Employment Agreement between NetWolves Corporation and Walter R. Groteke

Summary

This agreement is between NetWolves Corporation and Walter R. Groteke, who will serve as Vice-President-Sales. It sets Groteke’s compensation at $175,000 per year, with eligibility for stock options, benefits, and vacation. The agreement runs through September 30, 2003, with automatic one-year renewals unless terminated, but not beyond September 30, 2005. It covers expense reimbursement, severance terms if employment ends without cause or for good reason, and includes non-competition provisions during employment. The agreement also outlines benefits in the event of Groteke’s death.

EX-10.1 2 nwex10-1wrg.txt EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT dated as of the 1st day of October 2000 by and between NETWOLVES CORPORATION, a New York corporation (hereinafter the "Company") and Walter R. Groteke, an individual residing at 12113 Alameda Avenue, Clearwater, FL 33759 (hereinafter called "Groteke"). W I T N E S S E T H: WHEREAS, the Company desires to enter into an Employment Agreement with Groteke; and WHEREAS, Groteke desires to enter into an Employment Agreement with the Company; NOW, THEREFORE, it is agreed as follows: 1. Prior Agreements Superseded. This Agreement supersedes any employment, consulting or other agreements, oral or written, entered into between Groteke and the Company prior to the date of this Agreement except for stock options previously granted to Groteke, which stock options shall continue in full force and effect. 2. Employment. The Company hereby agrees to employ Groteke and Groteke hereby agrees to serve as Vice-President-Sales of the Company with commensurate responsibilities and to perform such services as dictated by the Board of Directors. Groteke's employment hereunder shall be on a full-time basis and Groteke shall not engage in any other business, except with the prior approval of the Board of Directors of the Company. Groteke shall serve in similar capacities of such of the subsidiary corporations of the Company as may be selected by the Board of Directors without additional compensation. Notwithstanding the foregoing, it is understood that the duties of Groteke during the performance of employment shall not be inconsistent with his position and title as Vice-President-Sales of the Company. 3. Term. Subject to earlier termination on the terms and conditions hereinafter provided, the term of this Employment Agreement shall end on September 30, 2003, provided that this agreement shall extend for additional one-year periods unless Groteke receives written notice from the Company each year on or before July 1 of said year that the Company will be terminating the agreement. In no event, however, shall this agreement extend beyond September 30, 2005. 4. Compensation. For all services rendered by Groteke under this Agreement, compensation shall be paid to Groteke as follows: (a) Groteke shall be paid at the annual rate of One Hundred Seventy-Five Thousand ($175,000) Dollars. (b) During the period of employment Groteke shall be eligible to participate in the Company's stock option and stock purchase plans to the extent determined in the discretion of the Board of Directors of the Company or committee thereof. (c) Groteke shall be entitled to participate in any short-term or long-term incentive plan which the Company has in existence or which may be adopted. (d) During the period of employment, Groteke shall be furnished with office space and secretarial service and facilities commensurate with his position and adequate for the performance of his duties. (e) Groteke shall be entitled to fully participate in all benefit programs available to executive employees of the Company throughout the term of this Agreement. (f) Groteke shall be entitled to four (4) weeks of vacation and sick leaves consistent with current practice of the Company. 5. Expenses. Groteke shall be reimbursed for all out-of-pocket expenses, including medical expenses, reasonably incurred by him in the performance of his duties hereunder. Expense reports, with receipts and justifications, must be submitted to the Chairman of the Board for approval. 6. Severance Benefits. Groteke shall be entitled to the severance benefits provided for in subsection (c) hereof in the event of the termination of his employment by the Company without cause or in the event of a voluntary termination of employment by Groteke for good reason. In such event, Groteke shall have no duty to mitigate damages hereunder. Groteke and the Company acknowledge that the foregoing provisions of this paragraph 6 are reasonable and are based upon the facts and circumstances of the parties at the time of entering into this Agreement, and with this Agreement, and with due regard to future expectations. (a) The term "cause" shall mean: (i) Groteke's willful and continued failure to substantially perform his duties under this Agreement (other than any such failure resulting from his incapacity due to physical or mental illness) after demand for substantial performance is delivered to Groteke by the Chairman of the Board of the Company which specifically identifies the manner in which the Board believes Groteke has not substantially performed his duties. (ii) Groteke's failure to refuse to follow directions from the Company's Board of Directors provided that (a) Groteke is provided written notice of such directions and a reasonable period in which to comply and (b) Groteke's compliance with any such direction would not be illegal or unlawful. (iii)Any act or fraud, embezzlement or theft committed by Groteke whether or not in connection with his duties or in the course of his employment which substantially impairs his ability to perform his duties hereunder. (iv) Any willful disclosure by Groteke of confidential information or trade secrets of the Company or its affiliates. For purposes of this paragraph, no act or failure to act on Groteke's part shall be considered "willful" unless done, or omitted to be done, by Groteke not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, Groteke shall not be deemed to have been terminated for cause unless and until there shall have been delivered to him a copy of a notice of termination from the Chairman of the Board of the Company after reasonable notice to Groteke and an opportunity for Groteke with his counsel to be heard before the Board of Directors of the Company finding that in the good faith opinion of such Board of Directors Groteke was guilty of the conduct set forth in clauses (i), (ii) or (iii) of this paragraph and specifying the particulars thereof in detail. (b) For these purposes, Groteke shall have "good reason" to terminate this Agreement if: 2 (i) the Company removes Groteke from the position of Vice-President-Sales at any time during the term of this Agreement; (ii) Groteke's place of employment is moved beyond a fifty-mile radius from the Company's current facility in Tampa, Florida as a direct result of an event described in Section 14(a) or (b) hereof. (c) The severance benefits under this section in the event of termination without cause or by Groteke for "good reason", shall consist of the continued payment to Groteke for the remaining term of this Agreement, of the annual salary provided in Section 4(a) hereof plus the immediate vesting of all outstanding options. 7. Death. In the event of Groteke's death during the term of this Agreement, Groteke's legal representative shall be entitled to receive his per annum base salary as provided in paragraph 4(a) of this Agreement to the last day of the calendar quarter following the calendar quarter in which Groteke's death shall have occurred and thereafter to receive one-half (1/2) of the base salary provided in paragraph 4(a) of this Agreement for the balance of the period covered by this Employment Agreement. 8. Non-Competition. (a) Groteke agrees that, during the term of this Agreement, he will not, without the prior written approval of the Board of Directors of the Company, directly or indirectly, through any other individual or entity, (a) become an officer or employee of, or render any services [including consulting services] to, any competitor of the Company, (b) solicit, raid, entice or induce any customer of the Company to cease purchasing goods or services from the Company or to become a customer of any competitor of the Company, and Groteke will not approach any customer for any such purpose or authorize the taking of any such actions by any other individual or entity, or (c) solicit, raid, entice or induce any employee of the Company, and Groteke will not approach any such employee for any such purpose or authorize the taking of any such action by any other individual or entity. However, nothing contained in this paragraph 8 shall be construed as preventing Groteke from investing his assets in such form or manner as will not require him to become an officer or employee of, or render any services (including consulting services) to, any competitor of the Company. (b) During the term hereof and at all times thereafter, Groteke shall not disclose to any person, firm or corporation other than the Company any trade secrets, trade information, techniques or other confidential information of the business of the Company, its methods of doing business or information concerning its customers learned or acquired by Groteke during Groteke's relationship with the Company and shall not engage in any unfair trade practices with respect to the Company. 9. Enforcement. (a) The necessity for protection of the Company and its subsidiaries against Groteke's competition, as well as the nature and scope of such protection, has been carefully considered by the parties hereto in light of the uniqueness of Groteke's talent and his importance to the Company. Accordingly, Groteke agrees that, in addition to any other relief to which the Company may be entitled, the Company shall be entitled to seek and obtain injunctive relief (without the requirement of any bond) for the purpose of restraining Groteke from any actual or threatened breach of the covenants contained in paragraph 8 of this Agreement. 3 (b) If for any reason a court determines that the restrictions under paragraph 8 of this Agreement are not reasonable or that consideration therefor in adequate, the parties expressly agree and covenant that such restrictions shall be interpreted, modified or rewritten by such court to include as much of the duration and scope identified in paragraph 8 as will render the restrictions valid and enforceable. 10. Notices. Any notice to be given to the Company or Groteke hereunder shall be deemed given if delivered personally, telefaxed or mailed by certified or registered mail, postage prepaid, to the other party hereto at the following addresses: To the Company: NetWolves Corporation One Corporate Drive Suite 103 Bohemia, New York 11716 Copy to: David H. Lieberman, Esq. Blau, Kramer, Wactlar & Lieberman, P.C. 100 Jericho Quadrangle Suite 225 Jericho, NY 11753 To Groteke: Walter R. Groteke 12113 Alameda Avenue Clearwater, FL 33759 Either party may change the address to which notice may be given hereunder by giving notice to the other party as provided herein. 11. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company, its successors and assigns, and upon Groteke, his heirs, executors, administrators and legal representatives. 12. Entire Agreement. This Agreement constitutes the entire agreement between the parties except as specifically otherwise indicated herein. 13. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York. 14. In the event (a) the Company has been consolidated or merged into or with any other corporation or all or substantially all of the assets of the Company have been sold to another corporation, with or without the consent of Employee, in his sole discretion; or (b) the Company undergoes a Change of Control, as hereinafter defined below, without prior Board approval; then Employee is entitled to the following settlement benefits: (i) a lump-sum payment for the greater of (A) twelve (12) months of the annual salary provided in section 4(a) hereof or (B) the balance of compensation for the term of this Employment Agreement; and (ii) any and all stock options and warrants held by Employee shall become immediately vested and exercisable; if 4 (A) Employee voluntarily and unilaterally resigns his position with the Company within 60 days of an event described in Section 14(a) or (b) hereof, or (B) Employee is given notice of termination directly as a result of such Change in Control within twelve (12) months of an event described in Section 14(a) or (b) hereof, or (C) Employee's place of employment is moved beyond a fifty-mile radius, from its current facility in Tampa, Florida as a direct result of an event described in this Section. A "Change of Control" of the Company, or in any person directly or indirectly controlling the Company, shall mean: (i) a change of control as such term is presently defined in Regulation 240.12b-2 under the Securities Exchange Act of 1934 (the "Exchange Act"); (ii) if during the Term of employment any "person" (as such term is used in Section 13(d) and 14(d) of the Exchange Act) other than the Company or any person who on the date of this Employment Agreement is a director or officer of the Company, becomes the "beneficial owner" (as defined in Rule 13(d)03 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% of the voting power of the Company's then outstanding securities; or (iii) if during the Term of employment the individuals who at the beginning of such period constitute the Board cease for any reason other than death, disability or retirement to constitute at least a majority thereof." IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the day and year first above written. NETWOLVES CORPORATION By: /s/ Walter M. Groteke Walter M. Groteke Chairman of the Board /s/ Walter R. Groteke Walter R. Groteke Employee 5