Redesignation occurs during the Employment Period,
the Employee his annual salary, as provided herein, for three (3) years
following the effective date of such resignation or until January 1, 2001,
whichever is the longer period. In the event that the Redesignation shall occur
at any time after the Employment Period, and during one of the Renewal Periods,
the Employer shall pay the Employee his annual salary, as provided herein, for
three (3) years following the effective date of such resignation. All sums owing
hereunder in the event of a Redesignation and a subsequent resignation by the
Employee shall be due and payable within thirty (30) days of the effective date
of such resignation. Furthermore, in the event of such Redesignation and
subsequent resignation, all Deferred Salary,
4
- 4 -
including $104,000 deferred prior to the effective date of this agreement,
(hereinafter referred to as the "Deferred Salary") and/or other monies owed the
Employee under any voluntary or company-imposed compensation deferral program,
shall also be payable within thirty (30) days of the effective date of such
resignation. These amounts shall be paid in cash in accordance with policies and
procedures covering the Employee and all similarly-situated Company employees at
that time.
1.5 Other Business Activities. The Employee shall devote his full time,
attention and energies to the business of the Company and shall not, so long as
he remains in the employ of the Company, be engaged in any other employment or
business of substantial nature, whether or not such business activity is pursued
for gain or profit, without the written consent of the Company. Nothing
contained herein, however, shall be construed as preventing the Employee from
(i) making passive investments of his assets in such form or manner as he
desires, provided such investments: (a) do not require the Employee to render
service in the operations or affairs of the firms, corporations or other
entities in which such investments are made, and (b) are not made in any
business directly or indirectly competing with the Employer or its subsidiaries
or affiliated corporations, if any, unless the stock of such company is listed
on a national stock exchange and the Employee owns less than three percent (3%)
of the outstanding voting securities, or (ii) becoming a member of the Board of
Directors of any other
5
- 5 -
corporation that the Employee desires, provided that the corporation upon whose
Board the Employee becomes a member of is not, in the sole discretion of the
Employer's Board of Directors, in competition with the business of the Employer.
The Company shall provide the Employee with adequate office and support
staff to accomplish the objectives for which he is employed and in order to
perform the duties as set forth herein.
II. COMPENSATION
2.1 Annual Salary. Subject to the provisions for deferral set forth in
Section 2.2 below, the Employer shall pay to the Employee in compensation for
the Employee's services hereunder, a base salary of $250,000 per annum, subject
to the cessation of the current salary abatement program, payable in equal
periodic installments in accordance with the customary payroll policy of the
Employer. The Employee shall also be eligible to receive merit or promotional
increases in accordance with the Employer's annual review, or other general
review of its officer compensation.
2.2 Deferred Compensation. As noted in Section 1.4 above, the Employee
deterred $104,000 of salary (the Deferred Salary") in an earlier period for the
Company's benefit. The Deferred Salary shall be payable once the Employer has
reported two consecutive profitable fiscal quarters during the Employment Period
or the renewal Periods. Furthermore, the Deferred Salary shall be payable in
equal monthly installments over a one year period once the two consecutive
quarters of cumulative
6
- 6 -
profitability have been recorded. Alternatively, the Employee, at his sole
discretion, may convert the Employer's Deferred Salary obligations into any
program established by the Employer to discharge its obligations to employees
under any compensation abatement or similar deferral procedure. The converted
amounts will be valued in the new program on a basis equitable and in accordance
with the procedure used to establish the values for all other participants in
such program.
Notwithstanding any other provision to the contrary contained in
this Section 2.2, in the event of any resignation of the Employee pursuant to
Section 1.3 or as a result of the Employee's notification to the Employer that
he does not desire to renew this Agreement as required under Section 1.2 hereof,
or in the event of any termination pursuant to Sections 3.1, 3.2, 3.4, or 3.5
all Deferred Salary or other deferred compensation shall be payable within
thirty (30) days of such termination thereof.
2.3 Expenses. The Employer agrees to reimburse the Employee against his
receipts for all reasonable business expenses incurred by him during the
Employment Period in connection with the performances of his services hereunder.
2.4 Bonus. The Employer agrees that the Employee will be entitled to
participate in any bonus or similar plan approved by the Employer's Board of
Directors.
2.5 Stock Purchase Warrants. As a condition to his entering into this
Employment Agreement, Employee is entitled to purchase, subject to the
provisions of the warrant ("Warrant"), from XCEL Corporation, at $5.00 per
share, two hundred fifty
7
- 7 -
thousand (250,000) shares of the company's common stock, no-par value ("Common
Stock") at any time during the period commencing on the date of the Warrant,
January 1, 1996, to 5:OO p.m. New York City time, December 31, 2000.
2.6 Stock Options and other Incentive Plans. The Employee shall continue
to be eligible to participate in any Incentive Stock Option or Non-qualified
Stock Option Plan, or other incentive plans duly approved by the Board of
Directors for implementation within the Company.
2.7 Insurability: Right to Insure. Employee represents and warrants to the
Company that on the date hereof he is, and upon the commencement of the
Employment Period he will be, insurable at standard premium rates. Employee
agrees that the Employer shall have the right during the Employment Period to
insure the life of Employee by a policy or policies of insurance (including that
presently in force) in such amount or amounts as it may deem necessary or
desirable, and Employer shall be the beneficiary of any such policy and shall
pay the premiums or other costs thereof. The Employer shall have the right, from
time to time, to modify any such policy or policies of insurance or to take out
new insurance on the life of the Employee. Employee agrees, upon request, at any
time or times prior to the commencement of or during the Employment Period to
sign and deliver any and all documents and to submit to any physical or other
reasonable examinations which may be required in connection with any such policy
or policies of insurance or modifications thereof.
8
- 8 -
2.8 Personal Guarantee/Capital Preservation Insurance. The Company will
provide a life insurance policy on Employee's life, in the amount of $1 million,
payable to Employee's estate in the event of his death during the life of this
agreement and any extensions thereof. This benefit is in return for, and will
protect the estate from financial loss arising from, any and all personal
guarantees which the Employee provided in favor of the Corporation, as required
by various corporate lenders. It will also enable such estate to exercise all
warrants and options pertaining to the Company's capital stock, thereby
preserving to his heirs the Employee's equity in the Company, which is a
privately held entity with illiquid shares.
2.9 Additional Benefits. The Employee shall be entitled to the customary
and usual medical, insurance, fringe and other benefits made available to the
Employer's employees generally.
9
- 9 -
III. TERMINATION
3.1 Termination due to Death. If during the Employment Period Employee
shall die, this Agreement shall terminate, except that the compensation or other
amounts payable hereunder, including all of the Employee's Deferred Salary
payable pursuant to Section II of this Agreement, to or for the benefit of
Employee shall be paid for one (1) year following the death of the Employee to
such person or persons as Employee may designate by notice to the Employer from
time to time or, in the absence of such designation, to his legal
representatives.
3.2 Termination due to Disability. If during the Employment Period
Employee shall become physically or mentally disabled, whether totally or
partially, so that he is unable substantially to perform his services hereunder
(i) for a period of 180 consecutive days, or (ii) for shorter periods
aggregating 18O days during any period of eighteen consecutive months, the
Employer may at any time after the last day of the 180 consecutive days of
disability or the day on which the shorter periods of disability shall have
equaled an aggregate of 180 days, by 10 days written notice to Employee (but
before Employee had recovered from such disability), terminate this Agreement.
Notwithstanding such disability, the Employer shall continue to pay Employee
compensation or other amounts payable hereunder, including all of the Employee's
Deferred Salary
10
- 10 -
payable pursuant to Section II of this Agreement, to or for the benefit of
Employee up to and including the date two (2) years after the effective date of
such termination.
3.3 Termination for Cause. The Employer may at any time during the
Employment Period, by notice, terminate this Agreement and discharge Employee
for cause, whereupon the Employer's obligation to pay any compensation,
severance allowance, or other amounts payable hereunder to or for the benefit of
Employee shall terminate on the date of such discharge, notwithstanding anything
herein contained to the contrary. As used herein the term "for cause" shall be
deemed to mean and include chronic alcoholism; drug addiction; misappropriation
of any money or other assets or properties of the Employer or its subsidiaries;
willful violation of specific and lawful written directions from the Board of
Directors of the Employer; failure or refusal to perform the services required
of Employee under this Agreement; willful disclosure of trade secrets or other
confidential information resulting in substantial detriment to the Company as
documented by the Employer under oath or affirmation; conviction in a court of
competent jurisdiction of any crime involving the funds or assets of the Company
including, but not limited to, embezzlement and larceny; any civil or criminal
misconduct or personal misbehavior which is detrimental to the image,
reputation, welfare or security of the Employer where such
11
- 11 -
misconduct or misbehavior and judgment have been documented by the Employer
under oath or affirmation; and any other acts or Omissions that constitute
grounds for cause under the laws of the State of New Jersey, California or
Illinois.
3.4 Termination Without Cause. The Employer may terminate this Agreement
without cause at any time upon sixty (60) days written notice to the Employee.
In the event the Employer does terminate this Agreement without it being "for
cause", the Employee, if requested in writing by the Employer, shall continue to
render services at full compensation until the effective date of such
termination. Thereafter, during the Employment Period, the Employee shall be
paid his Annual Salary for two and one-half (2 1/2) years following the
effective date of such termination or until January 1, 2001 whichever is the
longer period. in the event such termination pursuant to this Section 3.4 occurs
during any of the Renewal Periods, the Employee shall be paid his Annual Salary
through the expiration of that particular Renewal Term as well as all and other
amounts payable hereunder including the Employee's Deferred Salary. Termination
"without cause" shall include the ceasing of operations due to bankruptcy and/or
the general inability of the Employer to meet the Employer's obligations as they
become due.
3.5 Termination upon Sale of Business. Employer may terminate this
Agreement upon thirty (30) days written notice
12
- 12 -
to Employee upon the happening of any of the following events:
a. Sale by Employer of substantially all of its assets;
b. Sale, exchange or other disposition of two-thirds or more of the
outstanding capital stock of the Employer;
c. Merger or reorganization of the Employer in which the shareholders
of the Employer immediately prior to such merger or reorganization
receive less than fifty percent (50%) of the outstanding voting
shares of the successor corporation;
provided, however, that upon any termination pursuant to this Section 3.5, the
Employer shall pay in a lump sum within thirty (30) days of the occurrence of
any of the events described in this Section 3.5 or, at Employee's election, in
installments, the Employee's Annual Salary and all other amounts payable
hereunder, including the Employee's Deferred Salary for two and one-half (2 1/2)
years following the effective date of such termination or until January 1, 2001,
whichever is the longer period. In the event such termination pursuant to this
Section 3.5 occurs during any of the Renewal Periods, the Employee shall he paid
his Annual Salary to the expiration of that particular Renewal Term as well as
all other amounts payable hereunder, including the Employee's Deferred Salary.
13
- 13 -
3.6 Consequences of Termination. (a) In the event of a termination of this
Agreement for any reason and unless otherwise agreed in writing by the parties
hereto, (i) the principal and interest of all loans made by the Employee and by
members of Employee's family to Employer shall on the effective date of such
termination become due and, payable and shall be paid in full as soon as
practicable thereafter notwithstanding any agreements to the contrary; (ii) all
personal guarantees given by the Employee and the Employee's family on behalf of
the Employer shall be voided no later than the effective date of such
termination and written evidence thereof shall be provided as soon thereafter as
practicable; (iii) all other obligations incurred by the Employee on behalf of
the Employer, including any and all lease obligations signed by the Employee
related to the performance of his duties hereunder, including but not limited to
residence lease agreements between the Employee and third parties shall be
voided on or about the effective date of such termination or fully assumed by
the Employer; (iv) all loan collateral pledged by the Employee or members of
Employee's family shall be returned to the Employee and other pledgers as soon
as practicable, and replaced by collateral of similar value therefore by the
Company and (v) all Deferred Salary which shall have accrued on or before the
effective date of termination shall be paid as described in this Agreement. It
is the expressed understanding of the parties hereto that as soon as practicable
after the effective date of the Employee's termination of employment, or
14
- 14 -
termination of the lease relating to the occupancy of a certain domicile used by
the Employee and other business related persons, all personal property of the
Employee will be returned to the principal place of residence of the Employee at
the expense of the Employer.
(b) In the event that the Employer fails to comply in full with the
requirements of subparagraph (a) of this section, the Employee's Annual Salary
shall be paid, or continue to be paid, until compliance is rendered in full, and
such payments shall be in addition to any severance payments and not set off
against same.
IV. COVENANTS NOT TO COMPETE
4.1 The Employee agrees that (i) during the Employment Period and any
renewals thereof, or in the event of a termination pursuant to Section 3.3 and,
thereafter for a period of two years or (ii) in the event of a termination
pursuant to Sections 3.4 or 3.5 and for the period from the effective date of
such termination until the expiration of a period of twelve months thereafter,
or (iii) until the expiration of a period of twelve months following his
resignation upon Redesignation for the Interim Period as defined in Section 1.3,
he will not act as a principal, agent, employee, employer, consultant, control
person, stockholder, director or co-partner of any person, firm
business entity other than the Employer, or in any individual
15
- 15 -
representative capacity whatsoever, directly or indirectly, without the express
consent of the Employer:
(a) engage or participate or be employed in any business whose products or
services are competitive with that of the Employer in the World; provided,
however, that the ownership by the Employee of not more than three percent (3%)
of a corporation or similar business venture shall not be deemed to be a
violation of this covenant as long as the Employee does not become a controlling
person or actively involved in the management of such corporation or business
venture;
(b) approach, solicit business from, or otherwise do business or deal with
any customer of the Employer in connection with any product or service
competitive with any provided by the Employer; provided, however, the Employee
may approach, solicit business from, or otherwise do business or deal with any
subsidiary or division of any customer of the Employer provided that such
customer's division or subsidiary does not provide a product or service
competitive with any provided by the Employer.
(c) approach, counsel, solicit, assist to solicit or attempt to induce any
person who is then in the employ of the Employer its affiliates or subsidiaries
to leave the employ of the Employer or employ or attempt to employ on behalf of
any person or entity any such person or persons who at any time
16
- 16 -
during the preceding six months was in the employ of the Employer;
(d) aid or counsel any other person, firm, corporation or business entity
to do any of the above.
For purposes of this Section 4.1, the term "customer" shall mean (i) any
person or entity who was a customer of the Employer at any time during the last
two months of the Employee's employment by the Employer; (ii) any prospective
customer to whom the Employer had made a presentation (or similar offering of
product(s)) during the last year of the Employee's employment by the Employer.
The Employee acknowledges (i) that his position with the Employer requires
the performance of services which are special, unique, extraordinary and
intellectual in character and places him in a position of confidence and trust
with the customers and employees of the Employer, through which, among other
things, he shall obtain knowledge of such organizations "technical information"
and "know-how" and become acquainted with their customers, in which matters such
organizations have substantial proprietary interests, (ii) that the restrictive
covenants act forth above are necessary in order to protect and maintain such
proprietary interests and the other legitimate business interests of the
Company, and (iii) that the Employer would not have entered into this Agreement
unless such covenants were included herein.
17
- 17 -
The Employee also acknowledges that the business of the Employer Presently
extends throughout the World, that he has personally supervised or engaged in
such business on behalf of Employer, or will do so pursuant to the terms of this
Agreement, and, accordingly, it is reasonable that the restrictive covenants set
forth above are not more limited as to geographic area than is set forth
therein. The Employee also represents to the Employer that the enforcement of
such covenants will not prevent the Employee from earning a livelihood.
If any of the provisions of this Section, or any part thereof, it
hereinafter construed to be invalid or unenforceable, the same shall not affect
the remainder of such provision or provisions, which shall be given full effect,
without regard to the invalid portions. If any of the provisions of this
Section, or any part thereof, is held to be unenforceable because of the
duration of such provision, the area covered thereby or the type of conduct
restricted therein, the parties agree that the court making such determination
shall have the power to modify the duration, geographic area and/or other terms
of such provision and, as so modified, said provision shall then be enforceable.
In the event that the courts of any one or more jurisdictions shall hold such
provisions wholly or partially unenforceable by reason of the scope thereof or
otherwise, it is the intention of the parties
18
- 18 -
hereto that such determination not bar or in any way affect the Employer's right
to the relief provided for herein in the Courts of any other jurisdictions as to
breaches or threatened breaches of such Provisions in such other jurisdictions,
the above provisions as they relate to each jurisdiction being, for this
Purpose, severable into diverse and independent covenants.
V. CONFIDENTIAL INFORMATION
5.1 DISCLOSURE OF INFORMATION. The Employee recognizes and acknowledges
that the financial information, trade secrets, technical information and
confidential or proprietary information of the Employer, including such
information as may exist from time to time, and information as to the identity
of customers or prospective customers of the Employer and other similar items,
are valuable. special and unique assets of the Employer's business, access to
and knowledge of which are essential to the performance of the duties of the
Employee hereunder. The Employee will not, during or after the term hereof, in
whole or in part, disclose such secrets or confidential, technical or
proprietary information to any person, firm, corporation, association or other
entity for any reason or purpose whatsoever, nor shall the Employee make use of
any such property or information for his own purpose or for the benefit of any
person, firm, corporation or other entity (except the Employer) under any
19
- 19 -
circumstances, during or after the term hereof, provided that after the term
hereof these restrictions shall not apply to such secrets or information which
are then in the public domain (provided that the Employee was not responsible
directly or indirectly, for such secrets or information entering the public
domain without the consent of the Employer).
5.2 Ownership of Inventions. All of the Employee's right, title and
interest in all developments or improvements devised or conceived by the
Employee, alone or with others, during his working hours, as well as in all
developments or improvements devised or conceived by the Employee, alone or with
others, which relate to any business in which the Employer is then engaged or
contemplating engaging, regardless of when devised or conceived, is the
exclusive property of the Employer. The Employee shall promptly disclose all
such developments and improvements to the Employer. The Employee shall not use
or disclose any such developments or improvements, other than in furtherance of
the Employer's business, without the Employer's prior written consent.
5.3 Return Memoranda. Employee hereby agrees to deliver promptly to the
Employer on termination of his employment, or at any other time the Employer may
so request, all memoranda, notes, records, reports, manuals, drawings and other
documents (and all copies thereof) relating to the Employer's business and all
property associated therewith, which he may then possess or have under his
control.
20
- 20 -
VI. INJUNCTIVE RELIEF
6.1. The Employee acknowledges that the remedy at law for any breach or
threatened breach Of Articles IV and V hereof by the Employee will be
inadequate, and that, accordingly, the Employer shall, in addition to all other
available remedies (including without limitation seeking such damages as it can
show it has sustained by reason of such breach), be entitled to injunctive
relief without being required to post bond or other security and without having
to prove the inadequacy of the available remedies at law. The Employee agrees
not to plead or defend on grounds of adequate remedy at law or any similar
defense in any action by the Employer against him or injunctive relief or for
specific performance of any of his obligations pursuant to Articles IV and V
hereof. Nothing herein shall be construed as prohibiting the Employer from
pursuing any other remedies for such breach or threatened breach.
VII. MISCELLANEOUS PROVISIONS
7.1 Notices and Communications. All notices and communications hereunder
shall be in writing and shall be hand delivered or sent postage prepaid by
registered or certified mail, return receipt requested, to the address first
above written or to such other address of which notice shall have been given in
the manner herein provided.
21
- 21 -
7.2 Entire Agreement. All Prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement are superseded by this Agreement, and this Agreement constitutes the
entire understanding between the parties. This Agreement may not be modified,
amended, changed or discharged except by a writing signed by the parties hereto,
and then only to the extent therein set forth.
7.3 Assignment. This Agreement may be assigned by the Employer and shall
be binding upon and inure to the benefit of the Employees assigns and
successors. The services to be performed by the Employee pursuant to this
Agreement may not be assigned by the Employee.
7.4 Waiver. No waiver of any breach of this Agreement or of any objection
to any act or omission connected herewith shall be implied or claimed by any
party, or be deemed to constitute a consent to any continuation of such breach,
act or omission, unless in a writing signed by the party against whom
enforcement of such waiver or consent is sought, and then only to the extent
therein set forth.
7.5. Indemnification. The Employer will indemnify Employee, to the maximum
extent permitted by applicable law and the Bylaws of the Company, against all
costs, charges and expenses incurred or sustained by him in connection with any
action, suit or other
22
- 22 -
reason of his being an officer, director or employee of the Employer or any
subsidiary or affiliate thereof.
7.6 Section Headings. The section headings of this Agreement are solely
for the purpose of convenience and shall neither be adeemed a part of this
agreement nor used in any interpretation thereof.
7.7 Governing Law. This agreement and the relationship of the parties
shall be governed by, and construed in accordance with, the laws of the state of
New Jersey, or until such time as the Company's state of incorporation may be
changed to another state within the United States, at which point the
relationship of the parties would then be governed by, and construed in
accordance with, the laws of the new state of incorporation.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the day and year first above written.
XCEL CORPORATION
Dated: 1/1/96 BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman,
Management Development and
Compensation Committee,
Board of Directors
Dated: 1/1/96 /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Employee