EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”)
is entered into by and between Skinny Nutritional Corp. (the “Company”) and
Xxxxxx XxXxxxxx (“Employee”) on this 12th day of
August, 2010.
Article
1. Position and Duties.
Section 1.01. The
Company hereby continues the employment of the Employee and the Employee hereby
accepts continued employment pursuant to the terms of this Agreement. Your
employment under this Agreement will take effect on August 12, 2010 (the
“Effective Date”) and will continue until the third anniversary of the Effective
Date; provided
that the term of this Agreement shall automatically be extended for one (1)
additional year on the first anniversary of the Effective Date and
each anniversary thereafter, unless, not less than ninety (90) days prior to
each such date, either party shall have given notice to the other that it does
not wish to extend the term. You will be employed by the Company on a
full-time basis in the position of Chief Financial Officer. In
addition, you will serve as an officer of one or more of the Company’s
Affiliates without further compensation, as you are requested from time to
time.
During
the term of this Agreement (the “Term”), the Company shall nominate Employee,
and use its best efforts to have him elected, to the Board of Directors of the
Company (the “Board”) throughout
the term of this Agreement and shall include him in the management slate for
election as a director at every stockholders meeting during the Term at which
his term as a director would otherwise expire. Employee agrees to accept
election, and to serve during the Term, as director of the Company.
Section 1.02. You
agree to perform the duties of your position and such other duties as reasonably
may be assigned to you from time to time by the Chief Executive Officer and/or
the Board; provided, however, that you
shall not be assigned duties that are inconsistent with your position, duties,
responsibilities and status with the Company immediately prior to the Effective
Date. You also agree that, while employed by the Company, you will
devote your full business time and your best efforts, business judgment, skill
and knowledge to the advancement of the business and interests of the Company
and its Affiliates and to the discharge of your duties and responsibilities for
them. This provision does not prevent you from serving on the board
of any business, church, non-profit or charitable organization; provided that such
service does not give rise to a conflict of interest; provided further that such
activities do not materially detract from your performance of your duties
hereunder and that as a precondition the Board of Directors of the Company (the
“Board”) has been notified of your service on such board, and has agreed in
writing to permit such service.
Article
2. Compensation and Benefits. During your
employment, as compensation in full for all services performed by you for the
Company and its Affiliates, the Company will provide you the following pay and
benefits.
1
Section 2.01. Base Salary. The
Company will pay you a base salary at the rate of $140,000 per year, payable in
accordance with the regular payroll practices of the Company and subject to
increase from time to time by the Board in its discretion. This salary will
increase by an amount to be determined by the Board or Compensation Committee
based on benchmarks set by the Board or Compensation Committee on each
anniversary of the Effective Date. Whether any such increase will be
paid in cash or shares of Common Stock is in the discretion of the Board or its
designated committee (the “Committee”). In the event the Board or the Committee
elects to pay such increase in shares of the Company’s common stock (the “Common
Stock”), the number of shares of Common Stock to be issued in satisfaction of
such obligation shall be determined by reference to the fair market value of the
Company’s Common Stock, which shall be determined as follows: (i) if the
Company’s Common Stock is listed on a national securities exchange (including
the Nasdaq Stock Market, LLC) or is quoted on the OTC Bulletin Board, the last
sale price of the Common Stock in the principal trading market for the Common
Stock on such date, as reported by the exchange or the OTC Bulletin Board, as
the case may be, or if no sale was reported on that date, then on the last
preceding date on which such sale took place; (ii) if the Common Stock is not
listed on a national securities exchange or quoted on the OTC Bulletin Board,
but is traded in the residual over-the-counter market, the last sale price of
the Common Stock on such date, as reported by Pinksheets, LLC or similar
publisher of such information, or if no sale was reported on that date, then on
the last preceding date on which such sale took place; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause (i) or
(ii) above, such price as the Board or Committee shall determine in good
faith.
Section 2.02. Bonus
Compensation. For each fiscal year completed during your
employment with the Company, you will be eligible to be considered by the Board
for an annual cash performance bonus, the actual amount of any bonus awarded to
you will be determined by the Board or its designated committee.
Section
2.03. Equity Rights.
|
|
(a)
|
In the event the Company proposes
to issue new shares of Common Stock (or Common Stock Equivalents, as such
term is defined below) in a transaction for the principal purpose of
raising capital, then in order to prevent the dilution of your
then-current percentage interest in the Company (as determined in
accordance with the applicable provisions of Regulation 13D, adopted by
the Securities and Exchange Commission, as it currently exists and as it
may be amended or replaced during the Term), you will be given the
opportunity to purchase up to a maximum of such number of newly-issued
shares of Common Stock (or such other Common Stock Equivalents) as would
enable you to maintain such then-current percentage interest in the
Company. Such purchase would occur at the same time, and under the same
terms and conditions, as such shares are offered for purchase by other
persons.
|
|
|
(b)
|
As
used herein, the term “Common Stock Equivalents” shall mean any securities
of the Company which would entitle the holder thereof to acquire at any
time Common Stock, including, without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise entitles
the holder thereof to receive, Common
Stock.
|
2
|
|
(c)
|
For
the purpose of clarity, the following issuances of Common Stock or Common
Stock Equivalents shall not be subject to the provisions of this Section
2.03: (a) the issuance of shares of Common Stock or Common Stock
Equivalents to employees, consultants, officers or directors of the
Company pursuant to any equity compensation plan duly adopted by a
majority of the non-employee members of the Board or a majority of the
members of a committee of non-employee directors established for such
purpose (including the issuance of shares of Common Stock upon exercise of
Common Stock Equivalents granted pursuant to a Company plan subsequent to
the date hereof ); (b) the issuance of Common Stock upon the exercise or
exchange of or conversion of Common Stock Equivalents which are issued and
outstanding on the date of this Agreement; (c) the issuance of shares of
Common Stock (or Common Stock Equivalents) to consultants, vendors,
lessors, distributors or similar persons, as consideration for services or
assets provided to the Company (and the shares of Common Stock which may
be issued upon exercise or conversion of securities issued to the class
persons specified in this clause); (d) securities issued pursuant to
mergers, acquisitions, consolidations, or reorganizations the primary
purpose of which transaction is not to raise capital; and (e) shares of
Common Stock or other securities issued in connection with any stock split
or stock dividend of the Company.
|
|
|
(d)
|
Upon
either the occurrence of a Change of Control or in the event of the
termination of Employee’s employment either (i) by the Company without
Cause or (ii) by the Employee for Good Reason, then effective as of the
consummation of such Change of Control or termination date, and
notwithstanding anything herein or in any stock option agreement to the
contrary, (A) the Employee’s right to purchase shares of Common Stock of
the Company pursuant to any stock option or stock option plan (whether
granted before or subsequent to the Effective Date) shall immediately
fully vest and become exercisable, (b) the exercise period in which
Employee may exercise his options to purchase Company Common Stock under
such options shall be extended to the duration of their original term, as
if Employee remained an employee of the Company, and the terms of such
options shall be deemed amended to take into account the foregoing
provisions.
|
Section 2.04. Employee
Benefits. While holding the position of Chief Financial Officer,
you will be entitled to participate in the employee benefit plans maintained by
the Company of general applicability to other senior executives of the Company,
including but not limited to the disability plan currently in place for senior
executives which the Company shall continue for your benefit.
Section 2.05. Paid Time
Off. You will be entitled to earn paid time off at the rate
of three (3) weeks per year, in addition to holidays observed by the
Company, and to use such paid time off in accordance with the policies of the
Company generally applicable to its executives, as in effect from time to
time. In addition, the Company shall pay you $800 per month as an
automobile allowance during the Term.
3
Section 2.06. Business
Expenses. The Company will pay or reimburse you for all
reasonable business expenses incurred or paid by you in the performance of your
duties and responsibilities for the Company, subject to any maximum annual limit
and other restrictions on such expenses set by the Company and to such
reasonable substantiation and documentation as it may specify from time to
time.
Section 2.07. Signing
Bonus. Upon execution of this Agreement, the Company shall
issue to Employee 3,000,000 shares of the Company’s Common Stock as a signing
bonus. This bonus shall constitute good and valuable consideration,
the sufficiency of which is acknowledged by your signature below.
Article
3. Confidential Information and Restricted
Activities.
Section 3.01. Confidential
Information. During the course of your employment with the
Company, you will learn of Confidential Information, as defined below, and you
may develop Confidential Information on behalf of the Company. You
agree that you will not use or disclose to any Person (except as required by
applicable law after notice to the Board or for the proper performance of your
regular duties and responsibilities for the Company) any Confidential
Information obtained or developed by you incident to your employment or any
other association with the Company or any of its Affiliates. You
understand and agree that this restriction shall continue to apply after your
employment terminates, regardless of the reason for such termination. Further,
Employee covenants and agrees that all Confidential Information shall be kept
secret and confidential at all times during or after the Term and shall not be
used or divulged by him outside the scope of his employment as contemplated by
his Agreement. In the event
that Employee is requested in a judicial, administrative or governmental
proceeding to disclose any of the Confidential Information, Employee will
promptly so notify the Company so that the Company may seek a protective order
of other appropriate remedy and/or waive compliance with this Agreement. If
disclosure of any of the Confidential Information is required, Employee may
furnish the material so required to be furnished, but Employee will furnish only
that portion of the Confidential Information that legally is
required.
Section 3.02. Protection
of Documents. All documents, records and files, in any media
of whatever kind and description, relating to the business, present or
otherwise, of the Company or any of its Affiliates, and any copies, in whole or
in part, thereof (the “Documents”), whether or not prepared by you, shall be the
sole and exclusive property of the Company. You agree to safeguard
all Documents and to surrender to the Company, at the time your employment
terminates or at such earlier time or times as the Board or its designee may
specify, all Documents and other property of the Company and its Affiliates then
in your possession or control.
4
Section
3.03. Non-Competition. You acknowledge that in your
employment with the Company you have had, and will continue to have, access to
Confidential Information which, if disclosed, would assist in competition
against the Company and its Affiliates; and that you also have generated and
will continue to generate goodwill for the Company and its Affiliates in the
course of your employment. You further acknowledge that you are
receiving under this Agreement new consideration that is good and valuable and
fully sufficient to support your covenants set forth in this Section
3. Therefore, you agree that the following restrictions on your
activities during and after your employment are necessary to protect the
goodwill, Confidential Information and other legitimate interests of the Company
and its Affiliates:
|
|
a)
|
While
you are employed by the Company and during the one (1) year immediately
following termination of your employment (in the aggregate, the
“Non-Competition Period”), you shall not, directly or indirectly, whether
as owner, partner, investor, consultant, agent, employee, co-venturer or
otherwise, compete with the Business of the Company within the United
States. Specifically, but without limiting the foregoing, you
agree not to work or provide services, in any capacity, whether as an
employee, independent contractor or otherwise, whether with or without
compensation, to any Person that is engaged in any business that is
competitive with the Business of the Company in the United
States. For purposes of this Agreement, the “Business of the
Company” means the business in which the Company is engaged in the United
States during your employment.
|
|
|
b)
|
You
agree that during the Non-Competition Period, you will not (A) hire any
employee of the Company or any of its Affiliates or seek to persuade any
employee of the Company or any of its Affiliates to discontinue
employment, (B) solicit or encourage any customer of the Company or any of
its Affiliates or independent contractor providing services to the Company
or any of its Affiliates to terminate or diminish its relationship with
them or (C) seek to persuade any customer or prospective customer of the
Company or any of its Affiliates to conduct with anyone else any business
or activity that such customer or prospective customer conducts or could
conduct with the Company or any of its Affiliates. For purposes
of your obligations hereunder after termination of your employment, an
employee, independent contractor, customer or prospective customer shall
mean any natural person or entity that was such at any time during the
last six (6) months of your employment with the
Company.
|
Section 3.04. Assignment
of Intellectual Property. You agree to promptly and fully
disclose to the Company all Intellectual Property, as defined
below. You hereby assign and agree to assign to the Company (or as
otherwise directed by the Company) your full right, title and interest in and to
all Intellectual Property. You further agree to execute any and all
applications for domestic and foreign patents, copyrights and other proprietary
rights and do such other acts (including, among others, the execution and
delivery of instruments of further assurance or confirmation) requested by the
Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights and other proprietary rights in the
Intellectual Property. You agree that you will not charge the Company
for time spent in complying with these obligations, including after your
employment ends. All copyrightable works that you create shall be
considered “work made for hire” and shall be the property of the
Company.
5
Section
3.05. Enforcement. In signing this Agreement, you
give the Company assurance that you have carefully read and considered all the
terms and conditions of this Agreement, including the restraints imposed on you
under this Section 3. You agree without reservation that these
restraints are necessary for the reasonable and proper protection of the Company
and its Affiliates and that each and every one of the restraints is reasonable
in respect to subject matter, length of time and geographic area. You
represent and warrant to the Company that these restrictions will not,
individually or in the aggregate, prevent you from obtaining other suitable
employment after your employment with the Company terminates and that you will
not, and will not permit anyone acting on your behalf, to take any position to
the contrary in any forum hereafter and you give the Company those assurances
with the understanding that the Company will rely upon them in continuing your
employment and in providing you access to Confidential Information and to its
other employees and its customers. Further, you agree that, were you
to breach any of the covenants contained in this Section 3, the damage to the
Company and its Affiliates would be irreparable. You therefore agree
that the Company, in addition to any other remedies available to it, shall be
entitled to preliminary and permanent injunctive relief against any breach or
threatened breach by you of any of those covenants, without having to post
bond. You and the Company further agree that, in the event that any
provision of this Section 3. is determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographic area or too great a range of activities, that
provision shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law. It is also agreed that each of the
Company’s Affiliates shall have the right to enforce all of your obligations to
that Affiliate under this Agreement, including without limitation, pursuant to
this Section 3.
Article
4. Termination of Employment. Your employment
under this Agreement shall continue until terminated pursuant to this Article 4,
unless earlier terminated pursuant to Section 1.01.
Section
4.01.
(a) Without Cause or for Good
Reason. In the event that your employment with the
Company hereunder is terminated by the Company, other than for Cause and other
than as a result of death or Disability, or if Employee terminates his
employment for Good Reason, then the Company will provide you the following
severance pay and benefits, subject to your signing and returning a timely and
effective release of claims in a form reasonably satisfactory to the parties and
subject also to your meeting in full your obligations as set forth in Section 3
of this Agreement: In addition to base salary for the final payroll period of
your employment, through the date your employment with the Company terminates,
which amounts shall be payable at the Company’s next regular payday following
such termination, the Company (i) will pay you severance pay of an amount equal
to the sum of your base salary for the amount of time remaining in the Term of
this Agreement and the Bonus Compensation paid for the fiscal year immediately
preceding termination, either in accordance with the Company’s regular pay
periods or in a lump-sum payment in the sole discretion of the Board; and (ii)
provided that you and your eligible dependents exercise your rights to continue
participation in the Company’s group health plans under the federal law
generally known as COBRA (or any successor law), the Company will pay the
premium cost of your participation and that of your eligible dependents in the
Company’s group health plans and will make payments to your Health Savings
Account (“HSA”), if any, in accordance with Company policy until the sooner to
occur of (Y) the expiration of the Severance Pay Period (as defined below) and
(Z) the date you become eligible to enroll in any health plan of another
employer; provided, however, that if your
continued participation in the Company’s group health plans is not possible
under the terms of those plans (other than as a result of your becoming eligible
to participate in a health plan of another employer), the Company shall instead
arrange to provide you and your eligible dependents substantially similar
benefits upon reasonably comparable terms or pay you an amount during the
Severance Pay Period equal to the premiums the Company would have paid if you
had continued to participate in the Company’s group health
plans. Payments pursuant to clause (ii) of this Section 4.01(a) shall
be made on the first day of each month during the Severance Pay Period (or
sooner, if required by applicable law). You are not required to mitigate damages
or the amount of any payment provided for under this Section 4.01(a) by seeking
other employment or otherwise, but the amount of any payment provided for under
this Section 4.01(a) shall be reduced by any compensation you earn as the result
of employment by another employer during the Severance Pay
Period. The Release creates legally binding obligations and the
Company advises you to consult an attorney prior to signing the
Release.
6
(b) Severance Pay
Period. The Severance Pay Period shall be the period of time
commencing on the date of termination of this Agreement for the reasons
specified in Section 4.01(a) and ending on the third anniversary of the
termination of the Agreement.
(c) Cause; Without Good
Reason. If the Company terminates Employee’s employment for
Cause, or if Employee resigns as an employee of the Company for reasons other
than an event of Good Reason (not including death or Disability), then the
Company shall pay to Employee the Accrued Compensation (defined below) but shall
have no obligation to pay Employee any amount, whether for salary, benefits,
bonuses, or other compensation or expense reimbursements of any kind, accruing
or vesting after the end of the Term, and such rights shall, except as otherwise
required by law or pursuant to the applicable award agreement or plan, be
forfeited immediately upon the end of the Term, except that in the event the
Employee resigns for other than Good Reason (not including death or Disability),
than his
right to purchase shares of Common Stock of the Company pursuant to any stock
option or stock option plan to the extent vested as of the termination date
shall remain exercisable for a period of three months following the termination
date, but in no event after the expiration of the exercise period of such
option(s). As used herein, “Accrued Compensation” shall mean an amount which
shall include all amounts earned or accrued by Employee through the date of
termination of this Agreement but not paid as of such date, including (i) base
salary, (ii) reimbursement for business expenses incurred by the Employee on
behalf of the Company, pursuant to the Company’s expense reimbursement policy in
effect at such time, (iii) vacation pay per Company policy, and (iv) bonuses and
incentive compensation solely to the extent earned and awarded prior to the date
of termination. Accrued Compensation shall be paid on the first regular pay date
after the date of termination (or earlier, if required by applicable
law).
7
Section 4.02. You
may elect to terminate your employment under this Agreement other than for Good
Reason at any time upon thirty (30) days’ notice to the Company; provided, however, that the
Company may elect to waive some or all of the notice given by paying you your
base salary for that portion of the first thirty (30) days of notice which it
elects to waive.
Section 4.03. This
Agreement shall automatically terminate in the event of your death at any time
during the Term of your employment and the Company may terminate your employment
hereunder by written notice in the event of Disability, as defined below. In the
event that Employee’s employment terminates as a result of his death, the
Employee’s estate shall be entitled to the same benefits and payments as if his
employment had been terminated by the Company for Cause except that any vested
options shall remain exercisable to the extent provided in the applicable option
agreement. In the event that the Company terminates Employee’s employment as a
result of Disability, Employee shall be entitled to the same benefits and
payments pursuant to Section 4.01(a) as if his employment had been terminated by
the Company without Cause except that (1) the amount of severance payable to
Employee would be equal to (A) an amount equal his then-current base salary for
a period of twelve months from the date of termination payable in accordance
with the Company’s regular pay periods or in a lump-sum payment in the sole
discretion of the Board and (B) the benefits described in clause (ii) of Section
4.01(a), except that the “Severance Pay Period” would be deemed reduced to a
period of 12 months from the date of termination and (2) any vested options
shall remain exercisable to the extent provided in the applicable option
agreement.
Except as
provided above, it is agreed that, notwithstanding anything to the contrary
contained in this Agreement, any right to compensation and continued
participation in Company benefit plans during any period of leave of absence
granted you by the Company during your employment hereunder whether resulting
from a Disability, as defined in this Agreement, or from other illness, injury
or condition, shall be governed by any paid sick leave or other policies of the
Company generally applicable to its executives, and by applicable law, as in
effect from time to time. If any question shall arise as to whether
you are disabled by illness, injury or condition to the extent that you are
unable to perform substantially all of your duties and responsibilities for the
Company as determined in the reasonable discretion of the Board of Directors,
you shall, at the Company’s request, submit to a medical examination by a
physician selected by the Company to determine whether you are so
disabled and such determination shall for the purposes of this Agreement be
conclusive of the issue. If such a question arises and you fail to
submit to the requested medical examination, the Company’s determination of the
issue shall be binding on you. In the event the Company elects to terminate this
Agreement due to the Disability of Employee, it shall give Employee written
notice of termination which shall take effect thirty (30) days after the date it
is sent to Employee unless Employee shall have returned to the performance of
his duties hereunder during such thirty (30) day period (whereupon such notice
shall become void).
8
Article V. Effect
of Termination of Employment.
Section
5.01. Except as otherwise expressly provided in Section 4.01.
and except for payment of base salary for waiver of some or all of your notice
of termination other than for Good Reason pursuant to Section 4.02., the Company
shall have no obligation or liability to you hereunder following termination of
your employment, howsoever occurring, other than for payment of any unpaid base
salary earned by you during the last payroll period of your employment, through
the date of termination.
Section
5.02. Except for any right you may have under COBRA (or any
successor law) to continue participation in the Company’s group health plans,
all benefits shall terminate in accordance with the terms of the applicable
benefit plans based on the date of termination of your employment, without
regard to any continuation of base salary or other payment to you following
termination. Except as expressly provided in Section 4.01., any
continuation in the Company’s group health plans under COBRA shall be at your
cost.
Section
5.03. Provisions of this Agreement shall survive any
termination if so provided in this Agreement or if necessary or desirable to
accomplish the purposes of other surviving provisions, including without
limitation your obligations under Article 3 of this Agreement. The
obligation of the Company to make payments to you, or on behalf of you or your
eligible dependents under Section 4.01, is expressly conditioned upon your
continued full performance of obligations under Article 3, hereof.
Article
VI. Definitions. For purposes of
this Agreement, the following definitions apply:
Section
6.01. “Affiliates” means all persons and entities directly or
indirectly controlling, controlled by or under common control with the Company,
where control may be by management authority, contract, or equity
interest.
Section
6.02. “Cause,” as used in this Agreement, means (i) the
commission of fraud, embezzlement, theft or other dishonesty in the performance
of your duties for, or responsibilities to, the Company, (ii) willful, or
repeated or negligent failure to adequately perform your duties for, or
responsibilities to the Company as reasonably determined by the Board or
material breach of this Agreement, and after reasonable notice from the Board
setting forth in reasonable detail the nature of such failure or breach and you
shall not have remedied such failure within thirty (30) days of receiving such
notice; or (iii) a breach of your fiduciary duty to the Company; or (iv)
personal dishonesty injurious to the Company.
9
Section
6.03. “Change of Control” means (i) a sale of all or
substantially all of the Company’s business or assets in one transaction or a
series of related transaction, (ii) the consummation by the Company of any
merger, consolidation, or other business combination transaction of the Company
with or into or otherwise involving another corporation, entity or person, other
than a transaction in which the holders of at least a majority of the shares of
voting capital stock of the Company outstanding immediately prior to such
transaction continue to hold (either by such shares remaining outstanding or by
their being converted into shares of voting capital stock of the surviving
entity) a majority of the total voting power represented by the shares of voting
capital stock of the Company (or the surviving entity) outstanding immediately
after such transaction, (iii) the direct or indirect acquisition (including by
way of a tender or exchange offer) by any person, or persons acting as a group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of
1934), other that the Company or any subsidiary of the Company, of beneficial
ownership or a right to acquire beneficial ownership of shares representing a
majority of the voting power of the then outstanding shares of capital stock of
the Company, (iv) a contested election of Directors, as a result of which or in
connection with which the persons who were Directors before such election or
their nominees cease to constitute a majority of the Board, or (v) a dissolution
or liquidation of the Company.
Section
6.04. “Confidential Information” means any and all information
of or concerning (i) the Company, its Affiliates and employees and
their work on behalf of the Company and (ii) any other Person with which the
Company does or may do business, which is not generally known or readily
available to those Persons with whom the Company or any of its Affiliates
competes or does business or with whom the Company or any of its Affiliates
plans to compete or do business. Confidential Information also includes any
information received by the Company or any of its Affiliates from any Person
with any understanding, express or implied, that it will not be
disclosed.
Section 6.05. “Good
Reason,” as used in this Agreement, means the occurrence of any of the following
without your express written consent at any time during your employment, provided that you
have complied with the Good Reason Process: (i) the assignment to you by the
Company of duties materially inconsistent with your position, duties,
responsibilities and status with the Company or a material adverse change in
your titles or offices, or any removal of you from or any failure to reelect you
to any of such positions, including but not limited to your position as a
director of the Company, except in connection with the termination of your
employment for Disability or Cause or as a result of your death or by you other
than for Good Reason; (ii) a relocation of the Company’s principal executive
offices to a location outside of Metropolitan Philadelphia, Pennsylvania,
except for required travel by you on the Company’s business to an extent
substantially consistent with your business travel obligations at the time of
the Acquisition; or (iii) a breach of any of the material terms or conditions of
this Agreement by the Company that is not cured within 30 days after written
notice thereof.
10
Section
6.06. “Good Reason Process”
shall mean that (A) you reasonably determine in good faith that a “Good Reason”
event has occurred; (B) you notify the Company in writing of the occurrence of
the Good Reason event within five (5) days of its occurrence); (C) you
cooperate in good faith with the Company’s efforts, for a period not less than
thirty (30) days following such notice, to modify your employment situation in a
manner acceptable to you and the Company; and (D) notwithstanding such efforts,
one or more of the Good Reason events continues to exist and has not been
modified in a manner acceptable to you.
Section
6.07. “Intellectual Property” means any invention, formula,
process, discovery, development, design, innovation or improvement (whether or
not patentable or registrable under copyright statutes) made, conceived or first
actually reduced to practice by you solely or jointly with others, during your
employment by the Company; provided, however, that, as
used in this Agreement, the term “Intellectual Property” shall not apply to any
invention that you develop on your own time, without using the equipment,
supplies, facilities or trade secrets or Confidential Information of the Company
or any of its Affiliates, unless such invention relates at the time of
conception or reduction to practice of the invention (i) to the business of the
Company or any of its Affiliates, (ii) to the actual or demonstrably anticipated
research or development of the Company or any of its Affiliates or (iii) results
from any work performed by you for the Company or any of its
Affiliates.
Section
6.08. “Person” means an individual, a corporation, a limited
liability company, an association, a partnership, an estate, a trust or any
other entity or organization, other than the Company or any of its
Affiliates.
Section
6.09. “Disability” means (i) Employee’s incapacity due to
physical or mental illness that results in his being substantially unable to
perform his duties hereunder for six consecutive months (or for six months out
of any nine month period) or (ii) a qualified independent physician mutually
acceptable to the Company and Employee determines that Employee is mentally or
physically disabled so as to be unable to regularly perform the duties of his
position and such condition is expected to be of a permanent duration. During a
period of Disability while he remains an employee of the Company, Employee shall
continue to receive his base salary hereunder, provided that if the Company
provides Employee with disability insurance coverage, payments of Employee’s
base salary shall be reduced by the amount of any disability insurance payments
received by Employee due to such coverage.
Article
VII. Conflicting Agreements. You hereby
represent and warrant that your signing of this Agreement and the performance of
your obligations under it will not breach or be in conflict with any other
agreement to which you are a party or are bound and that you are not now subject
to any covenants against competition or similar covenants or any court order
that could affect the performance of your obligations under this
Agreement. You agree that you will not disclose to or use on behalf
of the Company any proprietary information of any Person without that Person’s
consent.
11
Article
VIII. Withholding. All payments made
by the Company under this Agreement shall be reduced by any tax or other amounts
required to be withheld by the Company under applicable law.
Article
IX. Assignment. Neither you nor
the Company may make any assignment of this Agreement or any interest in it, by
operation of law or otherwise, without the prior written consent of the other;
provided, however, that the
Company may assign its rights and obligations under this Agreement without your
consent to one of its Affiliates or to any Person with whom the Company shall
hereafter affect a reorganization, consolidate with, or merge into or to whom it
transfers all or substantially all of its properties or assets. This
Agreement shall inure to the benefit of and be binding upon you and the Company,
and each of our respective successors, executors, administrators, heirs, and
permitted assigns.
Article
X. Severability. If any portion or
provision of this Agreement shall to any extent be declared illegal or
unenforceable by a court of competent jurisdiction, then the remainder of this
Agreement, or the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
Article
XI. Indemnity. The Company
hereby agrees to indemnify, defend, and hold harmless the Employee for any and
all claims arising from or related to his employment by the Company at any time
asserted, at any place asserted, to the fullest extent permitted by law, except
for claims based on Employee’s fraud, deceit or willfulness. The
Company shall maintain such insurance as is necessary and reasonable to protect
the Employee from any and all claims arising from or in connection with his
employment by the Company during the term of Employee's employment with the
Company. The provisions of this Article XI are in addition to and not in lieu of
any indemnification, defense or other benefit to which Employee may be entitled
by statute, regulation, common law or otherwise.
Article
XII. Miscellaneous.
Section 12.01. This
Agreement sets forth the entire agreement between you and the Company and
supersedes any and all prior and contemporaneous communications, agreements and
understandings, written or oral, with respect to the terms and conditions of
your employment Agreement”); provided, however, that this
Agreement shall not supersede or otherwise terminate any effective assignment
you have made of any invention or other intellectual property to the Company or
any of its Affiliates on or before the Effective Date or otherwise with respect
to confidentiality, non-competition, non-solicitation or the like prior to the
Effective Date, all of which assignments and rights shall remain in full force
and effect.
Section 12.02. This
Agreement may not be modified or amended, and no breach shall be deemed to be
waived, unless agreed to in writing by you and an expressly authorized
representative of the Board. The headings and captions in this
Agreement are for convenience only and in no way define or describe the scope or
content of any provision of this Agreement. This Agreement may be
executed in two or more counterparts, each of which shall be an original and all
of which together shall constitute one and the same instrument.
12
Section 12.03. This
is a Pennsylvania
contract and shall be governed and construed in accordance with the laws of the
Commonwealth of
Pennsylvania, without regard to the conflict of laws principles
hereof.
Section 12.04. Upon
execution of this Agreement we will pay all reasonable attorneys’ fees which you
incur for the review and negotiation of this Agreement and any ancillary
documents and agreements relating thereto.
Section 12.05. It is the
intention of the parties that this Agreement comply strictly with the
provisions of Section 409A of the Internal Revenue Code, as amended, and
Treasury Regulations and other Internal Revenue Service guidance promulgated
thereunder (the “409A Rules”). Consistent with that intention, all references
hereunder to termination of the Employee’s employment with the Company shall
mean separation from the service of the service recipient under the 409A
Rules. Further, to the extent the Company determines in good faith
that the Employee is a specified employee under the 409A Rules, any payments of
deferred compensation within the meaning of the 409A Rules will be deferred for
a period of six (6) months and one (1) day, unless the Employee dies within such
period, in which event payment will be made pursuant to Section
4.03. Accordingly, this Agreement, including, but not limited to, any
provisions relating to severance payments, may be amended from time to time as
may be necessary or appropriate to comply with the 409A Rules without obtaining
any additional consent from Employee, so long as such amendment or modification
does not materially affectthe net present value of the compensation or benefits
to which Employee otherwise would be entitled under this Agreement.
Section
12.06. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and
obligations.
Section
12.07. Except as otherwise expressly provided in this
Agreement, any notices provided for in this Agreement shall be in writing and
shall be effective when delivered in person, consigned to a reputable national
courier service or deposited in the United States mail, postage prepaid, and
addressed to you at your last known address on the books of the Company or, in
the case of the Company, to it at its principal place of business, attention of
the Chair of the Board, or to such other address as either party may specify by
notice to the other actually received.
Signature
page follows.
13
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
|
|
By:
|
/s/ Xxxxxxx Xxxxxxx | |
| Name: | |||
| Title: | |||
|
Employee
|
|||
|
/s/
Xxxxxx X. XxXxxxxx
|
|||
|
Xxxxxx
X. XxXxxxxx
|
|||
14
