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EXHIBIT 10.10
CHANGE OF CONTROL
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is made and entered into as
of June 1, 1999 between International Trading & Manufacturing Corporation, a
Nevada corporation (the "COMPANY"), and Xxxxx Xxxxxxx (the "EXECUTIVE").
STATEMENT OF PURPOSE
The Company considers sound and vital management to be essential to
protecting and enhancing the best interests of the Company and its stockholders.
Although the Company knows of no change in control of the Company which is being
contemplated, the Company recognizes that a future change in control is always
possible and this possibility creates uncertainty and insecurity among members
of management. The Company believes that appropriate measures should be taken to
reinforce the dedication of key members of management and to provide them with a
greater sense of security so that they will be encouraged to remain in the
employ of the Company. The Company also believes that it is in the best
interests of the Company and its stockholders that appropriate measures be taken
to assure the neutrality of management in analyzing a potential change in
control and the options available to the Company and to preserve continuity in
corporate management and operations in the event of a change in control.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Company and the Executive hereby agree as follows:
1. Operation of Agreement.
(a) This Agreement shall be effective upon its execution, but anything
in this Agreement to the contrary notwithstanding, neither this Agreement nor
any of its provisions, except its renewal provision, shall be operative unless
and until there has been a Change in Control of the Company, as defined in
Subsection 1(c) below and subject to the provisions of Subsection 1(d) below
(regarding action by a majority of the Incumbent Board to modify or terminate
this Agreement up to 30 days following a Change in Control).
(b) If no Change in Control of the Company has occurred on or before the
close of business on December 31, 2001, this Agreement shall thereupon expire;
provided, however, the parties by their written mutual assent may extend such
date on which this Agreement shall expire.
(c) A "CHANGE IN CONTROL" shall be deemed to have occurred if any of the
following events shall have occurred:
(i) any corporation, other person or "Group" (as defined
below) becomes the "Beneficial Owner" (as defined below)
of more than 15% of the Company's outstanding Common
Stock; or
(ii) the Company's outstanding Common Stock (x) is held of
record by less than 300 persons or (y) is neither listed
on a national securities exchange nor authorized to be
quoted on an inter-dealer quotation system of a registered
national securities association.
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For purposes of this definition of Change in Control, the following
terms shall have the following meanings:
"BENEFICIAL OWNER" shall have the meaning which that term is
given in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "ACT").
"GROUP" shall mean persons who act in concert as described in
Section 14(d)(2) of the Act.
(d) Notwithstanding any provision of this Agreement to the contrary, at
any time up to thirty (30) days following the date of a Change in Control, the
Board of Directors may, in its sole and exclusive discretion with approval of at
least a majority of the Incumbent Board (as defined below), terminate this
Agreement or make any modifications to the terms and provisions of this
Agreement (including without limitation causing the Agreement not to apply with
respect to the given Change in Control or reducing the amount of benefits
described herein) without the consent of Executive. For purposes hereof,
"INCUMBENT BOARD" shall mean the group of individuals who, as of the date of
this Agreement, constitute the Board of Directors of the Company; provided,
however, that any individual who becomes a director subsequent to the date of
this Agreement and whose election, or whose nomination for election by the
Company's shareholders, to the Board of Directors was either (i) approved by a
vote of at least a majority of the directors then comprising the Incumbent Board
or (ii) recommended by a nominating committee comprised entirely of directors
who are then Incumbent Board members, shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Act), other actual
or threatened solicitation of proxies or consents or an actual or threatened
tender offer.
2. Employment; Period of Employment.
(a) The Company agrees to continue the Executive in its employ, and the
Executive hereby agrees to remain in the employ of the Company, for the period
set forth in Subsection 2(b) below (the "PERIOD OF EMPLOYMENT") in the position
and with the duties and responsibilities set forth in any Employment Agreement
in effect on the date of any Change in Control and Section 3 below, subject to
the other terms and conditions of this Agreement. If there is any conflict
between any terms of any such Employment Agreement and any terms hereof, the
terms of this Agreement shall prevail.
(b) The Period of Employment shall commence on the date of any Change in
Control and, subject only to the Executive's death or termination of employment
by the Company for "Cause" or "Disability" or by the Executive for "Good Reason"
(as defined in Section 4), shall continue until the close of business on the
later of (i) that date two years after the date on which the Change in Control
occurred or (ii) the expiration date under Subsection 1(b), taking into account
any extensions of such expiration date.
3. Position, Duties, and Responsibilities.
(a) During the Period of Employment, the Executive shall continue to
serve as an officer of the Company, either (i) with substantially the same
offices, titles, duties and responsibilities as the Executive had immediately
prior to the Change in Control or (ii) with a higher office with titles, duties
and responsibilities commensurate with such higher office.
(b) During the Period of Employment, the Executive shall devote his
full-time efforts during normal business hours to the business and affairs of
the Company, except reasonable vacation periods and
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periods of illness or incapacity, but nothing in this Agreement shall preclude
the Executive from devoting reasonable time to serving as a director or member
of a committee of one or more organizations (business, charitable, civic,
religious or otherwise) involving no conflict with the interests of the Company.
4. Termination Following Change in Control. If, after a Change in
Control of the Company has occurred, the Company shall terminate the Executive's
employment other than because of his death or for Disability or Cause or if the
Executive shall terminate his employment for Good Reason, the Executive shall be
entitled to all of the benefits and payments provided in Section 5 below,
subject to the provisions of Subsection 1(d) above.
(a) Disability. Termination based on "DISABILITY" shall mean termination
because of the Executive's absence due to physical or mental illness from his
duties with the Company on a full-time basis for 150 consecutive business days
unless within 30 days after Notice of Termination (as defined in Subsection 4(d)
below) is given following such absence, the Executive shall return to the
full-time performance of his duties.
(b) Cause. Termination shall be deemed to have been for "CAUSE" only if
termination shall have been the result of an act or acts of dishonesty on the
part of the Executive constituting a felony and resulting or intended to result
in substantial gain or personal enrichment at the expense of the Company, or if
there has been a willful and substantial breach by the Executive of the
provisions of Subsection 3(b) above, and such breach has caused substantial
injury to the Company. In no event shall the Executive's termination by the
Company be considered to have been for Cause if such termination took place as a
result of (i) the Executive's bad judgment or negligence or (ii) any act or
omission without intent of gaining a profit to which the Executive was not
legally entitled or (iii) any act or omission believed by the Executive in good
faith to have been in, or not opposed to, the interests of the Company.
(c) Good Reason. "GOOD REASON" shall mean
(i) the assignment to the Executive of any duties inconsistent
with his duties described in Subsection 3(a) above or any
removal of the Executive from or any failure to re-elect
the Executive to his positions described in Subsection
3(a) above, except in connection with promotions to higher
office;
(ii) a reduction by the Company in the Executive's base salary
as in effect immediately prior to the Change in Control;
(iii) the failure by the Company to maintain and to continue the
Executive's participation in the Company's benefit or
compensation plans as in effect immediately prior to the
Change in Control (including but not limited to bonus and
incentive compensation plans, stock option, bonus, award
and purchase plans, life insurance, medical, health and
accident, and disability plans); or the taking of any
action by the Company which would adversely affect the
Executive's participation in or reduce the Executive's
benefits under any of such plans or deprive the Executive
of any fringe benefit he enjoyed immediately prior to the
Change in Control; or the failure to provide the Executive
with the number of paid vacation days to which he was
entitled under the Company's normal vacation policy in
effect immediately prior to the Change in Control;
(iv) the relocation of the Executive's office to anywhere other
than a location within 100 miles of Del Mar, California or
the Company's requiring the Executive to be based anywhere
other than within 100 miles of Del Mar,
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California (or such other location as shall be the
location of the Executive's office immediately prior to
the Change in Control) except for required travel on the
Company's business to an extent consistent with the
Executive's business travel obligations immediately prior
to the Change in Control; or
(v) the failure by the Company to obtain the assumption of
this Agreement by any successor as contemplated in Section
7 below.
(d) Any termination of the Executive's employment, unless because of
death, shall be communicated by written Notice of Termination to the other
party. In the event of termination of employment by the Company for Cause or
Disability or by the Executive for Good Reason, the Notice of Termination shall
state the specific ground for termination (Cause, Disability or Good Reason) and
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for the specified ground of termination.
(e) "TERMINATION DATE" shall mean (i) if the Executive's employment is
terminated due to death, the Executive's date of death, (ii) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
performance of his duties on a full-time basis during such thirty day period),
(iii) if the Executive's employment is terminated for Cause, the date specified
in the Notice of Termination, and (iv) if the Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given.
5. Benefits.
(a) If the Company shall terminate the Executive's employment other than
because of his death or for Disability or Cause, or if the Executive shall
terminate his employment for Good Reason, then the Company shall pay to the
Executive and provide him, his dependents, beneficiaries and estate, with the
following;
(i) The Company shall pay the Executive his full base salary
through the Termination Date at the higher of the rate in
effect when Notice of Termination is given or the rate in
effect one year prior to such date, plus credit for any
vacation earned but not taken. The Executive's full base
salary shall be paid at the times normally scheduled for
payment of the salaries of key members of management;
provided, however, that all of such salary shall be paid
not later than Termination Date.
(ii) Subject to clause (iii) below, the Company shall pay the
Executive a lump sum payment equal to ten (10) times the
highest annual compensation (including base salary,
incentive compensation and monetary bonus or similar
award) paid or payable to the Executive by the Company for
any of the three fiscal years ended immediately prior to
the Termination Date. The Company shall gross-up the lump
sum payment such that the amount of the payment is net of
all federal, state, local, excise and other taxes and
withholdings, including without limitation, any "golden
parachute" taxes payable by the Executive. This lump sum
payment shall be due and payable on the 10th business day
after the Termination Date and bear interest from the
Termination Date until paid at then current prime rate of
interest published by Citibank, N.A.
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(iii) The Company shall pay all legal fees and expenses which
the Executive may incur as a result of the Company's
contesting the validity or enforceability of this
Agreement, or as a result of the Company's failure to make
timely payment of any sum due to the Executive hereunder.
(b) The Executive shall not be required to mitigate the benefits or
amounts of any payment provided for in this Section 5 by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
this Section 5 be reduced by any compensation earned by the Executive as a
result of employment by another employer after the Date of Termination, or
otherwise.
6. Options. Subject to the provisions of Subsection 1(d) above, all of
the Executive's outstanding stock options shall become exercisable in full on
the date of a Change in Control of the Company, whether or not the stock options
were exercisable on such date.
7. Successors; Binding Agreement.
(a) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. As used in this
Agreement, "COMPANY" shall mean the company as defined in the preamble to this
Agreement and any successor to its business or assets which executes and
delivers the agreement provided for in this Paragraph 7 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
8. Notices.
For the purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United Stated registered or certified mail,
return receipt requested, postage prepaid. All notices to the Company will be
effective if delivered to ITM Corporation, 0000 Xx Xxxxxx Xxxx, Xxxxx 000, Xxx
Xxxxx, XX 00000, attention: Chief Executive Officer. All notices to Executive
will be effective if delivered to Executive's last residential address provided
to the Company by Executive, or to such other address as any party may have
furnished to the other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal laws of the
State of California.
10. 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 the Executive and the Company. No waiver by either party of
any breach of this Agreement shall be deemed a waiver of any prior or subsequent
breach. No agreements or representations, oral or otherwise, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
11. Separability. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
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12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same Agreement.
13. Withholding of Taxes. The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
14. Non-assignability. 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, except as
provided in Section 7 above. 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 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.
15. Arbitration; Fees.
(a) Any disputes between the Company and the Executive
concerning this Agreement will be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, by a panel
of three arbitrators, one selected by the Executive, one selected by the Company
and the other selected by the two so chosen. Judgment upon the arbitration award
rendered by the arbitrators shall be binding and conclusive and may be entered
in any court having jurisdiction thereof. The costs of the arbitration shall be
borne by the Company.
(b) In the event that the Executive receives an arbitration
award pursuant to subsection (a) above, the Company shall, within thirty (30)
days after the presentation of proper receipts or invoices therefor, reimburse
the Executive the reasonable fees and disbursements of counsel incurred in
connection of any amounts awarded the Executive pursuant thereto.
16. Termination of Pre-Existing Employment Agreement. The Company and
the Executive hereby acknowledge and agree that this Agreement replaces any
employment agreement previously entered into between the Company and the
Executive, and that any rights granted under any such pre-existing employment
agreement are hereby terminated and of no further force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above set forth.
INTERNATIONAL TRADING & MANUFACTURING CORPORATION
BY: /s/ XXXXXX XXXXX
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Xxxxxx Xxxxx
PRESIDENT
EXECUTIVE
BY: /s/ XXXXX XXXXXXX
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Xxxxx Xxxxxxx
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