EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT ("Agreement") dated as of April 1st, 2007 between Surge Solutions
Group, Inc., a Florida Corporation with its principal place of business
at 0000 Xxxxxxxxxx Xxxx. #000, Xxxx Xxxx Xxxxx, Xx. 00000 ("the
Company"), and Xxxx Xxxxxx, who resides at 0000 XX Xxxxxxxx Xxx Xxxx Xxxx, Xx.
00000 ("Executive").
WHEREAS, the Executive has extensive
experience as a senior executive in the areas of management and
operations of all aspects of business relating to the restoration and
remediation of commercial and residential real properties damaged as a result of
natural and/or other types of disasters including but not limited to hurricanes,
fires, floods, etc. and which are applicable to the Company’s
business;
WHEREAS,
the Company has determined that it is in the best interest of the Company to
employ Executive as its Chief Executive Officer to further the business purposes
of the Company; and
WHEREAS,
Executive is desirous of employment with the Company on the terms provided
herein:
WHEREAS,
It is the interest of this Agreement to assure Executive’s dedication to the
Company by providing Executive with Compensation and benefit arrangements while
Executive fulfills his duties now and during the pendency of a Change of
Control, should such an event occur, which provides Executive with a measure of
security commensurate with Executive’s importance to the Company, and assure the
Company of continuity in its services and relationships with customers and
employees;
NOW,
THEREFORE, the Company and Executive agree as follows:
1 . Employment.
1.1 Term. The Company
shall employ Executive in an executive position as its Chief Executive Officer,
or in such comparable management capacity as the Company may from time to time
designate and which the Executive agrees to in writing. This Agreement shall
become effective as of April 1st, 2007 and shall continue to the
third anniversary date hereof, unless earlier terminated (“Original Term”).
Thereafter, the term of employment shall automatically be extended on the same
terms and conditions contained herein for successive one-year periods (each a
“Renewal Term”), except that if one party gives notice in writing to the other
party not less than ninety (90) days prior to the date in which such term of
employment would otherwise be renewed indicating such party’s intent to
terminate this Agreement at the end of the period in which notice is given, then
this Agreement shall terminate on the date such period expires. (The
Original Term and all Renewal Terms are hereinafter collectively referred to as
the Term.) Executive acknowledges that, except as set forth in this
Agreement, Executive’s employment is "at will".
If,
during the Term, a "person" (as that term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) commences
any action that, if consummated, would result in a Change of Control of the
Company or if any person publicly announces an intention or proposal to commence
any such action, Executive agrees that Executive will not leave the Company's
employ (other than as a result of death or Disability) and, Executive will
render the services contemplated in this Agreement for the reasonable duration
of the Company's defense against such action and until such action has been
abandoned or terminated or a Change in Control has occurred, and Executive will
actively promote the Company's interest during such period.
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Any
termination of Executive’s employment during the Term for reasons other than
Executive’s death shall be evidenced by a written notice ("Notice of
Termination"), which shall specify the provision of this Agreement relied upon
for such termination and describe with reasonable detail the facts and
circumstances claimed by the sender of such Notice of Termination to provide the
basis for termination. Any such Notice of Termination shall also specify the
effective date of termination (the "Termination Date"). If Executive dies during
the Term, the Termination Date shall be the date of Executive’s
death.
1.2 Present and Future
Duties. Executive’s role in the Company shall be that of Chief Executive
Officer. Executive shall perform all duties required of or incidental to
Executive’s position with the Company, and such specific duties as may be
assigned to Executive by senior management or the Board of Directors of the
Company. Executive’s position shall have the powers, duties and responsibilities
set forth in Exhibit A attached hereto and made a part
hereof. Executive agrees to use Executive’s best efforts in the
business of the Company and to devote such time, attention and energy to the
business of the Company as Executive deems appropriate to the performance of
Executive’s duties hereunder. The Company and Executive agree that Executive may
work, on a parttime or independent contracting or consulting basis, with or
without compensation, for any other business or enterprise during the Term which
does not Compete (as hereinafter defined) with the Company.
1.3 Compensation and
Expenses
(a) During
the period of Executive's employment hereunder, the Company shall pay to
Executive a minimum base salary at a rate of not less than $ 290,000 for the
first twelve months of the term of this Agreement, $320,000 for the next twelve
months and $360,000 thereafter, in each case payable in substantially equal
installments in accordance with the executive payroll schedule in effect for
executive employees at a similar level from time to time at the Company’s
principal executive office. Executive's base salary shall be reviewed
by the Board at intervals not greater than twelve months to determine what
upward adjustment should be made, consideration being given to the scope of
Executive’s responsibilities, the performance of Executive’s duties and changes
in the cost of living during such interval. Upon such review,
Executive's base salary shall be increased by a percentage at least equal to the
percentage increase in the Consumer Price Index (All Urban Consumers - U.S. City
Average - All Items) published by the Bureau of Labor Statistics of the U.S.
Department of Labor since Executive’s last salary increase. In no
event shall Executive’s base salary be reduced without Executive's prior written
consent.
(b) Executive
shall also receive an auto allowance of $750.00 per month, payable on the first
of each month from the date of this Agreement.
(c) Executive
shall be entitled to receive 500,000 warrants, exercisable at Company’s
valuation at the time of issuance (or price per share or unit as reported by one
of the nationally recognized security exchanges), and a Cash Bonus per
each year of this Agreement paid each (date) equivalent to
50% of the prior twelve (12) month’s Base Salary (as defined above), contingent
on the Company reaching revenue, and gross profit targets per year as defined in
writing with the Board of Directors before the commencement of each fiscal year
“Performance Criteria”).
(d) During
the term of this Agreement, the Company shall reimburse Executive twice each
month for all reasonable travel and other business expenses incurred in the
performance of Executive’s duties hereunder, including, without limitation,
cellular telephone charges, provided that Executive submits receipts or other
expense records to the Company in accordance with the Company's general
reimbursement policy then in effect for executives of the Company.
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(e) Executive
shall have the right to immediately participate in any Stock Option programs
instituted by the Company.
1.4 Place of Performance.
In connection with Executive’s employment by the Company, Executive shall be
based at the Company’s principal executive offices, which are currently located
at its principal place of business at 0000 Xxxxxxxxxx Xxxx. #000,
Xxxx Xxxx Xxxxx, Xx. 00000 .
1.5 Benefits:
Perquisites. Executive shall be entitled to receive the benefits and,
perquisites provided by the Company from time to time for executives at the
highest level within the Company.
1.6 Employee Benefit
Plans
(a) During
the term of Executive's employment under this Agreement, the Company shall
maintain for the benefit of Executive employee benefit plans, including, but not
limited to, medical, hospitalization, disability, dental and life
insurance:
(i) Corporate Life
Insurance at not less than 5 times annual salary, with Executive’s
designation of sole Beneficiary (ies).
(ii)
100% Premium Paid
Family Medical, Disability and Dental Insurance, with
acceptable-to-Executive carriers.
Executive
shall also be entitled to participate in all other employee benefit plans
adopted during the Term of this Agreement by the Company.
(b) During
the term of Executive's employment, Executive shall be entitled to reasonable
vacations compatible with Executive’s position and responsibilities and with due
regard for the preservation of Executive’s health, aggregating not less than
three (3) weeks for the first calendar year and not less than four (4) weeks for
each calendar year thereafter, as well as paid holidays given by the Company to
its employees and five (5) personal days or such greater amount of paid vacation
and paid holidays as may be generally made available annually to other employees
of the company of comparable pay grade and/or position. In the event
that due to the press of business, Executive is unable to take Executive’s full
vacation during any calendar year, then the Company shall, at Executive's
request, pay Executive for such foregone vacation at the rate set forth in
Section 4(a) hereof; provided, however, that in lieu thereof, Executive, at
Executive’s option, may carry over such foregone vacation for one or more
successive years.
2. Developments and
Intellectual Property. Executive acknowledges that all developments,
including but not limited to trade secrets (including strategies, business plans
and customer lists), discoveries, improvements, ideas and writings which either
directly or indirectly relate to or may be useful in the business of the Company
(the "Developments") which Executive, either alone or in conjunction with any
other person or persons, shall conceive, make, develop, acquire or acquire
knowledge of during the Term are the sole and exclusive property of the Company.
Executive will cooperate with the Company's reasonable requests to obtain or
maintain rights or protections under United States or foreign law with respect
to all Developments. The Company will reimburse Executive for all reasonable
expenses incurred by Executive in order to comply with this provision of this
Agreement, regardless of when such expenses may be incurred.
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3. Confidential
Information. Executive acknowledges that by reason of Executive’s
employment by the Company, especially as a senior executive thereof, Executive
may now or will in the future have access to information of the Company that the
Company deems to be confidential and/or proprietary, including but not limited
to, information about the Company's technology, developments, target markets and
customer segments, strategies, plans, products and services, methods of
operation, employees, financial forecasts and results, sales, profits, expenses,
customer lists and the relationships between the Company or a subsidiary and its
customers, suppliers and others who have business dealings with it which is not
in the public domain (“Confidential Information”). Executive
covenants and agrees that during the Term and thereafter, without time or
geographic limitation, Executive will not disclose any such information to any
person without the prior written authorization of the Chief Executive Officer of
the Company or the Board. The obligations undertaken by Executive
pursuant to this Section 3 shall not apply to any confidential Information which
hereafter shall become published or otherwise generally available to the public,
except in consequence of a willful act or admission by Executive in
contradiction of the obligations set forth in this Section 3.
If
Executive’s employment ends for any reason other than Executive’s death,
Executive agrees to return promptly to Company all such information and any
other tangible product or document which has been produced or received by, or
otherwise submitted to Executive during Executive’s employment, and no copies
shall be retained by Executive or made available to any other person or entity.
This provision includes but is not limited to information printed or stored on
paper, magnetic tape, floppy disks, hard drives or other computer storage
media.
4. Non-Competition.
4.1 Covenant. Executive
and the Company acknowledge that Executive has a special, unique and
extraordinary expertise in the management and operations of businesses that are
involved in the restoration and remediation of commercial and residential real
properties damaged as a result of natural and/or other types of disasters
including but not limited to hurricanes, fires, floods, etc., and also has a
special, unique and extraordinary expertise in the marketing area, and that in
Executive’s employment with the Company, Executive will have continuing access
to information about the Company's technology, developments, target markets,
strategies, plans, product or service offerings, methods of operation, financial
and operating expectations and results, customer base, sales, marketing and
pricing strategies, most valued employees, and customer and supplier
relationships. In consideration of the benefits provided to Executive under this
Agreement, which Executive acknowledges are independent consideration, Executive
covenants and agrees that during the Restricted Period (as defined below),
Executive will not, directly or indirectly, without the Company's prior consent,
own, manage, operate, finance, join, control or participate in the ownership or
control of, or be associated as an officer, director, executive, partner or
principal, agent, representative, consultant or otherwise with, or use or permit
Executive’s name to be used in connection with, any enterprise that directly or
indirectly competes (as defined below) with the business of the Company in a
Restricted Area (as defined below). Executive acknowledges that so long as
Executive is able to use Executive’s skills for enterprises that do not directly
or indirectly compete with the business of the Company, Executive will not be
unreasonably limited in Executive’s ability to work.
4.2 Definitions.
4.2.1
"Competes" means the production, marketing, promotion, distribution or selling
of any product, capability, functionality or service of any person or entity
other than the Company which resembles or competes with a product or service
produced, marketed, promoted, distributed or sold by the Company (or to
Executive’s knowledge was under development by the Company) during the period of
Executive’s employment by the Company (whether under this Agreement or
otherwise). The parties agree that general employment or consulting
in the internet or computer fields that is not relying on internet filtering as
its primary business is not competition with this Agreement.
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4.2.2
"Restricted Area" means:
(a) The
Standard Metropolitan Statistical Area (or the equivalent) of any independent
contractor sales office, place of employment, business address or prior place of
business maintained by the Company
4.2.3
"Restricted Period" means:
(a) The
period of Executive’s employment by the Company (whether under this Agreement or
otherwise), if Executive’s employment is terminated because of Executive’s death
or Disability;
(b) The
period of Executive’s employment by the Company (whether under this Agreement or
otherwise) and 12 months thereafter, if Executive’s employment is terminated by
the Company for Cause or without Cause (and not by the Company following Change
of Control);
(c) The
period of Executive’s employment by the Company (whether under this Agreement or
otherwise) and, if this Agreement is still in effect at the Termination Date,
the number of months remaining in the Term at the Termination Date or 12 months,
whichever is longer (but in no event more than 24 months), if Executive
terminates Executive’s employment voluntarily (and not for Good Reason);
or
(d) The
period of Executive’s employment by the Company under this Agreement, if
Executive’s employment is terminated by Executive for Good Reason (unless this
Agreement ends or is terminated under Section 1.2 in which event the Restricted
Period shall be 12 months) or by the Company on any basis following Change of
Control.
4.2.4
Exception. This
Section shall not be construed to prohibit the ownership by Executive of not
more than 5% of any class of securities of any corporation which competes with
the Company and which has a class of securities registered pursuant to the
Exchange Act, as amended.
4.3 Savings Clause.
Executive and the Company specifically agree that this covenant not to compete
and its specific limitations constitute a reasonable covenant under the
circumstances and is supported by the consideration stated above, and further
agree that if, in the opinion of any court of competent jurisdiction, any of the
provisions of this Section 4 are ever determined by a court to exceed the time,
geographic scope or other limitations permitted by applicable law in any
jurisdiction, then such excessive provisions shall be deemed reduced, in such
jurisdiction only, to the maximum time, geographic scope or other limitation
permitted in such jurisdiction, and Executive agrees to the enforcement of the
remainder of the covenant as so amended.
5. Non-Solicitation.
Executive also covenants and agrees that during the Restricted Period set out in
Section 4.2.3, and without regard to the activity or activities in which
Executive is engaging, whether it is within or without the restoration and
remediation industry, Executive will not, directly or through employees, agents,
recruiters, independent contractors or others: (a) offer, promise, provide or
guarantee employment, work for compensation, business opportunity or other means
of financial gain, or solicit, invite an inquiry on employment or other
compensatory relationship, respond to such inquiry with a promise or grant of an
employment or other compensatory relationship, or otherwise seek to influence
any person to leave the Company or to undertake activities that would be adverse
to the Company's interests, where such person is employed by the Company or is
in an independent contractor relationship in which a majority of their time is
spent on Company-related activities, or is a supplier of services to the Company
who would thereafter become unavailable to provide such services to the Company,
or who has been in such an employment or independent contractor relationship
within the 12 months prior to Executive’s contract(s); or (b) solicit from,
convert, attempt to convert, divert business from, or attempt to divert business
from any of the Company's customers, customer accounts or locations, whether
such activity is intended to benefit Executive or any other person or entity,
and whether or not such activity is successful.
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6. Equitable Relief.
Executive specifically acknowledges that the restrictions contained in each of
Sections 2, 3, 4 and 5 of this Agreement are, in view of the nature of the
business of the Company, and Executive’s position with it, reasonable and
necessary to protect the legitimate interests of the Company, and that any
violation of the provisions of those Sections will result in irreparable injury
to the Company for which there would be no adequate remedy at law. Executive
also acknowledges that the Company shall be entitled to preliminary and
permanent injunctive relief, without the necessity of proving actual damages,
and to an equitable accounting of all earnings, profits and other benefits
arising from such violation. These, rights shall be cumulative and in addition
to any other rights or remedies to which the Company may be entitled. Executive
agrees to submit to the jurisdiction of any Florida court located in Palm Beach
County or the United States District Court for the Southern District of Florida
or of the state court or the federal court located in or presiding over the
county in which the Company has its corporate headquarters at the applicable
time in any action, suit or proceeding brought by the Company to enforce its
rights under Sections 2, 3, 4 and/or 5 of this Agreement, and that any separate
claim Executive has shall not constitute a defense to the enforcement of the
covenants and agreements in those paragraphs.
7. Company's Obligations upon
Termination. The sole obligations of the Company upon the termination of
Executive’s employment are as set forth in this Section 7. Any and all amounts
to be paid to Executive in connection with Executive’s termination shall be
paid, at Executive’s election, either: (a) in a lump sum promptly after the
Termination Date, and not more than 30 days thereafter, or (b) as salary
continuation for a period identified by the number of years' salary to be paid
as severance.
7.1 Termination upon Disability
or Death. If Executive’s employment with the Company ends by reason of
Executive’s death or Disability (as defined later in this Agreement), the
Company shall pay Executive all amounts earned or accrued through the
Termination Date but not paid as of the Termination Date,
including:
7.1.1
Base compensation;
7.1.2
Reimbursement for reasonable and necessary expenses incurred by Executive on
behalf of the Company during the Term;
7.1.3 Pay
for earned but unused vacation and floating holidays;
7.1.4 All
compensation Executive previously deferred (if any) to the extent not yet paid;
and
7.1.5 An
amount equal to Executive’s "Pro Rata Bonus". Executive’s Pro Rata Bonus shall
be determined by multiplying the "Bonus Amount" (as defined below) by a
fraction, the numerator of which is the number of days in the fiscal year
through the Termination Date and the denominator of which is 365. The term
"Bonus Amount" means the greater of: (i) Executive’s identified or standard
bonus for that part of the bonus year during which Executive was employed, using
the Performance Criteria and the actual performance metrics of the Company
applied to the time period until the Termination Date occurs, and only to that
period; or (ii) the bonus paid or payable to Executive with respect to the
fiscal year preceding the year in which the Termination Date occurs. No bonus
will cover any period after the date that Executive’s employment ends, or use
any Performance Criteria or actual performance metrics of the Company
established or achieved after that date.
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The
amounts described in Sections 7.1.1 through 7.1.4, inclusive, are called
elsewhere in this Agreement, collectively, the "Accrued
Compensation".
Except as
otherwise provided in this Section 7. 1, Executive’s entitlement to any other
compensation or benefits shall be determined in accordance with the Company's
employee benefit plans and other applicable programs and practices, including
any long term compensation benefits, then in effect.
7.2 Termination Without
Cause. If the Company terminates Executive’s employment without Cause (as
defined later in this Agreement), the Company shall pay Executive:
7.2.1 All
Accrued Compensation;
7.2.2 A
Pro Rata Bonus (as defined in Section 7.1.5 above); and
7.2.3
Severance ("Severance") equal to: (a) three times the sum of (i) the annual base
compensation Executive would have received for the entire fiscal year in which
the Termination Date occurs plus (ii) the Bonus Amount plus (iii) $100,000
(being the agreed cash equivalent of the annual value of the perquisites
provided to Executive under the Company's Executive Compensation Program), plus
(iv) the Company contributions which would have been made on Executive’s behalf
to the 401 (k) retirement savings plan (if any) maintained by the Company (b)
reduced by the present value (determined as provided in Section 28OG(d)(4) of
the Internal Revenue Code of 1986 as amended (the "Code")). The foregoing shall
be in lieu of any other amount of severance relating to salary or bonus
continuation to be received by Executive upon termination of Executive’s
employment under any severance plan, policy or arrangement of the
Company.
In addition, the Company shall continue
to provide to Executive and Executive’s family at the, Company's expense, for 36
months following the Termination Date, the life insurance, medical, dental,
vision and hospitalization benefits provided to Executive and Executive’s family
immediately prior to the Termination Date.
Except as otherwise provided in this
Section 7.2, Executive’s entitlement to any other compensation or benefits shall
be determined in accordance with the Company's employee benefit plans and other
applicable programs and practices then in effect.
7.3 Termination for Cause or
Voluntary Termination. If Executive’s employment is terminated for Cause
(as defined later in this Agreement), or if Executive voluntarily terminates
Executive’s employment other than for Good Reason, the Company shall
pay-Executive all Accrued Compensation. Except as otherwise provided in this
Section 7.3, Executive’s entitlement to any other compensation or benefits shall
be determined in accordance with the Company's employee benefit plans and other
applicable programs and practices then in effect.
7.4 Termination for Good Reason
or by Company Following Change of Control. If Executive terminates
Executive’s employment for Good Reason or the Company terminates Executive’s
employment following a Change of Control, the Company shall pay
Executive:
7.4.1 All
Accrued Compensation;
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7.4.2 A
Pro Rata Bonus; and
7.4.3
Severance equal to: (a) three times the sum of (i) the annual base compensation
Executive would have received for the entire fiscal year in which the
Termination Date occurs plus (ii) the Bonus Amount plus (iii) $100,000 (being
the agreed cash equivalent of the annual value of the perquisites provided to
Executive under the Company's Executive Compensation Program), plus (iv) the
Company contributions which would have been made on Executive’s behalf to the
401 (k) retirement savings plan maintained by the Company (if any) (b) reduced
by the present value (determined as provided in Section 280G(d)(4) of the Code).
The foregoing severance shall be in lieu of any other amount of severance
relating to salary or bonus continuation to be received by Executive upon
termination of Executive’s employment under any severance plan, policy or
arrangement of the Company.
In addition, the Company shall continue
to provide to Executive and Executive’s family at the Company's expense, for 36
months following the Termination Date, the life insurance, medical, dental,
vision and hospitalization benefits provided to Executive and Executive’s family
immediately prior to the Termination Date.
The Company shall reimburse Executive
for all reasonable legal fees and expenses which Executive may incur following a
Change of Control as a result of the Company's attempts to contest the validity
or enforceability of this Agreement or Executive’s attempts to obtain or enforce
any right or benefit provided to Executive under this Agreement, provided any
actions Executive has taken are determined to have been undertaken in good faith
and upon a reasonable basis.
Except as otherwise provided in this
Section 7.4, Executive’s entitlement to any other compensation or benefits shall
be determined in accordance with the Company's employee benefit plans and other
applicable programs and practices, including any long term compensation
benefits, then in effect.
8. Gross-Up Payment.
Notwithstanding anything else in this Agreement, if it is found that any or all
of the payments made to Executive, including but not limited to payments made by
the Company, or under any plan or arrangement maintained by the Company, to
Executive or for Executive’s benefit (other than any additional payments
required under this Section 8) (the "Payments") would be subject to the excise
tax imposed by Section 4999 of the Code or Executive incur any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, collectively the "Excise Tax"), then Executive is
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that, after Executive pays all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, Executive will retain an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. The
procedures for the calculation and contesting of any claim that such Excise Tax
is due are set forth in the Addendum.
The
following provisions shall apply to the calculation and procedures relating to
the Gross-Up Payment:
8.1 The
Company's independent auditors in the fiscal year in which the Change of Control
occurs (the "Accounting Firm") shall determine Whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment and the assumptions to
be used in making such determination. The Accounting Firm shall provide detailed
supporting calculations, together with a written opinion with respect to the
accuracy of such calculations, to Executive and the Company within 15 business
days of the receipt of a written request from either Executive or the Company.
If the Accounting Firm is serving (or has served Within the three years
preceding the Change in Control) as accountant or auditor for the person in
control of the Company following the Change of Control or any affiliate thereof,
Executive may appoint another nationally recognized accounting firm to make the
determinations required in connection with the Gross-Up Payment and the
substitute accounting firm shall then be referred to as the Accounting Firm).
The Company shall pay Executive any Gross-Up Payment, determined in accordance
with this Addendum, within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that Executive will not be
liable for any Excise Tax, it shall furnish Executive with a written opinion
that Executive’s failure to report the Excise Tax on the applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon
Executive and the Company.
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8.2. If
there is uncertainty about how Section 4999 is to be applied when the Accounting
Firm makes its initial determination, and as a result the Gross-Up Payment made
to Executive by the Company is determined (after following the procedures set
forth in this Addendum) to be less than it should have been made (an
"Underpayment"), and Executive is thereafter required to pay any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment and any such
Underpayment shall be promptly paid by the Company to Executive or for
Executive’s benefit.
8.3. Executive
shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the Company to pay Executive the Gross-Up
Payment. Executive’s notice shall be given as soon as practicable but no later
than ten business days after Executive has been informed in writing of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30 day period following the date on which
Executive gave such notice to the Company (or any shorter period, if the taxes
claimed are due sooner). If the Company notifies Executive in writing prior to
the expiration of such period that it desires to contest such claim, Executive
shall: (a) give the Company any information reasonably requested by it relating
to such claim, (b) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company, (c) cooperate with the Company
in good faith in order effectively to contest such claim, and (d) permit the
Company to participate in any proceedings relating to such claim.
8.4. The
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in connection
with the claim and may, at its sole option, either direct Executive to pay the
tax claimed and xxx for a refund or contest the claim in any permissible manner,
and Executive agrees to prosecute the contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts as the Company shall determine.
8.5. Any
extension by the Company of the statute of limitations relating to payment of
taxes for the taxable year for which such contested amounts claimed to be due
shall be limited solely to such contested amount. The Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable under this Agreement and Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
8.6. If
the Company directs Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to Executive, on an
interest-free basis, and shall indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance.
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8.7. If
Executive receives a refund of any amount advanced to Executive by the Company,
Executive will promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If
the Company advanced to Executive any amounts and a determination is made that
Executive will not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest such
denial of, refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and Executive will not be required to be
repay it. The amount of such advance shall offset the amount of the Gross-Up
Payment required to be paid.
8.8. The
Company shall pay all fees and expenses of the Accounting Firm. The Company
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties with respect thereto) imposed as
a result of such representation and
9. No Obligation to Mitigate
Damages. Executive is not required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment or
otherwise, and the amounts to be paid to Executive under Section 7 of this
Agreement shall not be reduced by any compensation Executive may earn from other
sources. However, if, during any period that Executive would otherwise be
entitled to receive any payments or benefits under this Agreement, Executive
breaches Executive’s obligations under Section 2, 3 or 4 of this Agreement, the
Company may immediately terminate any and all payments and the provision of
benefits (to the extent permitted by law and the terms of the benefit plans
maintained by the Company from time to time) hereunder.
10. Successor to Company.
The Company will require any successor or assignee to all or substantially all
of the business and/or assets of the Company, whether by merger, sale of assets
or otherwise, by agreement in form and substance reasonably satisfactory to
Executive, to assume and agree to perform the Company's obligations under this
Agreement in the same manner and to the same extent that the Company would be
required to perform them if such succession or assignment had not taken place.
Such agreement of assumption must be express, absolute and unconditional. If the
Company fails to obtain such an agreement within three business days prior to
the effective date of such succession or assignment, Executive shall be entitled
to terminate Executive’s employment under this Agreement for Good
Reason.
11. Survival.
Notwithstanding the expiration or termination of this Agreement, except as
otherwise specifically provided herein, Executive’s obligations under Sections
2, 3 and 4 of this Agreement and the obligations of the Company under this
Agreement shall survive and remain in full force and effect.
This Agreement shall inure to the
benefit of, and be enforceable by, Executive’s personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive dies while any amounts are still payable to
Executive, all such amounts, unless otherwise provided in this Agreement, shall
be paid in accordance with the terms of this Agreement to Executive’s
devisee(s), legatee(s) or other designee(s) or, if there is no such designee(s),
to Executive’s estate.
12. Definitions. Whenever
used in this Agreement, the following terms shall have the meanings
below:
12.1
"Cause" means:
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12. 1.1
Executive has willfully and continually failed to substantially perform
Executive’s duties (other than due to an incapacity resulting from physical or
mental illness or due to any actual or anticipated failure after Executive have
given a Notice of Termination for Good Reason) after a written demand for
substantial performance is delivered to Executive by the Chief Executive Officer
or the Board which specifically identifies the manner in which it is believed
that Executive has not substantially performed Executive’s duties;
or
12.1.2
Executive has willfully engaged in conduct which is demonstrably and materially
injurious to the Company (monetarily or otherwise), including but not limited to
a breach of fiduciary duty; or
12.1.3
Executive has willfully engaged in conduct which is illegal or in violation of
the Company's Code of Ethics; or
12.1.4
Executive has been convicted of a felony or a crime involving moral turpitude;
or
12.1.5
Executive has violated the provisions of Section 2 and/or Section 3 and/or
Section 4 and/or Section 5 of this Agreement
and, in
any of the events described in Sections 12.1.1 through 12.1.5 above, the Board
adopts a resolution or its minutes reflect a finding that in the good faith
opinion of the Board that Executive was culpable for the conduct set forth in
any of Sections 12.1.1 through 12.1.5 and specifying the particulars thereof in
detail. For the purposes of this Agreement, no act or failure to act on
Executive’s part shall be considered willful unless done, or omitted to be done,
by Executive not in good faith and without reasonable belief that Executive’s
action or omission was in the best interests of the Company. Any such resolution
of the Board must receive the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for the purpose of considering the issue, and Executive must receive reasonable
notice of the meeting and have an opportunity, with Executive’s counsel, to
present Executive’s case to the Board.
12.2
"Change of Control" Means:
12.2.1
The consummation of a consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which the
shares or units of the Company's common, voting equity are to be converted into
cash, securities or other property. For the purposes of this Agreement, a
consolidation or merger with a corporation which was a wholly-owned direct or
indirect subsidiary of the Company immediately before the consolidation or
merger is not a Change of Control; or
12.2.2
The sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the Company's assets;
or
12.2.3
The approval by the Company's shareowners of any plan or proposal for the
liquidation or dissolution of the Company; or
12.2.4
Any person, as that term is used in Section 13(d) and 14(d) of the Exchange Act
(other than the Company, any trustee or other fiduciary holding securities of
the Company under an employee benefit plan of the Company, a direct or indirect
wholly-owned subsidiary of the Company or any other company owned, directly or
indirectly, by the shareowners of the Company in substantially the same
proportions as their ownership of the Company's common, voting equity), is or
becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, of 30% or more of the Company's then
outstanding common, voting equity; or
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12.2.5
During any period of two consecutive years, individuals who at the beginning of
such period constitute the Board, including for this purpose any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in this Section 12.2.5) whose
election or nomination for election by the Company's shareowners was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period or whose election or nomination for
election was previously so approved (the "Incumbent Board"), cease for any
reason to constitute a majority of the Board.
12.3
"Disability" means:
12.3.1
Executive’s absence from Executive’s duties with the Company on a full-time
basis for 180 consecutive business days as a result of incapacity due to mental
or physical illness; or
12.3.2 A
physical or mental condition which prevents Executive from satisfactorily
performing Executive’s duties with the Company and such incapacity or condition
is determined to be total and permanent by a physician selected by the Company
or its insurers and reasonably acceptable to Executive and/or Executive’s legal
representative.
12.4
"Good Reason" means:
12.4.1
Without Executive’s express written consent, after a Change of Control, a
significant reduction in title and authority, or the assignment to Executive of
duties with the Company or with a person, as that term is used in Section 13(d)
and 14(d) of the Exchange Act, in control of the Company materially diminished
from the duties assigned to Executive immediately prior to a Change of Control;
or
12.4.2
Without Executive’s express written consent, after a Change of Control, any
reduction by the Company or any person, as that term is used in Section 13(d)
and 14(d) of the Exchange Act, in control of the Company in Executive’s annual
base compensation or annual bonus at Standard (or equivalent) rating from the
amounts of such compensation and/or bonus in effect immediately before and
during the fiscal year in which the Change of Control occurred (except that this
Section 12.4.2 shall not apply to across-the-board salary or bonus reductions
similarly affecting all Executive’s of the Company and all Executive’s of any
person in control of the Company); or
12.4.3
Without Executive’s express written consent, after a Change of Control, the
failure by the Company or any person, as that term is used in Section 13(d) and
14(d) of the Exchange Act, in, control of the Company to increase Executive’s
annual base compensation or annual bonus at Standard (or equivalent) rating at
the times and in comparable amounts as they are increased for similarly situated
senior executive officers of the Company and of any person, as that term is used
in Section 13(d) and 14(d) of the Exchange Act, in control of the Company;
or
12.4.4
Without Executive’s express written consent, after a Change of Control, the
failure by the Company or by any person, as that term is used in Section 13(d)
and 14(d) of the Exchange Act, in control of the Company to continue in effect
any benefit or incentive plan or arrangement (except any benefit plan or
arrangement which expires by its own terms then in effect upon the occurrence of
a Change of Control) in which Executive is participating at the time of the
Change of Control, unless a replacement plan or arrangement with at least
substantially similar terms is provided to Executive; or
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12.4.5
Without Executive’s express written consent, after a Change of Control, the
taking of any action by the Company or by any person, as that term is used in
Section 13(d) and 14(d) of the Exchange Act, in control of the Company which
would adversely affect Executive’s participation in or materially reduce
Executive’s benefits under any benefit plan or arrangement or deprive Executive
of any other material benefit (including any miscellaneous benefit which is not
represented and protected by a written plan document or trust) enjoyed by
Executive at the time of a Change of Control; or
12.4.6
Executive terminates Executive’s employment (other than because of Executive’s
death or Disability) by giving the Company a Notice of Termination with a
Termination Date not later than the first anniversary of the Change of Control;
or
12.4.7
Any failure by the Company to comply with any of its material obligations under
this Agreement, after Executive has given notice of such failure to the Company
and the Company has not cured such failure promptly after its receipt of such
notice.
13. Notice. All notices
and other communications required or permitted under this Agreement shall be in
writing and shall be deemed given when mailed by certified mail, return receipt
requested, or by nationally recognized overnight courier, receipt requested,
when addressed to Executive at Executive’s official business address when
employed by the Company or at Executive’s home address as reflected in the
Company's records from time to time and when addressed to the Company at its
corporate headquarters, to the attention of the Board, with a required copy to
the Company's highest ranking legal executive or officer.
14. Amendment and
Assignment. This Agreement cannot be changed, modified or terminated
except in writing. Executive may not assign Executive’s duties with the Company
to any other person. The Company may assign its obligations under this Agreement
to one of its principal subsidiaries for administrative purposes.
15. Severability. If any
provision of this Agreement or the application of this Agreement to anyone or
under any circumstances is determined by a court to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provisions or applications of this Agreement which can be effective
without the invalid or unenforceable provision or application, and such
invalidity or unenforceability shall not invalidate or render unenforceable such
provision in any other jurisdiction.
16. Remedies Cumulative; No
Waiver. No remedy conferred on Executive or on the Company by this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy shall be cumulative and shall be in addition to any other remedy given
under this Agreement or now or later existing at law or in equity. No delay or
omission by Executive or by the Company in exercising any right, remedy or power
under this Agreement or existing at law or inequity shall be construed as a
waiver of such right, remedy or power, and any such right, remedy or power may
be exercised by Executive or the Company from time to time and as often as is
expedient or necessary.
17. Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Florida, without regard to any applicable conflicts of
laws.
18. Counterparts. This
Agreement may be signed by Executive and on behalf of the Company in one or more
counterparts, each of which shall be one original but all of which together will
constitute one and the same instrument.
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19.Indemnification. To
the fullest extent permitted by applicable law, Executive shall be indemnified
and held harmless by the Company against any loss, cost or expense incurred by
Executive in connection with any claim, proceeding, suit or action, whether
civil, criminal, administrative, investigative or otherwise, including, without
limitation, counsel fees incurred in the defense thereof, any settlement thereof
and/or judgments rendered therein, as to which Executive may become involved by
reason of Executive’s employment by the Company, or by reason of any decision,
action or omission by or of Executive made in good faith in the course of
performance by Executive of Executive’s duties for the Company pursuant to
this Agreement. If so requested by Executive, the Company shall
advance (within two business days) funds to Executive to pay such
anticipated future expenses (such as retainer fees required by legal counsel and
cost advances or expert witness fees) and which may be reasonably necessary
although not yet earned by the recipient or yet paid by Executive
and/or any existing present such expenses and which have been paid by
Executive or on his behalf.
If this
Agreement correctly sets forth our agreement on its subject matter, please sign
and return to me the enclosed copy of this Agreement. Please keep the other copy
for Executive’s records.
IN
WITNESS WHEREOF, this Agreement has been executed by the Company and Executive
as of the date first written above.
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SURGE
SOLUTIONS GROUP, INC.
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By:
________________________________
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Name:
______________________________
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ACCEPTED:
XXXX XXXXXX
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By:
________________________________
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Name:
______________________________
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Title:
CEO/President
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