EMPLOYMENT AGREEMENT
THIS
AGREEMENT (the “Agreement”) effective the first day of December 2001 entered
into by and between XXXXXXX
XXXX (“Executive”)
and VERTICAL
COMPUTER SYSTEMS, INC.,
a
Delaware corporation
(“the
Company”) or any of its affiliates, with its principal place of business at 0000
Xxxxxxxx Xxxx. Xxx Xxxxxxx, Xxxxxxxxxx 00000. This Agreement may be unilaterally
transferred to an affiliate of the Company, without economic detriment to the
Employee.
BACKGROUND
A. The
Company has been established for the purpose of e-commerce development and
related Internet business operations;
B. The
Company desires to employ Executive as Chief Executive Officer and President
and
Executive desires to be so employed and;
NOW,
THEREFORE, the parties desire to memorialize herein the terms and conditions
of
Executive’s employment. In consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the parties hereby
acknowledge the receipt and sufficiency of which hereto, the parties agree
as
follows:
1. Position.
Executive
shall serve as Chief Executive Officer and President upon the terms set forth
in
this Agreement. Executive shall have the responsibilities inherent in this
position and shall report to the Board of Directors and Executive
shall perform any other duties reasonably required by Board of
Directors.
2. Term
of Employment.
Subject
to the provisions of this Agreement, the term of Executive’s employment under
this Agreement shall commence on December 1, 2001 and shall continue up to
December31, 2004 (the “Initial Term”). This Agreement may be renewed for an
additional two (2) year term at Executive’s option and the Board’s approval.
However, the Executive shall have the option to renew the agreement for two
years provided the Company achieves a minimum profitability of $5,000,000 in
2002 with a 50% minimum increase in net profit in 2003 and 2004 respectively
upon the good faith concurrence of the Board in the achievement of the
performance criteria or validation of "profitability" by independent auditors.
Unless either party elects to terminate this Agreement at the end of the initial
or any renewal term by giving the other party written notice of such election
at
least ninety (90) days before the expiration of the then current term, this
Agreement shall be deemed to have been renewed for an additional term of two
(2
year commencing on the day after the expiration of the then current term. Either
party may elect not to renew this Agreement with or without cause, in which
case
this Section 2 shall govern Executive’s termination, and not Section 5. Upon
expiration of this Agreement after notice of non-renewal, Company shall provide
Executive all compensation and benefits to which Executive is entitled through
the date of termination and thereafter Company’s obligation hereunder shall
cease.
Page
1 of
13
Notwithstanding
what is contained in this agreement, the Executive will sign and abide by the
employee handbook and all other company’s policies.
3. Compensation
and Bonus.
3.1 Salary.
The
Company shall pay Executive an annual base salary of THREE HUNDRED THOUSAND
DOLLARS ($300,000.00) during the term of Executive’s employment, payable in
accordance with the Company’s semi-monthly payroll disbursement cycle (“Base
Compensation”). Executive’s Base Compensation shall be reviewed and increased
each year during the term of Executive’s employment, provided that the Company’s
performance criteria are achieved as set forth by the Board each year;
and
3.2 Bonus.
Executive shall receive an annual bonus One Hundred Twenty (120) days after
the
end of the Company’s fiscal year from a pool equal to five (5) percent of the
Company taxable income from the federal tax return filed before depreciation.
Executive’s share of the bonus pool is equal to the percentage of his annual
base compensation to the total combined annual base compensation of all
executives of Company in bonus pool;
3.3 Warrants.
Executive
will receive 20,000,000 warrants at a strike price of $0.10 and 600,000
non-dilutable warrants at a strike price of $0.10 piggyback registration rights
in the form attached. The Executive will be vested monthly in equal amounts
over
three (3) years, so long as Executive remains employed by the Company or as
otherwise set forth herein in this Agreement.
3.4 Service
with the Company. During
the term of this Agreement, Executive shall perform such reasonable employment
duties, commensurate with Executive’s position, as the Board of Directors,
shall, from time to time, assign to Executive;
3.5 Performance
of Duties.
Executive shall serve the Company faithfully and to the best of his ability
and
devote full business time, attention, skill and effort exclusively to the
performance of the duties described in this Agreement. Executive shall comply
with all policies, procedures and budgets established by the Company in the
performance of his duties and responsibilities. During
the Period of Employment, (i) Executive’s working time, energy, skill and best
efforts shall be devoted to the performance of Executive’s duties hereunder in a
manner which will faithfully and diligently further the business and interests
of Company; and (ii) Executive shall not accept any other employment, or engage,
directly or indirectly, in any other business, commercial, or professional
activity (whether or not providing compensation) that is or may be competitive
with Company or any Affiliate that might create a conflict of interest with
Company or any Affiliate or that otherwise might interfere with the business
of
Company or any Affiliate. Executive may engage in charitable, civic, fraternal,
professional and trade association activities that do not interfere materially
with Executive’s obligations to Company;
Page
2 of
13
3.6 Vacation
and Sick Leave.
Executive will be entitled to Four (4) weeks of vacation and sick leave equal
to
six (6) days per year. Vacation time and sick leave shall not be accumulated
after the end of any year. Sick leave shall accumulate at the rate of one half
day per month;
3.7 Expenses.
The
Company shall reimburse Executive for all expenses incurred in connection with
his duties on behalf of the Company, provided that Executive shall keep, and
present to the Company, records and receipts relating to reimbursable expenses
incurred by her. Such records and receipts shall be maintained and presented
in
a format, and with such regularity, as the Company reasonably may require in
order to substantiate the Company’s right to claim income tax deductions for
such expenses. Without limiting the generality of the foregoing, Executive
shall
be entitled to reimbursement for any business-related travel, business-related
entertainment, whether at his residence or otherwise, or other costs and
customary business expenses reasonably incident to the performance of his duties
on behalf of the Company. Executive will be entitled to reimbursement of all
reasonable, customary business expenses incurred by his in the performance
of
his duties.
3.8 Benefits.
Executive will be entitled to participate in the employee benefit plans or
programs of the Company, including medical and life insurance and profit
sharing, to the fullest extent possible, subject to the rules and regulations
applicable hereto and to standard eligibility and vesting requirements of any
coverage and shall be furnished with other services and perquisites appropriate
to his position. Without limiting the generality of the foregoing, Executive
shall be entitled to the following benefits:
(a) Comprehensive
medical insurance for Executive, his spouse, and his dependent children with
TWENTY
PERCENT (20%)
deductibles;
(b) Dental
insurance for Executive, Executive’s spouse, and his dependent
children;
(c) Group
term life insurance with death benefits equal to one hundred percent (100%)
of
base salary;
(d) Annual
physical examination;
(e) Long-term
disability.
Page
3 of
13
4.
Termination.
4.1 Due
to
Disability
(a) If
Executive becomes unable to perform the duties specified hereunder due to
partial or total disability or incapacity resulting from a mental or physical
illness, injury or any other cause, Company will continue the payment of
Executive’s base salary at its then current rate for a period of TWENTY-SIX (26)
weeks following the date Executive is first unable to perform such duties due
to
such disability or incapacity. Thereafter, Company shall have no obligation
for
base salary, bonus or other compensation payments to Executive during the
continuance of such disability or incapacity. Company will continue to provide
benefits to Executive so long as Executive remains employed;
(b) If
Executive is unable to perform the duties specified hereunder due to partial
or
total disability or incapacity resulting from a mental or physical illness,
injury or any other cause for a period of TEN (10) consecutive weeks or for a
cumulative period of SEVENTY (70) business days during any FIVE (5) month period
(“Disability”), then, to the extent permitted by law, Company shall have the
right to terminate this Agreement thereafter, in which event Company shall
have
no further obligations or liabilities hereunder after the date of such
termination except Executive will be deemed disabled and eligible for the
payments outlined in paragraph 4.1 (a). EXECUTIVE REPRESENTS THAT TO THE BEST
OF
HIS KNOWLEDGE HE HAS NO MEDICAL CONDITION THAT COULD CAUSE PARTIAL OR TOTAL
DISABILITY THAT WOULD RENDER HER UNABLE TO PERFORM THE DUTIES SPECIFIED IN
THIS
AGREEMENT OTHERWISE THE BENEFITS IN PARAGRAPH 4.1(a) SHALL BE NULL AND
VOID.
4.2 Due
to
Death.
If
Executive dies during the period of employment, Executive’s employment with
Company shall terminate as of the end of the calendar month in which the death
occurs. Company shall have no obligation to Executive or Executive’s estate for
Base Compensation or other form of compensation or benefit other than amounts
accrued through the date of Executive’s death, except as otherwise required by
law or by benefit plans provided at Company expense.
In
the
event of the termination of Executive’s employment due to Executive’s death or
Disability, Executive or Executive’s legal representatives, as the case may be,
shall be entitled to:
(a) In
the
case of death, unpaid Base Compensation earned or accrued through Executive’s
date of death and continued Base Compensation at a rate in effect at the time
of
death, for
a
period of (3) three months after which Executive’s death occurs, or the end of
the employment term, which ever is the lesser amount.
(b) Any
performance or special incentive bonus earned but not yet paid;
Page
4 of
13
(c) A
pro
rata performance bonus for the year in which employment terminates due to death
or Disability based on the performance of Company for the year during which
such
termination occurs or, if performance results are not available, based on the
performance bonus paid to Executive for the prior year; and
(d) Any
other
compensation and benefits to which Executive or Executive’s legal
representatives may be entitled under applicable plans, programs and agreements
of Company to the extent permitted under the terms thereof, including, without
limitation, life insurance as provided in Section 3.8 above.
4.3 For
Cause.
Company
may terminate Executive’s employment relationship with Company for
"cause" by action of at least a majority of the Company's Board of Directors,
at
a meeting duly called and held upon at least 30 days written notice to the
Executive specifying the particulars of the action or inaction alleged to
constitute "cause" and at which meeting Executive and his counsel were entitled
to be present and given adequate opportunity to be heard..
(a) For
purposes of this Agreement, termination of employment of Executive by the
Company for “cause” means termination for the following reasons: (i) frequent
and unjustifiable absenteeism, other than solely by reason of his illness or
physical or mental disability; (ii) failing to follow the reasonable
instructions of the Chairman; (iii) proven dishonesty materially injurious
to
the Company or to its business, operations, assets or condition (an “Adverse
Effect”); or gross violation of Company policy or procedure after being warned,
notified, or Executive’s acknowledged, gross or willful misconduct, or willful
neglect to act, which misconduct or neglect is committed or omitted by Executive
in bad faith and had an Adverse Effect; or (iv) a failure by Executive to comply
with any material provision of this Agreement, which failure is not cured (if
capable of cure) within 30 days after receipt of written notice of such
non-compliance by Executive. Action or inaction by Executive shall not be
considered "willful" unless done or omitted by him intentionally or not in
good
faith and without reasonable belief that his action or inaction was in the
best
interest of the Company, and shall not include failure to act by reason of
total
or partial incapacity due to physical or mental illness.
(b)
Company shall have no obligation to Executive for Base Compensation or other
form of compensation or benefits, except as otherwise required by law, other
than (i) amounts accrued through the date of termination, and (ii) reimbursement
of appropriately documented expenses incurred by Executive before the
termination of employment, to the extent that Executive would have been entitled
to such reimbursement but for the termination of employment.
Page
5 of
13
4.4 Termination
of Employment by the Executive
(a)
The
Executive may terminate his employment for Good Reason and receive the payments
and benefits specified in Section 4.4 (a)(iii)(B)). For purposes of this
Agreement, “Good Reason” will exist if any one or more of the following
occur:
(i) Failure
by the Company to honor any of its obligations under this Agreement, including,
without limitation, its obligations under Sections 1 and 3.4 (Employment
Capacity and Duties), Section 3.5 (Executive Performance Covenants), Sections
3.1, 3.2, 3.3 (Compensation), Section 3.7 (Reimbursement of Expenses). Sections
3.6 and 3.8 (Employee Benefits, Vacations), Section 11 (Indemnification)
and Section 12.3 (Successors and Assigns); or
(ii) Any
purported termination by the Company of the Executive’s employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 4.3 above and, for purposes of this Agreement, no such purported
termination shall be effective.
(iii) (A) If
there
is a Change in Control of the Company (as defined below) and the employment
of
the Executive is concurrently or subsequently terminated (i) by the Company
without Cause, (ii) by service of a Notice of Termination or (iii) by
the resignation of the Employee because he has reasonably determined in good
faith that his titles, authorities, responsibilities, salary, bonus
opportunities or benefits have been materially diminished, or that a material
adverse change in his working conditions has occurred or the Company has
breached this Agreement, then Executive shall be entitled to the “Benefits”
described in (B). For the purpose of this Agreement, a Change in Control of
the
Company has occurred when: (x) any person (defined for the purposes of this
Section to mean any person within the meaning of Section 13(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”)), other than the Company,
or an employee benefit plan established by the Board of Directors of the
Company, acquires, directly or indirectly, the beneficial ownership (determined
under Rule 13d-3 of the regulations promulgated by the Securities and Exchange
Commission under Section 13(d) of the Exchange Act) of securities issued by
the
Company having twenty percent (20%) or more of the voting power of all of the
voting securities issued by the Company in the election of directors at the
meeting of the holders of voting securities to be held for such purpose; or
(y) a majority of the directors elected at any meeting of the holders of
voting securities of the Company are persons who were not nominated for such
election by the Board of Directors of the Company or a duly constituted
committee of the Board of Directors of the Company having authority in such
matters; or (z) the Company merges or consolidates with or transfers
substantially all of its assets to another person.
Page
6 of
13
(B) Benefits.
If during the term of this Agreement a Change of Control” occurs (as defined
above) then the Executive shall be entitled to receive the following: (i) salary
and vacation accrued through the date of the Change in Control plus an amount
equal to three years of Executive’s salary then in effect, payable immediately
upon Change in Control, (ii) an amount equal to three times target bonus for
the
fiscal year in which the Change in Control occurs (as well as any unpaid bonus
from the prior fiscal year), all payable immediately upon Change in Control,
(iii) acceleration in full of vesting of all outstanding stock options, Tarps
and other equity arrangements subject to vesting and held by Executive (and
in
this regard , all such options and other exercisable rights held by Executive
shall remain exercisable one year following the date of the Change in Control),
(iv) (A) continuation of group health and insurance benefits at the Company’s
cost pursuant to the Company’s standard programs as in effect from time to time
(or at the Company’s election substantially similar benefits as in effect at the
Termination Date (if applicable), through a third party carrier) for executive,
his spouse and any children, for three years following date of Change in Control
(even if executive ceases employment), and (B) thereafter, to the extent COBRA
shall be applicable, continuation of health benefits for such persons at
Executive’s cost, for a period of 18 months or such longer period as may be
applicable under the Company’s policies then in effect, provided the Executive
makes the appropriate election and payments, and (v) no other compensation
,
severance or other benefits.
(b) Additional
Payments by the Company. If
it is
determined (as hereafter provided) 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 pursuant to or by reason of any other agreement, policy, plan,
program, or arrangement, including without limitation any stock option, stocck
appreciation right or similar right or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
“Payment “), would be subject to the excise tax imposed by section 4999 of the
Code (or any successor provisions thereto) or to any similar tax imposed by
state or local law , or any interest or penalties with respect to such excise
tax (such tax or taxes, together with any such interest and penalties, are
hereafter collectively referred to as the “Excise Tax”), then Executive will be
entitled to receive an additional payment or payments (a “Gross-Up Payment”) in
an amount such that, after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments
(c) The
Executive shall have the right voluntarily to terminate his employment other
than for Good Reason prior to the Scheduled Employment Termination Date, and
if
the Executive shall so terminate his employment, he shall be entitled only
to
payment of the amounts which would be payable under Section 4.3 had he been
terminated for Cause.
Page
7 of
13
4.5 Termination
Obligations.
(a) All
tangible Company Property shall be returned promptly to Company upon termination
of the Period of Employment;
(b) All
benefits to which Executive is otherwise entitled shall cease upon Executive’s
termination, unless explicitly continued either under this Agreement or under
any specific written policy or benefit plan of Company;
(c) Upon
termination of the Period of Employment, Executive shall be deemed to have
resigned from all offices and directorships then held with Company or any
Affiliate.
(d) Executive’s
obligations under this Section 4.5 on Termination Obligations, Section 5 on
Confidentiality and Non-Disclosure, Section 7 on Inventions, and Section 8
on
Arbitration shall survive the termination of the Period of Employment and the
expiration or termination of this Agreement; and
(e) Following
any termination of the Period of Employment, Executive shall cooperate fully
with Company in all matters relating to completing pending work on behalf of
Company and the orderly transfer of work to other employees of Company.
Executive shall also cooperate in the defense of any action brought by any
third
party against Company that relates in any way to Executive’s acts or omissions
while employed by Company.
5.
Confidentiality
and Non-Disclosure.
Executive
agrees to abide by the terms of the Confidentiality and Non-Disclosure Agreement
appended hereto as Exhibit A and to comply with such confidentiality,
non-disclosure, and proprietary information policies now in effect by the
Company or as may be established in the future.
6.
Company
Property.
All
products, records, designs, patents, plans, data, manuals, brochures, memoranda,
devices, lists and other property delivered to Executive by or on behalf of
the
Company, all confidential information including, but not limited to, lists
of
potential customers, prices, and similar confidential materials or information
respecting the business affairs of the Company, such as hardware manufacturers,
software developers, networks, strategic partners, business practices regarding
technology and schedules, legal actions and personnel information, and all
records compiled by Executive which pertain to the business of the Company,
and
all rights, title and interest now existing or that may exist in the future
in
and to any intellectual property rights created by Executive for the Company,
in
performing his duties during the term of this Agreement shall be and remain
the
property of the Company. Executive agrees to execute and deliver at a future
date any further documents that the Company, determines may be necessary or
desirable to perfect the Company’s ownership in any intellectual or other
property rights.
Page
8 of
13
7. Inventions.
7.1
Subject
to the limitations of California Labor
Code§
2870,
a
copy of which is attached as Exhibit B, “Inventions” shall mean any and all
writings, original works or authorship, inventions, ideas, trademarks, service
marks, patents, copyrights, know-how, improvements, processes, designs,
formulas, discoveries, technology, computer hardware or software, procedures
and/or techniques which Executive may make, conceive, discover, reduce to
practice or develop, either solely or jointly with any other person or persons,
at any time during the Period of Employment, whether or not during working
hours
and whether or not at the request or upon the suggestion of Company, which
relate to or are useful in connection with any business now or hereafter carried
on or contemplated by Company, including developments or expansions of its
present fields of operations;
7.2
Executive
shall make full disclosure to Company of all Inventions and shall do everything
necessary or desirable to vest the absolute title thereto in Company. Executive
shall write and prepare all specifications and procedures regarding such
inventions, improvements, processes, procedures and techniques and otherwise
aid
and assist Company so that Company can prepare and present applications for
copyright or Letters Patent therefor and can secure such copyright or Letters
Patent wherever possible, as well as reissues, renewals, and extensions thereof,
and can obtain the record title to such copyright or patents so that Company
shall be the sole and absolute owner thereof in all countries in which it may
desire to have copyright or patent protection. Executive shall not be entitled
to any additional or special compensation or reimbursement regarding any
Invention;
7.3
All
Inventions shall be the sole and exclusive property of Company. Executive agrees
to, and hereby does, assign to Company all of Executive’s right, title, and
interest (throughout the United States and in all foreign countries), free
and
clear of all liens and encumbrances, in and to each Invention.
7.4
Continuing
Obligations.
The
rights and obligations of Executive and Company set forth in this Section shall
survive the termination of Executive’s employment and the expiration of this
Agreement.
8.
Arbitration.
8.1 Arbitrable
Claims.
To the
fullest extent permitted by law, all disputes between Executive (and his
attorneys, successors and assigns) and Company (and its Affiliates,
shareholders, directors, officers, employees, agents, successors, attorneys
and
assigns) of any kind whatsoever, including, without limitation, all disputes
arising under this Agreement (“Arbitrable Claims”), shall be resolved by
arbitration. All persons and entities specified in the preceding sentence (other
than Company and Executive) shall be considered third-party beneficiaries of
the
rights and obligations created by this Section on Arbitration. Arbitrable Claims
shall include, but are not limited to, contract (express or implied) and tort
claims of all kinds, as well as all claims based on any federal, state or local
law, statute or regulation, excepting only claims under applicable workers’
compensation law and unemployment insurance claims. By way of example and not
in
limitation of the foregoing, Arbitrable Claims shall include any claims arising
under Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Americans with Disabilities Act and the California Fair
Employment and Housing Act;
Page
9 of
13
8.2 Procedure.
Arbitration of Arbitrable Claims shall be in accordance with the National Rules
for the Resolution of Employment Disputes of the American Arbitration
Association, as amended (“AAA Employment Rules”), as augmented in this
Agreement. Arbitration shall be initiated as provided by the AAA Employment
Rules, although the written notice to the other party initiating arbitration
shall also include a statement of the claim(s) asserted and the facts upon
which
the claim(s) are based. Arbitration shall be final and binding upon the parties
and shall be the exclusive remedy for all Arbitrable Claims. Either party may
bring an action in court to compel arbitration under this Agreement and to
enforce an arbitration award. Otherwise, neither party shall initiate or
prosecute any lawsuit or administrative action in any way related to any
Arbitrable Claim. Notwithstanding the foregoing, either party may, at its
option, seek injunctive relief pursuant to section 1281.8 of the California
Code
of Civil Procedure. All arbitration hearings under this Agreement shall be
conducted in Los Angeles, California. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY
MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS, INCLUDING, WITHOUT
LIMITATION, ANY RIGHT TO TRIAL BY JURY AS TO THE MAKING, EXISTENCE, VALIDITY
OR
ENFORCEABILITY OF THE AGREEMENT TO ARBITRATE;
8.3 Arbitrator
Selection and Authority.
A
single arbitrator shall decide all disputes involving Arbitrable Claims. The
arbitrator shall be selected by mutual agreement of the parties within thirty
(30) days of the effective date of the notice initiating the arbitration. If
the
parties cannot agree on an arbitrator, then the complaining party shall notify
the AAA and request selection of an arbitrator in accordance with the AAA
Employment Rules. The arbitrator shall have authority to award equitable relief,
damages, costs and fees to the same extent that, but not greater than, a court
would have. The fees of the arbitrator shall be split between both parties
equally, unless this would render this Section of Arbitration unenforceable,
in
which case the arbitrator shall apportion said fees so as to preserve
enforceability. The arbitrator shall have exclusive authority to resolve all
Arbitrable Claims, including, but not limited to, whether any particular claim
is arbitrable and whether all or any part of this Agreement is void or
unenforceable;
8.4 Continuing
Obligations.
The
rights and obligations of Executive and Company set forth in this Section on
Arbitration shall survive the termination of Executive’s employment and the
expiration of this Agreement.
Page
10
of 13
9. Prior
Agreements; Conflicts of Interest. Executive
represents to Company: (a) that there are no restrictions, agreements or
understandings, oral or written, to which Executive is a party or by which
Executive is bound that prevent or make unlawful Executive’s execution or
performance of this Agreement; (b) none of the information supplied by Executive
to Company or any representative of Company or placement agency in connection
with Executive’s employment by Company misstated a material fact or omitted
information necessary to make the information supplied not materially
misleading; and (c) Executive does not have any business or other relationship
that creates a conflict between the interests of Executive and the
Company.
10. Non-Competition.
During
the term of this Agreement Executive shall not:
10.1
Start employment with, offer consulting services to, or otherwise become
involved in, advise or participate on behalf of any other company, entity or
individual, in the field of the Company; and
10.2
Individually or through any agent, for herself or on behalf of any other person
or entity (i) solicit employees of the Company, to entice them to leave the
Company; or (ii) solicit or induce and third party now or at any time during
the
term of this Agreement who is providing services to the Company, through
license, contract, partnership, or otherwise to terminate or reduce their
relationships with the Company.
11. Indemnification.
As an
employee, officer and director of the Company, the Executive shall be
indemnified against all liabilities, damages, fines, costs and expenses by
the
Company in accordance with the indemnification provisions of the Company’s
Certificate of Incorporation as in effect on the date hereof, and otherwise
to
the fullest extent to which employees, officers and directors of a corporation
organized under the laws of Delaware may be indemnified pursuant to Delaware
General Corporations Law, as the same may be amended from time to time (or
any
subsequent statute of similar tenor and effect), subject to the terms and
conditions of such statute.
12. Binding
Agreement; Successors.
12.1
This
Agreement shall be binding upon and shall inure to the benefit of the Company
and its successors and assigns. The Company shall 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, by agreement
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. For purposes of this Agreement, “ Company” shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid.
12.2
This
Agreement shall be binding upon and shall inure to the benefit of the
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, beneficiaries, devises and legatees. If the
Executive should die while any amounts are payable to him hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
the
terms of this Agreement to the Executive’s devisee. Legatee, beneficiary or
other designee or, if there be no such designee, to the Executive’s
estate.
Page
11
of 13
12.3 Except
as
otherwise set forth in this Section 12, this Agreement is personal in nature
and
neither of the parties hereto shall, without the consent of the other, assign,
or transfer this Agreement or any rights or obligations hereunder. Without
limiting the foregoing, the Executive’s right to receive payments hereunder
shall not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than a transfer by his will or trust
or by
the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this paragraph the company shall have no
liability to pay any amount so attempted to be assigned or
transferred.
13.
Miscellaneous
Provisions.
13.1 Authority. Each
party hereto represents and warrants that it has full power and authority to
enter into this Agreement and to perform this Agreement in accordance with
its
terms.
13.2 Governing
Law.
This
Agreement shall be construed, interpreted and enforced in accordance with the
laws of the State of California.
13.3 Captions.
The
captions of the sections of this Agreement are for convenience of reference
only
and in no way define, limit or affect the scope or substance of any section
of
this Agreement.
13.4
Severability.
In the
event that any provision of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired
thereby.
13.5 Amendment.
This
Agreement may be amended only in writing executed by the parties hereto.
13.6 Attorney’s
Fees.
In the
event of a dispute the prevailing party shall be entitled to be reimbursed
for
its legal fees by the other party.
13.7 Special
Costs.
Notwithstanding Section 12.6, if a dispute arises regarding a termination of
the
Executive or the interpretation or enforcement of this Agreement, subsequent
to
a Change in Control or for Good Reason, all the reasonable legal fees and
expenses incurred by the Executive and any arbitration costs in contesting
any
such termination or obtaining or enforcing all or part of any right or benefit
provided for in this Agreement or in otherwise pursuing all or part of his
claim
will be paid by the Company, unless prohibited by law. The Company further
agrees to pay pre-judgment interest on any money judgment obtained by Executive
calculated at the prime interest rate reported in the Wall Street Journal in
effect from time to time from the date that payment to him should have been
made
under this Agreement.
Page
12
of 13
13.8 Finality
of Agreement.
This
Agreement, when executed by the parties, supersedes all other agreements of
the
parties with respect to the matters discussed.
IN
WITNESS WHEREOF, the parties have executed this Agreement effective as of the
day and year first set forth above.
| “Executive” | ||
|
Xxxxxxx Xxxx |
||
| |
|
|
| “Vertical Computer Systems, Inc.” | ||
| By: | ||
|
Xxxxxxx
Xxxxx - Director & Secretary
|
||
Page
13
of 13
