Lakeland Industries, Inc. Employment Agreement
Exhibit
10.5
Lakeland
Industries, Inc.
This
agreement ("Agreement") has been entered into this 16th day of April 2010, by
and between Lakeland Industries, Inc., a Delaware corporation ("Company"), and
Xxxxxxxxxxx X. Xxxx, individual ("Executive").
IT IS
AGREED AS FOLLOWS
SECTION
1: DEFINITIONS AND CONSTRUCTION.
1.1.
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DEFINITIONS.
For purposes of this Agreement, the following words and phrases, whether
or not capitalized, shall have the meanings specified below, unless the
context plainly requires a different
meaning.
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1.1
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(a)
"ACCRUED COMPENSATION" has the meaning set forth in Section 4.5 of this
Agreement.
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1.1
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(b)
"ACCRUED OBLIGATIONS" has the meaning set forth in Section 4.1 (a) of this
Agreement.
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1.1
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(c)
"ANNUAL BASE SALARY" has the meaning set forth in Section 2.4 (a) of this
Agreement.
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1.1
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(d)
"BOARD" means the Board of Directors of the
Company.
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1.1
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(e)
"CAUSE" has the meaning set forth in Section 3.3 of this
Agreement.
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1.1
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(f)
"CHANGE IN CONTROL" means:
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(i)
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The
acquisition by any individual, entity or group, or a Person (within the
meaning on 13 (d) 3) or 14 (d) (2) of the Exchange Act) of a controlling
interest of either (a) the then outstanding common stock of the Company
(the "Outstanding Company Common Stock") or (b) the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); or
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(ii)
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Individuals
who, as of the date hereof, constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, as a member of the Incumbent Board, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
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(iii)
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Approval
by the stockholders of the Company of a reorganization, merger or
consolidation, in each case, unless, following such reorganization, merger
or consolidation, (a) more than 35% of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of
the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such reorganization, merger or consolidation in substantially the
same proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case
may be, (b) no Person beneficially owns, directly or indirectly, 21% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation or
the combined voting power of the then outstanding voting securities of
such corporation, entitled to vote generally in the election of directors
and (c) at least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such reorganization,
merger or consolidation; or
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1
(iv)
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Approval
by the stockholders of the Company of (a) a complete liquidation or
dissolution of the Company or (b) the sale or other disposition of all or
substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other
disposition, (1) more than 35% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sales or other
disposition, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (2) no Person beneficially
owns, directly or indirectly, 21% or more of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (3) at least a
majority of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other
disposition of assets of the
Company.
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1.1 | (g) "COMPANY" has the meaning set forth in the first paragraph of this Agreement and, with regard to successors, in Section 6.2 of this Agreement. |
1.1
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(h)
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
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1.1
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(i)
"CURRENT TARGET BONUS" has the meaning set forth in Section 4.1 (a) of
this Agreement.
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1.1
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(j)
"DATE OF TERMINATION" has the meaning set forth in Section 3.6 of this
Agreement.
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1.1
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(k)
"DISABILITY" has the meaning set forth in Section 3.2 of this
Agreement.
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1.1
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(I)
"DISABILITY EFFECTIVE DATE" has the meaning set forth in Section 3.2 of
this Agreement.
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1.1
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(m)
[INTENTIONALLY DELETED]
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1.1
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(n)
'·EFFECTIVE DATE" means the date of this
Agreement.
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1.1
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(o)
"EMPLOYMENT PERIOD" means the period beginning on the Effective Date and
ending on the later of (i) April 16, 2015, or (ii) April 1 of any
succeeding fiscal year during which notice is given by either party (as
described in Section 1.1 (dd) of this Agreement) of such party's intent
not to renew this Agreement.
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1.1
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(p)
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
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1.1
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(q)
"EXCISE TAX" has the meaning set forth in Section 4.2 (e) of this
Agreement.
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1.1
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(r)
"GOOD REASON' has the meaning set forth in Section 3.4 of this
Agreement.
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1.1
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(s)
"GROSS-UP PAYMENT" has the meaning set forth in Section 4.2 (e) of this
Agreement.
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2
1.1
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(t)
"INCENTIVE BONUS" has the meaning set forth in Section 2.4 (b) of this
Agreement.
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1.1
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(u)
"NOTICE OF TERMINATION" has the meaning set forth in Section 3.5 of this
Agreement.
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1.1
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(v)
[INTENTIONALLY DELETED]
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1.1
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(w)
"OTHER BENEFITS" has the meaning set forth in Section 4.1 (d) of this
Agreement.
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1.1
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(x)
"OUTSTANDING COMPANY COMMON STOCK" has the meaning set forth in Section
1.1 (f) (i) of this Agreement.
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1.1 | (y) "OUTSTANDING COMPANY VOTING SECURITIES" has the meaning set forth in Section 1.1 (f) (i) of this Agreement. |
1.1
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(z)
"PAYMENT" has the meaning set forth in Section 4.2 (e) of this
Agreement
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1.1
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(aa)
"PERSON" has the meaning set forth in Sections 13 (d) and 14 (d) of the
Exchange Act.
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1.1
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(bb)
[INTENTIONALLY DELETED]
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1.1
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(cc)
"TERM" means the period that begins on the Effective Date and ends on the
earlier of (i) the Date of Termination as defined in Section 3.6 of this
Agreement, or (ii) the close of business on the later of February 1, 2003
or February 1 any renewal term as set forth in Section 2.1 of this
Agreement.
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1.1
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(dd)
"TRIGGERING TRANSACTION" means a Change of Control of the
Company
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1.1
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(ee)
"TRIGGERING TRANSACTION DATE" shall mean the date of the Triggering
Transaction.
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1.2.
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GENDER
AND NUMBER. When appropriate, pronouns in this Agreement used in the
masculine gender include the feminine gender, words in the singular
include the plural, and words in the plural include the
singular.
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1.3.
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HEADINGS.
All headings in this Agreement are included solely for ease of reference
and do not bear on the interpretation of the text. Accordingly, as used in
this Agreement, the terms "Article" and "Section" mean the text that
accompanies the specified Article and Section of the
Agreement.
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1.4.
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APPLICABLE
LAW. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without reference to its conflict of law
principles.
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SECTION
2: TERMS AND CONDITIONS OF EMPLOYMENT
2.1.
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PERIOD
OF EMPLOYMENT. The Executive shall remain in the employ of the Company
throughout the Term of this Agreement in accordance with the terms and
provisions of this Agreement. This Agreement will automatically renew for
two year periods unless either party gives the other written notice, by
October 30, 2014, or October 30 of any succeeding year, of such party's
intent not to renew this Agreement.
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2.2.
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POSITIONS
AND DUTIES.
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2.2
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(a)
Throughout the Term of this Agreement, the Executive shall serve as a
Director of the Board and Executive Vice President, General Counsel and
Secretary of the Company, subject to reasonable directions and nominations
of the Board. The Executive shall have such authority and shall perform
such duties as are specified by, the By-laws of the Company for the office
to which he has been appointed hereunder and shall so serve, subject to
the control exercised by the Board from time to time. Additionally, each
year throughout the Term of the Executive's service as a Director, the
Executive shall be nominated to serve as member of the
Board.
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2.2
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(b)
Throughout the Term of this Agreement (but excluding any periods of
vacation and sick leave to which the Executive is entitled), the Executive
shall devote reasonable attention and time during normal business hours to
the business and affairs of the Company and shall use his reasonable best
efforts to perform faithfully and efficiently such responsibilities as are
assigned to him under or in accordance with this Agreement; provided that,
it shall not be a violation of this paragraph for the Executive to (i)
serve on corporate, civic or charitable boards or committees, (ii) deliver
lectures or fulfill speaking engagements, or (iii) manage personal
investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement or violate the
Company's conflict of interest policy as in effect immediately prior to
the Effective Date.
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3
2.3.
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SITUS
OF EMPLOYMENT. Throughout the Term of this Agreement, the Executive's
services shall be performed at the location where the Executive was
employed immediately prior to the Effective Date, or any office of the
Company which is located in the greater Long Island areas. It is
understood and agreed by the Executive that the Executive will be required
at the discretion of the Board of Directors, to engage in substantial
business travel.
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2.4.
COMPENSATION.
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2.4
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(a)
ANNUAL
BASE SALARY. For the first calendar year within the Term of this
Agreement, the Executive shall receive an annual salary ("Annual Base
Salary") of Four Hundred Thousand Dollars ($400,000) which shall be paid
in equal or substantially equal semi-monthly installments. During the Term
of this Agreement, the Annual Base Salary payable to the Executive shall
be reviewed at least annually and shall be increased at the discretion of
the Board of the Compensation Committee of the Board but shall not be
reduced.
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2.4
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(b)
INCENTIVE
BONUSES. In addition to Annual Base Salary, the Executive shall
be awarded the opportunity to earn an incentive bonus on an annual basis
(“Incentive Bonus”) under an incentive compensation plan to be determined
by the Compensation Committee of the Board (and attached hereto as Exhibit
1). During the Term of this Agreement, the annual Incentive
Bonus which the Executive will have the opportunity to earn shall be
reviewed at least annually and be increased at the discretion of the
Compensation Committee of the Board
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2.4
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(c)
INCENTIVE,
SAVINGS AND RETIREMENT PLANS. Throughout the Term of this Agreement, the
Executive shall be entitled to participate in all incentive, savings and
retirement plans generally available to other peer executives of the
Company.
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2.4
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(d)
WELFARE
BENEFIT PLANS. Throughout the Term of this Agreement (and thereafter,
subject to Sections 4.1 (c) hereof), the Executive and/or the Executive's
family, as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance
plans and programs) to the extent generally available to other peer
executives of the Company but only to the extent that such persons are
eligible for coverage under the terms of such Plan. As it affects Sections
2.4(c) and 2.4(d) above, the Company shall always have the right to alter
its benefit plan providers.
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2.4
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(e)
EXPENSES.
Throughout the Term of this Agreement, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies, practices and procedures
generally applicable to other peer executives of the Company. The
Executive agrees to submit receipts and or vouchers in support of all
requests for reimbursement.
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2.4
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(f)
FRINGE
BENEFITS. Throughout the Term of this Agreement, the Executive shall be
entitled to an automobile allowance of $9,500.00 annually and whole life
insurance of $500,000 paid by the Company. Executive agrees to be solely
responsible for any and all federal, state and local taxes owing as a
result of such term life insurance being
provided.
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2.4
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(g)
VACATION.
Throughout the Term of this Agreement, the Executive shall be entitled to
paid vacation for four (4) weeks each
year.
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SECTION
3: TERMINATION OF EMPLOYMENT
3.1.
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DEATH.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment
Period.
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4
3.2.
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DISABILITY.
If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), the Company may give to the
Executive written notice in accordance with Section 7.2 of its intention
to terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the thirtieth
(30) day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the ninetieth (90) days after such
receipt, the Executive shall not have returned to full-time performance of
the Executive's duties. For purposes of this Agreement, "Disability" shall
mean that the Executive has been unable to perform the services required
of the Executive hereunder on a full-time basis for a period of one
hundred eighty (180) consecutive business days by reason of a physical
and/or mental condition. "Disability" shall be deemed to exist when
certified by a physician paid for and selected by the Company and
acceptable to the Executive or the Executive’s legal representative (such
agreement as to acceptability not to be withheld unreasonably). The
Executive will submit to such medical or psychiatric examinations and
tests as such physician deems necessary to make any such Disability
determination.
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3.3.
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TERMINATION
FOR CAUSE. The Company may terminate the Executive’s employment during the
Employment Period for "Cause", which shall mean termination based upon:
(i) the Executive's willful and continued failure to substantially perform
his duties with the Company (other than as a result of incapacity due to
physical or mental condition), after a written demand for substantial
performance is delivered to the Executive by the Company, which
specifically identifies the manner in which the Executive has not
substantially performed his duties, (ii) the Executive's arrest or
indictment for any felony or any act constituting a criminal offense
involving moral turpitude, dishonesty, or breach of trust, or (iii)
the Executive's material breach of any provision of this Agreement. For
purposes of this Section, no act, or failure to act on the Executive's
part shall be considered "willful" unless done, or omitted to be done,
without good faith and without reasonable belief that the act or omission
was in the best interest of the Company. Notwithstanding the foregoing,
the Executive shall not be deemed to have been terminated for Cause unless
and until (i) he receives a Notice of Termination from the Company, (ii)
he is given the opportunity, with counsel to be heard before the Board
(except in the event he is incarcerated, in which case his appearance
shall not be necessary); and (iii) the Board finds, in its good faith
opinion, the Executive was guilty of the conduct set forth in the Notice
of Termination.
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3.4.
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GOOD
REASON. The Executive may terminate his employment with the Company for
"Good Reason", which shall mean:
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3.4
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(a)
the assignment to the Executive of any duties inconsistent in any respect
with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
contemplated by Section 2.2 (a) or any other action by the Company which
results in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose any action not taken in bad
faith and which is remedied by the Company promptly after receipt of
notice thereof given by the
Executive;
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3.4
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(b)
(i) in the event of and after the occurrence of a Triggering Transaction,
the failure by the Company to continue in effect any benefit or
compensation plan, stock ownership plan, life insurance plan, health and
accident plan or disability plan to which the Executive is entitled as
specified in Section 2.4, (ii) the taking of any action by the Company
which would adversely affect the Executive's participation in, or
materially reduce the Executive's benefits under, any plans described in
Section 2.4, or deprive the Executive of any material fringe benefit
enjoyed by the Executive as described in Section 2.4 (f), or (iii) the
failure by the Company to provide the Executive with paid vacation to
which the Executive is entitled as described in Section 2.4
(g).
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3.4
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(c)
in the event of and after the occurrence of a Triggering Transaction, the
Company's requiring the Executive to be based at any office or location
other than that described in Section
2.3;
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3.4
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(d)
a material breach by the Company of any provision of this Agreement; Such
breach by the Company shall require Executive to provide the Company a
written notice describing with specificity the nature of the contractual
breach and the Company shall have 30 days to cure such
breach.
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3.4
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(e)
any purported termination by the Company of the Executive's employment
otherwise than as expressly permitted by this Agreement;
or
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3.4
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(f)
within a period ending at the close of business on the date one (1) year
after the Triggering Transaction Date of any Change in Control, if the
Company has failed to comply with and satisfy Section 6.2 on or after
suchTriggering Transaction Date. For purposes of this Section, any good
faith determination of "Good Reason" made by the Executive shall be
conclusive.
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3.5.
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NOTICE
OF TERMINATION. Any termination by the Company for Cause or Disability, or
by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party, given in accordance with Section 7.2. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated, and (iii)' if the Date of Termination (as defined in Section
3.6 hereof) is other than the date of' receipt of such notice, specifies
the termination date (which date shall be not more than thirty (30) days
after the giving of such notice). The failure by the Executive 6r the
Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company hereunder or preclude the Executive
or the Company from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights
hereunder.
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3.6.
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DATE
OF TERMINATION. “Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause, or by the Executive for
Good Reason, the Date of Termination shall be the date of receipt of the
Notice of Termination or any later date specified therein, as the case may
be, (ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be, or (iii)
if the Executive's employment is terminated by the Company other than for
Cause, death, or Disability, the Date of Termination shall be the date of
receipt of the Notice of Termination; provided that if within thirty (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, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written
agreement of the parties, or by 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).
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SECTION
4: CERTAIN BENEFITS UPON TERMINATION.
4.1.
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TERMINATION
WITHOUT CAUSE OR FOR GOOD REASON NOT IN CONNECTION WITH A TRIGGERING
TRANSACTION. If, prior to a Triggering Transaction during the Employment
Period (except in the event that one of the following terminations of
employment occurs within the six-month period prior to the earlier of
(a) a Triggering Transaction or (b) the execution of a definitive
agreement or contract that eventually results in a Triggering Transaction,
which shall result in the payment of severance benefits set forth in
Section 4.2 of
this Agreement): (i) the Company shall terminate the Executive's
employment without Cause, or (ii) the Executive
shall terminate employment with the Company for Good Reason, the Executive
shall be entitled to the payment of the benefits provided below as of the
Date of Termination:
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4.1
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(a)
Accrued Obligations. Within thirty (30) days after the Date of
Termination, the Company shall pay to the Executive
the sum of (1) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (2) the accrued benefit
payable to the Executive under any deferred compensation plan, program or
arrangement in which the Executive is a participant subject to the
computation of benefits provisions of such plan, program or arrangement,
and (3) any accrued vacation pay; in each case to the extent not
previously paid (the "Accrued Obligation"). In addition, on the date that
Incentive Bonuses are paid to other peer executives for the year in which
the Executive's employment is terminated, the Executive will be paid an
amount equal to the product of the Current Target Bonus multiplied by a
fraction, the numerator of which is the number of days during the fiscal
year for which the Incentive Bonus is paid prior to the Date of
Termination and denominator of which is 365. For purposes of this
Agreement, the term "Current Target Bonus" means the Incentive Bonus that
would have been paid to the Executive for the fiscal year in which the
termination of employment occurred, if the Executive's employment had not
been so terminated and the Executive had earned 100% of the Incentive
Bonus that he could have earned for that
year.
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4.1
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(b)
Annual Base Salary and Target Bonus Continuation. For the remainder of the
Employment Period, the Company
shall pay to the Executive, the Executive's then-current Annual Base
Salary and Current Target Bonus as would have been paid to the Executive
had the Executive remained in the Company's employ throughout the
Employment Period; provided that in all cases the Executive shall receive,
at minimum, the then-current
Annual Base Salary and Current Target Bonus for the remainder of the
Employment Period, or for a period beginning on the Date of Termination
and ending two years thereafter, whichever is longer. The Company at any
time may elect to pay the balance of such payments then remaining in a
lump sum, in which case the total of such payments shall be discounted to
present value on the basis of the applicable Federal short-term monthly
rate as determined according to Code Section 1274 (s) for the month in
which the Executive's Date of Termination
occurred.
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6
4.1
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(c)
Medical and Health Benefit Continuation. For a period of two years
beginning on the Date of Termination, or
such longer period as any plan, program, practice or policy may provide,
but only to the extent allowable under such Plan, the Company shall
continue medical and health benefits to the Executive and/or the
Executive's family at least equal to those which would have been provided
to them in accordance with the plans, programs, practices and policies
described in Section 2.4 (d) if the Executive's employment had not been
terminated, in accordance with the plans, practices, programs or policies
of the Company as those provided generally to other peer executives and
their families; provided, however, that if the Executive becomes
re-employed with another employer and is eligible to receive medical or
health benefits under another employer-provided plan, the medical and
health benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility. In the
event Executive is able to obtain medical and health care coverage from a
third party for the duration of such coverage period that is at least as
good in all material respects as that described in the immediately
preceding sentence, Executive agrees to accept, in lieu of such Company
provided medical and health benefits. a lump sum cash payment in an amount
equal in value to the entire cost to Executive on an after-tax basis of
such alternate medical and health care
coverage.
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4.1
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(d)
Other Benefits. To the extent not previously paid or provided, the Company
shall timely payor provide to the Executive
and/or the Executive's family any other amounts or benefits required to be
paid or provided for which the Executive and/or the Executive's family is
eligible to receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the Company as
those provided generally to other peer executives and their families
("Other Benefits").
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4.2.
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BENEFITS
UPON TERMINATION IN CONNECTION WITH A TRIGGERING TRANSACTION. If (a) a
Triggering Transaction occurs during the Employment Period and within four
(4) years after the Triggering Transaction Date (i) the Company shall
terminate the Executive's employment without Cause, or (ii) the Executive
shall terminate employment with the Company for Good Reason, or
alternatively, (b) if one of the above-described terminations of
employment occurs within the six-month period prior to the earlier of (i)
a Triggering Transaction or (ii) the
execution of a definitive agreement or contract that eventually results in
a Triggering Transaction, then the Executive shall become entitled to the
payment of the benefits as provided below as of either (y) the Date of
Termination, in the case where the sequence of the requisite events is as
set forth in subsection (a) above or (z) the Triggering Transaction Date,
in the case where the sequence of the requisite events occurred as set
forth in subsection (b) above (the relevant date for purposes of
entitlement to the benefits set forth in this Section 4.2 is hereinafter
referred to as the "Entitlement
Date"):
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4.2
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(a)
Accrued Obligations. Within thirty (30) days after the Entitlement Date,
the Company shall pay to the Executive
the Accrued Obligation. In addition, on the date that Incentive Bonuses
are paid for the year in which the Executive's employment is terminated,
the Executive will be paid an amount equal to the product of the Current
Target Bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive Bonus is
paid prior to the Date of Termination and the denominator of which is
365.
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4.2
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(b)
Severance Amount. Within thirty (30) days after the Entitlement Date, the
Company shall pay to the Executive
as liquidated damages severance pay in a lump sum, in cash, an amount
equal to 3.99 times an amount equal to his then-current Annual Base Salary
and Current Target Bonus.
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4.2
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(c)
Stock Options. To the extent not otherwise provided for under the terms of
the Company's stock option plans or
the Executive's Restricted Stock Plans, all stock options held by the
Executive that have not expired in accordance with their respective terms
shall vest and become fully exercisable as of the Entitlement
Date.
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4.2
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(d)
Other Benefits. To the extent not previously paid or provided, the Company
shall timely payor provide to the Executive
and/or the Executive's family any Other Benefits required to be paid or
provided for which the Executive
and/or the Executive's family is eligible to receive pursuant to this
Agreement and under any plan, program, policy or practice or contract or
agreement of the Company to be implemented by the Company during the term
of this Agreement, such as deferred compensation or retirement
plans.
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7
4.2
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(e)
Excess Parachute Payment. Anything in this Agreement to the contrary
notwithstanding, in the event that it shall
be determined that any payment or distribution by the Company to or for
the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise but
determined without regard to any additional payments required under this
Section 4.2 (e) (a "Payment") would be subject to the excise
tax imposed by Code Section 4999 (or any successor provision) or any
interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment (a
"Gross-up Payment") in an amount such that after payment by the Executive
of all taxes (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any
interest or penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment on an after-tax basis equal to the Excise Tax imposed upon
the Payment. The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty (30)
business days after the Executive is informed in writing of such claim by
the Internal Revenue Service and the notification shall apprise the
Company of the nature of the claim and the date on which such claim is
required to be paid.
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The
Executive shall not pay such claim prior to the expiration of a thirty
(30) day period following the date on which the Executive has given such
notification to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is required). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall
cooperate with the Company in so contesting; provided, however, that the
Company shall bear and pay all costs and expenses, (including additional
interest and penalties) incurred in connection with such contest, on an
after-tax basis to the Executive.
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4.3.
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DEATH.
If the Executive's employment is terminated by reason of the Executive's
death during the employment Period (either prior or subsequent to a
Triggering Transaction), this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations (as defined in Section 4.1
(a» (which shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination) and (ii) the timely payment or provision of Other Benefits
(as defined in Section 4.1 (d», including death benefits pursuant to the
terms of any plan, policy, or arrangement of the
Company.
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4.4.
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DISABILITY.
If the Executive's employment is terminated by reason of the Executive's
Disability during the Employment Period (either prior or subsequent to a
Triggering Transaction), this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued
Obligations as defined in Section 4.1 (a»
which shall be paid to the Executive in a lump sum in cash within thirty
(30) days of the Date of
Termination).
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4.5.
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TERMINATION
FOR CAUSE; OTHER THAN GOOD REASON. If the Executive's employment shall be
terminated for Cause during the Employment Period (either prior or
subsequent to a Triggering Transaction), this Agreement shall terminate
without further obligations to the Executive other than the obligations to
pay to the Executive his Accrued Compensation (as defined in this
Section). If the Executive terminates employment with the Company during
the Employment Period, (excluding a termination for Good Reason), this
Agreement shall terminate without further obligations to the Executive,
other than for the payment of Accrued Compensation (as defined in this
Section). In such case, all Accrued Compensation shall be paid to the
Executive in a lump sum in cash within thirty (30) days of the Date of
Termination.
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For
the purpose of this Section, the term "Accrued Compensation" means the sum
of (i) the Executive's Annual Base Salary pro-rated through the Date of
Termination to the extent not previously paid, (ii) any compensation
previously deferred by the Executive (together with any accrued interest
or earnings thereon), and (iii) any accrued vacation pay in each case to
the extent not previously
paid.
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8
4.6.
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NON-EXCLUSIVITY
OF RIGHTS; SUPERSESSION OF CERTAIN BENEFITS. Except as provided in Section
4.1 (c) and in this Section 4.6, nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any contract or agreement with
the Company. Amounts which are vested benefits of which the Executive is
otherwise entitled to receive under any plan, policy, practice or program
of, or any contract or agreement with, the Company at or subsequent to the
Date of Termination, shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
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4.7.
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FULL
SETTLEMENT. The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement
and, except as provided in Sections 4.1 (c), such amounts shall not be
reduced whether or not the Executive obtains other employment. In the
event of and after the occurrence of a Triggering Transaction, the Company
agrees to pay promptly as incurred, to the full extent permitted by law,
all legal fees and expenses which the Executive may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the Company,
the Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive regarding
the amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate provided
for in Code Section 7872 (f) (2)
(A).
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4.8.
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RESOLUTION
OF DISPUTES. If there shall be any dispute between the Company and the
Executive (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or (ii)
in the event of any termination of employment by the Executive, whether
Good Reason existed, then, unless and until there is a final,
non-appealable judgment by a court of competent jurisdiction declaring
that such termination was for Cause or that the determination by the
Executive of the existence of Good Reason was not made in good faith, the
Company shall pay all amounts, and provide all benefits, to the Executive
and/or the Executive's family or other beneficiaries, as the case may be,
that the Company would be required to payor provide pursuant to Section
4.1 as though such termination were by the Company without Cause or by the
Executive with Good Reason; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant to this Section except
upon receipt of an undertaking by or on behalf of the Executive to repay
all such amounts to which the Executive is ultimately adjudged by such
court not to be entitled
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.
SECTION
5: NON-COMPETITION.
5.1.
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NON-COMPETE
AGREEMENT
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5.1
|
(a)
It
is agreed that during the period beginning on the date the Term of this
Agreement expires and ending one (1) year (the "Non-Compete Term")
thereafter, the Executive shall not, without prior written approval of the
Board, become an officer, employee, agent, partner, consultant,
beneficial/owner, agent, investor, or director of any entity located
anywhere in the world which is engaged in the same business as the Company
is engaged at any time during the Non-Competition Term provided that, if
the Executive is terminated by the Company without Cause or if the
Executive terminates his employment for Good Reason, after a Triggering
Transaction, then he will not be subject to the restrictions of this
Section.
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5.1
|
(b)
For
purposes of Section 5.1, a business enterprise with which the Executive
becomes associated as an officer, employee, agent, partner, consultant,
beneficial/owner, agent, investor or director shall be considered in
substantial direct competition, if such entity competes with the Company
in any business in which the Company is engaged and is within the
Company's market area as of the date that the Employment Period
expires.
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5.1
|
(c)
The above constraint shall not prevent the Executive from making passive
investments, not to exceed five percent
(5%), in any publicly traded company.
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5.1
|
(d)
The Executive agrees that the foregoing restrictions, in the absence of a
Triggering Transaction are reasonable
and may not prevent the Executive from earning a livelihood and
furthermore, if any court of competent
jurisdiction deems any of the provisions of the foregoing invalid, this
Agreement shall be enforced to the full extent that such other provisions
are valid and such court may modify such restrictions to afford the
Company the maximum applicable protection permitted under the
law.
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9
5.1
|
(e)
Should Executive be adjudicated by a court of competent Jurisdiction to be
in violation of this Section 5.1 or Section 5.2 below, all amounts owed
Executive pursuant to this Agreement shall be forfeited and the Company
shall be entitled to injunctive or such other equitable relief as is
necessary to restrain Executive's breaching
conduct.
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5.2.
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CONFIDENTIAL
INFORMATION. The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge
or data relating to the Company or any of its affiliated companies, and
their respective businesses, which shall have been obtained by the
Executive during the Executive's employment by the Company and which shall
not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company, or as
may otherwise be required by law or legal process, communicate or divulge
any such information, knowledge or data to anyone other than the Company
and those designated by it (nor shall Executive use such information in
any way).
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SECTION
6: SUCCESSORS.
6.1.
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SUCCESSORS
OF EXECUTIVE. This Agreement is personal to the Executive and, without the
prior written consent of the Company, the rights (but not the obligations)
shall not be assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
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6.2.
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SUCCESSORS
OF COMPANY. 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
expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to terminate the
Agreement at his option on or after the Triggering Transaction Date for
Good Reason. As used in this Agreement, "Company" shall mean the Company
as hereinbefore defined and any successor to its business and/or assets
which assumes and agrees to perform this Agreement by operation of law, or
otherwise. After such obligations are agreed to be assumed by such
successor, the Company shall have no further obligations thereunder or
hereunder.
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SECTION
7: MISCELLANEOUS.
7.1.
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OTHER
AGREEMENTS. The Board may, from time to time, in the fixture, provide
other incentive programs and bonus arrangements to the Executive with
respect to the occurrence of a Triggering Event that will be in addition
to the benefits required to be paid in the designated circumstances in
connection with the occurrence of a Triggering Transaction. Such
additional incentive programs and/or bonus arrangements will affect or
abrogate the benefits to be paid under this Agreement only in the manner
and to the extent explicitly agreed to by the Executive in any such
subsequent program or arrangement.
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7.2.
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NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to
have been duly given wl\en delivered or mailed by certified or registered
mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the Chairman of the Board,
or to such other address as one party may have furnished to the other in
writing in accordance herewith, except that notice of change of address
shall be effective only upon
receipt.
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Notice to
Executive:
Xxxxxxxxxxx
X. Xxxx
000 Xxxx
Xxxxxxxx Xxxx Xxxxx, XX 00000
10
Notice to
Company:
Lakeland
Industries, Inc.
000-0
Xxxxxxx Xxx. Xxxxxxxxxx, XX 00000
7.3.
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VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of
this Agreement.
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7.4.
|
WAIVER.
The Executive's or the Company's failure to insist upon strict compliance
with any provision hereof or any other provision of this Agreement or the
failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3.4 shall not be
deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
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IN
WITNESS WHEREOF, the Executive and the company pursuant to the authorization
from its Board, have caused this Agreement to be executed I it name3 on its
behalf, all as of the day and year first above written
By: /s/
Xxxxxxxxxxx X. Xxxx
Xxxxxxxxxxx
X. Xxxx
Compensation
Committee
By: /s/ Xxxxxxx
X. Xxxxxxxxx
Xxxxxxx X.
Xxxxxxxxx
By: /s/ Xxxx X.
Xxxxxxx
Xxxx X.
Xxxxxxx
By: /s/
Xxxxx Xxxxx
Xxxxx
Xxxxx
11
Exhibit
1
NEW CONTRACT
2010-2015
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2.4(b)
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INCENTIVE
BONUSES. In addition to Annual Base Salary, the Executive shall
be awarded the opportunity to earn an incentive bonus on an annual basis
(“Incentive Bonus”) under an incentive compensation plan to be determined
by the Compensation Committee of the Board (and attached hereto as Exhibit
1). During the Term of this Agreement, the annual Incentive
Bonus which the Executive will have the opportunity to earn shall be
reviewed at least annually and be increased at the discretion of the
Compensation Committee of the
Board.
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In May of
each year commencing in 2010, you may be awarded a discretionary bonus based on
an increase in earnings per share measured from an amount set by the Board of
Directors at the beginning of each fiscal year (The “Bonus Base”). Said bonus
shall be calculated as follows: for each xxxxx increase in earnings from the
Bonus Base up to a maximum of $0.20 in excess of the Bonus Base a bonus of
$3000, and thereafter $1500 of restricted stock subject to two year time vesting
with adjustments for stock splits or dividends or other such dilution in EPS
during the fiscal year.
12