Exhibit 10.1
EMPLOYMENT AGREEMENT
BETWEEN
XXXXXX X. XXXXXXX
AND
REFAC
Dated as of April 1, 2005
THIS EMPLOYMENT AGREEMENT (the "Agreement") made as of April 1, 2005
(the "Effective Date") between REFAC, a Delaware corporation ("REFAC"), and
Xxxxxx X. Xxxxxxx ("XXXXXXX").
XXXXXXX was heretofore employed by REFAC under a Fifth Amended and
Restated Employment Agreement dated as of November 7, 2003 (the "Prior
Agreement") with an employment term that expired on March 31, 2005.
The parties hereto desire enter into the contractual arrangement as
set forth in this Agreement effective as of the Effective Date.
In consideration of the premises and the respective agreements of the
parties herein contained, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment. Subject to the provisions hereof, following the
Effective Date, REFAC shall continue to employ XXXXXXX and XXXXXXX shall
continue to serve as the Chief Executive Officer, President, and General
Counsel of REFAC with full responsibility for the supervision of all corporate
affairs, provided that in the event that the Board of Directors of REFAC (the
"Board") shall appoint a new Chief Executive Officer, then XXXXXXX shall remain
employed with REFAC as its Senior Vice President and General Counsel or other
senior executive level position.
2. Term. The employment of XXXXXXX by REFAC hereunder will continue
from the Effective Date until December 31, 2006, (the "Employment Period")
unless further extended by agreement of XXXXXXX and REFAC or until sooner
terminated as hereinafter provided.
3. Duties.
(a) Regular Duties. During the Employment Period, XXXXXXX will
continue to perform such duties and have such powers as are customary for the
chief executive officer, president and general counsel or other senior
executive level position.
(b) Responsible to the Board. As Chief Executive Officer, President
and General Counsel, XXXXXXX will report and be directly responsible to the
Board of Directors of REFAC (the "Board"). In the event that XXXXXXX is named
Senior Vice President and General Counsel, XXXXXXX shall report to the
individual then serving as the chief executive officer of REFAC.
(c) Time Devoted to REFAC's Affairs. XXXXXXX will devote substantially
all his working time and efforts to the business and affairs of REFAC and will
not, without the prior authorization of the Board, have any active engagement
in or responsibility with respect to any business or commercial enterprise
other than REFAC or a subsidiary of REFAC; provided, however, XXXXXXX may enter
into separate arrangements for his own account with Palisade Capital
Management, L.L.C. ("Palisade") and/or any of its affiliated companies that are
engaged in private equity or investment management pursuant to which he may
become a member, partner, officer, director or stockholder of such entity or
may provide consulting or professional services thereto provided that such
activities do not materially interfere with the regular performance of his
duties and responsibilities under this Agreement.
4. Place of Performance. In connection with XXXXXXX'x employment by
REFAC, XXXXXXX will be based in the New York City metropolitan area, except for
required travel on REFAC's business to an extent consistent with REFAC's
business requirements and his responsibilities hereunder.
5. Base Salary and Incentive Compensation.
(a) Base Salary. During the Employment Period, XXXXXXX'x salary will
be $325,000 per annum ("Base Salary"). Payment of such salary will be made in
accordance with REFAC's customary pay practices for senior officers and will be
subject to such payroll deductions as are required by law or by the terms of
any applicable benefit plan of REFAC.
(b) Incentive Compensation. In addition to the Base Salary as set
forth in Section 5(a) of this Agreement, REFAC may, in its sole discretion, pay
to XXXXXXX additional incentive compensation in cash and/or equity upon the
achievement of certain performance goals.
(c) Stock Option. In connection with the entering into of this
Agreement, REFAC shall xxxxx XXXXXXX an option to purchase one hundred thousand
(100,000) shares of REFAC common stock with an exercise price equal to the
closing price of REFAC's common stock on the date immediately preceding the
grant (the "Stock Option"). One-third of the Stock Option shall vest on the
date of grant and one-third shall vest on each of the next two (2)
anniversaries of the date of grant. Such Stock Option shall be subject to the
terms and conditions as set forth in a stock option agreement to be entered
into by and between REFAC and XXXXXXX.
6. Fringe Benefits, Expenses and Related Matters.
(a) Expenses. During Employment Period, XXXXXXX will be entitled to
receive prompt reimbursement for all reasonable expenses incurred by XXXXXXX in
performing services hereunder, including all reasonable expenses of travel and
living expenses while away from home on business or at the request of and in
the service of REFAC, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures established by REFAC.
(b) Automobile. During the Employment Period, REFAC will provide
XXXXXXX with an automobile with a maximum monthly lease payment of $900.
(c) Other Benefits. XXXXXXX will be entitled to participate in or
receive benefits under any employee benefit plan or arrangement now or in the
future made available by REFAC generally to its executive employees, subject to
and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements, including health insurance and life insurance
benefits.
(d) Vacations. XXXXXXX will be entitled to four weeks of paid vacation
per calendar year, prorated for any portion thereof and to all paid holidays
given by REFAC in accordance with REFAC's regular paid holidays policy.
7. Facilities and Support Services Furnished. REFAC will furnish
XXXXXXX with office space, secretarial assistance and such other facilities and
services as shall be suitable to XXXXXXX'x position and adequate for the
performance of his duties as herein set forth.
8. Termination. XXXXXXX'x employment hereunder may be terminated under
the following circumstances:
(a) Death. XXXXXXX'x employment hereunder will terminate immediately
upon his death.
(b) Disability. REFAC may terminate XXXXXXX'x employment hereunder if
XXXXXXX should become permanently disabled. For the purposes of this Agreement,
permanent disability ("Disability") means XXXXXXX'x inability, by virtue of
physical or mental illness or injury, to perform his regular duties on a
full-time, continuous basis for 120 consecutive days. XXXXXXX'x disability will
be established if a qualified medical doctor selected by the parties so
certifies in writing. If the parties are unable to agree on the selection of
such a doctor, each party will designate a qualified medical doctor who
together will select a third doctor who will make the determination. XXXXXXX
will make himself available for an examination by a doctor selected in
accordance with this paragraph (b).
(c) Cause. REFAC may terminate XXXXXXX'x employment hereunder for
Cause at any time during the Employment Period hereof as hereinafter set forth.
For purposes of this Agreement, REFAC will have "Cause" to terminate XXXXXXX'x
employment hereunder upon (i) the willful and continued failure, in the
reasonable judgment of the Board, by XXXXXXX to perform substantially his
duties with REFAC (other than any such failure resulting from his death or
Disability) after a written demand for substantial performance is delivered to
XXXXXXX by the Board which specifically identifies the manner in which it is
believed that XXXXXXX has not substantially performed his duties or (ii) the
conviction of XXXXXXX (or the entering by XXXXXXX of a plea of guilty or nolo
contendere) for any felony or any lesser crime which involved REFAC or its
property. For purposes of clause (i) of this definition, no act, or failure to
act, on XXXXXXX'x part shall be deemed "willful" unless done, or omitted to be
done, by XXXXXXX not in good faith and without reasonable belief that his act,
or failure to act, was in the best interest of REFAC. Notwithstanding the
foregoing, XXXXXXX will not be deemed to have been terminated for Cause within
the meaning of clause (i) without (1) reasonable notice to XXXXXXX setting
forth the reasons for REFAC's intention to terminate for Cause, (2) an
opportunity for XXXXXXX, together with his counsel, to be heard before the
Board, and (3) delivery to XXXXXXX of a Notice of Termination, as defined in
paragraph (e) of this Section 8, from the Board finding that, in the good faith
opinion of the Board, clause (i) hereof may be invoked, and specifying the
particulars thereof in detail.
(d) Good Reason. XXXXXXX may terminate his employment with REFAC for
Good Reason at any time during the Employment Period. For purposes of this
Agreement, XXXXXXX will have "Good Reason" to terminate his employment with
REFAC upon: (i) the assignment to XXXXXXX of any duties materially inconsistent
with his status as Chief Executive Officer and General Counsel of REFAC or a
substantial adverse alteration in the nature or status of his responsibilities;
provided, that XXXXXXX shall not have Good Reason to terminate his employment
if, following REFAC's appointment of a chief executive officer other than
XXXXXXX, XXXXXXX continues as General Counsel of REFAC with the title of Senior
Vice President and/or assumes another senior level executive position, (ii) a
reduction by REFAC in XXXXXXX'x Base Salary set forth in Section 5 hereof;
(iii) the relocation of XXXXXXX'x principal place of employment to a location
more than thirty-five (35) miles from Fort Xxx, New Jersey except where such
relocation does not result in XXXXXXX'X commute from his principal residence to
his principal place of employment being greater than such commute as of the
Effective Date; (iv) the failure by REFAC to pay to XXXXXXX any portion of
XXXXXXX'x compensation hereunder or under the Prior Agreement within fourteen
(14) days of the date such compensation is due; (v) a Change in Control of
REFAC (as defined below) and (vi) any other material breach of this Agreement
by REFAC which is not cured within ten (10) days of a written notice by
XXXXXXX. XXXXXXX'x right to terminate his employment for Good Reason shall not
be affected by his incapacity due to physical or mental illness. XXXXXXX'x
continued employment shall not constitute consent to, or a waiver of rights
with respect to, any act or failure to act constituting Good Reason hereunder.
For purposes of this Agreement, a Change in Control shall be deemed to have
occurred when (i) Palisade Concentrated Equity Partnership, L.P. and/or its
affiliates cease(s) to own, in the aggregate, at least thirty-five percent
(35%) of the outstanding common stock of REFAC or (ii) any person, entity or
group (as defined in section 13(d)(3) of the Securities Exchange Act of 1934,
as amended) that is not affiliated with Palisade acquires in one or a series of
transaction(s) more than fifty percent (50%) of the outstanding common stock of
REFAC.
(e) Notice of Termination. Any termination of XXXXXXX'x employment by
REFAC or by XXXXXXX (other than termination pursuant to Section 8(a)) during
the Employment Period will be communicated by written Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" means a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of XXXXXXX'x employment under the provision so indicated.
(f) Date of Termination. "Date of Termination" shall mean (i) if
XXXXXXX'x employment is terminated by his death, the date of his death, (ii) if
XXXXXXX'x employment is terminated pursuant to paragraph (b) of this Section 8,
three weeks after Notice of Termination, (iii) if XXXXXXX'x employment is
terminated pursuant to paragraph (c) or (d) of this Section 8, the date
specified in the Notice of Termination, and (iv) if XXXXXXX'x employment is
terminated for any other reason, the date specified in the Notice of
Termination.
(g) XXXXXXX Cooperation. From and after the earlier to occur of (i)
delivery of a Notice of Termination and (ii) termination of XXXXXXX'x
employment hereunder (other than termination due to XXXXXXX'x death) XXXXXXX
will, to the best of his knowledge, disclose or provide for the disclosure to
REFAC or any successor thereof, orally or in writing as appropriate, all
information of a material nature relating to existing or prospective clients
and licensees and as to any other matters in which TUCHMAN shall prior to his
Date of Termination have been personally involved or as to which XXXXXXX will
have acquired special knowledge, and XXXXXXX will thereafter answer to the best
of his knowledge any questions that REFAC may from time to time submit with
respect to any such aforesaid matters.
9. Compensation Upon Termination or During Disability.
(a) Disability. During any period that XXXXXXX fails or is unable to
perform his duties hereunder as a result of Disability, XXXXXXX will continue
to receive his full salary at the rate then in effect for such period until his
employment is terminated, provided that such payments will be reduced by the
amounts, if any, paid to XXXXXXX under any disability benefit plans of REFAC or
under the Social Security disability insurance program. Following the
termination of his employment, XXXXXXX'x benefits will be determined in
accordance with REFAC's retirement, insurance, and other applicable programs
and plans then in effect, if any. Following the termination of XXXXXXX'x
employment due to Disability, REFAC will pay XXXXXXX any compensation deferred
in accordance with Section 11 hereof and the Stock Option shall become
immediately vested and exercisable on the Date of Termination and shall remain
exercisable as to all shares subject thereto (by XXXXXXX or his heirs,
distributees or legal representatives, as applicable) for the remainder of the
term of the Stock Option.
(b) Death. If XXXXXXX'x employment should be terminated by his death,
REFAC will (i) pay any accrued salary and other compensation and benefits
through the date of death to XXXXXXX'x spouse, or, if he leaves no spouse, to
his estate, (ii) pay or cause the payment to XXXXXXX'x beneficiary, or if he
specified no beneficiary, to his estate, the death benefits payable pursuant to
REFAC's life insurance program in effect at the date of death, if any, (iii)
pay any compensation deferred in accordance with Section 11 hereof, to
XXXXXXX'x spouse, or, if he leaves no spouse, to his estate, and (iv) the Stock
Option shall become immediately vested and exercisable on the Date of
Termination and shall remain exercisable as to all shares subject thereto (by
XXXXXXX'x heirs or distributees, as applicable) for the remainder of the term
of the Stock Option.
(c) Cause. If XXXXXXX'x employment should be terminated by REFAC for
Cause or by XXXXXXX during the Employment Period, REFAC will pay XXXXXXX his
full salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus any compensation deferred in accordance
with Section 11 hereof and all other amounts to which XXXXXXX is entitled as of
the Date of Termination under any benefit plan of REFAC at the time such
payments are due, and REFAC will have no further obligations to XXXXXXX under
this Agreement.
(d) Without Cause. XXXXXXX'x employment with REFAC may not be
terminated by REFAC during the Employment Period for reasons other than those
described in Section 8(a), 8(b) or 8(c) unless, prior to such termination
XXXXXXX has together with his counsel had an opportunity to appear and be heard
at a meeting of the Board which was called and held (after reasonable notice to
XXXXXXX) for the purpose of considering such a termination. In the event that
XXXXXXX'x employment is terminated by REFAC during the Employment Period for
reasons other than those described in Section 8(a), 8(b) or 8(c), REFAC will
(i) pay XXXXXXX a lump sum equal to the sum of (A) his full salary that would
have been payable for the remainder of the Employment Period absent such
termination at the rate in effect at the time Notice of Termination is given
and (B) any compensation deferred in accordance with Section 11 hereof, (ii)
provide, except to the extent that XXXXXXX shall receive similar benefits from
a subsequent employer, the auto, life, health and similar welfare benefits
which XXXXXXX would have been entitled to during the remainder of the
Employment Period absent such termination under any such benefit plan of REFAC,
and (iii) the Stock Option shall become immediately vested and exercisable on
the Date of Termination and shall remain exercisable as to all shares subject
thereto (by XXXXXXX or his heirs, distributees or legal representatives, as
applicable) for the remainder of the term of the Stock Option.
(e) Good Reason. In the event that XXXXXXX'x employment is terminated
by XXXXXXX during the Employment Period for Good Reason, REFAC will (i) pay
XXXXXXX a lump sum equal to the sum of (A) his full Base Salary that would have
been payable for the remainder of the Employment Period absent such termination
at the rate in effect at the time Notice of Termination is given and (B) any
compensation deferred in accordance with Section 11 hereof, (ii) provide,
except to the extent that XXXXXXX shall receive similar benefits from a
subsequent employer, the auto, life, health and similar welfare benefits which
XXXXXXX would have been entitled to during the remainder of the Employment
Period absent such termination under any such benefit plan of REFAC, and (iii)
the Stock Option shall become immediately vested and exercisable on the Date of
Termination and shall remain exercisable as to all shares subject thereto (by
XXXXXXX or his heirs, distributees or legal representatives, as applicable) for
the remainder of the term of the Stock Option; provided; however, that in the
event that XXXXXXX terminates employment for Good Reason solely as a result of
a Change in Control, then such Stock Option shall remain exercisable for a
period of one (1) year following the Date of Termination and shall thereafter
expire.
(f) Mitigation of Payments. XXXXXXX will not be required to mitigate
the amount of any lump sum payment or bonus entitlement provided for in this
Section 9 by reducing it by the amount of any compensation earned by XXXXXXX as
the result of employment by another employer after the Date of Termination, or
otherwise. However, he will be required to mitigate the costs of the other
benefits provided for in this Section.
10. Noncompetition. XXXXXXX will not, except as hereinafter set forth,
engage in any Competitive Activity (as hereinafter defined) during the
Employment Period or for a period of one year following the termination of
XXXXXXX'x employment for any reason. For purposes of this Section, "Competitive
Activity" will mean directly or indirectly: owning, managing, controlling,
investing in, or otherwise being connected with, in any manner, whether as an
officer, director, employee, partner, investor, consultant, lender or
otherwise, any business entity or activity which is engaged in, or is in any
way related to, any business conducted by REFAC or any subsidiary companies
that it may own during the Employment Period other than businesses that are
being wound down from prior activities of REFAC. Notwithstanding the above,
nothing herein contained will prohibit XXXXXXX from investing in securities of
a business entity if the securities of such entity are listed for trading on a
national securities exchange or traded in the over-the-counter market and
XXXXXXX'x holdings therein represent less than five (5%) percent of the total
number of shares or principal amount of other securities of such entity
outstanding.
11. Section 162 (m). In the event that any payment or benefit received
or to be received by XXXXXXX in connection with his employment by REFAC would
otherwise not be deductible (in whole or part), by REFAC as a result of the
operation of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the delivery of the non-deductible portion of such payment or
benefit to XXXXXXX by REFAC shall be deferred until the earliest date on which
it may be delivered to XXXXXXX without being subject to the limit on
deductibility imposed by Section 162(m) of the Code. XXXXXXX will be paid any
amount deferred pursuant to the Prior Agreement in accordance with the terms of
this Section 11.
12. Successors; Binding Agreement.
(a) Should any entity succeed (whether by purchase, merger,
consolidation or similar transaction) to all or substantially all of the
business and/or assets of REFAC, XXXXXXX shall continue to perform all of his
duties and obligations hereunder.
(b) REFAC will require any successor (whether by purchase, merger,
consolidation or similar transaction) to all or substantially all of the
business and/or assets of REFAC, by agreement in form and substance reasonably
satisfactory to XXXXXXX, to expressly assume and agree to perform this
Agreement in substantially the same manner and to substantially the same extent
that REFAC would be required to perform it if no such succession had taken
place.
(c) This Agreement and all rights of XXXXXXX hereunder shall inure to
the benefit of and be enforceable by XXXXXXX'x personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If XXXXXXX should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to XXXXXXX'x devisee, legatee, or other designee or, if there be no
such designee, to XXXXXXX'x estate.
13. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to XXXXXXX:
Xxxxxx X. Xxxxxxx
0 Xxxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
If to REFAC:
REFAC
0 Xxxxxx Xxxxx - Xxxxx 000
Xxxx Xxx , Xxx Xxxxxx 00000
Copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
or to such other address as any party may have furnished to the others
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
14. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by XXXXXXX and such other officer of REFAC as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without regard
to its conflicts of law principles. All compensation payable to XXXXXXX
pursuant to this Agreement shall be subject to all applicable withholding
taxes, normal payroll withholding and any other amounts required by law to be
withheld.
15. Validity. If any term or provision of this Agreement or the
application thereof to any person, entity or circumstance should to any extent
be invalid or unenforceable, the remainder of this Agreement or the application
of such term or provision to any person, entity or circumstance other than
those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement (including, to the
extent permitted by law, any such term or provision which has been held to be
otherwise invalid or unenforceable) shall be deemed valid and enforceable to
the fullest extent permitted by law.
16. Counterparts and Facsimile Signature. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.
In the event that any signature is delivered via facsimile transmission, such
signature shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force and effect
as if such facsimile signature page were an original signature.
17. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement will be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
18. Confidentiality. As an officer and director of REFAC, XXXXXXX is
privy to information generally regarded as confidential and often proprietary
with respect to REFAC, its business relationships, negotiations and activities.
Such information may include details of REFAC's business and client
relationships (past, present and prospective) and related REFAC and client
plans, products, property rights, technical and market data.
By reason of the foregoing:
(a) XXXXXXX will not at any time divulge or negligently permit the
communication of any of the foregoing types of information in any way that
could conflict with the interests of REFAC, any subsidiary companies it may own
during the Employment Period or any of their respective clients, customers or
business associates.
(b) For a period of two (2) years after any Date of Termination,
neither XXXXXXX nor any company which XXXXXXX directly or indirectly owns,
controls or manages shall employ or solicit the employment of any present or
future employee of REFAC or any subsidiary company that it may own during the
Employment Period.
19. Breach of Noncompetition and/or Confidentiality Covenant. Each of
the parties hereto acknowledges that in the event of any breach of Sections 10
and/or 18 of this Agreement by XXXXXXX, XXXXX would be irreparably harmed and
could not be made whole by monetary damages. Therefore REFAC, in addition to
any other remedy to which it may be entitled at law or in equity, may compel
specific performance of Sections and/or 18 of this Agreement, as the case may
be. XXXXXXX hereby acknowledges and agrees that the covenants contained in
Sections 10 and 18 of this Agreement are reasonable and fully necessary for the
protection of the legitimate interests of REFAC and are not oppressive to the
interest of XXXXXXX.
20. Entire Agreement.
(a) Except as otherwise provided in Section 20(b), as of the Effective
Date, this Agreement shall supersede the Prior Agreement in its entirety and
the Prior Agreement shall be of no further force or effect. Subject to the
foregoing, this Agreement together with the stock option agreement set forth
the entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, agreements,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto.
(b) Notwithstanding the provisions of Section 20(a) or anything
contained herein to the contrary, it is expressly understood and agreed that
XXXXXXX is entitled to the Success Bonus (as defined in the Prior Agreement)
earned by him under the Prior Agreement and that same shall be payable at the
time and in the amount specified therein.
21. Survival. The obligations of the parties set forth in Sections
8(g) and 9 through 19 of this Agreement shall survive the expiration of the
Employment Period.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
April 1, 2005.
/s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
REFAC
By: /s/ Xxxxxxx X. Xxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
