July 21, 2006 Joseph E. Sarachek
EXHIBIT
10.1
July
21, 2006
Xxxxxx
X. Xxxxxxxx
00
Xxxxxxx Xxxxx
Xxxxxxxxx,
XX 00000
Re:
Engagement as Chief Executive Officer and Member of the Board of
Directors
Dear
Xx. Xxxxxxxx :
This
letter agreement (this “Agreement”) confirms the terms pursuant to which
PubliCARD, Inc. (the “Company”) engages Xxxxxx X. Xxxxxxxx (“Xxxxxxxx”) to serve
as Chief Executive Officer of the Company. In connection with his service as
Chief Executive Officer, Sarachek will provide financial and restructuring
advisory services on behalf of the Company which may include serving as the
senior operations officer of the Company, overseeing the Company’s operations,
analyzing, assisting and developing a financial restructuring plan involving
the
Company, assisting the Company in developing and negotiating a prospective
plan
of reorganization with its creditors, selling the Company through a merger
or
otherwise, selling the Company’s assets, purchasing assets or companies, and/or
raising additional debt/equity capital for the Company (each, a “Transaction”),
and such other tasks that may be reasonably requested by the Company’s Board of
Directors. The Company will take such actions within its authority to cause
Sarachek to be elected as a member of the Company’s Board of Directors (and to
retain such status) during the term of this Agreement.
Sarachek
shall have control of the manner and means by which his services are performed
under this Agreement and shall report to, and be subject to the general
direction of, the Company’s Board of Directors. Sarachek shall be treated as an
independent contractor for all employment and tax law purposes. Sarachek agrees
to devote such time and effort as he reasonably determines is necessary to
perform the services required of him under this Agreement. The Company
acknowledges that Sarachek’s engagement as an independent contractor under this
Agreement shall not require him to devote his full attention and business time
to the Company. During the term of this Agreement, Sarachek may engage in,
provide services to or possess an interest in any other business ventures of
any
nature or description, independently or with others, to the extent such actions
do not breach Sarachek’s fiduciary duties as an officer and director of the
Company.
This
Agreement shall become effective as of the date hereof upon the execution by
both the Company and Sarachek and may be terminated on 30 days’ prior written
notice by the Company or Sarachek. The termination of this Agreement shall
not
affect: a) any compensation earned by Sarachek up to the date of termination;
b)
any compensation which Sarachek may otherwise become entitled to hereunder;
c)
the reimbursement of expenses incurred by Sarachek up to the date of
termination; or d) Sarachek’s rights to indemnification in accordance with this
Agreement and the attached indemnification provisions, which are incorporated
herein, all of which shall remain in full force and effect.
Compensation
of Services
|
I.
|
The
Company shall pay Sarachek a monthly fee of $15,000 (“Monthly Fee”). The
initial Monthly Fee shall be paid upon the execution of this Agreement
and
each subsequent Monthly Fee shall be paid on the 21st of each month
thereafter.
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II.
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In
addition to the Monthly Fee, promptly after the date hereof Sarachek
shall
be granted options (the “Initial Grant”) priced at the market price of the
Company’s common stock at the date of grant for 10% of the fully diluted
shares of the Company, which shall become vested and immediately
exercisable upon the consummation of the Initial Transaction (as
defined
below) and shall include such other terms and conditions, including
registration rights, as provided in the stock option agreement attached
hereto as Appendix B (the “Stock Option Agreement”). The Initial Grant
shall be made, to the extent shares are available, under the Company’s
stock incentive plans, and any additional shares shall be outside
of such
plans. In connection with the consummation of the first Transaction
after
the date hereof (the “Initial Transaction”), Sarachek shall be granted, in
the amount provided below, additional options (“Additional Options”) to
purchase shares of the Company’s common stock (or any successor company)
priced at the market price of the Company’s common stock at the date of
grant which shall be immediately vested and exercisable and shall
otherwise be on the same terms and conditions, including registration
rights, as the Initial Grant. The amount of Additional Options to
be
granted shall equal such number of shares as shall provide Sarachek
with
options to purchase 10% of the fully diluted shares of the Company
(or any
successor company) after giving effect to the Initial Transaction
and
taking into consideration the Initial
Grant.
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III.
|
In
addition to the Monthly Fee, during the term of this Agreement, the
Company shall pay Sarachek a cash Transaction Fee (the “Transaction Fee”),
subject to V below, upon consummation of each Transaction based on
the
aggregate value thereof received by the Company or its stockholders,
including the gross proceeds of any financing (whether in cash, securities
or other-in-kind consideration, including assumption of debt ) as
follows:
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|
Aggregate
Transaction Value
|
Cumulative
Transaction Fee
|
|
From
0 to $1,000,000
|
4%,
plus
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|
From
$1,000,000 to $5,000,000
|
5%
of the incremental, plus
|
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From
$5,000,000 to $10,000,000
|
6%
of the incremental, plus,
|
|
Over
$10,000,000
|
7%
of any amount over $10,000,000
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IV.
|
Sarachek
shall be reimbursed for all reasonable out-of-pocket expenses incurred
in
carrying out the terms of this Agreement, including telephone, travel,
facsimile, courier, computer time charges and attorneys’ fees (to the
extent necessary), food, messenger services, postage and copying.
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V.
|
The
Transaction Fee and any other fees that are unpaid, shall be paid
out of
the proceeds of any Transaction. Sarachek shall be entitled to payment
in
full of his Monthly Fees and expenses, regardless of whether any
Transaction is successfully completed.
|
Payment
of all fees and expenses incurred under this Agreement, are solely the
responsibility of the Company. The Company shall reimburse Sarachek up to $7,000
for the legal fees of Kronish Xxxx Xxxxxx & Xxxxxxx LLP incurred in
connection with the preparation and negotiation of this Agreement. For a period
of one year following termination of this Agreement by the Company without
cause, Sarachek shall be entitled to receive Transaction Fees in connection
with
each Transaction the Company or its successors consummates with any party (or
its affiliates) with whom Sarachek or the Company have contacted during the
term
of this Agreement.
Indemnification/Insurance
The
Company shall indemnify (including advancement of expenses) and hold harmless
Sarachek to maximum extent permitted by law and shall execute the
Indemnification Agreement attached hereto as Appendix A, the terms and
conditions of which are hereby incorporated herein by reference.
2
If
at any time after the termination of this Agreement, Sarachek is called upon
by
the Company or is legally required to render services directly or indirectly
relating to the subject matter of this Agreement beyond the services
contemplated herein (including, but not limited to, producing of documents,
answering interrogatories, giving depositions, giving expert or other testimony,
whether by agreement, subpoena or otherwise), the Company shall pay Sarachek’s
then current hourly rates for the time expended in rendering such services,
including, but not limited to, time for meetings, conferences, preparation
and
travel, and all related costs and expenses, including the reasonable legal
fees
and expenses of Sarachek’s counsel.
During
the term of this Agreement, the Company shall not amend, repeal or otherwise
modify its articles of incorporation or by-laws, each as amended (together,
the
“Charter Documents”), in a manner that would adversely affect Sarachek’s rights
to indemnification and exculpation thereunder. For a period of six years
following the termination of this Agreement, the Company shall indemnify
(including advancement of expenses) and hold harmless Sarachek to maximum extent
permitted by law and, in addition, to the same extent as he will be indemnified
by the Company as an officer and director of the Company or in connection with
any other capacities indemnifiable thereunder pursuant to the Company’s Charter
Documents immediately prior to the termination of this Agreement for acts or
omissions which occurred at or prior to such termination.
During
the term of this Agreement, the Company shall use reasonable efforts to maintain
officers’ and directors’ liability insurance with at least as favorable terms
and coverage amounts as it currently has in place, which policy shall cover
Sarachek in his capacity as an officer and director of the Company and in
connection with any other capacities coverable thereunder.
If
the Company or any of its successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers or conveys all
or
substantially all of its properties and assets to any person, then, and in
each
such case, to the extent necessary, proper provision shall be made so that
the
successors and assigns of the Company or its assets shall assume the obligations
set forth in this Agreement.
Disclosure
All
non-public information provided by the Company to Sarachek will be considered
as
confidential information and shall be maintained as such by Sarachek, except
as
required by law or as required to enable Sarachek to perform his services
pursuant to this Agreement, until the same becomes known to the public without
release thereof by Sarachek.
Sarachek
will not be responsible for independently verifying the accuracy of any
information provided to Sarachek by the Company or its agents (the
“Information”) and he shall not be liable for inaccuracies in any Information
provided to Sarachek by or at the direction of the Company.
Entire
Agreement, Governing Laws and Jurisdiction, Etc.
This
Agreement, the Stock Option Agreement and the Indemnification Agreement set
forth the entire understanding of the parties relating to the subject matter
hereof and supersede and cancel any prior communications, understandings and
agreements between the parties with respect to the subject matter hereof. This
Agreement cannot be terminated or changed, nor can any of its provisions be
waived, except by written agreement signed by the Company and Sarachek. This
Agreement shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company and
Sarachek.
3
This
Agreement shall be governed by and construed to be in accordance with the laws
of the State of New York applicable to contracts made and to be performed solely
in such state by citizens thereof. Any dispute arising out of this Agreement
shall be adjudicated by the American Arbitration Association.
Acceptance
Please
confirm that the foregoing is in accordance with your understanding by signing
in the space indicated below and returning an executed copy of this Agreement
to
the Company. A telecopy of a signed original of this Agreement shall be
sufficient to bind the parties whose signatures appear hereon.
Very
truly yours,
PubliCARD,
Inc.
By:
/s/ Xxxxxxx X. XxXxxx
ACCEPTED
AND AGREED TO:
By:
/s/
Xxxxxx X. Xxxxxxxx
Xxxxxx
X. Xxxxxxxx
Date:
July 21, 2006
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