EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of September 1, 2007 by and
between Xxxxxx Xxxxxx (the "Executive") and Xxxxxx.xxx, Inc., a New Jersey
corporation (the "Company").
W
I T N E
S S E T H:
WHEREAS,
Executive and the Company desire to enter into an Employment Agreement to
provide for Executive's employment by the Company on the terms and subject
to
the conditions set forth herein.
NOW,
THEREFORE, in consideration of the mutual promises, representations and
warranties set forth herein, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Offices
and Duties. The Company hereby employs Executive during the Term
(as hereinafter defined) to serve as the Company’s President and Chief Executive
Officer and to perform such executive and supervisory duties on behalf of the
Company as the Company’s Board of Directors may from time to time reasonably
direct. Executive hereby accepts such employment and agrees that
throughout the Term he shall faithfully, diligently and to the best of his
ability, in furtherance of the business of the Company, perform the duties
assigned to him or incidental to the offices assumed by him pursuant to this
Section. Executive shall devote substantially all of his business
time and attention to the business and affairs of the Company, but Executive
shall not be required to devote any minimum amount of time or report or perform
his duties hereunder on a fixed or periodic basis, and Executive may engage
or
participate in such other activities incidental to any other employment,
occupation or business venture or enterprise as do not materially interfere
with
or compromise his ability to perform his duties hereunder. Executive
shall at all times be subject to the direction and control of the Company’s
Board of Directors, and observe and comply with such rules, regulations,
policies and practices as the Company’s Board of Directors may from time to time
establish.
2. Term. The
employment of Executive hereunder shall commence on the date hereof and end
on
August 31, 2012, provided, that Executive shall have the right in his sole
discretion to extend the term for an additional 12 months ending on August
31, 2013, by notifying the Company in writing of such no later than June 1,
2012, subject in all respects to earlier termination upon the terms and
conditions provided elsewhere herein. The term during which Executive
is employed hereunder shall be referred to herein as the “Term”. As
used herein, “Termination Date” means the last day of the Term.
3. Compensation.
(a) As
compensation for his services hereunder, the Company shall pay to Executive
during the Term:
(i) a
base
salary at the rate of $200,000 per annum (the “Base Salary”), such Base Salary
to be paid in substantially equal installments no less often than twice
monthly;
(ii) the
Base
Salary shall be increased by 10% on January 1 of each year of the Term over
the prior year’s Base Salary;
(iii) a
car allowance in the amount of $1,000 per month, payable monthly;
(iv) a
bonus (the “2.5% Bonus”) in respect of each Bonus Period (as hereinafter
defined), payable within ninety (90) days after the end of such Bonus Period,
in
an amount equal to two and one-half percent (2.5%) of Pre-Tax Income (as
hereinafter defined);
(v) a
bonus (the “Additional Bonus”) in respect of each Bonus Period, payable within
ninety (90) days after the end of such Bonus Period, as follows: (A) $75,000,
if
Pre-Tax Income for the Bonus Period is between 150% and 200% of the prior fiscal
year’s Pre-Tax Income; or (B) $100,000, if Pre-Tax Income for the Bonus Period
is between 201% and 250% of the prior fiscal year’s Pre-Tax Income; or (C)
$200,000, if Pre-Tax Income for the Bonus Period is 251% or greater than the
prior fiscal year’s Pre-Tax Income; but in no event shall the Additional Bonus
payable to Executive with respect to any Bonus Period exceed five (5%) percent
of Pre-Tax Income for such Bonus Period; and
(vi) such
additional incentive or bonus compensation as the Company’s Board of Directors
may from time to time determine.
(b) For
the
purposes of paragraph 3(a):
(i) “Bonus
Period” is a fiscal year of the Company ending during the Term; and
(ii) The
“Pre-Tax Income” in any Bonus Period is the Company’s income before provision
for income taxes.
The
determination of the Pre-Tax Income and the 2.5% Bonus and Additional Bonus
for
any Bonus Period shall be determined by the Company’s then Chief Financial
Officer (or other senior most accounting official if no one holds a position
with that title) in accordance with the Company’s audited financial statements
as prepared by the Company’s independent auditor, which shall be conclusive and
binding upon the Company and Executive.
(c) The
Company shall provide major medical, hospitalization and dental insurance for
the benefit of Executive and his family consistent with benefits made available
to other of the Company’s senior executives and if no such benefits are then
available or paid to other executives, than in amount of, and providing coverage
for, no lesser benefits than Executive has prior to the date hereof, and the
Company shall pay all premiums and any other costs or expenses incurred to
maintain such policies in effect during the Term.
(d) In
addition to his Base Salary and other compensation provided herein, Executive
shall be entitled to participate, to the extent he is eligible under the terms
and conditions thereof, in any stock, stock option or other equity participation
plan and any profit-sharing, pension, retirement, insurance, medical service
or
other employee benefit plan generally available to the executive officers of
the
Company, and to receive any other benefits or perquisites generally available
to
the executive officers of the Company pursuant to any employment policy or
practice, which may be in effect from time to time during the
Term. The above notwithstanding, the Company shall use its
commercially reasonable efforts to obtain for the benefit of Executive a life
insurance policy with a death benefit of at least $2 million payable to a
beneficiary of Executive’s choice, provided, however, that the Company shall not
be obligated to spend more than $10,000 annually on the premiums for such
policy. Except as otherwise expressly provided herein, the Company
shall be under no obligation hereunder to institute or to continue any such
employee benefit plan or employment policy or practice.
(e) No
provision hereof is intended, or shall be deemed, to impair or limit Executive’s
eligibility to receive, or any right he may now or at any time hereafter have
to
receive, hold or dispose of any common stock, par value $.001 per share, of
the
Company (the “Common Stock”) or other securities of the Company or to receive,
hold or exercise any options, warrants or other rights to acquire any Common
Stock or other securities of the Company.
(f) During
the Term, Executive shall not be entitled to additional compensation for serving
in any office of the Company (or any subsidiary thereof) to which he is elected
or appointed, except that, throughout any period or periods during which he
shall serve as a director of the Company (or such subsidiary), Executive shall
be entitled to directors’ fees in accordance with the policies and practices of
the Company (or such subsidiary) then in effect.
4. Stock
Options.
(a) By
its
approval of this Agreement, the Company’s Board of Directors has approved the
issuance to Executive of an option to acquire 15,000,000 shares of the Company’s
Common Stock, under and pursuant to the provisions of the Xxxxxx.xxx, Inc.
2007
Stock Option Plan, as adopted by the Company’s Board of Directors and as will be
submitted to the Company’s Shareholders for approval (the “Plan”) and on the
terms set forth in the Stock Option Agreement annexed to this Agreement as
Exhibit A (the “Option Agreement”), which provides inter alia that such
option shall vest as set forth below, and be exercisable at the exercise price
of $0.05 per share at any time during the five (5) year period following the
date hereof (subject to earlier termination as provided under the
Plan):
(i) the
option to acquire 5,000,000 shares shall vest immediately;
(ii) the
option to acquire 5,000,000 shares shall vest on August 31, 2008;
and
(iii) the
option to acquire 5,000,000 shares shall vest on August 31, 2009.
(b) The
option being granted
hereby is subject in all respects to the terms and provisions of the Plan and
the Option Agreement, including, without limitation, the termination provisions
contained in the Plan, and in the event of any conflict between the terms of
this Agreement and the Plan or the Option Agreement, the Plan or the Option
Agreement shall control. The option granted hereby is also subject to
the approval of the Plan by the Company’s shareholders. It is
the intention of the parties hereto that, to the extent possible, the options
granted herein shall be “incentive stock options” as such term is defined in the
Internal Revenue Code of 1986 and any of the terms of the options shall be
modified, as minimally as necessary, to maintain their status as incentive
stock
options.
(c) Executive
shall receive such other option, restrictive stock awards or other
security-based compensation as the Board of Directors shall
approve.
5. Expense
Allowance. The Company shall pay directly, or advance funds to
Executive or reimburse Executive for, all expenses reasonably incurred by him
in
connection with the performance of his duties as an employee or consultant
hereunder, upon the submission to the Company of itemized expense reports,
receipts or vouchers in accordance with its then customary policies and
practices.
6. Location;
Office. Except for routine travel and temporary accommodation
reasonably required to perform his services hereunder, Executive shall not
be
required to perform his services hereunder at any location other than the
principal executive office of the Company, which office shall be located
throughout the Term at its location on the date hereof, or, if relocated, at
a
location within a distance of 30 miles from its location on the date hereof,
or
at such other office or site to which Executive may, in his sole discretion,
consent; nor shall he be required to relocate his principal residence to, or
otherwise to reside at, any location specified by the Company. The
Company shall provide Executive with suitable office space, furnishings and
equipment, secretarial and clerical services and such other facilities and
office support as Executive may reasonably request.
7. Vacation. Executive
shall be entitled to four (4) weeks paid vacation during each year of his full
time employment hereunder, such vacation to be taken at such time or times
as
shall be agreed upon by Executive and the Company. Vacation time
shall be cumulative from year to year, except that Executive shall not be
entitled to take more than six weeks vacation during any consecutive 12-month
period during the Term. Accrued but unused vacation time shall be
paid in cash on the Termination Date, except that in the event of a Termination
pursuant to Section 12, the amount of accrued vacation time to be paid on the
Termination Date shall be limited to six weeks and in the event of a Termination
pursuant to Section 13, the amount of vacation time to be paid on the
Termination Date shall be limited to four weeks.
8. Key-Man
Insurance. The Company shall have the right from time to time to
purchase, increase, modify or terminate insurance policies on the life of
Executive for the benefit of the Company in such amounts as the Company may
determine in its sole discretion. In connection therewith, Executive
shall, at such time or times and at such place or places as the Company may
reasonably direct, submit himself to such physical examinations and execute
and
deliver such documents as the Company may deem necessary or
appropriate.
9. Trade
Secrets.
(a) Executive
shall hold in a fiduciary capacity for the benefit of the Company all
confidential or proprietary information relating to or concerned with the
Company or its Affiliates (as defined below) or its products or services,
prospective products or services, operations, business and affairs
(“Confidential Information”), and he shall not, at any time hereafter, use or
disclose any Confidential Information to any person other than to the Company
or
its designees or except as may otherwise be required in connection with the
business and affairs of the Company, and in furtherance of the foregoing
Executive agrees that:
(i) Executive
will receive, maintain and hold Confidential Information in strict confidence
and will use the same level of care in safeguarding it that he uses with his
own
confidential material of a similar nature;
(ii) Executive
will take all such steps as may be reasonably necessary to prevent the
disclosure of Confidential Information; and
(iii) Executive
will not utilize Confidential Information for his personal benefit without
first
having obtained the Company’s consent to such utilization.
“Affiliate”
of a Person means another Person directly or indirectly controlling, controlled
by, or under common control with, such Person; for this purpose, “control” of a
Person means the power (whether or not exercised) to direct the policies,
operations or activities of such Person by virtue of the ownership of, or right
to vote or direct the manner of voting of, securities of such Person, or
pursuant to agreement or law or otherwise. The term “Person” includes
without limitation a natural person, corporation, joint stock company, limited
liability company, partnership, joint venture, association, trust, governmental
authority, or any group of the foregoing acting in concert.
(b) The
commitments set forth in paragraph 9(a) shall not extend to any portion of
Confidential Information:
(i) that
is generally available to the public;
(ii) that
was not acquired, directly or indirectly and/or in any manner, from the Company
and which Executive lawfully had in his possession prior to the date of this
Agreement; or
(iii) that,
hereafter, through no act or omission on the part of the Executive, becomes
information generally available to the public.
(c) At
any time upon written request by the Company (i) the Confidential Information,
including any copies, shall be returned to the Company, and (ii) all documents,
drawings, specifications, computer software, and any other material whatsoever
in the possession of the Executive that relates to such Confidential
Information, including all copies and/or any other form of reproduction and/or
description thereof made by Executive shall, at the Company’s option, be
returned to the Company or destroyed.
(d) In the
event that Executive becomes legally compelled (by deposition, interrogatory,
request of documents, subpoena, civil investigative demand or similar process)
to disclose any of the Confidential Information, the Executive shall provide
the
Company with prompt prior written notice of such requirement so that it (or
its
designees) may seek a protective order or other appropriate remedy and/or waive
compliance with the terms of this Agreement. In the event that such
protective order or other remedy is not obtained, or the Company waives
compliance with the provisions hereof, the Executive agrees to furnish only
such
portion of the Confidential Information which is legally required to be
furnished.
10. Intellectual
Property. Any idea, invention, design, process, system,
procedure, improvement, development or discovery conceived, developed, created
or made by Executive, alone or with others, during the Term and applicable
to
the business of the Company, whether or not patentable or registrable, shall
become the sole and exclusive property of the Company. Executive
shall disclose the same promptly and completely to the Company and shall, during
the Term or thereafter, (i) execute all documents requested by the Company
for
vesting in the Company the entire right, title and interest in and to the same,
(ii) execute all documents requested by the Company for filing and procuring
such applications for patents, trademarks, service marks or copyrights as the
Company, in its sole discretion, may desire to prosecute, and (iii) give the
Company all assistance it may reasonably require, including the giving of
testimony in any Proceeding (as defined below), in other to obtain, maintain
and
protect the Company’s right therein and thereto.
A
“Proceeding” is any suit, action, arbitration, audit, investigation or other
proceeding before or by any court, magistrate, arbitration panel or other
tribunal, or any governmental agency, authority or instrumentality of competent
jurisdiction.
11. No
Competition.
(a) During
the Restricted Period (as defined below), Executive shall not, directly or
indirectly:
(i) own,
control, manage, operate, participate or invest in, or otherwise be connected
with, in any manner, any business activity, venture or enterprise which is
engaged in any business in the United States in which the Company (or any
subsidiary thereof) is currently engaged or is engaged at the time of
termination of Executive’s employment hereunder, or
(ii) for
himself or on behalf of any other person, employ or engage any person who at
the
time shall have been within the preceding 12-month period an employee of the
Company (or such subsidiary) or contact any supplier, customer or employee
of
the Company (or such subsidiary) for the purpose of soliciting or diverting
any
supplier, customer or employee from the Company (or such
subsidiary).
(b) The
provisions of paragraph 11(a) notwithstanding, Executive may invest his
funds in securities of an issuer if the securities of such issuer are listed
for
trading on a registered securities exchange or actively traded in an
over-the-counter market and Executive’s holdings therein represent less than 5%
of the total number of shares or principal amount of the securities of such
issuer outstanding.
(c) Executive
acknowledges that the provisions of this Section, and the period of time,
geographic area and scope and type of restrictions on his activities set forth
herein, are reasonable and necessary for the protection of the
Company.
(d) “Restricted
Period” shall mean the period commencing on the date hereof and ending August
31, 2012; provided, however, that if Executive has exercised his option to
extend the Term to August 31, 2013 in accordance with Section 2 hereof, the
Restricted Period shall end August 31, 2014.
12. Termination
Upon Disability. In the event that the Board of Directors
determines that the Executive is unable to perform his duties hereunder by
reason of any disability or incapacity (due to any physical or mental injury,
illness or defect) for an aggregate of 180 days in any consecutive 12-month
period, the Company shall have the right to terminate Executive’s employment
hereunder within 60 days after the 180th day of his disability or incapacity
by
giving Executive notice to such effect at least 30 days prior to the date of
termination set forth in such notice, and on such date such employment shall
terminate. The Board of Directors’ determination shall be made after
due inquiry, on the basis of convincing evidence presented in at least two
medical opinions rendered by reputable physicians with experience in diagnosing
and treating the condition described in the opinion.
13. Termination
for Cause.
(a) In
addition to any other rights or remedies provided by law or in this Agreement,
the Company may terminate Executive’s employment under this Agreement
if:
(i) Executive
is convicted of, or enters a plea of guilty or nolo contendere (which
plea is not withdrawn prior to its approval by the court) to, a felony offense
or the commission of a fraud against, or embezzlement or misappropriation of
funds or other assets of, the Company (or any subsidiary thereof) and either
Executive fails to perfect an appeal of such conviction prior to the expiration
of the maximum period of time within which, under applicable law or rules of
court, such appeal may be perfected or, if Executive does perfect such an
appeal, his conviction of such as offense is sustained on appeal;
or
(ii) the
Company’s Board of Directors determines, after due inquiry, based on convincing
evidence, that Executive has:
(A) violated,
or caused the Company (or any subsidiary thereof) or any officer, employee
or
other agent thereof, or any other person to violate, any material law,
regulation or ordinance or any material rule, regulation, policy or practice
established by the Company’s Board of Directors;
(B) willfully,
or because of gross or persistent negligence, (x) failed properly to perform
his
duties hereunder or (y) acted in a manner detrimental to, or adverse to the
interests of, the Company; or
(C) violated,
or failed to perform or satisfy any material covenant, condition or obligation
required to be performed or satisfied by Executive
hereunder;
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and
that,
in the case of any violation or failure referred to in clause (A), (B) or (C)
of
this paragraph (ii) of Section 13(a), such violation or failure has caused,
or
is reasonably likely to cause, the Company to suffer or incur a substantial
casualty, loss, penalty, expense or other liability or cost.
(b) The
Company may effect such termination for cause by giving Executive notice to
such
effect, setting forth in reasonable detail the factual basis for such
termination, at least thirty (30) days prior to the date of termination set
forth therein; provided, however, that Executive may avoid such
termination if Executive, prior to the date of termination set forth in such
notice, explains to the reasonable satisfaction of the Company’s Board of
Directors why the facts relied upon by the Company in terminating Executive’s
employment do not constitute a For Cause Event (as defined below) or that
Executive has ceased any such claimed violation and/or cured any such failure
to
perform within such 20 day period.
(c) In
making
any determination pursuant to Section 13(a) as to the occurrence of any act
or
event described in clauses (A) to (C) of paragraph (ii) thereof (each, a “For
Cause Event”), each of the following shall constitute convincing evidence of
such occurrence:
(i) if
Executive is made a party to, or target of, any Proceeding arising under or
relating to any For Cause Event, Executive’s failure to defend against such
Proceeding or to answer any complaint filed against him therein, or to deny
any
claim, charge, averment, or allegation thereof asserting or based upon the
occurrence of a For Cause Event;
(ii) any
judgment, award, order, decree or other adjudication or ruling in any such
Proceeding finding or based upon the occurrence of a For Cause Event;
or
(iii) any
settlement or compromise of, or consent decree issued in, any such Proceeding
in
which Executive expressly admits the occurrence of a For Cause
Event;
provided
that none of the foregoing shall be dispositive or create an irrebuttable
presumption of the occurrence of such For Cause Event; and provided
further that the Company’s Board of Directors may rely on any other factor
or event as convincing evidence of the occurrence of a For Cause
Event.
(d) In
determining and assessing the detrimental effect of any For Cause Event on
the
Company and whether such For Cause Event warrants the termination of Executive’s
employment hereunder, the Company’s Board of Directors shall take the following
factors, to the extent applicable and material, into account:
(i) whether
the Company’s Board of Directors directed or authorized Executive to take, or to
omit to take, any action involved in such For Cause Event, or approved,
consented to or acquiesced in his taking or omitting to take such
action;
(ii) any
award
of damages, penalty or other sanction, remedy or relief granted or imposed
in
any Proceeding based upon or relating to such For Cause Event, and whether
such
sanction, remedy or relief is sufficient to recompense the Company or any other
injured person, or to prevent or to deter the recurrence of such For Cause
Event;
(iii) whether
any lesser sanction would be appropriate and effective; and
(iv) any
adverse effect that the loss of Executive’s services would have, or be
reasonably likely to have, upon the Company.
14. Termination
by Executive for Good Reason. In addition to any other rights or remedies
provided by law or in this Agreement, Executive may terminate his employment
hereunder:
(i) if
(A)
the Company violates, or fails to perform or satisfy any material covenant,
condition or obligation required to be performed or satisfied by it hereunder
or, (B) as a result of any action or failure to act by the Company, there is
a
material change in the nature or scope of the duties, obligations, rights or
powers of Executive’s employment, by giving the Company notice to such effect,
setting forth in reasonable detail the factual basis for such termination,
at
least thirty (30) days prior to the date of termination set forth therein;
provided however that the Company may avoid such termination if it,
prior to the date of termination set forth in such notice, cures or explains
to
the reasonable satisfaction of Executive the factual basis for termination
set
forth therein; or
(ii) if
a
Change of Control (as hereinafter defined) occurs while Executive is a full-time
employee of the Company, by giving the Company notice to such effect within
ninety (90) days after the occurrence of such Change of Control, setting forth
the event or circumstance constituting such Change of Control, such termination
to be effective upon the date of termination, not more than thirty (30) days
after the date of such notice, set forth therein or, if no such date is set
forth therein, immediately upon delivery of such notice to the
Company.
15. Voluntary
Termination. In addition to any other rights or remedies provided
by law or in this Agreement, from and after the date hereof, Executive may
terminate his employment hereunder by giving the Company written notice to
such
effect at least ninety (90) days prior to the date of termination set forth
therein.
16. Compensation
and Benefits upon Termination.
(a) Upon
termination of Executive’s employment hereunder, he shall be entitled to
receive, in any case, any Base Salary pursuant to Section 3(a)(i) accrued but
unpaid to the Termination Date. Any amount payable to Executive under
this subparagraph shall be paid promptly, and in any event within thirty (30)
days after the Termination Date.
(b) If
Executive’s employment is terminated as a result of a “For Cause Event” pursuant
to Section 13, except for the payment of any amount required to be made by
Section 16(a), from and after the Termination Date, the Company shall have
no
further obligation to Executive hereunder, including without limitation any
obligation pursuant to Section 18.
(c) If
the
Executive’s employment is terminated (i) by him pursuant to Section 14(i);
or (ii) by the Company other than as a result of a “For Cause Event” pursuant to
Section 13; he shall be entitled to receive an amount equal to the full
value of any Base Salary still remaining until the end of the Term plus an
amount equal to three times the Base Salary at the time of
termination. Notwithstanding the foregoing, if the Executive’s
employment (but not consultancy) is terminated by the Company after a Change
of
Control has occurred for any reason other than as a result of a “For Cause
Event” pursuant to Section 13, he shall be entitled to receive, upon the terms
and subject to the conditions set forth in Section 17, the Parachute Amount
(as
hereinafter defined in Section 17). Any amount payable to Executive
under this subparagraph shall be paid promptly, and in any event within thirty
(30) days after the Termination Date.
(d) If
the
Executive’s employment terminates as a result of a Change of Control pursuant to
Section 14(ii), he shall be entitled to receive, upon the terms and subject
to
the conditions set forth in Section 17, the Parachute Amount. Any
amount payable to Executive under this subparagraph shall be paid promptly,
and
in any event within thirty (30) days after the Termination Date.
(e) If
the
Executive’s employment is terminated by him pursuant to Section 14(i) or
14(ii) of this Agreement, or by the Company other than as a result of a “For
Cause Event” pursuant to Section 13, or if the Executive voluntarily terminates
his employment pursuant to Section 15(a) of this Agreement, the Company shall
for the two (2) year period following the Termination Date maintain and pay
for
Executive and his family, or reimburse Executive, for the cost of medical,
dental, and hospitalization benefits comparable to such benefits maintained
by
the Company during the twelve (12) months prior to the Termination
Date.
(f) Executive
shall have no obligation hereunder to seek or to accept any other employment
after the Termination Date or otherwise to mitigate the payments required to
be
made by this Section. No compensation or other amount received or
receivable by Executive on account of any employment or engagement after the
Termination Date shall be offset against or deducted from any payment required
to be made by this Section 16 or Section 17.
(g) In
the
event the Company terminates Executive other than as a result of a “For Cause
Event” pursuant to Section 13, or if the Executive’s employment is terminated by
him pursuant to Section 14(i) or 14(ii) of this Agreement, Executive shall
receive as his sole and exclusive remedy and damages the payments he would
otherwise be entitled to receive under the applicable provisions of this Section
16 (and, if applicable, the other benefits provided under clause (g) of this
Section 16).
(h) In
the
event of Executive’s death or if the Company terminates Executive for disability
pursuant to Section 12, the Company shall pay, in the case of Executive’s
death, Executive’s estate an amount equal to his then current Base Salary and in
the event of termination for disability, an amount equal to two times his then
current Base Salary. Any amount payable to Executive (or his estate)
under this subparagraph shall be paid promptly, and in any event within thirty
(30) days after the date Executive dies or is terminated for disability, as
the
case may be.
17. Change
of Control.
(a) For
the
purposes of this Section 17:
(i) The
“Act”
is the Securities Exchange Act of 1934, as amended.
(ii) A
“person” includes a “group” within the meaning of Section 13(d)(3) of the
Act.
(iii) “Control”
is used herein as defined in Rule 12b-2 under the Act.
(iv) “Beneficially
owns” and “acquisition” are used herein as defined in Rules 13d-3 and
13d-5, respectively, under the Act.
(v) “Non-Affiliated
Person” means any person, other than Executive, an employee stock ownership
trust of the Company (or any trustee thereof for the benefit of such trust),
or
any person controlled by Executive, the Company or such a trust.
(vi) “Voting
Securities” includes Common Stock and any other securities of the Company that
ordinarily entitle the holders thereof to vote, together with the holders of
Common Stock or as a separate class, with respect to matters submitted to a
vote
of the holders of Common Stock, but securities of the Company as to which the
consent of the holders thereof is required by applicable law or the terms of
such securities only with respect to certain specified transactions or other
matters, or the holders of which are entitled to vote only upon the occurrence
of certain specified events (such as default in the payment of a mandatory
dividend on preferred stock or a scheduled installment of principal or interest
of any debt security), shall not be Voting Securities.
(vii) “Right”
means any option, warrant or other right to acquire any Voting Security (other
than such a right of conversion or exchange included in a Voting
Security).
(viii) The
“Code” is the Internal Revenue Code of 1986, as amended.
(ix) “Base
amount,” “present value” and “parachute payment” are used herein as defined in
Section 280G of the Code.
(b) A
“Change
of Control” occurs when:
(i) a
Non-Affiliated Person acquires control of the Company;
(ii) upon
an
acquisition of Voting Securities or Rights by a Non-Affiliated Person from
persons other than the Executive (or persons controlled by the Executive) or
any
change in the number or voting power of outstanding Voting Securities, such
Non-Affiliated Person beneficially owns Voting Securities or Rights entitling
such person to cast a number of votes (determined in accordance with Section
16(g)) equal to or greater than 25% of the sum of (A) the number of votes that
may be cast by all other holders of outstanding Voting Securities and (B) the
number of votes that may be cast by such Non-Affiliated Person (determined
in
accordance with Section 17(g)); or
(iii) upon
any
change in the membership of the Company’s Board of Directors, a majority of the
directors are persons who are not nominated or appointed by the Company’s Board
of Directors as constituted prior to such change.
(c) The
“Parachute Amount” to which Executive shall be entitled pursuant to
Sections 16(c) and (d) shall equal 2.99 multiplied by the Executive’s base
amount.
(d) It
is
intended that the present value of any payments or benefits to Executive,
whether hereunder or otherwise, that are includible in the computation of the
Parachute Amount shall not exceed 2.99 times the Executive’s base
amount. Accordingly, if Executive receives any payment or benefit
from the Company prior to payment of the Parachute Amount which, when added
to
the Parachute Amount, would subject any of the payments or benefits to Executive
to the excise tax imposed by Section 4999 of the Code, the Parachute Amount
shall be reduced by the least amount necessary to avoid such tax. The
Company shall have no obligation hereunder to make any payment or provide any
benefit to Executive after the payment of the Parachute Amount which would
subject any of such payments or benefits to the excise tax imposed by Section
4999 of the Code.
(e) Any
other
provision hereof notwithstanding, Executive may (but only to the extent not
prohibited by the United States securities laws, as then amended), prior to
his
receipt of the Parachute Amount pursuant to Section 17(d), waive the payment
thereof, or, after his receipt of the Parachute Amount thereunder, treat some
or
all of such amount as a loan from the Company which Executive shall repay to
the
Company within 180 days after the receipt thereof, together with interest
thereon at the rate provided in Section 7872 of the Code, in either case, by
giving the Company notice to such effect.
(f) Any
determination of the Executive’s
base amount, the Parachute Amount, any liability for excise tax under Section
4999 of the Code or other matter required to be made pursuant to this Section
17, shall be made by the Company’s regularly-engaged independent certified
public accountants, whose determination shall be conclusive and binding upon
the
Company and Executive; provided that such accountants shall give to
Executive, on or before the date on which payment of the Parachute Amount or
any
later payment or benefit would be made, a notice setting forth in reasonable
detail such determination and the basis therefor, and stating expressly that
Executive is entitled to rely thereon.
(g) The
number of votes that may be cast by holders of Voting Securities or Rights
upon
the issuance or grant thereof shall be deemed to be the largest number of votes
that may be cast by the holders of such securities or the holders of any other
Voting Securities into which such Voting Securities or Rights are convertible
or
for which they are exchangeable or exercisable, determined as though such Voting
Securities or Rights were immediately convertible, exchangeable or exercisable
and without regard to any anti-dilution or other adjustments provided for
therein.
18. Other
Termination Provisions.
(a) Throughout
the 7-year period following the Termination Date, the Company shall indemnify
Executive, and hold him harmless from, any loss, damages, liability, obligation
or expense that he may suffer or incur in connection with any claim made or
Proceeding commenced during such period relating to his service as a director,
officer, employee or agent of the Company (or any subsidiary thereof) to the
same extent and in same manner as the Company shall be obligated so to indemnify
Executive immediately prior to the Termination Date; provided that, if
during such 7-year period the Company adopts or assumes any indemnification
policy or practice with respect to its directors, officers, employees or agents
that is more favorable than that in effect on the Termination Date, Executive
shall be entitled to such more favorable indemnification.
(b) Throughout
the 7-year period following the Termination Date, the Company shall maintain
for
the benefit of Executive directors’ and officers’ liability insurance (on a
“claims made” basis) providing coverage at least as favorable to Executive
(including with respect to limits of liability, exclusions, and deductible
and
retention amounts) as that in effect on the Termination Date.
19. Limitation
of Authority. Except as expressly provided herein, no provision
hereof shall be deemed to authorize or empower either party hereto to act on
behalf of, obligate or bind the other party hereto.
20. Notices. Any
notice or demand required or permitted to be given or made hereunder to or
upon
either party hereto shall be deemed to have been duly given or made for all
purposes if (a) in writing and sent by (i) messenger or an overnight courier
service against receipt, or (ii) certified or registered mail, postage paid,
return receipt requested, or (b) sent by telegram, telecopy, telex or similar
electronic means, provided that a written copy thereof is sent on the
same day by postage-paid first-class mail, to such party at the following
address:
to
the Company at:
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its
then current address of its principal office as stated on the cover
page
of its most recent public filing under the Act and if such address
is then
Executive’s residence, to the address of the Company’s Chairman of the
Board.
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with
a copy to:
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Feder,
Kaszovitz, Isaacson, Weber,
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Xxxxx,
Bass & Rhine LLP
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23rd
Floor
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000
Xxxxxxxxx Xxxxxx
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Xxx
Xxxx, Xxx Xxxx 00000-0000
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Attn:Xxxxxx
Xxxxxxxxx, Esq.
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Fax:
(000) 000-0000
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to
Executive at:
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00
Xxxxx Xxxxx
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Xxxxxx,
XX 00000
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Fax:
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(000)
000-0000
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or
such
other address as either party hereto may at any time, or from time to time,
direct by notice given to the other party in accordance with this
Section. The date of giving or making of any such notice or demand
shall be, in the case of clause (a) (i), the date of the receipt; in the case
of
clause (a) (ii), five business days after such notice or demand is sent; and,
in
the case of clause (b), the business day next following the date such notice
or
demand is sent.
21. Amendment. Except
as otherwise provided herein, no amendment of this Agreement shall be valid
or
effective, unless in writing and signed by or on behalf of the parties
hereto.
22. Waiver. No
course of dealing or omission or delay on the part of either party hereto in
asserting or exercising any right hereunder shall constitute or operate as
a
waiver of any such right. No waiver of any provision hereof shall be
effective, unless in writing and signed by or on behalf of the party to be
charged therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default, unless expressly
so stated in writing.
23. Governing
Law. This Agreement shall be governed by, and interpreted and
enforced in accordance with, the laws of the State of New York without regard
to
principles of choice of law or conflict of laws.
24. Jurisdiction. Each
of the parties hereto hereby irrevocably consents and submits to the
jurisdiction of the courts of the State of New York and the United States
District Court for the Southern District of New York in connection with any
suit, action or proceeding arising out of or relating to this Agreement or
the
transactions contemplated hereby, waives any objection to venue in the County
of
New York or Rockland, State of New York, or such District, and agrees that
service of any summons, complaint, notice or other process relating to such
proceeding may be effected in the manner provided by clause (a) (ii) of Section
20.
25. Remedies. In
the event of any actual or prospective breach or default by either party hereto,
the other party shall be entitled to equitable relief, including remedies in
the
nature of rescission, injunction and specific performance. All
remedies hereunder are cumulative and not exclusive, and nothing herein shall
be
deemed to prohibit or limit either party from pursuing any other remedy or
relief available at law or in equity for such actual or prospective breach
or
default, including the recovery of damages.
26. Severability. The
provisions hereof are severable and in the event that any provision of this
Agreement shall be determined to be invalid or unenforceable in any respect
by a
court of competent jurisdiction, the remaining provisions hereof shall not
be
affected, but shall, subject to the discretion of such court, remain in full
force and effect, and any invalid or unenforceable provision shall be deemed,
without further action on the part of the parties hereto, amended and limited
to
the extent necessary to render the same valid and enforceable.
27. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original and which together shall constitute one and the same
agreement.
28. Assignment. This
Agreement, and each right, interest and obligation hereunder, may not be
assigned by either party hereto without the prior written consent of the other
party hereto, and any purported assignment without such consent shall be void
and without effect, except that this Agreement shall be assigned to, and assumed
by, any person with or into which the Company merges or consolidates, or which
acquires all or substantially all of its assets, or which otherwise succeeds
to
and continues the Company’s business substantially as an
entirety. Except as otherwise expressly provided herein or required
by law, Executive shall not have any power of anticipation, assignment or
alienation of any payments required to be made to him hereunder, and no other
person may acquire any right or interest in any thereof by reason of any
purported sale, assignment or other disposition thereof, whether voluntary
or
involuntary, any claim in a bankruptcy or other insolvency proceeding against
Executive, or any other ruling, judgment, order, writ or decree.
29. Binding
Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement is not intended, and shall not be deemed, to
create or confer any right or interest for the benefit of any person not a
party
hereto.
30. Titles
and Captions. The titles and captions of the Articles and
Sections of this Agreement are for convenience of reference only and do not
in
any way define or interpret the intent of the parties or modify or otherwise
affect any of the provisions hereof.
31. Grammatical
Conventions. Whenever the context so requires, each pronoun or
verb used herein shall be construed in the singular or the plural sense and
each
capitalized term defined herein and each pronoun used herein shall be construed
in the masculine, feminine or neuter sense.
32. References. The
terms "herein," "hereto," "hereof," "hereby," and "hereunder," and other terms
of similar import, refer to this Agreement as a whole, and not to any Article,
Section or other part hereof.
33. No
Presumptions. Each party hereto acknowledges that it has had an
opportunity to consult with counsel and has participated in the preparation
of
this Agreement. No party hereto is entitled to any presumption with
respect to the interpretation of any provision hereof or the resolution of
any
alleged ambiguity herein based on any claim that the other party hereto drafted
or controlled the drafting of this Agreement.
34. Entire
Agreement. This Agreement embodies the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes any
prior agreement, commitment or arrangement relating thereto, written or oral,
if
any, which shall terminate immediately upon the commencement of the Term, except
that each party thereto shall (a) remain required to perform any act and to
satisfy any obligation or condition that such party is required to perform
or
satisfy thereunder with respect to any event occurring or circumstance existing
prior to the commencement of the Term hereof (including without limitation
the
payment or delivery to Executive of any compensation, reimbursable expense
or
employee benefit or perquisite to which he may be entitled, but which has not
yet been paid to him, on account of his employment under any such prior
arrangement) that has not been so performed or satisfied, and (b) retain his
or
its right under any such prior assignment to assert or to allege any claim
or
cause of action relating to or based upon, or otherwise to enforce, any
provision thereof with respect to any event occurring or circumstance existing
during the term thereof.
IN
WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the day and year first above written.
THE
COMPANY:
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XXXXXX.XXX,
INC.
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By:
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Name:
Xxxxxx Fireman
|
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Title:
Director (on behalf of the
Board)
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EXECUTIVE:
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Xxxxxx Xxxxxx | |