Exhibit 10.7
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EMPLOYMENT AND NON-COMPETITION AGREEMENT
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XXXXX X. XXXXXXXXX
This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "Agreement"), dated as
of August 14, 2000, is between Stronghold Technologies, Inc., a New Jersey
corporation (the "Employer") and Xxxxx X. Xxxxxxxxx (the "Employee").
WHEREAS, the Employer desires to retain the Employee as its Vice President
- Sales and Marketing, and the Employee desires to serve as such on the terms
and conditions set forth below;
NOW, THEREFORE, it is hereby agreed as follows:
ss.1 EMPLOYMENT. The Employer hereby employs the Employee, and the Employee
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hereby accepts employment, upon the terms and subject to the conditions
hereinafter set forth.
ss.2. DUTIES. The Employee shall be employed as Vice President - Sales and
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Marketing of the Employer. The Employee shall report directly to the Employer's
Chief Executive Officer. The Employee shall also serve, without additional
compensation, as a member of the Employer's Management Committee, which shall
not be a committee of the Board of Directors. The Employee agrees to devote his
full time and best efforts to the performance of his duties to the Employer. If
elected as such, the Employee shall also serve as a director of the Employer,
and the Employee shall be entitled to receive such compensation, if any, paid
generally to directors of the Employer. The Employee's office shall be located
in the New York metropolitan area during the term of this Agreement.
ss.3. TERM. The initial term of employment of the Employee hereunder shall
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commence on the date hereof (the "Commencement Date") and shall continue through
August 13, 2004 (the "Initial Term") unless earlier terminated pursuant to ss.6.
The term may be extended for additional one year terms upon the written consent
of the parties hereto.
ss.4. COMPENSATION AND BENEFITS. Until the termination of the Employee's
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employment hereunder, in consideration for the services of the Employee
hereunder, the Employer shall compensate the Employee as follows:
(a) Base Salary.
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(i) The Employer shall pay the Employee, in accordance with the
Employer's then current payroll practices, a base salary of
$15,000 per month ($180,000 per annum) during the first year of
the term of this Agreement and $16,000 per month ($192,000 per
annum) during the second year of the term of this Agreement (the
"Base Salary"), payable on the last business day of each month.
(ii) Thereafter, for each succeeding year during the term of this
Agreement, Base salary shall be increased annually by a
percentage equal to the percentage by which the Consumers Price
Index for Urban Wage Borrowers and Clerical Workers: Xxx Xxxx,
X.X. - Xxxxxxxxxxxx Xxx Xxxxxx (0000-00 equals 100), as published
by the Bureau of Labor Statistics of the United States Department
of Labor, shall have increased over the preceding year.
(iii)The adjustment provided for in ss.4(a)(ii) shall be made as soon
after August 14 of each year as possible, but in no event later
than fifteen (15) days after the date upon which the Bureau of
Labor publishes its consumer price index statistics for the month
of July. Any portion of an increase in the Employee's
compensation retroactively due shall be payable immediately upon
determination of the adjustment. If publication of the Consumer
Price Index is discontinued, the parties hereto shall accept
comparable statistics on the cost of living for the New York,
N.Y. - Northeastern New Jersey area as computed and published by
an agency of the United States or by a responsible financial
periodical of recognized authority then to be selected by the
parties.
(iv) The Board of Directors shall consider additional increments in
Base Salary from time to time, but such consideration shall occur
at least once annually, based on the Employer's financial
condition, levels of sales and profitability, and the performance
of the Employee.
(b) Incentive Compensation.
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(i) In addition to Base Salary, the Employee shall also receive,
subject to the limitations set forth below, a commission equal to
one (1 %) percent of "Net Sales", as defined below, recognized
by the Employer during each year of the term of this Agreement
commencing with the first year of the term of this Agreement. For
purposes of this Agreement the term "Net Sales" shall mean the
amount equal to the Employer's gross sales of products and
services, computed in accordance with generally accepted
accounting principles consistently applied, less duties,
shipping, sales and use taxes and other taxes payable by the
customer or client, insurance payable by the customer or client,
allowances, discounts, credits and returns. Net Sales shall not
include any sales of the Employer's assets not in the normal
course of its business. Incentive compensation shall be paid
monthly not later than thirty days following receipt of payment
from the client. Any appropriate adjustments to Net Sales to be
made following payment of Incentive Compensation shall be applied
against the succeeding months'
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Incentive Compensation, or in the event of termination of the
Employment of the Employee, within thirty (30) days following the
date of the event requiring such adjustment.
(ii) Notwithstanding anything in ss.4(b)(i) above to the contrary,
Incentive Compensation shall not exceed $20,000 for the first
year of the term of this Agreement and shall not exceed $50,000
during any year during the balance of the term of this Agreement.
(c) Stock Options.
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(i) Upon the later of the commencement of Employee's employment
hereunder or the adoption of the Stronghold Technologies, Inc.
2000 Stock Option Plan (the "Option Plan"), Employee will be
granted options under the Option Plan to purchase, at an exercise
price equal to the fair market value of the shares (estimated to
be less than $1 per share), 45,000 shares of the Company's common
stock. Such options shall vest and become exercisable at any time
in the next 10 years from date of grant, provided that Employee
has remained continuously employed hereunder through the date of
vesting (or as otherwise provided herein), and the Employer
achieves the required Net Sales during the respective fiscal
years (deemed to be 1/1 to 12/31 for purposes of this section) of
the Employer set forth below. Notwithstanding the foregoing, in
the event of the termination of employment of the Employee, all
unvested Options shall immediately expire and be of no further
force or effect (unless otherwise expressly provided herein), and
any Options which have previously vested in accordance with the
table set forth below or become vested in accordance with
ss.4 (c)(ii) hereof shall be exercisable by the Employee during
the ninety (90) day period following such termination of
employment (or in the event of the death or disability, as
defined below, of the Employee, during the one year period
following death or disability), after which time they shall
expire and be of no further force or effect:
Options Vesting
Fiscal Year Net Sales Achieved and Exercisable
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2001 $2,000,000 10,000
2002 $5,000,000 10,000
$10,000,000 15,000
2003 $10,000,000 10,000
$20,000,000 15,000
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$30,000,000 or more 20,000
The number of shares which vest in any year will not be prorated.
Thus, for example, if in fiscal year 2001, $1,000,000 of Net
Sales are achieved, no options will vest. If in fiscal year 2002,
$9,000,000 of Net Sales are achieved, only 10,000 options will
vest and become exercisable in that year. Options not exercisable
with respect to any fiscal year due to failure of the Employer to
recognize the required Net Sales as set forth above shall be
automatically terminated and be of no further force or effect.
(ii) In the event of a "Change of Control" of the Company, as defined
below, one half of all of Employee's theretofore unvested and
unexercisable stock options (including, but not limited to, the
stock options set forth in this Section 4) shall become vested
and exercisable immediately. In the event that, within one year
following such Change of Control, either Employee's employment is
terminated without Cause or Employee resigns his employment, all
of Employee's theretofore unvested and unexercisable stock
options (including, but not limited to, the stock options set
forth in this Section 4) shall become vested and exercisable
immediately.
(iii) Except as specifically provided herein, all stock options granted
to Employee hereunder or otherwise shall be subject to the terms
of the Option Plan. The Option Plan shall permit, and all options
granted hereunder shall provide:
(A) that they are "incentive stock options" ("ISO") within the
meaning of Section 422 of the Internal Revenue Code, as
amended, to the maximum extent permitted by law, unless
Employee agrees otherwise;
(B) that, if vested, they are exercisable for a period of at
least ten years from the date of grant, absent termination
of employment, and except for certain change of control
transactions in which both the exercise and the termination
of options may be accelerated;
(C) that they may be exercised by surrender of a number of
shares of the Company's stock with a fair market value equal
to the exercise price at the time of exercise, or that the
Company will provide reasonable financing (i.e. permitting
the Employee to execute a promissory note (such note to be
secured by a pledge of the stock) for the full exercise
price (provided, that nothing in this subparagraph (c) shall
require any terms that would cause any portion of the
options be treated as "variable options" under generally
accepted accounting principles or otherwise cause the
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Company to recognize expense for accounting purposes upon
the vesting or exercise of options so long as the options
can be structured to avoid such effect);
(D) to the extent permitted by applicable law (including Section
422 of the Internal Revenue Code and related rules with
respect to incentive stock options governed thereby), that
the Employee may designate a beneficiary in the case of
death, and a legal representative in the case of disability,
with full power to exercise the options in as favorable a
manner as if the Employee had held the options, and that the
Employee shall be permitted to transfer vested and
exercisable options to members of his immediate family or
trusts or similar entities of which he or they are the
beneficiaries;
(E) The Option Plan shall give the ISO holder the ability to
specifically designate his beneficiary; if the option holder
is disabled, the legal representative of the option holder
could exercise the option on his behalf, and exercise of the
ISO by the ISO holder's estate would also be permitted;
(F) The Option Plan shall provide that all granted but unvested
and unexercisable ISO's shall become vested and exercisable
immediately upon death or disability, with the term of the
disability to be defined by the Board in accordance with
allowable periods applicable to ISO's;
(iv) Change of Control. For purposes of this Agreement, a "Change of
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Control" shall occur on the first date on which (A) any person,
entity, or group of persons or entities acting in concert,
becomes a "beneficial owner" (as defined in Rule 13d3 under the
Securities Exchange Act of 1934), directly or indirectly, of
securities of the Company representing more than 50% of the
voting power of the then outstanding securities of the Company
with respect to the election of directors (other than (1)
Xxxxxxxxxxx X. Xxxxx, members of his family, or entities
controlled by or beneficially owned by him or them, or (2) an
entity as to which the stockholders of the Company immediately
prior to such entity becoming a beneficial owner would own at
least 50% of the voting power of the then outstanding securities
of such entity with respect to the election of directors); (B)
the Company's Board of Directors approves or recommends for
approval by stockholders any transaction that would result in the
condition set forth in clause (A); (C) the Company's Board of
Directors approves or recommends for approval by stockholders any
transaction in the nature of a merger, transfer of substantially
all the Company's assets, or liquidation, where the stockholders
of the Company immediately prior to such transaction, based on
their prior stock ownership in the Company,
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would own less than 50% of the voting power with respect to the
election of directors of the securities of an entity owning or
operating, directly or indirectly, a substantial portion of the
Company's pre-transaction assets.
(c) Additional Compensation. The Employer's Board of Directors (or
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applicable committee thereof) shall at all time retain discretion to
award Employee compensation in excess of the amounts set forth in this
Agreement.
(d) Vacation. The Employee shall be entitled to four (4) weeks vacation
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each 12 month period. Any vacation shall be taken at the reasonable
and mutual convenience of the Employer and the Employee.
(e) Insurance; Other Benefits. The Employee shall be entitled to
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participate under any group accident, life and health insurance plans,
pension and 401 (k) plans and option plans which in the future may be
maintained by the Employer generally for its employees and/or for its
full-time senior executive officers, as such employment benefits may
be modified from time to time by the Employer. The amount and extent
of such coverage, if any, shall be subject to the discretion of the
Board. During the period prior to the effective time of any health
insurance plan adopted by the Employer and the Employee's effective
date of participation therein, the Employer shall reimburse the
Employee for his out-of-pocket costs in maintaining individual health
insurance for the Employee and his spouse and children under COBRA.
The Employee will provide the Employer with appropriate proof of
payment.
(f) Car Allowance. In connection with the Employee's employment, the
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Employee shall from time to time be required to travel by automobile
on the Employer's business. Accordingly, the Employer shall provide to
the Employee an automobile allowance of $500 per month during the
first year of the term of this Agreement, $550 per month during the
second year of the term of this Agreement, and $600 per month
thereafter, to be expended by the Employee on monthly lease payments,
all maintenance, service and insurance charges. The above car
allowance shall not include gasoline and oil charges, which shall be
reimbursed in accordance with ss.5 hereof.
(g) Securities Registration Rights. If the Employer hereafter submits for
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registration under the federal securities laws any initial public
offering of its equity securities, or that of any of its affiliated
companies or entities or subsidiaries, the Employee shall have the
right to sell his shares of the Company's equity securities owned by
him in said offering in such amounts and at such times as the managing
underwriter shall, in its sole discretion, permit. If the Managing
Underwriter limits the aggregate number of shares that the Employer's
shareholders may sell in such offering, each shareholder shall be
permitted to sell an amount equal to his then percentage ownership of
the Class or Series of the Company's shares being offered, excluding
from such calculation the number of shares held by shareholders not
selling in such offering.
ss.5. EXPENSES. In addition to the foregoing, the Employer shall pay or
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reimburse the Employee for all reasonable out-of-pocket expenses properly
incurred by the Employee in the performance of his duties hereunder and such
authorized pre-incorporation expenses paid by the Employee on behalf of the
Employer upon presentation of appropriate vouchers therefor.
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ss.6. TERMINATION. The Employee's employment hereunder shall commence on
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the Commencement Date and continue until the expiration of the Initial Term, and
any extension of such term pursuant to ss.3, except that the employment of the
Employee hereunder shall earlier terminate:
(a) Death or Disability. Upon the death of the Employee during the
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term of his employment hereunder or, at the option of the Employer, in
the event of the Employee's disability extending for a period of
ninety (90) days, whether or not continuous, within any period of 180
days. For purposes of this Agreement, "disability" shall mean the
inability of the Employee, due to physical or mental illness, injury
or incapacity, to perform his regular full time duties on behalf of
the Employer.
(b) For Cause. For "Cause" immediately upon written notice by the
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Employer to the Employee; provided, that the Employer may not
terminate the Employee for Cause unless (i) such termination has been
approved by the affirmative vote or consent of a majority of the
directors on the Board (excluding the Employee if he is a director)
prior to the time of such termination; and (ii) not later than 30 days
prior to the effective date of such termination, the Employee shall be
given the opportunity to appear before the Board to address the
grounds for such termination. For purposes of this Agreement, a
termination shall be for Cause only if the Board shall reasonably
determine that any one or more of the following has occurred:
(i) acceptance of any unlawful bribe or kickback with respect to
the Employer's business; or
(ii) the Employee shall have been convicted by a court of
competent jurisdiction of, or pleaded guilty or nolo
contendere to, any felony which the Board reasonably
determines in its discretion would materially affect or
impair in any way (A) the Employee's ability to perform his
duties hereunder or (B) the reputation or operation of the
Employer's business or (C) the relationship between the
Employer and its suppliers, customers or employees; or
(iii)the Employee shall have committed a breach of any of the
covenants, terms and provisions of ss.9 hereof or a material
breach of any of the covenants, terms and provisions of ss.
8 hereof; or
(iv) the Employee shall have materially breached any one or more
of the provisions of this Agreement (excluding ss.ss.8 and 9
hereof) and such breach shall have continued for a period of
thirty (30) days after written notice to the Employee
specifying such breach in reasonable detail; or
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(v) the Employee shall have refused, after explicit written
notice, to obey any lawful resolution of or direction by the
Board which is consistent with this Agreement and his duties
hereunder.
(c) Termination Without Cause. Termination without cause may occur
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upon thirty (30) days' written notice by the Employer to the
Employee, or upon thirty (30) written notice from the Employee to
the Employer. For purposes of this Agreement, the Employee shall
be deemed to have been terminated without Cause if the
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termination is (i) initiated by the Employer and not based
substantially on any reason included in the above definition of
Cause or (ii) if the Employee terminates his employment hereunder
for Good Reason upon ten (10) days' written notice to the
Employer. The Employee shall be entitled to terminate his
employment for Good Reason if any of the following occur:
(i) the Employee is assigned duties which are substantially
inconsistent with the position or responsibilities
associated with his position as Vice President of the
Employer and the Employer has not revoked such assignment
within twenty (20) days written notice from the Employee
objecting to such duties;
(ii) if the Employer shall merge or consolidate into or transfer
substantially all of its assets to, or become a majority
owned subsidiary of, another corporation, and the Employee
is not then elected and/or appointed to a position of
responsibility in any such surviving, new or purchasing
corporation substantially equivalent to that provided in
ss.2 hereof; and
(iii) The Employer violates a material provision of this
Agreement and such violation is not remedied within thirty
(30) days' written notice from the Employee specifying such
violation in detail.
(iv) The Employer insists upon the Employee relocating Employee's
primary office to a place other than the New York
metropolitan area.
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(d) Rights and Remedies on Termination.
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(i) If the Employer shall terminate the Employee's employment
hereunder pursuant to ss.6(c) hereof, then (A) the Employee
shall be entitled to receive, as severance pay, payment, in
accordance with the Employer's then current payroll
practices, of his Base Salary in effect at the time of his
termination for a period of one (1) month, if termination
occurs during the first six months of the initial term of
this Agreement, and the lesser of (x) Base Salary payable
for the balance of the term of this Agreement or (y) two
months Base Salary, if termination occurs during the second
six months during the initial term of this Agreement. For
any termination pursuant to Section 6(c) hereof by the
Employer occurring after the first full year of employment
hereunder, the Employee shall receive as severance pay the
lesser of (x) Base Salary payable for the balance of the
then existing term of this Agreement or (y) two months' Base
Salary, plus one week's Base Salary for each full or part
year worked after the first year of employment hereunder.
Employee shall also be paid his allocable share, as a
shareholder of the Employer, of any positive balance of the
Accumulated Adjustments Account ("AAA" account for S
Corporation purposes) - i.e., his allocable share of any
amounts taxable to S Corporation shareholders, but not fully
distributed to such shareholders -- within 60 days after the
end of the fiscal year in which the Employee's employment
was terminated.
(ii) Except as otherwise set forth in this ss.6(d)or otherwise
required by law, the Employee shall not be entitled to any
severance or other compensation after termination other than
payment of any portion of his Base Salary through the
effective date of his termination, accrued Incentive
Compensation, pro rated based on the effective date of
termination, and any expense reimbursements under ss.5
hereof for expenses incurred in the performance of his
duties prior to termination. Options, which as of the
effective date of termination of employment have not become
vested and exercisable in accordance with ss.4(c)(ii) hereof
shall automatically terminate and be of no further force or
effect.
(iii) Valuation Date for Shares Upon Termination of Employment.
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It is acknowledged that Employee shall have a major role in
preparing and implementing the business plan of Employer and
in developing certain of Employer's intellectual property
the value of which may not be realized in the event of
Employee's early termination of employment. Accordingly, in
the event of the Employer's termination of the Employee's
employment without Cause or the Employee's termination of
his Employment with Good Cause, as defined above, or upon
the death or Total Disability of the Employee, as defined in
the Stockholders Agreement, by and among the Employer and
its Stockholders, the date for appraisal of the Sales Price
of Employee's Stock (i.e., its fair market value) set forth
in section 10 of the
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said Shareholders Agreement, shall, at the option of the
Employee or his personal representative exercisable within
one hundred twenty (120) days after such termination of
employment, death or Total Disability, as the case may be,
be determined as of (i) the end of the fiscal quarter
immediately preceding the exercise of such option, or (ii)
the end of the last completed quarter-annual period
occurring within the two (2) years after such termination of
employment or death or Total Disability, and the Closing
Date with respect to a purchase of the Employee's Stock
shall be within thirty (30) days following completion of
such appraisal; provided, however, that in the case of death
or Total Disability, the Closing shall be within 180 days
following completion of the appraisal. If the Employee or
his personal representative fails to exercise the above
option within the said 120-day period, he shall be deemed to
have elected to have the fair market value determined as of
the end of the fiscal quarter immediately preceding the said
120-day period.
ss.7. INVENTIONS; ASSIGNMENT. All rights to discoveries, inventions,
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improvements, and innovations (including all data and records pertaining
thereto) related to the Employer's business, whether or not patentable,
copyrightable, registerable as a trademark, or reduced to writing, that the
Employee may discover, invent or originate during the term of his employment
hereunder or during his previous employment by or on behalf of the Employer as
an employee or consultant, either alone or with others and during working hours
or by the use of the facilities of the Employer ("Inventions"), shall be the
exclusive property of the Employer. The Employee shall promptly disclose all
Inventions to the Employer, shall execute at the request of the Employer any
assignments or other documents the Employer may deem necessary to protect or
perfect its right therein, and shall assist the Employer, at the Employer's
expense, in obtaining, defending and enforcing the Employer's rights therein.
The Employee hereby appoints the Employer as his attorney-in-fact to execute on
his behalf any assignments or other documents deemed necessary by the Employer
to protect or perfect its right to any Inventions.
ss.8. CONFIDENTIAL INFORMATION. The Employee recognizes and acknowledges
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that certain assets of the Employer, including without limitation information
regarding customers, pricing policies, methods of operation, business plans,
business strategies, proprietary computer programs or any part thereof,
including without limitation, source or object code, sales, products, profits,
costs, markets, key personnel, formulae, product applications, technical
processes, and trade secrets (hereinafter called "Confidential Information") are
valuable, special, and unique assets of the Employer and its affiliates. The
Employee shall not, during or after his term of employment, disclose any part of
the Confidential Information to any person, firm, corporation, association, or
any other entity for any reason or purpose whatsoever, directly or indirectly,
except as may be required pursuant to his employment hereunder, provided, that
Confidential Information shall in no event include (a) Confidential Information
which was generally available to the public at the time of disclosure by the
Employer or (b) Confidential Information which becomes publicly available other
than as a consequence of the breach of the Employee of his confidentiality
obligations hereunder. In the event of the termination of his employment,
whether voluntary or involuntary and whether by the Employer or the Employee,
the Employee shall deliver to the Employer all documents and data pertaining to
the
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Confidential information and shall not take with him any documents data of any
kind or any reproductions (in whole or in part) or extracts of any items
relating to the Confidential Information.
ss.9. NON-COMPETITION. During the term of the Employee's employment
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hereunder and for a period of one (1) year thereafter or for a period of one
year after any termination of the Employee's employment hereunder, the Employee
will not (a) engage, directly or indirectly, alone or as a shareholder (other
than as a holder of less than five percent (5%) of the common stock of any
publicly traded corporation), partner, officer, member, director, employee,
consultant or otherwise of any other business or organization that is engaged or
becomes engaged in the development and/or sale of software and/or the provision
of services which (in the specific markets penetrated by the Employer or as to
which, at or prior to the time of expiration of the initial or any extended term
of this Agreement or at or prior to termination of the Employee's employment, it
has taken significant steps to penetrate)(i) directly compete with the software
sold by the Employer and/or with the services provided by the Employer or (ii)
compete with any other business activity of the Employer (collectively referred
to as "Competitive Business"); provided, however, that the Employee shall not be
prevented from being employed by or consulting with any division, subsidiary or
affiliate of any company engaged in a Competitive Business so long as the
division, subsidiary or affiliate of such company does not directly or
indirectly engage in any Competitive Business or (b) solicit or encourage any
officer, employee or consultant of the Employer to leave its employ for
alternative employment. If during the said one-year period the Employee is
employed or retained by another company, he shall, at least twenty one (21) days
prior to commencement of employment or other duties for such company notify the
Employer as to the name, address and telephone number of such company and the
name of his new supervisor. The Employer shall have the option to take
reasonable steps to verify that such employment shall not violate the provisions
of this Section 9. The Employee will continue to be bound by the provisions of
this ss.9 until their expiration, and shall not be entitled to any compensation
from the Employer with respect thereto except as may be provided in ss.6(d)
hereof; provided, however, that this ss.9 shall not apply if the Employer shall
default in the payment of any amount due to the Employee pursuant to ss.6(d)
hereof and shall have failed to cure such default within twenty (20) days after
written notice from the Employee specifying such default. If at any time the
provisions of this ss.9 shall be determined to be invalid or unenforceable, by
reason of being vague or unreasonable as to area, duration or scope of activity,
this ss.9 shall be considered divisible and shall become and be immediately
amended to only such area, duration and scope of activity as shall be determined
to be reasonable and enforceable by the court or other body having jurisdiction
over the matter; and the Employee agrees that this ss.9 as so amended shall be
valid and binding as though any invalid or unenforceable provision had not been
included herein.
ss.10. INDEMNIFICATION. The Employer shall indemnify the Employee in his
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capacity as an officer and/or director of the Employer to the full extent
provided in N.J.S.A.14A.3-5 without reference to its laws or principles
regarding conflicts of law. In connection with any dispute or proceeding arising
under this Agreement the other party shall promptly reimburse the prevailing or
substantially prevailing party for all costs, including, without limitation, the
reasonable attorneys' fees of any attorney or firm of attorneys incurred by the
prevailing or substantially prevailing party in any such dispute or proceeding
arising under this Agreement. Any termination of the Employee's services, or of
this Agreement, shall have no effect on the continuing operation of this
Section.
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ss.11. DISPUTE RESOLUTION PROCEDURE.
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This Section governs any dispute, disagreement, claim, or controversy
between the parties arising out of or relating to this Agreement or the breach
thereof, other than those arising under ss.7, 8 and 9 hereof (the "Disputed
Matter"). All Disputed Matters shall be submitted to the following dispute
resolution process:
(a) Mediation. Either party may, upon written notice elect to utilize
a non-binding resolution procedure whereby each presents its case
at a hearing before an acceptable neutral adviser. The hearing
will occur no more than ten (10) days after a party serves
written notice to use mediation. Each party may be represented at
the hearing by attorneys. If the matter cannot be resolved at
such hearing by the parties, the neutral adviser may be asked to
assist the parties in evaluating the strengths and weaknesses of
each party's position on the merits of the disputed matter.
Thereafter, the parties shall meet and try again to resolve the
matter. If the matter cannot be resolved at such meeting, the
parties' only recourse is binding arbitration as provided for in
Subsection 11 (b) below, and the mediation proceedings will have
been without prejudice to the legal position of either party. The
parties shall each bear their respective costs incurred in
connection with the mediation procedure, except that they shall
share equally the fees and expenses of the neutral adviser and
the costs of the facility for the hearing. Both parties agree to
use their best efforts to mutually agree on the use of a facility
for which no charge will be made.
(b) (i) Arbitration. If the Disputed Matter is not submitted to
mediation or, if submitted, cannot be resolved, then either party may
within ten (10) days after the completion of mediation (or at any time if
the matter is not submitted to mediation), as appropriate, upon written
notice, submit the Disputed Matter to formal binding arbitration in
accordance with the provisions set forth in Arbitration Provisions set
forth below.
(ii) Neither party will institute any action or proceeding
against the other party in any court concerning any Disputed matter other
than the entry of judgment upon a decision or an award rendered by the
arbitrator pursuant to this Section 11.
(iii) Any dispute between the parties shall be settled by final
and binding arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association (the "AAA"); provided, however,
that if such Rules are inconsistent with any provision of this Agreement,
this Agreement shall control.
(iv) Any such arbitration shall be conducted in the City of
Newark, New Jersey at a place and time mutually agreed upon by the parties
or, failing mutual agreement, selected by the arbitrator. The arbitrator
shall apply New Jersey law in connection with the arbitration of any
Disputed Matter without regard to its principles of conflicts of law.
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(v) Any arbitration shall be conducted before a single
arbitrator who shall be compensated for his services at a rate to be
determined by the AAA, in the event the parties are not able to agree upon
his or her rate of compensation, but based upon hourly or daily consulting
rates for the neutral arbitrator reasonably consistent with such
arbitrator's normal charges or fees charged by similarly experienced and
qualified arbitrators. Within five (5) days of notice by a party seeking
arbitration under this provision, the parties shall appoint the arbitrator.
In the event the parties cannot agree on the selection of an arbitrator
within the stated time period, the AAA rules for the selection of an
arbitrator shall be followed. In either event, the arbitrator shall be
required to have at least five (5) years experience in the industry in
which the Employer conducts its principal business.
(vi) Each party shall bear its own costs and expenses of
arbitration including, but not limited to, filing fees and attorneys' fees,
and each party hereby agrees to his or its proportionate share (based on
the number of parties to the proceeding) of the administrative fees of the
AAA and of the compensation to be paid to the arbitrator in any such
arbitration and his or its proportionate share of the costs of transcripts
and other expenses of the arbitration proceedings, subject, however, to
allocation of costs and expenses (including attorneys' fees) by the
arbitrator consistent with the award.
(vii) The parties agree to make available to the arbitrator all
nonprivileged books, records, schedules and other information reasonably
requested by the arbitrator. Such matters are to be made available to the
arbitrator at such times as are deemed necessary by them to make his
decision as herein provided.
(viii)The arbitrator may conduct any pre-trial proceedings by
telephonic conference call rather than by a face-to-face meeting.
(ix) The arbitrator shall, prior to rendering his decision on the
arbitration matter, afford each of the parties an opportunity, both orally
and in writing, to present any relevant evidence (the formal rules of
evidence applicable to judicial proceeding shall not apply) and to express,
orally and/or in writing that party's point of view and arguments as to the
proper determination of the arbitration matter; provided, however, that
either party submitting written material shall be required to deliver a
copy of such written material to the other party concurrently with the
delivery thereof to the arbitrator and such other party shall have the
opportunity to submit a written reply, a copy of such shall also be
delivered to the other party concurrently with the delivery thereof to the
arbitrator. Oral argument shall take place only at a hearing before the
arbitrator at which all parties are afforded a reasonable opportunity to be
present and be heard.
(x) In the event of a willful default by any of the parties
hereto in appearing before the arbitrator after due written notice shall
have been given, the arbitrator is hereby authorized to render a decision
upon the testimony of the party appearing before the arbitrator.
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(xi) The arbitrator shall make a decision and award resolving the
dispute within thirty (30) days after the selection of the arbitrator; and
within fifteen (15) days of the last hearing held concerning such
dispute(s).
(xii) Any judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.
(xiii) Within thirty (30) days after the arbitrator makes his or
her decision and award, the arbitrator shall render findings of fact and
conclusions of law and a written opinion setting forth the basis and
reasons for any decision and award rendered and deliver such documents to
each party to this Agreement along with a signed copy of the decision or
award.
(xiv) The arbitrator chosen in accordance with these provisions
shall not have the power to alter, limit, expand, amend or otherwise affect
the terms of this Agreement or these arbitration provisions.
ss.12. GENERAL.
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(a) Notices. All notices and other communications hereunder shall be
-------
in writing or by written telecommunication, and shall be deemed
to have been duly given if delivered personally or if mailed by
certified mail, return receipt requested, postage prepaid or sent
by written telecommunication or telecopy, to the relevant address
set forth below, or to such other address as the recipient of
such notice or communication shall have specified to the other
party hereto in accordance with this ss.12(a):
If to the Employee, to:
Xxxxx X. Xxxxxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxx Xxx, XX 00000
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With copies to:
Xxxxx Xxxx, Esq.
Xxxx Barium & O'Mara
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If to the Employer, to:
Stronghold Technologies, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
With copies to:
Xxxxxx X. Xxxxxx, Esq.
Podvey, Sachs, Meanor,
Catenacci, Xxxxxxx & Xxxxxxxxxx
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
(b) Equitable Remedies. Each of the parties hereto acknowledges and
-------------------
agrees that upon any breach by the Employee of his obligations
under ss.ss.7, 8 and 9 hereof, the Employer will have no adequate
remedy at law, and accordingly will be entitled to seek specific
performance and to seek other appropriate injunctive and
equitable relief.
(c) Severability. If any provision of this Agreement is or becomes
------------
invalid, illegal or unenforceable in any respect under any law,
the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired.
(d) Waivers. No delay or omission by either party hereto in
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exercising any right, power or privilege hereunder shall impair
such right, power or privilege, nor shall any single or partial
exercise of any such right, power or privilege preclude any
further exercise thereof or the exercise of any other right,
power or privilege.
(e) Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) Assign. This Agreement shall be binding upon and inure to the
------
benefit of the heirs and successors of each of the parties
hereto, including any entity which acquires substantially all of
the assets or equity interest of the Employer.
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(g) Entire Agreement. This Agreement contains the entire
------------------
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and shall
not be amended except by a written instrument hereafter signed by
each of the parties hereto.
(h) Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the local law of the State of New Jersey. With
respect to any claim brought under ss.7, ss.8 or ss.9 hereof, the
parties hereby consent to and submit to the jurisdiction of the
federal and state courts located in the State of New Jersey, and
any action or suit under any of said Sections of this Agreement
shall only be brought by the parties in any federal or state
court with appropriate jurisdiction over the subject matter
established or sitting in the State of New Jersey. The parties
shall not raise in connection therewith, and hereby waive, any
defenses based upon the venue, the inconvenience of the forum, or
the lack of personal jurisdiction in any such action or suit
brought in the State of New Jersey.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date and year
first above written.
STRONGHOLD TECHNOLOGIES, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------
Xxxxxxxxxxx X. Xxxxx, Chief Executive Officer
/s/ Xxxxx X. Xxxxxxxxx
----------------------------
XXXXX X. XXXXXXXXX
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