EXHIBIT 10.3.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of December 1, 2001 by and between TRAFFIX,
INC., a Delaware corporation (the "Company"), and XXXXXXX X. XXXXXXXX
("Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ Executive on the terms and subject
to the conditions hereinafter set forth, and Executive desires so to be
employed;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties 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. By its approval of this Agreement, the Company's Board of Directors
shall also agree to elect Executive to serve as the Company's Chairman, and may
elect or designate Executive to serve in such other corporate offices of the
Company or a subsidiary or affiliate of the Company as the Company's Board of
Directors from time to time may deem necessary, proper or advisable and as the
Executive shall accept. 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 continue for a term of three (3) years ending on November 30, 2004,
subject to earlier termination upon the terms and conditions provided elsewhere
herein (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 for the period from the date of this agreement
through and including November 30, 2002 at the rate of $500,000 per annum,
and in each subsequent twelve (12) month period during the Term (each such
twelve month period or part thereof during the Term is referred to as an
"Employment Year" or part or portion thereof; for example, the period from
the date of this Agreement through and including November 30, 2001 is a
partial Employment Year) at a rate to be determined by the Company's Board
of Directors, but that is at least ten percent (10%) more than the annual
rate in the immediately preceding year (the "Base Salary"), such Base
Salary to be paid in substantially equal installments no less often than
twice monthly;
(ii) a bonus (the "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 the product of (A) 0.50 and (B) five
percent (5%) of Pre-Tax Income (as hereinafter defined), but until approval
of this Agreement by the Company's shareholders, in no event shall the
amount payable to Executive under this subclause (ii) in any fiscal year of
the Company exceed an amount, which, when added to all other
compensation (as such term is used in Section 162(m) of the Code) paid to
Executive in such fiscal year results in the total of such compensation for
such fiscal year to exceed $1,000,000; and
(iii) an additional 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) $75,000.00, if Pre-Tax Income for the Bonus Period
is between 150% and 200% of the prior fiscal year's Pre-Tax Income; or (B)
$100,000.00, if Pre-Tax Income for the Bonus Period is between 200% and
250% of the prior fiscal year's Pre-Tax Income; or (C) $200,000.00, if
Pre-Tax Income for the Bonus Period is two hundred fifty (250%) percent 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 the EBITDA for such Bonus Period; and
(iv) 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) A "Bonus Period" is either a fiscal year of the Company ending
during the Term or, if the Term ends on a day other than the last day of a
fiscal year of the Company, the portion of such fiscal year ending on the
last day of the last full month 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 5% Bonus or Additional Bonus for
any Bonus Period, in accordance with the Company's audited financial statements,
which shall be conclusive and binding upon the Company and Executive. If a Bonus
Period ends prior to the end of a fiscal year of the Company, and any year-end
adjustment is subsequently made that affects the determination of the 5% Bonus
or Additional Bonus for such Bonus Period, the Company shall promptly give
written notice to Executive of any change proposed to be made to such 5% Bonus,
setting forth in reasonable detail therein the amount of and basis for such
change. If such change involves an increase to such 5% Bonus or Additional
Bonus, the Company shall pay such increase to Executive concurrently with the
delivery of such notice; and if such change involves a decrease to such 5% Bonus
or Additional Bonus, Executive shall repay the amount of such decrease to the
Company promptly, and in any event within 60 days, after receipt of such notice.
(c) At his request, the Company shall use its best efforts to procure major
medical, hospitalization, dental and disability insurance for the benefit of
Executive and his wife and children, and the Company shall pay all premiums and
any other costs or expenses incurred to maintain such policies in effect during
the term of Executive's employment hereunder.
(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. 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
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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. By its approval of this Agreement, the Company's Board of
Directors has approved the issuance to Executive of an option to acquire 105,000
shares of the Company's Common Stock, under and pursuant to the provisions of
the Traffix, Inc. Third Amended and Restated 1996 Stock Option Plan and on the
terms set forth in the Stock Option Agreement annexed to this Agreement as
Exhibit A, which provides inter alia that such option shall vest as set forth
below, and be exercisable at the exercise price of $5.70 per share at any time
during the ten (10) year period following the date hereof:
the option to acquire 35,000 shares shall vest immediately,
the option to acquire 35,000 shares shall vest on December 1, 2002, and
the option to acquire 35,000 shares shall vest on December 1, 2003.
5. Expense Allowance.
(a) 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 hereunder and the business of the Company,
upon the submission to the Company of itemized expense reports, receipts or
vouchers in accordance with its then customary policies and practices.
(b) The Company shall provide to Executive a suitable automobile or other
vehicle for his exclusive use and the Company shall pay the entire cost thereof,
including without limitation purchase price or lease payments, insurance
premiums, repair charges, and maintenance and operating expenses, or if, in lieu
thereof, Executive uses his own automobile or other vehicle, the Company shall
grant him a monthly allowance in an amount sufficient to pay all such costs
therefor.
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 six (6) weeks paid vacation during
each year of his 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 eight weeks vacation during any consecutive 12-month period
during the Term.
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. Executive shall hold in a fiduciary capacity for the benefit
of the Company all information relating to or concerned with its operations,
business and affairs, and he shall not, at any time hereafter, use or disclose
any such 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.
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
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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 hereinafter defined in
Section 34), in order to obtain, maintain and protect the Company's right
therein and thereto.
11. No Competition.
(a) During the Term, and if his employment terminates because he is
discharged by the Company "for cause" pursuant to Section 13 or he voluntarily
resigns pursuant to Section 15, for a further period of one year thereafter,
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 Section 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 1%
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.
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 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 a
felony 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) committed fraud against, or embezzled or misappropriated funds
or other assets of, the Company (or any subsidiary thereof);
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(B) 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;
(C) willfully, or because of gross or persistent negligence, (A)
failed properly to perform his duties hereunder or (B) acted in a manner
detrimental to, or adverse to the interests of, the Company; or
(D) violated, or failed to perform or satisfy any material
covenant, condition or obligation required to be performed or satisfied
by Executive hereunder;
and that, in the case of any violation or failure referred to in clause (B), (C)
or (D) 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 five 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, cures or
explains to the reasonable satisfaction of the Company's Board of Directors the
factual basis for termination set forth therein.
(c) In making any determination pursuant to Section 13(a) as to the
occurrence of any act or event described in clauses (A) to (D) 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 (that is not reversed or vacated on appeal); 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.
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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 ten (10) 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, by giving
the Company notice to such effect, 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 by Executive. In addition to any other rights or
remedies provided by law or in this Agreement, Executive may terminate his
employment hereunder at any time by giving the Company written notice to such
effect at least ninety (90) days prior to the date of termination set forth
therein, such termination to be irrevocable upon receipt of such notice by the
Company.
The termination by Executive of his employment hereunder pursuant to Section 14
of this Agreement shall not constitute or be deemed to constitute for any
purpose a "voluntary resignation" of his employment.
16. Compensation and Benefits upon Termination.
(a) Upon termination of Executive's employment hereunder, he shall be
entitled to receive, in any case, any compensation or other amount due to him
pursuant to Section 3 or 4 in respect of his employment prior to the Termination
Date.
(b) If Executive is discharged 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 by him pursuant to Section
14(i) or 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 product of
(i) the sum of (A) his Base Salary in effect on the Termination Date and (B) his
5% Bonus for the last Bonus Period ending before the Termination Date
(annualized if such Bonus Period is other than a 12-month fiscal year of the
Company), and (ii) a fraction, the numerator of which is the number of full
months remaining in the balance of the Term after the Termination Date and the
denominator of which is 36, but in no event more than an amount equal to 1.99
multiplied by his Base Salary in effect on the Termination Date.
(d) If the Executive's employment terminates as a result of a Change of
Control pursuant to Section 14(ii) and, if at the time Executive gives the
Company the notice of termination referred to therein, the Company has not given
to Executive a notice of termination upon his disability pursuant to Section 12
or 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 16, he shall be entitled to receive the Parachute Amount (as hereinafter
defined) in Section 17. If Executive is paid the Parachute Amount he shall not
be entitled to receive the amounts payable under Section 16(c) above.
(e) If the Executive voluntarily terminates his employment pursuant to
Section 15 at any time after November 30, 2002 and, if at the time Executive
gives the Company the notice of termination referred to therein, the Company has
not given to Executive a notice of termination upon his disability pursuant to
Section 12 or "For Cause Event" pursuant to Section 13, he shall be entitled to
receive an amount equal to
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fifty percent (50%) of the product of (i) the sum of (A) his Base Salary in
effect on the Termination Date and (B) his 5% Bonus for the last Bonus Period
ending before the Termination Date (annualized if such Bonus Period is other
than a 12-month fiscal year of the Company), and (ii) a fraction, the numerator
of which is the number of full months elapsed during the Term immediately prior
to the Termination Date and the denominator of which is 36, but in no event less
than an amount equal to fifty (50%) percent of his Base Salary in effect on the
Termination Date if the Termination Date occurs after November 30, 2002 but
prior to December 1, 2003, or seventy-five percent (75%) of his Base Salary in
effect on the Termination Date if the Termination Date occurs after November 30,
2003 but prior to December 1, 2004.
(f) 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, the Executive shall be entitled for
the two (2) year period following the Termination Date, or if the Executive
voluntarily terminates his employment pursuant to Section 15 of this Agreement,
the Executive shall be entitled for the one (1) year period following the
Termination Date, to (A) maintain an office either at the Company's premises
comparable in size and location to the office maintained by Executive prior to
the Termination Date and receive secretarial and clerical services, all at the
Company's expense, or, at Executive's option or if the Company is not
maintaining such offices at its place of business at which Executive performed
his services at the Termination Date, then the Company shall reimburse the
Executive for the cost of his maintaining a comparable office, secretarial and
clerical services at such other location selected by Executive and (B) the
Company shall continue to 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.
(g) Any amount payable to Executive upon termination of his employment
hereunder shall be paid promptly, and in any event within thirty (30) days,
after the Termination Date.
(h) 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.
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.
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(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 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
16(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
Section 16(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, prior to his
receipt of the Parachute Amount pursuant to Section 15(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 18, 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.
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18. Other Termination Provisions.
(a) Throughout the 10-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 10-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 10-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:
Xxx Xxxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Attn: Exec. Vice-President
Fax: (000) 000-0000
with a copy to:
Feder, Kaszovitz, Isaacson, Weber,
Xxxxx, Bass & Rhine LLP
23rd Floor
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
to Executive at:
0 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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.
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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.
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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. Certain Definitions. As used herein:
(a) "Person" includes without limitation a natural person, corporation,
joint stock company, limited liability company, partnership, joint venture,
association, trust, government or governmental authority, agency or
instrumentality, or any group of the foregoing acting in concert.
(b) 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.
35. 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:
TRAFFIX, INC.
By: /s/ XXXXXX XXXXXXXX
------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Executive Vice-President
EXECUTIVE:
--------------------------------------
Xxxxxxx X. Xxxxxxxx
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