EMPLOYMENT AGREEMENT
This
Employment Agreement (this "Agreement") is made as of January 13, 2006, by
and between Radiant Logistics, Inc., a Delaware corporation (the
"Employer"), and XXXX X. XXXXX (the "Executive").
RECITALS
WHEREAS,
the Employer considers it essential and in the best interest of the stockholders
to xxxxxx the employment of key management personnel and desires to engage
the
services of the Executive on the terms and conditions hereinafter set forth;
and
WHEREAS,
Executive desires to render services to the Employer on the terms and conditions
provided in this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto, intending to be legally bound hereby, agree
as
follows:
The
parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For
the
purposes of this Agreement, the following terms have the meanings specified
or
referred to in this Section 1:
"Agreement"
means this Employment Agreement, as amended from time to time.
"Basic
Compensation" shall include all items of base and bonus compensation and
benefits provided for in Section 3.1 of this Agreement.
"Benefits"
is defined in Section 3.1(b).
"Board
of
Directors" means the board of directors of Employer.
"Change
of Control" shall be deemed to have occurred if (A) any "Person" (as the term
"Person" is used in §13(d) and §14(d) of the Securities Exchange Act of 1934),
except for Executive, becomes, after the date hereof, the beneficial owner,
directly or indirectly, of securities of Employer representing 50% or more
of
the combined voting power of Employer's then outstanding securities; (B) there
occurs a contested proxy solicitation of Employer's shareholders that results
in
the contesting party obtaining the ability to vote securities representing
50%
or more of the combined voting power of Employer's then outstanding securities;
(C) there occurs a sale, exchange, transfer or other disposition of 50% or
more
in value of the assets of Employer to another Person or entity, except to an
entity controlled directly or indirectly by Employer; (D) there occurs a merger,
consolidation or other reorganization of Employer in which Employer is not
the
surviving entity and in which the historic shareholders of Employer continue
to
own less than 50% of the outstanding securities of the acquiror immediately
following the transaction, or a plan of liquidation or dissolution of Employer
other than pursuant to bankruptcy or insolvency laws is adopted; or (E) during
any period of twelve consecutive months, individuals who at the beginning of
such period constituted the Board cease for any reason to constitute at least
a
majority thereof unless the election, or the nomination for election by Employer
shareholders, of each new director was approved by a vote of at least a majority
of the directors then still in office who were directors at the beginning of
the
period. Notwithstanding the foregoing, a "change of control" shall not be deemed
to have occurred for purposes of this Agreement (i) in the event of a sale,
exchange, transfer or other disposition of substantially all of the assets
of
Employer to, or a merger, consolidation or other reorganization involving
Employer and Executive, alone or with other officers of Employer, or any entity
in which Executive (alone or with other officers) has, directly or indirectly,
at least a 25% equity or ownership interest; or (ii) in a transaction otherwise
commonly referred to as a "management leveraged buy-out".
"Code"
means the Internal Revenue Code of 1986, as amended.
"Disability"
shall mean once the Executive is unable for the “Disability Period” (as
hereafter defined) to perform the essential functions of the Executive's duties
with reasonable accommodation. The disability of the Executive will be
determined by a medical doctor selected by written agreement of the Employer
and
the Executive upon the request of either party by notice to the other. If the
Employer and the Executive cannot agree on the selection of a medical doctor,
each of them will select a medical doctor and the two medical doctors will
attempt to make a determination of disability. If they cannot agree, they will
select a third medical doctor who will determine whether the Executive has
a
disability. The determination of the third medical doctor selected under this
provision will be binding on both parties. The Executive must submit to a
reasonable number of examinations by the medical doctor making the determination
of disability under this provision, and the Executive hereby authorizes the
disclosure and release to the Employer of such determination and all supporting
medical records. If the Executive is not legally competent, the Executive's
legal guardian or duly authorized attorney-in-fact will act in the Executive's
stead for the purposes of submitting the Executive to the examinations, and
providing the authorization of disclosure, required under this
provision.
“Disability
Period” shall mean 180 consecutive days or 180 days during any twelve (12) month
period; or such lesser number of days as elapse until disability insurance
benefits commence under any disability insurance coverage furnished by Employer
to Executive, if any.
"Effective
Date" means January 13, 2006.
"Employment
Period" means the term of the Executive's employment under this Agreement as
defined in Section 2.2.
"For
Cause" shall mean: (a) any violation of a law, rule or regulation other than
minor traffic violations, which causes or is likely to cause material damages
to
the Employer, including without limitation, any violation of the Foreign Corrupt
Practices Act; (b) a breach of fiduciary duty for personal profit; (c) fraud,
dishonesty or other acts of willful misconduct in the rendering of services
on
behalf of the Employer or relating to the Executive's employment; (d) willful
misconduct by the Executive which would cause the Employer to violate any state
or federal law relating to sexual harassment or age, sex or other prohibited
discrimination or any violation of written policy of the Employer or any
successor entity adopted in respect to such law; (e) failure to follow Employer
work rules or the lawful instructions (written or otherwise) of the Board of
Directors of the Employer, provided compliance with such directive was
reasonably within the scope of the Executive's duties and the Executive was
given notice that his or her conduct could give rise to termination and such
conduct is not, or could not be cured, within ten (10) days thereafter; or
(f)
any violation by the Executive of the terms of this Agreement; provided,
however, that in order to terminate Executive For Cause, Employer must first
provide Executive with thirty (30) days written notice of the particular For
Cause events alleged by Employer; however, in the event of a For Cause event
specified at sub-sections (e) and (f) above, the thirty (30) day notice period
must be accompanied with a right to cure within such thirty (30) day
period.
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"Good
Reason" shall mean, unless Executive shall have consented in writing thereto,
any of the following: (i) a reduction in Executive's title, duties,
responsibilities or status which are inconsistent with Executive’s position with
Employer; (ii)
the
assignment to Executive of duties inconsistent with the duties normally assigned
to Persons in offices of similar position to that of Executive; (iii) a
reduction by Employer in Executive's Basic Compensation; or (iv) the breach
by
Employer of any agreement or obligation under this Agreement after notice and
a
thirty day right to cure.
"Person"
means any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, or governmental body.
2. EMPLOYMENT
TERMS AND DUTIES
2.1 EMPLOYMENT
Commencing
on the Effective Date, the Employer agrees to employ the Executive for the
term
of this Agreement upon the terms and conditions set forth in this Agreement,
and
the Executive agrees to commence employment for Employer also upon the terms
and
conditions set forth in this Agreement.
2.2 TERM
Subject
to the provisions of Section 6, the Employment Period for the Executive's
employment under this Agreement will be five (5) years, beginning on the
Effective Date, and shall be automatically renewed for consecutive one-year
renewal terms thereafter, unless, not less than sixty (60) days prior to the
end
of the original term or any renewal term, either party gives the other party
written notice of termination of employment which termination shall be effective
as of the end of such original term or renewal term. In the event of a Change
of
Control during the original term or any renewal term, the Employment Period
for
the Executive’s employment under this Agreement will be automatically extended
to a five (5) year term.
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2.3 DUTIES
The
Executive will serve as the Chief Executive Officer of Employer and will perform
all duties required in furtherance of his position, including without
limitation, all such duties as are customarily associated with such position
or
such duties as are assigned or delegated to the Executive by the Board of
Directors. The Executive agrees to perform in good faith and to the best of
his
ability all services which may be required of him hereunder and will devote
his
full-time efforts and business time, skill, attention and energies as are
reasonably necessary to perform his duties and responsibilities under this
Agreement and to promote the success of the Employer's business. Executive
may
continue to engage in the following activities: (a) attending board of
directors' or like meetings of other companies in which Executive or an
affiliate has invested or in which Executive has been elected to serve, and
(b)
managing his personal investments, provided that such activities set forth
in
(a) and (b) (individually or collectively) do not in the good faith view of
Employer’s Board of Director’s materially interfere or conflict with the
performance of Executive's duties or responsibilities under this
Agreement.
3. COMPENSATION
3.1 BASIC
COMPENSATION
(a)
Base
Salary.
The
Executive will be paid an initial annual base salary of $250,000, subject to
further adjustment as provided below (the "Base Salary"), which will be payable
in equal periodic installments according to the Employer's customary payroll
practices, but no less frequently than monthly. The Executive's Base Salary
will
be reviewed by Employer's Board of Directors not less frequently than annually,
and may be adjusted upward or downward by Employer but in no event will be
less
than $250,000 per year.
(b) Bonus.
Executive
shall be eligible to receive annual bonus compensation at the discretion of
Employer's Board of Directors and in accordance with Employer's executive bonus
or incentive compensation plan that may be in effect from time to time. In
addition, Executive will be eligible to participate in an annual incentive
plan
which will provide an incentive payment based upon achievement of agreed upon
performance goals. The Compensation Committee of Employer will determine the
goals to be measured against as well as the target incentive (the "Target
Incentive"), expressed as a percentage of base salary, to be up to 50% of Base
Salary, subject to adjustment from time to time. In the event that the Executive
is employed for a partial year, he shall be entitled to such bonus as declared
by the Compensation Committee or as set forth in an incentive plan adopted
by
the Compensation Committee or Board of Directors, on a prorata basis for that
period of the year for which he was employed
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(c) Benefits.
(i) General
Benefits.
The
Executive will, during the Employment Period, be permitted to participate in
such pension, profit sharing, bonus (subject to the provisions of Section 3.1
(b)), life insurance, hospitalization, major medical, and other employee benefit
plans of the Employer that may be in effect from time to time, to the extent
the
Executive is eligible under the terms of those plans (collectively, the
"Benefits"). The Executive shall also be entitled to such other fringe benefits
as are now or may become available to all of Employer's other Executive
officers.
(ii) Life
and Disability Insurance.
During
the term of this Agreement, the Employer shall pay Executive an annual amount
not to exceed $2,500 per annum (prorated for less than annual periods) to
reimburse Executive for the cost of Executive securing life or disability
insurance policies in an amount and to the extent Executive may select.
(iii) Relocation
and Storage Expense.
In
recognition of Executive's possible need to relocate from his present residence,
Employer agrees to reimburse the Executive for actual out-of-pocket expenses
incurred in connection with (A) real estate commissions incurred in connection
with the sale of Executives his present residence and (B) the Executive's
general moving and relocation.
(iv) Expense
Allowance.
A
yearly expense allowance of $12,000 (paid monthly or quarterly at the discretion
of Executive) will be paid by Employer to Executive to pay for an auto allowance
for the cost of maintaining, insuring and operating one automobile for business
purposes, dues, assessments and expenses incurred by the Executive relating
to
membership or participation in professional or social groups or organizations
which the Executive determines are useful or necessary for the purpose of
promoting and maintaining the business of the Company or for other travel and
entertainment expenses incurred by Executive which he believes are useful or
necessary for the purpose of promoting and maintaining the business of the
Company.
3.2 OPTIONS
Employer
hereby grants to Executive options to purchase up to one million (1,000,000)
shares of its common stock at an exercise price of $0.50 per share and options
to purchase up to one million (1,000,000) shares of its common stock at an
exercise price of $0.75 (the "2005 Options"). The 2005 Options shall be granted
under and subject to the Employer’s then effective Stock Option Plan and under
the terms and conditions of the Stock Option Agreement dated as of the Effective
Date. The 2005 Options shall fully vest upon a Change of Control.
4. EXPENSE
REIMBURSEMENT
The
Employer will pay reasonable expenses incurred by the Executive in the
performance of the Executive's duties pursuant to this Agreement, including
without limitation reasonable expenses incurred by the Executive in attending
conventions, other business meetings and for promotional expenses, provided
that
any such activities must be related to Employer's business and all individual
expenses (or those aggregated for a single convention, seminar or other business
trip) greater than $5,000 must be approved by either Employer's Chief Financial
Officer or the Employer’s Compensation Committee (or if Employer has no
Compensation Committee, its Board of Directors). The Executive must file expense
reports with respect to such expenses in accordance with the Employer's
policies.
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5. VACATIONS
AND HOLIDAYS
The
Executive will be entitled to four (4) weeks paid vacation each calendar year
in
accordance with the vacation policies of the Employer in effect for its
Executive officers from time to time. The Executive will also be entitled to
the
paid holidays and other paid leave set forth in the Employer's policies.
Vacation days during any calendar year that are not used by the Executive during
such calendar year may be used in any subsequent calendar year; provided,
however, that no more than six (6) weeks' paid vacation may be accrued or
carried forward. Accrued but unused vacation days will be paid for by Employer
in certain instances upon the termination of this Agreement as provided for
in
Section 6.2 hereafter.
6. TERMINATION
6.1 EVENTS
OF
TERMINATION
The
Executive's employment pursuant to this Agreement may be terminated by Employer
on the following grounds:
(a) upon
the
death of the Executive;
(b) upon
the
disability of the Executive immediately upon notice from either party to the
other;
(c) For
Cause
(following the expiration of any applicable notice period from Employer to
Executive);
(d) at
the
discretion of Employer other than For Cause.
The
Executive may terminate his employment on the following grounds:
(e) without
Good Reason, provided that Executive gives Employer at least thirty (30) days
prior written notice of his termination of employment; or
(f) for
Good
Reason (following the expiration of any applicable notice period from Executive
to Employer).
6.2 TERMINATION
PAY
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Effective
upon the termination of this Agreement, the Employer will be obligated to pay
the Executive (or, in the event of his death, his designated beneficiary as
defined below) the compensation provided in this Section 6.2:
(a) Termination
by the Employer For Cause or Termination by Executive Without Good
Reason.
If the
Employer terminates this Agreement for cause or Executive resigns or terminates
his employment for other than Good Reason, the Executive will be entitled to
receive his Basic Compensation only through the date such termination is
effective and any
current
and carried-over unused vacation days,
but
will not be entitled to any accrued bonus compensation for the calendar year
during which such termination occurs, however, will be entitled to retain any
bonus compensation paid prior to such termination. Executive's options will
be
treated, in this case, as set forth in any option agreement between Executive
and Employer.
(b) Termination
upon Disability.
If this
Agreement is terminated by either party as a result of the Executive's
Disability, the Employer will continue to pay the Executive his Basic
Compensation for a period of one (1) year following such termination, set-off
by
any disability insurance benefits payable to Executive under any disability
insurance coverage furnished by the Employer to the Executive. Executive shall
also be entitled to receive that part of the Executive's accrued bonus
compensation, if any, for the calendar year during which his Disability occurs,
prorated through the end of the calendar quarter during which his termination
is
effective. If this Agreement is terminated as a result of the Executive's
Disability, Executive shall fully vest in 100% of all options which Executive
received in connection with his employment by Employer, and
Executive shall have the full term of such Options in which to exercise any
or
all of them, notwithstanding any accelerated exercise period contained in any
such Option.
(c) Termination
upon Death.
If this
Agreement is terminated because of the Executive's death, Employer will continue
to pay Executive's estate his Basic Compensation for a period of one (1) year,
and that part of the Executive's accrued bonus compensation, if any, for the
calendar year during which his death occurs, prorated through the end of the
calendar month during which his death occurs. If this Agreement is terminated
as
a result of the Executive's death, Executive shall fully vest in 100% of all
options which Executive received in connection with his employment by Employer,
and
Executive shall have the full term of such Options in which to exercise any
or
all of them, notwithstanding any accelerated exercise period contained in any
such Option.
(d) Termination
by Executive For Good Reason or Termination by Employer Without Cause Prior
to a
Change of Control.
If prior
to a Change of Control this Agreement is terminated by Executive for Good
Reason, or if this Agreement is terminated by Employer other than For Cause
then
(i) Employer shall continue to pay to Executive his Basic Compensation
(including for this purpose the greater of Executive's most recent annual bonus
or his Target Incentive bonus), for the remaining term under this Employment
Agreement; and (ii) all options in Employer which Executive received in
connection with his employment by Employer shall immediately vest and
Executive shall have the full term of such Options in which to exercise any
or
all of them, notwithstanding any accelerated exercise period contained in any
such Option.
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(e) Termination
by Executive For Good Reason or Termination by Employer Without Cause Following
a Change of Control.
If
following a Change of Control this Agreement is terminated by Executive for
Good
Reason or by Employer other than For Cause, then Employer shall within ten
(10)
days after the date of termination pay to Executive in cash: (i) an amount
equal
to 2.99 times Executive's Basic Compensation calculated at the rate in effect
on
the date of termination; (ii) current and carried-over unused vacation days;
and
(iii) all other amounts to which Executive is entitled, including (A) any bonus
to which Executive would have been entitled had he remained employed by Employer
for a period of three (3) years following the date of termination (calculated
on
an annual basis as the greater of Executive’s most recent annual bonus or the
Target Incentive bonus) , (B) any expense reimbursement amounts accrued to
the
effective date of termination, and (C) any amounts under any other benefit
plan
of the Employer, in each case at the time such payments are due. Also, for
three
years following the date of termination, the Employer shall continue to provide
Executive with all fringe benefits or the economic equivalent thereof he was
receiving as of the date of termination, including, without limitation, all
health, life and disability insurance he was receiving immediately prior to
the
date of termination, or the economic equivalent thereof, as if he were actually
employed for that period. . Moreover, any Options held by Executive which were
not fully exercisable on the date of Executive's termination pursuant to this
Section 6 shall vest and immediately become fully exercisable by Executive
upon
the date of termination, and Executive shall have the following term of such
Options in which to exercise any or all of them, notwithstanding any accelerated
exercise period contained in any such Option.
Executive
shall have the right to elect with respect to the payment to him of 2.99 times
his annual Compensation pursuant to Section 6.2(e) above to take such payment
in
the form of either (x) a single sum payment in cash or (y) securities of the
Employer equal in value to the amount of such payment, with such securities
valued for purposes hereof at 75% of the average closing price for the last
20
trading days on the principal exchange on which the securities were listed.
The
Employer further agrees to include the shares acquired hereunder by Executive,
at its sole cost and expense, in a Registration Statement to be filed with
the
Securities and Exchange Commission providing for the resale of such shares
in an
open market or private transaction, within one hundred eighty (180) days after
the date of the distribution of such shares.
7. TAX
INDEMNITY PAYMENTS
(a) Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by Employer or any affiliates to
or
for the benefit of Executive, whether paid or payable or distributed or
distributable pursuant to the terms of the Agreement or otherwise but determined
without regard to any additional payments required under this Section 7 (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code or any successor provision (collectively, "Section 4999"), or any interest
or penalties are incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any Federal,
state or local income and employment taxes and Excise Tax (and any interest
and
penalties imposed with respect to any such taxes) imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.
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(b) Subject
to the provisions of Section 7(b), all determinations required to be made under
this Section 7, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumption to be utilized in
arriving at such determination, shall be made by Employer's public accounting
firm (the "Accounting Firm") which shall provide detailed supporting
calculations both to Employer and Executive within fifteen (15) business days
of
the receipt of notice from Executive that there has been a Payment, or such
earlier time as is requested by Employer. In the event that the Accounting
Firm
is serving as accountant or auditor for the individual, entity or group
affecting the Change of Control, Executive may appoint another nationally
recognized public accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely
by the Employer. Any Gross-Up Payment, as determined pursuant to this Section
7,
shall be paid by Employer to Executive within five (5) days of the receipt
of
the Accounting Firm's determination. If the Accounting Firm determines that
no
Excise Tax is payable by Executive, it shall furnish Executive with a written
opinion that failure to report the Excise Tax on Executive's applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon Employer
and Executive.
(c) Executive
shall notify Employer in writing of any claim by the Internal Revenue Service
that, if successful, would require a payment by Employer, or a change in the
amount of the payment by Employer, of the Gross-Up Payment and Employer shall
be
responsible to make such payment to Employer. Such notification shall be given
as soon as practicable after Executive is informed in writing of such claim
and
shall apprise Employer of the nature of such claim and the date on which such
claim is required to be paid; provided that the failure to give any notice
pursuant to this Section 7(c) shall not impair Executive's rights under this
Section 7 except to the extent Employer is materially prejudiced thereby.
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which Employee gives such notice to Employer (or such
shorter period ending on the date that any payment of taxes with respect to
such
claim is due). If Employer notifies Executive in writing prior to the expiration
of such period that it desires to contest such claim, Executive
shall:
(1) give
Employer any information reasonably requested by Employer;
(2) take
such
action in connection with contesting such claim as Employer shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by Employer;
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(3) cooperate
with Employer in good faith in order to effectively contest such claim;
and
(4) permit
Employer to participate in any proceedings relating to such claim;
provided,
however, that Employer shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax-basis,
for any Excise Tax or income, employment or other tax (including interest and
penalties with respect thereto) imposed as a result of such representation
and
payment of costs and expenses. Without limitation on the foregoing provisions
of
this Section 7(c), Employer shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect to such claim and may, at its sole option, either direct
Executive to pay the tax claimed and xxx for a refund or contest the claim
in
any permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as Employer shall determine;
provided further, that if Employer directs Executive to pay such claim and
xxx
for a refund, Employer shall advance the amount of such payment to Executive
on
an interest-free basis and shall indemnify and hold Executive harmless, on
an
after-tax basis, from any Excise Tax or income, employment or other tax
(including interest or penalties with respect to any such taxes) imposed with
respect to such advance or with respect to any imputed income with respect
to
such advance; and provided further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive
with
respect to which such contested amount is claimed to be due is limited solely
to
such contested amount. Furthermore, Employer's control of the contest shall
be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case
may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If,
after
the receipt by Executive of an amount advanced by Employer pursuant to Section
7(c), Executive becomes entitled to receive, and receives, any refund with
respect to such claim, Executive shall (subject to Employer's complying with
the
requirements of Section 7(c)) promptly pay to Employer the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by Executive of an amount advanced by Employer
pursuant to Section 7(c), a determination is made that Executive shall not
be
entitled to any refund with respect to such claim and Employer does not notify
Executive in writing of its intent to contest such denial of refund prior to
the
expiration of thirty (30) days after such determination, then such advance
shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
8. CHARACTER
OF TERMINATION PAYMENTS; MITIGATION
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The
amounts payable to Executive upon any termination of this Agreement shall be
considered severance pay in consideration of past services rendered on behalf
of
the Employer and his continued service from the date hereof to the date he
becomes entitled to such payments. Executive shall have no duty to mitigate
his
damages by seeking other employment and, should Executive actually receive
compensation from any such other employment, the payments required hereunder
shall not be reduced or offset by any such other compensation.
9. |
CONFIDENTIALITY
AND RELATED MATTERS.
|
9.1 NON-DISCLOSURE
COVENANT
Employer
and the Executive acknowledge that the services to be performed by the Executive
under this Agreement are unique and valuable and that, as a result of the
Executive's employment, the Executive will be in a relationship of confidence
and trust with Employer and will come into possession of "Confidential
Information" (i) owned or controlled by Employer and its subsidiaries and
affiliates; (ii) in the possession of Employer and its subsidiaries and
affiliates and belonging to third parties; or (iii) conceived, originated,
discovered or developed, in whole or in part, by the Executive during the term
of this Agreement and relating to his duties for the Employer under this
Agreement. As used herein "Confidential Information" means trade secrets and
other confidential or proprietary business, technical, personnel or financial
information of Employer, whether or not the Executive's work product, in
written, graphic, oral or other tangible or intangible forms, including but
not
limited to specifications, samples, records, data, computer programs, drawings,
diagrams, models, consumer names, ID's or e-mail addresses, business or
marketing plans, studies, analyses, projections and reports, communications
by
or to attorneys (including attorney-client privileged communications), memos
and
other materials prepared by attorneys or under their direction (including
attorney work product), and software systems and processes that are not readily
available to the public, even it is not specifically marked as a trade secret
or
confidential, unless Employer advises the Executive otherwise in writing or
unless the information has been shared by Employer with entities not bound
by
non-disclosure agreements. In consideration of the compensation and benefits
to
be paid or provided to the Executive by the Employer under this Agreement,
the
Executive agrees not to directly or indirectly use or disclose to anyone, either
during the Employment Period or after the termination of this Agreement, except
in the performance of his duties of his employment with Employer or with
Employer's prior written consent, any Confidential Information of Employer.
This
non-disclosure covenant does not apply to information that is disclosed or
becomes public through another source that is not bound by a confidentiality
agreement with Employer; which Executive is required to disclose pursuant to
court order, subpoena or applicable law (provided that Executive will use
reasonable efforts to provide Employer with prompt notice of any such requests
or requirement so that Employer may seek an appropriate protective order);
or
which is disclosed in any proceeding to enforce or interpret this Agreement.
The
Executive agrees that in the event of the termination of the Executive's
employment for any reason, the Executive will deliver to Employer, upon request,
all property belonging to Employer, including all documents and materials of
any
nature pertaining to the Executive's work with Employer and will not take with
him any documents or materials of any description, or any reproduction thereof
of any description, containing or pertaining to any Confidential
Information.
11
9.2 |
WORK
MADE FOR HIRE
|
Executive
recognizes and understands that Executive's duties at the Employer may include
the preparation of materials, including without limitation written or graphic
materials, and that any such materials conceived or written by Executive shall
be done as "work made for hire" as defined and used in the Copyright Act of
1976, 17 U.S.C. §§ 1 et seq.
In the
event of publication of such materials, Executive understands that since the
work is a "work made for hire", the Employer will solely retain and own all
rights in said materials, including right of copyright.
9.3 |
DISCLOSURE
OF
WORKS AND INVENTIONS/ASSIGNMENT OF PATENTS
|
In
consideration of the promises set forth herein, Executive agrees to disclose
promptly to the Employer, or to such person whom the Employer may expressly
designate for this specific purpose (its "Designee"), any and all works,
inventions, discoveries and improvements authored, conceived or made by
Executive during the period of employment and related to the business or
activities of the Employer, and Executive hereby assigns and agrees to assign
all of Executive's interest in the foregoing to the Employer or to its Designee.
Executive agrees that, whenever he is requested to do so by the Employer,
Executive shall execute any and all applications, assignments or other
instruments which the Company shall deem necessary to apply for and obtain
Letters Patent or Copyrights of the United States or any foreign country or
to
otherwise protect the Company's interest therein. Such obligations shall
continue beyond the termination or nonrenewal of Executive's employment with
respect to any works, inventions, discoveries and/or improvements that are
authored, conceived of, or made by Executive during the period of Executive's
employment, and shall be binding upon Executive's successors, assigns,
executors, heirs, administrators or other legal representatives.
10. |
NON-COMPETITION
AND NON-SOLICITATION MATTERS
|
10.1 |
NON-COMPETITION
|
12
During
the term of this Agreement the Executive agrees that he shall not work for
or be
interested in any business which provides services or products which are
directly competitive with "primary" services or products offered by the Employer
or a subsidiary or affiliate of Employer at any time during his term of
employment or at the Executive's termination date (the “Non-Compete Period”). In
the event the Executive is terminated For Cause or Executive terminates for
other than Good Reason, the Non-Compete Period shall be extended until the
earlier of (i) one year; or (ii) the then scheduled expiration of the term
of
the Agreement. In the event the Executive is terminated in a manner in which
he
is paid severance, his Basic Compensation is continued, or he is paid a lump-sum
as though his employment had continued, the Non-Compete Period shall be extended
through the period of such severance or compensation continuation. For the
purpose of this Agreement, a product or service shall be deemed "primary" only
if such service or product constitutes a primary component of the core business
of Employer on Executive's termination date. For the further purposes of this
Agreement, the term "work for or be interested in any business" means that
the
Executive is a stockholder, director, officer, employee, partner, individual
proprietor, lender or consultant with that business, but not if (i) his interest
is limited solely to the passive ownership of five percent (5%) or less of
any
class of the equity or debt securities of a corporation whose shares are listed
for trading on a national securities exchange or traded in the over-the-counter
market. In the event that any part of this Section 9 is adjudged invalid or
unenforceable by any court of record, board of arbitration or judicial or quasi
judicial entity having jurisdiction thereof by reason of length of time,
geographical coverage, activities covered, or for any other reason, then the
invalid or unenforceable provisions of this covenant shall be deemed reformed
and amended to the maximum extent permissible under applicable law and shall
be
enforced and enforceable as so amended in accordance with the intention of
the
parties as expressed herein.
10.2 |
NON-SOLICITATION
|
During
the Non-Compete Period, the Executive also agrees that he will not directly
or
indirectly: (i) solicit the trade of, or trade with, any past, present or
prospective customer of the Employer for any business purpose that directly
or
indirectly competes with the business of Employer or a subsidiary or affiliate
of Employer; or (ii) solicit or induce, or attempt to solicit or induce, any
employee of Employer to leave Employer for any reason whatsoever, or assist
or
participate in the hiring of any employee of Employer to work for another
entity.
11. REPRESENTATIONS
OF EXECUTIVE
As
a
material inducement to Employer to execute this Agreement and consummate the
transactions contemplated thereby, the Executive hereby makes the following
representations to Employer, each of which are true and correct in all material
respects as of the date hereof.
11.1 |
QUESTIONNAIRE
|
On
or
before the date hereof Executive has completed and returned to Employer a
Directors and Officers Questionnaire (the “Questionnaire”) which is true and
correct in all material respects.
11.2 |
NO
PRIOR AGREEMENTS
|
Executive
represents and warrants that Executive is not a party to or otherwise subject
to
or bound by the terms of any contract, agreement or understanding which in
any
manner would limit or otherwise affect Executive's ability to perform his
obligations hereunder, including without limitation any contract, agreement
or
understanding containing terms and provisions similar in any manner to those
contained in Sections 9 and 10 of this Agreement. Executive further represents
and warrants that his employment with the Employer will not under any
circumstances require him to disclose or use any confidential information
belonging to prior Employers or other persons or entities, or to engage in
any
conduct which may potentially interfere with the contractual, statutory or
common-law rights of such other Employers, persons or entities. In the event
that Executive knows or learns of any facts whatsoever which suggest that such
interference might arguably occur as the result of any proposed actions by
either Executive or the Employer, Executive expressly promises that he will
immediately bring such facts to the Employer’s attention.
13
11.3 |
REVIEW
BY COUNSEL
|
Executive
expressly acknowledges and represents that Executive has been given a full
and
fair opportunity to review this Agreement with an attorney of Executive's
choice, and that Executive has satisfied himself, with or without consulting
with counsel, that the terms and provisions of this Agreement, specifically
including, but not limited to, the restrictive covenant and related provisions
of Section 10 hereof, are reasonable and enforceable.
11.4 |
NO
CONFLICTS OF INTEREST
|
Executive
covenants that, as of the date hereof, he is not involved in any venture or
activity that could compete with Employer or which could potentially interfere
with his ability to perform under this Agreement. During the Term, he will
disclose to the Company, in writing, any and all interests he may have, whether
for profit or compensation or not, in any venture or activity which could
potentially interfere with his ability to perform under this Agreement or create
a conflict of interest for him with the Company. For purposes of this Section
11.4 only, "conflict of interest" shall mean ownership of greater than one
percent (1%) of, or $25,000 worth of equity in, another company which conducts
business similar to that undertaken by the Employer.
11.5 |
EXECUTIVE’S
ABILITY
|
Executive
represents that Executive's experience and capabilities, and the limited
provisions of Section 10, are such that he will not be prevented from earning
his livelihood in businesses similar to that of Employer. Executive acknowledges
that there are a significant number of businesses for which his qualifications
and experience would render him qualified for employment that do not constitute
a competing businesses such that his ability to become employed after the
termination or nonrenewal of this Agreement would not be impaired.
12. GENERAL
PROVISIONS
12.1 |
INJUNCTIVE
RELIEF AND ADDITIONAL REMEDY
|
The
Executive acknowledges that the injury that would be suffered by the Employer
as
a result of a breach of the provisions of any provision of Sections 9 and 10
of
this Agreement would be irreparable and that an award of monetary damages to
the
Employer for such a breach would be an inadequate remedy. Consequently Employer
will have the right, in addition to any other rights it may have, to obtain
injunctive relief to restrain any breach or threatened breach or otherwise
to
specifically enforce any provisions of Sections 9 and 10 of this Agreement,
and
the Employer will not be obligated to post bond or other security in seeking
such relief.
14
12.2 |
WAIVER
|
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by either party in exercising
any
right, power, or privilege under this Agreement will operate as a waiver of
such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or
privilege.
12.3 |
TOLLING
PERIOD
|
The
non-competition, non-disclosure and non-solicitation obligations contained
in
Sections 9 and 10 of this Agreement shall be extended by the length of time
during which Executive shall have been in breach of any of the provisions of
such Sections 9 and 10, regardless of whether the Employer knew or should have
known of such breach.
12.4 |
EMPLOYER
VIOLATION NOT A DEFENSE
|
In
an
action by the Employer to enforce any provision of this Agreement, any claims
asserted by Executive against the Employer shall not constitute a defense to
the
Employer's action.
12.5 |
INDEMNIFICATION
|
Employer
shall indemnify and defend Executive and his heirs, executors and administrators
against any costs or expense (including reasonable attorneys’ fees and amounts
paid in settlement, if such settlement is approved by the Employer), fine,
penalty, judgment and liability reasonable incurred by or imposed upon Executive
in connection with any action, suit or proceeding, civil or criminal, to which
Executive may be made a party or with which Executive shall be threatened,
by
reason of Executive’s being or having been an officer or director, unless with
respect to such matter Executive shall have been adjudicated in any proceeding
not to have acted in good faith or in the reasonable belief that the action
was
in the best interests of the Employer, or unless such indemnification is
precluded by law, public policy, or in the judgment of the Employer’s Board of
Directors, such indemnification is being sought as a result of actions of
Executive which were either: (i) grossly negligent; (ii) reflective of Executive
misconduct; (iii) in violation of rules, regulations or laws applicable to
the
Employer; or (iv) in disregard of Employer policies.
12.6 |
NOTICES
|
All
notices, consents, waivers, and other communications under this Agreement must
be in writing and will be deemed to have been duly given when (a) delivered
by
hand, (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed by registered mail, return receipt requested, or (c)
when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
15
Ifto
Employer:
|
0000
Xxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Telephone
No.: 000-000-0000
Facsimile
No.: 215.545-2862
Attn:
General Counsel
If to Executive: |
Xx.
Xxxx Xxxxx
000
Xxxxxxxx Xxxx
Xxxxxx,
XX 00000
|
12.7 |
ENTIRE
AGREEMENT; AMENDMENTS
|
This
Agreement and the documents referenced herein, contain the entire agreement
between the parties with respect to the subject matter hereof and supersede
all
prior agreements and understandings, oral or written, between the parties hereto
with respect to the subject matter hereof. This Agreement may not be amended
orally, but only by an agreement in writing signed by the parties
hereto.
12.8 |
GOVERNING
LAW
|
This
Agreement will be governed by the laws of the State of Delaware without regard
to conflicts of laws principles.
12.9 |
ARBITRATION,
OTHER DISPUTES.
|
In
the
event of any dispute or controversy arising under or in connection with this
Agreement, the parties shall first promptly try in good faith to settle such
dispute or controversy by mediation under the applicable rules of the American
Arbitration Association before resorting to arbitration. In the event such
dispute or controversy remains unresolved in whole or in part for a period
of
thirty (30) days after it arises, the parties will settle any remaining dispute
or controversy exclusively by arbitration in the city in which Employer has
its
principal Executive offices in accordance with the commercial arbitration rules
of the American Arbitration Association then in effect. Judgment may be entered
on the arbitrator’s award in any court having jurisdiction. All administration
fees and arbitration fees shall be paid solely by Employer. Notwithstanding
the
above, Employer shall be entitled to seek a restraining order or injunction
in
any court of competent jurisdiction to prevent any continuation of any violation
of section 9 or 10 hereof. The prevailing party may recover attorneys’ fees in
any dispute or controversy arising under or in connection with this
Agreement
12.10 |
ASSIGNABILITY,
BINDING NATURE
|
16
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors, heirs (in the case of the Executive) and assigns.
No rights or obligations of the Executive under this Agreement may be assigned
or transferred by the Executive other than his rights to compensation and
benefits, which may be transferred only by will or operation of
law.
12.11 |
SURVIVAL
|
The
respective rights and obligations of the parties hereunder shall survive any
termination of the Executive's employment to the extent necessary to the
intended preservation of such rights and obligations.
12.12 |
SECTION
HEADINGS, CONSTRUCTION
|
The
headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Agreement
unless otherwise specified. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words
or
terms.
12.13 |
SEVERABILITY
|
If
any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the
extent not held invalid or unenforceable.
12.14 |
COUNTERPARTS
|
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. This
Agreement (and all other agreements, documents, instruments and certificates
executed and/or delivered in connection herewith) may be executed by facsimile
signatures, each of which shall be deemed an original copy of this Agreement
(or
other such agreement, document, instrument and certificate).
IMPORTANT
NOTICE:
THIS AGREEMENT RESTRICTS EXECUTIVE’S RIGHTS TO OBTAIN OTHER EMPLOYMENT FOLLOWING
HIS EMPLOYMENT WITH THE EMPLOYER. BY SIGNING IT, EXECUTIVE ACKNOWLEDGES THIS
FACT, AND FURTHER ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY THE EMPLOYER TO
READ
THE AGREEMENT CAREFULLY, AND/OR TO CONSULT WITH COUNSEL OF HIS CHOICE CONCERNING
THE LEGAL EFFECTS OF SIGNING THE AGREEMENT, PRIOR TO SIGNING
IT.
17
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of
the date first written above.
WITNESS:
_________________________________
Signature
_________________________________
Print
Name
_________________________________
Address
_________________________________
Address
|
EMPLOYER:
By: /s/
Xxxxxxx X. Xxxxx
Authorized
Executive
Officer
|
EMPLOYEE:
/s/
Xxxx X. Xxxxx
Xxxx
X. Xxxxx
|
18