EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), entered into as of this _____
day of August, 1997 by and between TECHSTAR COMMUNICATIONS, INC., a Delaware
corporation ("TechStar" or the "Corporation"), having its principal offices at
0000 Xxxx Xxxx Xxxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxx 00000; IDF INTERNATIONAL,
INC., a Delaware corporation ("IDF"), having its principal offices at 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and XXXXXX XXXXXXX, an individual
residing at 0000 Xxxx Xxxxx, Xxxxx Xxxxx, XX 00000 (the "Employee"). TechStar
and IDF are hereinafter sometimes collectively referred to as the "Corporation."
W I T N E S S E T H :
WHEREAS, the Employee is presently a senior executive officer of
TechStar and has extensive knowledge with respect to the business of TechStar;
WHEREAS, American United Global, Inc. ("AUGI"), has, pursuant to an
agreement and plan of merger dated July 31, 1997 (the "Merger Agreement")
between AUGI, IDF, TechStar and an acquisition subsidiary of IDF, transferred to
IDF, through a merger of such acquisition subsidiary with and into TechStar (the
"Merger"), 100% of the capital stock of TechStar;
WHEREAS, the Corporation desires to have access to the services of the
Employee after the Merger is consummated;
WHEREAS, the Employee is willing and able to render his services to the
Corporation on the terms and conditions of this Agreement;
WHEREAS, it is understood that this Agreement shall become effective as
of the consummation of the Merger (the "Effective Date"); and
WHEREAS, the Employee, TechStar and AUGI are parties to an employment
agreement, dated December 11, 1996 (the "Prior Employment Agreement") which
shall terminate on the Effective Date.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound thereby, the
parties hereby agree as follows:
1. Nature of Employment.
(a) Subject to the terms and conditions of this Agreement, the
Corporation shall, throughout the term of this Agreement, retain the Employee,
and the Employee shall render services to the Corporation, in the capacity and
with the title of Senior Vice President, Chief Financial Officer and Secretary
of IDF and President and Chief Executive Officer of TechStar, and such
additional titles as may be assigned to the Employee from time to time by the
Board of Directors of the Corporation (the "Board"), which titles the Employee
may be willing to accept. In such capacity, the Employee shall have and exercise
primary responsibility (i) on behalf of IDF, for overseeing and actively
participating in all aspects of financial reporting, corporate finance and
banking, dealing with auditors and periodic reporting to the Securities and
Exchange Commission, and (ii) on behalf of TechStar, the establishment of all
policies, plans and strategic goals for such Corporation and subsidiaries,
together with such other similar or related duties consistent with his offices
as may be assigned to the Employee from time to time by the Board.
(b) Throughout the period of his employment hereunder, the
Employee shall: (i) devote his full business time, attention, knowledge and
skills, faithfully, diligently and to the best of his ability, to the active
performance of his duties and responsibilities hereunder on behalf of the
Corporation; (ii) observe and carry out such rules, regulations, policies,
directions and restrictions as may be established from time to time by the
Board, including but not limited to the standard policies and procedures of the
Corporation as in effect from time to time; and (iii) do such traveling at the
Corporation's expense as may reasonably be required in connection with the
performance of such duties and responsibilities; provided, however, that the
Employee shall not be assigned to regular duties that would reasonably require
him to relocate his permanent residence from that first set forth above. The
Employee may engage in charitable, educational, religious, civic and similar
types of activities (all of which shall be deemed to benefit the Corporation),
speaking engagements, membership on the board of directors of other
organizations, and similar activities to the extent that such activities do not
inhibit or prohibit the performance of his duties hereunder or inhibit or
conflict in any material way with the business of the Corporation.
2. Term of Employment.
(a) Subject to prior termination in accordance with Section
2(b) below, the term of this Agreement and the Employee's employment hereunder
shall commence as of the Effective Date and shall continue through November 30,
2000, and shall thereafter automatically renew (except to the extent otherwise
provided in this Agreement) for additional terms of one (1) year each unless
either party gives written notice of termination to the other party not less
than ninety (90) days prior to the end of any term (in which event this
Agreement shall terminate effective as of the close of such term), as the same
may be renewed (the "Term").
(b) This Agreement may be terminated:
(i) upon mutual written agreement of the Corporation
and the Employee;
(ii) at the option of the Employee, upon thirty (30)
days' prior written notice to the Corporation, in the event that (A) the
Corporation shall (1) fail to make any payment to the Employee required to be
made under the terms of this Agreement within thirty (30) days after payment is
due after three (3) business days written notice and opportunity to cure, or (2)
fail to perform any other material covenant or agreement to be performed by it
hereunder (including the failure to re-appoint or re-elect Employee to the
offices described in Section 1(a) of this Agreement or other material change in
the duties of the Employee which reduces the scope or importance of such
position) or take any action prohibited by this Agreement, and fail to cure or
remedy same within thirty (30) days after written notice thereof to the
Corporation; provided, however, that if any periodic salary payment is not paid
within ten (10) days of its due date, the Employee shall only be required to
provide fifteen (15) days prior written notice of termination; or (B) the
Corporation is declared insolvent, liquidates, dissolves or discontinues the
Corporation Business (as hereinafter defined).
(iii) at the option of the Corporation, upon written
notice to the Employee, "for cause" (as hereinafter defined);
(iv) at the option of the Corporation in the event of
the "permanent disability" (as hereinafter defined) of the Employee; or
(v) upon the death of the Employee, or as a result of
the voluntary resignation by the Employee for any reason other than as specified
in Section 2(b)(ii) above.
(c) As used herein, the term "for cause" shall mean and be
limited to:
(i) any breach of any of the material covenants and
agreements of the Employee (A) contained in this Agreement, or
(B) contained in Section 5 below, which, in any case, is not
corrected in all material respects (if so correctable) within
thirty (30) days after written notice of same from either of
the Corporation to the Employee;
(ii) any material breach by the Employee of his
fiduciary duties and obligations to the Corporation or its
subsidiaries which is not corrected in all material respects
(if so correctable) within thirty (30) days after written
notice of same the Corporation to the Employee;
(iii) the habitual (meaning more than two (2)
breaches of the same covenant or agreement) and material
breach by the Employee of a material
provision of this Agreement (regardless of any prior cure
thereof, but provided that Employee shall have received the
notice and opportunity to cure provided by clause (i) above);
or
(iv) conduct constituting fraud or embezzlement or
gross dishonesty by Employee in connection with the
performance of his duties under this Agreement, or a formal
charge or indictment of Employee for or conviction of Employee
of a felony or, if it shall materially and adversely damage or
bring into disrepute the business, reputation or goodwill of
either of the Corporation, any crime involving moral
turpitude.
The notice pursuant to clause (i) above shall specify with
particularity the covenant or agreement alleged to have been breached by
Employee and action necessary to be taken by Employee to cure the breach to the
satisfaction of the Corporation. Termination for cause pursuant to clauses (ii),
(iii) or (iv) above shall be effective upon delivery of written notice to
Employee specifying the covenants or agreements alleged to have been breached by
Employee.
(d) As used herein, the term "permanent disability" shall
mean, and be limited to, any physical or mental illness, disability or
impairment that prevents the Employee from continuing the performance of his
normal duties and responsibilities hereunder for a period in excess of four (4)
consecutive months or one hundred eighty (180) non-consecutive days within any
period of three hundred sixty five (365) working days. For purposes of
determining whether a "permanent disability" has occurred under this Agreement,
the written determination thereof by two (2) qualified practicing physicians
selected and paid for by the Corporation (and reasonably acceptable to the
Employee) shall be conclusive.
(e) Upon any termination of this Agreement as hereinabove
provided, the Employee (or his estate or legal representatives, as the case may
be) shall be entitled to receive any and all earned but unpaid Base Salary (as
hereinafter defined) prorated through the effective date of termination, and any
other amounts and benefits then accrued or due and payable to the Employee
hereunder; provided, that the Employee's participation in any benefit or welfare
plans of the Corporation (including, without limitation, the Stock Options
described below and any profit-sharing plans) shall terminate upon the effective
date of termination of employment except to the extent such Stock Options shall
have vested or as otherwise required by law or provided under the express terms
of the applicable plan. All such payments shall be made on the next applicable
payment date therefor (as provided in Section 3 below) following the effective
date of termination. Except when termination is (x) by the Employee pursuant to
Section 2(b)(ii) above, or (y) by the Corporation other than "for cause" (as
defined in Section 2(c) hereof (any termination described in clauses (x) or (y)
being sometimes hereinafter referred to as a "Non-Cause Termination"), the
foregoing constitutes all amounts to which the Employee shall be entitled upon
termination of this Agreement. In the case of a Non-Cause Termination, the
amount to which the Employee shall be entitled is not so limited and shall
include the Option Benefit (defined below).
(f) In the event that there shall be a dispute among the
parties hereto as to whether or not a termination shall constitute a Non-Cause
Termination, during the pendency of such dispute the Corporation will place in
escrow with a third party attorney or financial institution in an interest
bearing escrow account all such periodic Base Salary payments and the securities
representing the Option Benefit (as hereinafter defined) and fringe benefits
which shall be disbursed to the appropriate party or parties upon the final
resolution or settlement of such dispute from which no appeal can or shall have
been taken. As used herein, the term Option Benefit means all the Option Shares
vested pursuant to Section 3(d)(iii) of this Agreement.
3. Compensation and Benefits.
(a) Base Salary. As compensation for his services to be
rendered hereunder, the Corporation shall pay to the Employee a base salary at
the rates per annum set forth below (the "Base Salary"), payable in periodic
installments in accordance with the standard payroll practices of the
Corporation in effect from time to time, but not less than twice each month:
From the Effective Date through November 30, 1997 $180,000
From December 1, 1997 through November 30, 1998 $200,000
From December 1, 1998 through November 30, 1999 $225,000
From December 1, 1999 through November 30, 2000 $250,000;
provided, that the contemplated increase for the period commencing December 1,
1999 is expressly made subject to the Corporation achieving its "1999 Target
Income" (described below).
(b) Fringe Benefits. The Corporation shall also make available
to the Employee, throughout the period of his employment hereunder, such
benefits and perquisites as are generally provided by the Corporation to its
other senior management employees (which benefits shall, in the aggregate, be at
least as generous as the most generous benefits supplied by the Corporation as
any of its subsidiaries to senior executive officers), including but not limited
to eligibility for participation in any group life, health, dental, disability
or accident insurance, pension plan, 401(k) plan, profit-sharing plan, or other
such benefit plan or policy, if any, which may presently be in effect or which
may hereafter be adopted by the Corporation for the benefit of its employees
generally; provided, however, that, except as specified on Exhibit "A" annexed
hereto, nothing herein contained may be deemed to require the Corporation to
adopt or maintain any particular plan or policy; and provided, further, that the
Corporation shall not be obligated to permit the Employee to participate in any
stock option plans it may provide to its employees from time to time, other than
the stock option plan established for the Employee pursuant to this Agreement
and described below. Participation in such benefit plans may be subject to
standard
waiting periods following the commencement of full-time employment.
Notwithstanding the foregoing, throughout the term of this Agreement, the
Employee shall be entitled to receive the minimum fringe benefits listed on
Exhibit "A" annexed hereto and made a part hereof.
(c) Expenses. Throughout the period of the Employee's
employment hereunder, the Corporation shall also reimburse the Employee,
reasonably promptly after presentment by the Employee to the Corporation of
appropriate receipts and vouchers therefor and related information in such form
and detail as the Corporation may reasonably request, for any reasonable
out-of-pocket business expenses incurred by the Employee in connection with the
performance of his duties and responsibilities hereunder.
(d) Stock Options. The Employee has been awarded options (the
"Options") to purchase a maximum aggregate of Two Hundred and Eighty Five
Thousand Five Hundred and Seventeen (285,517) shares of the common stock, $0.001
par value per share (the "IDF Common Stock") of IDF (the "Option Shares") at an
exercise price equal to $1.25 per share (the "Exercise Price"). Such Exercise
Price was calculated based upon the conversion price per share into which
convertible notes issued to private placement investors (including Employee) on
the Effective Date of this Agreement may be converted directly or indirectly
into a share of IDF Common Stock, and the exercise price for which such Options
were approved by the Board. The Exercise Price of the Options and number of
Option Shares are subject to adjustment for subdivisions or splits,
combinations, or reclassifications of the IDF Common Stock. All Options awarded
hereunder are subject to the terms and conditions hereinafter set forth
including, without limitation, the forfeiture provisions set forth below.
(i) Term of Options. The Options shall have a term
expiring on a date which shall be the earlier to occur of: (x) July 1, 2000, but
only to the extent of any Options which shall not have "vested" in accordance
with Section 3(d)(ii) or Section 3(d)(iii) hereof, or (y) on November 30, 2002,
to the extent of any Options which shall have "vested" in accordance with
Section 3(d)(ii) or Section 3(d)(iii) hereof shall not have been exercised (the
"Option Expiration Date").
(ii) Vesting Conditions. Except as provided in
Section 3(d)(iii) below, the Options shall vest and become exercisable only upon
the following terms and conditions:
(A) An aggregate of Seventy One Thousand
Three Hundred Seventy Nine (71,379) Options shall
vest immediately on the Effective Date of this
Agreement and may be immediately exercised at the
Exercise Price then in effect; and
(B) In the event that the "Pre-Tax Income"
(as hereinafter defined) of the Corporation for the
period commencing on July 1, 1997 and ending June 30,
1998 (the "1998 Measuring Period") shall equal or
exceed $3.0 million (the "1998 Target Income"), a
maximum of an additional 71,379 Option Shares may be
immediately exercised; provided, that (x) a maximum
of 23,793 Option Shares shall be pro-rated from zero
by multiplying 23,793 by the fraction determined by
dividing the actual 1998 Pre-Tax Income by the 1998
Target Pre-Tax Income; and (y) if the actual Pre-Tax
Income for such 1998 Measuring Period shall be equal
to or greater than $1.4 million, but less than the
1998 Target Income, the remaining 47,586 Option
Shares exercisable for the 1998 Measuring Period
shall be pro-rated by multiplying such 47,586 Option
Shares by a fraction (1) the numerator of which
shall be the amount by which the actual 1998 Pre-Tax
Income exceeds the minimum 1998 Pre-Tax Income, and
(2) the denominator of which shall be the amount by
which the 1998 Target Income exceeds the minimum
1998 Pre-Tax Income; and
(C) In the event that the "Pre-Tax Income"
(as hereinafter defined) of the Corporation for the
period commencing on July 1, 1998 and ending June 30,
1999 (the "1999 Measuring Period") shall equal or
exceed $4.25 million (the "1999 Target Income"), a
maximum of an additional 71,379 Option Shares may be
immediately exercised; provided, that (x) a maximum
of 23,793 Option Shares shall be pro-rated from zero
by multiplying 23,793 by the fraction determined by
dividing the actual 1999 Pre-Tax Income by the 1999
Target Pre-Income; and (y) if the actual Pre-Tax
Income for such 1999 Measuring Period shall be equal
to or greater than $2.125 million, but less than the
1999 Target Income, the remaining 47,586 Option
Shares exercisable for the 1999 Measuring Period
shall be pro-rated by multiplying such 47,586 Option
Shares by a fraction (1) the numerator of which shall
be the amount by which the Actual 1999 Pre-Tax Income
exceeds the minimum 1999 Pre-Tax Income, and (2) the
denominator of which shall be the amount by which the
1999 Target Income exceeds the minimum 1999 Pre-Tax
Income; and
(D) In the event that the "Pre-Tax Income"
(as hereinafter defined) of the Corporation for the
period commencing on July 1, 1999 and ending June 30,
2000 (the "2000 Measuring Period") shall equal or
exceed $5.0 million (the "2000 Target Income"), a
maximum of all remaining 71,379 Option Shares may be
immediately exercised; provided, that if (x) a
maximum of 23,793 Option Shares shall be pro-rated
from zero by multiplying 23,793 by the fraction
determined by dividing the actual 2000 Pre-Tax Income
by the 2000 Target Pre-Tax Income; and (y) the actual
Pre-Tax Income for such 2000 Measuring Period shall
be equal to or greater than $3.0 million, but less
than the 2000 Target Income, the remaining 47,586
Option Shares exercisable for the 2000 Measuring
Period shall be pro-rated by multiplying such 47,586
Option Shares by a fraction (1) the numerator of
which shall be the amount by which the actual 2000
Pre-Tax Income exceeds the minimum 2000 Pre-Tax
Income, and (2) the denominator of which shall be the
amount by which the 2000 Target Income exceeds the
minimum 2000 Pre-Tax Income; and
(E) In the event that the accumulated
Pre-Tax Income for all three (3) Measuring Periods
referred to in clauses (B) through (D) above: (or
any portion thereof) shall equal or exceed
$12.25 million, all of the remaining 285,517 Option
Shares shall be immediately and fully
exercisable, irrespective of the actual Pre-Tax
Income earned in any or all of the 1998 Measuring
Period or 1999 Measuring Period; provided, that
the provisions of this clause (E) shall only be
applicable if either (x) the actual Pre-Tax Income
in the 2000 Measuring Period, shall equal or exceed
$3.0 million, or (y) the average of the
closing prices of the Corporation's common
stock, as traded on the Nasdaq Stock Market or any
other national securities exchange, for the
thirty (30) consecutive trading days immediately
prior to June 30, 2000 shall equal or exceed $5.00
per share.
Example: The following is an example of the
application of the pro-ration provisions contained in clauses
(B) through (D) above: 23,793 Option Shares shall be pro-rated
from zero based upon the fraction determined by dividing the
actual Pre-Tax Income by the Target Pre-Tax Income in such
Measuring Year, and the remaining 47,586 Option Shares shall
be multiplied by a fraction: (x) the numerator of which shall
be the amount by which the actual Pre-Tax Income earned in a
Measuring Year shall exceed the minimum base Pre-Tax Income
required in such Measuring Year, and (y) the denominator of
which shall be the difference between the Target Income for
such Measuring Year and the minimum base Pre-Tax Income in
such Measuring Year. Accordingly, if the Corporation's actual
Pre-Tax Income in the 1998 Measuring Year is $2.0 million, an
aggregate of 33,707 Option Shares shall vest in such Measuring
Year, calculated as follows: (i) initially, 15,862 of the
initial 23,793 Option Shares shall, vest, based upon the
product of multiplying 23,793 by 2/3; the fraction determined
by dividing the $2.0 million actual Pre-Tax Income by the $3.0
million Target Pre-Tax Income in such Measuring Year; and (ii)
then 17,845 of the remaining 47,586 Option Shares shall vest,
based upon multiplying such 47,586 Option Shares by 0.375;
being the fraction resulting from dividing $600,000 ($2.0
million actual Pre-Tax Income less the $1.4 million minimum
base Pre-Tax Income for the 1998 Measuring Year) by $1.6
million (the $3.0 million Target Pre-Tax Income less the $1.4
million minimum base Pre-Tax Income).
(iii) Immediate Vesting on Certain Events. The
Options shall immediately vest and shall be exercisable to the extent set forth
below:
(A) if at any time prior to June 30, 2000,
IDF shall effect a sale of all or substantially all
of its shares of the capital stock or assets to any
unaffiliated third party, whether by merger,
consolidation, stock sale, asset sale or like
transaction, all Options shall immediately vest and
be exercisable in full; or
(B) if at any time prior to June 30, 2000,
IDF shall consummate an underwritten public offering
of securities of IDF pursuant to which it shall
receive gross proceeds of $15.0 million or more (a
"Qualified Public Offering"), the unvested Options
shall (x) immediately vest, to the extent of 71,379
Options if the Qualified Public Offering gross
proceeds shall equal or exceed $15.0 million, to the
extent of an addition 71,379 Options (a total of
142,758 Options) if the Qualified Public Offering
gross proceeds shall equal or exceed $17.0 million,
and to the extent of an additional 71,379 Options (a
total of 214,137 Options) if the Qualified Public
Offering gross proceeds shall equal or exceed $20.0
million; and (y) be exercisable, irrespective of the
actual Pre-Tax Income of the Corporation, to the
extent of 33-1/3% of such vested Options in each of
the 1998 Measuring Period, 1999 Measuring Period and
2000 Measuring Period; provided, however, that such
vested Options or any Option Shares issuable upon
exercise thereof shall be subject to the same
underwriter's "lockup" agreement as shall be required
of the shares of IDF then owned by AUGI or AUGI's
affiliates; or
(C) if the Employee's employment pursuant to
this Agreement is terminated by the Corporation or by
the Employee, in either case prior to June 30, 2000,
for any reason, other than (x) "for cause" (as
defined in this Agreement), (y) as a result of the
Employee's resignation or voluntary termination
(except from a constructive termination) of his
employment with the Corporation for any reason other
than a breach by the Corporation of its obligations
to the Employee hereunder, or (z) pursuant to Section
2(b)(i) of this Agreement, all Options shall
immediately vest and shall be fully exercisable.
(iv) Termination of Options. Options not previously
vested and immediately exercisable pursuant to their terms shall immediately
terminate:
(A) effective as of July 1, 2000, but only
with respect to any Options that shall not have
previously vested in accordance with the provisions
of Section 3(d)(ii) or Section 3(d)(iii) above; or
(B) if the Employee's employment with the
Corporation shall terminate "for cause" (as defined
herein), or
(C) if the Employee shall resign or
otherwise voluntarily terminate (except arising from
constructive termination) his full-time employment
with the Corporation prior to June 30, 2000 for any
reason other than a breach by the Corporation of its
obligations to the Employee hereunder.
(v) Definition. As used herein, the term "Pre-Tax
Income" shall mean the net income of the Corporation and all of its consolidated
Subsidiaries (as that term is defined in the Merger Agreement), including,
without limitation, TechStar, after deduction of all expenses paid or accrued
for the appropriate Measuring Period in question in accordance with generally
accepted accounting principles, but before application of or deduction for: (i)
all interest on indebtedness aggregating $600,000 originally incurred by AUGI on
December 11, 1996, of which $300,000 shall be assumed by TechStar pursuant to
the Merger Agreement, and (ii) all federal, state and local income taxes for
such Measuring Period, all as determined by the independent auditors engaged to
audit the consolidated financial statements of the Corporation, subject only to
the right of the Employee (at his sole cost and expense) to engage his own
accountant or financial advisor to review the calculations of such Pre-Tax
Income for the applicable Measuring Period at the Employee's expense. Disputes
shall be resolved in accordance with Section 10(f) of this Agreement.
(vi) Assignment of Options. The Options may not be
transferred, assigned or otherwise disposed of by the Employee unless and until
they have become vested and are then immediately exercisable into Option Shares;
provided, that the Employee shall have the right to assign all or any portion of
his Options to any member of his family; provided, further, that any such
permitted assignee shall execute a joinder or similar agreement with IDF and
TechStar agreeing to be bound by all of the terms and conditions of this Section
3(d).
(vii) Reservation of Option Shares; Registration of
Options. IDF hereby covenants and agrees to:
(A) take all steps necessary and appropriate
to keep a sufficient number of Option Shares reserved
for issuance upon exercise of the Options; and
(B) to the extent that the same have vested
and are then currently exercisable in accordance with
this Agreement, IDF shall, at its sole cost and
expense, include the Options and underlying Option
Shares in any one or more Form S-8 Registration
Statements which IDF shall elect, in its sole
discretion, to file with the Securities and Exchange
Commission to register stock options for any
executive officers, directors or key employees of IDF
or any of its Subsidiaries.
(viii) Cashless Exercise. The Employee shall have the
right to exercise his Options upon vesting pursuant to a "cashless" exercise.
Pursuant to such cashless exercise, vested Options shall, at the request of the
Employee, be deemed to have been exercised by the Employee, to the extent of
such number of Option Shares resulting from dividing the aggregate amount by
which all such vested Options are then "in the money" by the closing price of
the IDF's Common Stock, as traded on the Nasdaq National Market (or other
national securities exchange). In such event, the number of vested Options
resulting from such calculation shall be deemed exercised in full by the
Employee, all such vested Options shall be cancelled, and the underlying Option
Shares resulting from such "cashless" exercise may be sold without payment to
IDF.
Example: By way of example, if 100,000 Options shall
have vested at an exercise price of $1.25 per share and the closing price of
IDF's publicly traded Common Stock shall be $2.50 per share: (A) the 100,000
Options shall be deemed to be "in the money" to the extent of $125,000 (100,000
multiplied by the excess of the $2.50 closing price over the $1.25 exercise
price), and (B) the Employee shall, upon exercise of all 100,000 vested Options,
receive 50,000 shares of IDF Common Stock, as a result of dividing $125,000 by
the $2.50 per share closing price.
(ix) Public Distribution of Option Shares. To the
extent Options shall have vested and shall have been exercised by the Employee
pursuant to this Agreement, the Employee shall, prior to effecting any public
sale or distribution of any such Option Shares, consult with the Corporation and
utilize the services of any recognized broker/dealer or investment banking firm
recommended by the Corporation to effect such distribution in order to maintain
an orderly market for the Corporation's publicly traded common stock; provided
that underwriting discounts and commissions and the other terms of such public
distribution shall be on financially competitive terms.
4. Vacation.
The Employee shall be entitled to take, from time to time,
normal and reasonable vacations with pay, consistent with the Corporation's
standard policies and procedures in effect from time to time (provided that such
policies and procedures shall be no less favorable than those set forth on
Exhibit "A" annexed hereto), at such times as shall be mutually convenient to
the Employee and the Corporation, and so as not to interfere unduly with the
conduct of the business of the Corporation.
5. Restrictive Covenants.
(a) The Employee hereby acknowledges and agrees that (i) the
business contacts, customers, suppliers, technology, product designs and
specifications, know-how, trade secrets, marketing techniques, promotional
methods and other aspects of the business of the Corporation have been of value
to the Corporation and will be of value to the Corporation, and have provided
the Corporation and will hereafter provide the Corporation with substantial
competitive advantage in the operation of its business, and (ii) the Employee
has and will continue to have detailed knowledge and possesses and will possess
confidential information concerning the business and operations of the
Corporation.
(b) Unless otherwise approved in writing by IDF or its
Chairman of the Board after full disclosure by the Employee to IDF's Board of
Directors of all relevant facts and circumstances, the Employee shall not,
directly or indirectly, for the Employee or through or on behalf of any other
person or entity, at any time during the "Restrictive Period" (as defined in
clause (ii) below):
(i) divulge, transmit or otherwise disclose or cause
to be divulged, transmitted or otherwise disclosed, any clients or customer
lists, technology, know-how, trade secrets, marketing techniques, contracts or
other confidential or proprietary information of the Corporation of whatever
nature, whether now existing or hereafter created or developed (provided,
however, that for purposes hereof, information shall not be considered to be
confidential or proprietary if (A) the information, and its relevance in the
applicable instance, is a matter of common knowledge or public record, (B) the
information, and its relevance in the applicable instance, is generally known in
the industry, or (C) the information is disclosed to Employee after termination
of his employment by another person not prohibited from making such disclosure,
(D) the information is required to be disclosed by law pursuant to court order
or subpoena, or (E) the Employee can demonstrate that such information, and its
relevance in the particular instance, was already known to the recipient thereof
other than by reason of any breach of any obligation under this Agreement or any
other confidentiality or non-disclosure agreement); and/or
(ii) unless the Employee's employment with the
Corporation shall be terminated by reason of a Non-Cause Termination, at any
time during the period commencing on the date hereof through and including the
date which shall be three (3) years following the voluntary resignation by the
Employee of his employment with the Corporation or his termination by the
Corporation "for cause", but in no event longer than one (1) year following the
end of the Term (the "Restrictive Period"), invest, carry on, engage or become
involved, either as an employee, agent, advisor, officer, director, stockholder
(excluding ownership of not more than 5% of the outstanding shares of a publicly
held corporation if such ownership does not involve managerial or operational
responsibility), manager, partner, joint venturer, participant or consultant in
any business enterprise (other than the Corporation or any of its Subsidiaries,
affiliates, successors or assigns) which derives any material revenues from the
TechStar Business or the IDF Business (as those terms are defined in the Merger
Agreement), or which engages in any other business substantially similar to and
directly competitive with the TechStar Business or the IDF Business.
(c) The Employee and the Corporation hereby acknowledge and
agree that, in the event of any breach by the Employee, directly or indirectly,
of the foregoing restrictive covenants, it will be difficult to ascertain the
precise amount of damages that may be suffered by the Corporation by reason of
such breach; and accordingly, the parties hereby agree that, as liquidated
damages (and not as a penalty) in respect of any such breach, the breaching
party or parties shall be required to pay to the Corporation, on demand from
time to time, cash amounts equal to any and all gross revenues derived by the
Employee or his affiliate, directly or indirectly, from any and all violative
acts or activities. The parties hereby agree that the foregoing constitutes a
fair and reasonable estimate of the actual damages that might be suffered by
reason of any breach of this Section 5 by the Employee, and the parties hereby
agree to such liquidated damages in lieu of any and all other measures of
damages that might be asserted in respect of any subject breach.
(d) The Employee and the Corporation hereby further
acknowledge and agree that any breach by the Employee, directly or indirectly,
of the foregoing restrictive covenants will cause the Corporation irreparable
injury for which there is no adequate remedy at law. Accordingly, the Employee
expressly agrees that, in the event of any such breach or any threatened breach
hereunder by the Employee, directly or indirectly, the Corporation shall be
entitled, in addition to the liquidated damages provided for in Section 5(c)
above, to seek and obtain injunctive and/or other equitable relief to require
specific performance of or prevent, restrain and/or enjoin a breach under the
provisions of this Section 5, in any such case without the necessity of proving
actual damages or posting bond.
(e) In the event of any dispute under or arising out of this
Section 5, the prevailing party in such dispute shall be entitled to recover
from the non-prevailing party or parties, in addition to any damages and/or
other relief that may be awarded, its reasonable costs
and expenses (including reasonable attorneys' fees) incurred in connection with
prosecuting or defending the subject dispute.
(f) Upon the termination of the Employee's employment with the
Corporation, the Employee shall immediately surrender and deliver to the
Corporation all notes, drawings, diagrams, models, prototypes, lists, books,
records, documents and data of every kind or description, in whatever written or
other media (including, without limitation, electronic, tape, or other form of
storage) relating to or connected with the business contacts, client or customer
lists, technology, know-how, trade secrets, marketing techniques, contracts or
other confidential or proprietary information of the Corporation, its business,
its properties, or its customers referred to in Section 5(b)(i) above.
6. Inventions; Intellectual Property.
(a) The Employee shall promptly communicate to the Corporation
and disclose to the Corporation in such form as the Corporation requests from
time to time, all drawings, sketches, models, records, information, details and
data (in whatever media the same may be created or recorded including, without
limitation, print, tape, electronic, or otherwise) pertaining to all ideas,
processes, trademarks, inventions, improvements, discoveries and improvements,
product designs and specifications, and other intellectual property, whether
patented or unpatented, and copyrightable or uncopyrightable, made, conceived,
developed, acquired or implemented by the Employee, solely or jointly, during
the term of this Agreement (the "Development Term"), whether or not conceived
during regular working hours through the use of Corporation time, material or
facilities or otherwise (each of the foregoing hereinafter referred to,
individually and collectively, as a "Development"). The Employee hereby assigns,
transfers, conveys and sells to the Corporation all right, title and interest in
and to all Developments, whether now existing or hereafter existing during the
Development Term, and acknowledges that the same, whether now existing or
hereafter existing during the Development Term, are the sole and exclusive
property of the Corporation for which the Employee is being adequately
compensated hereunder. At any time and from time to time, upon the request of
the Corporation and at its expense, the Employee will execute and deliver to the
Corporation any and all applications, assignments, instruments, documents and
papers, give evidence and do any and all other acts which, in the opinion of the
Corporation, are or may be necessary or desirable to document such transfer or
to enable the Corporation to file and prosecute applications for and to acquire,
maintain and enforce any and all patents, trademark or tradename registrations,
copyrights or other rights under United States, foreign, state or local law with
respect to any such Developments or to obtain any extension, validation,
reissue, continuance, division or renewal of any of the same, in whole or in
part, and otherwise to establish, protect and enforce the Corporation's rights
in and to such intellectual property.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the foregoing Section 6(a) shall only apply and be effective to the
extent permitted under applicable
law. In this regard, the provisions of Section 6(a) of this Agreement which
provide that the Employee shall assign or offer to assign any of the Employee's
rights in any Development to the Corporation shall not apply to any Development
for which no equipment, supplies, facility, or trade secret information of the
Corporation was used and which was developed entirely on the Employee's own
time, unless (a) the Development relates (i) directly to the business of the
Corporation, or (ii) to the Corporation's actual or demonstrably anticipated
research or development, or (b) the Development results from any work performed
by the Employee for the Corporation.
7. Non-Assignability.
In light of the unique personal services to be performed by
the Employee hereunder, it is acknowledged and agreed that any purported or
attempted assignment or transfer by the Employee of this Agreement or any of his
duties, responsibilities or obligations hereunder shall be void.
8. Notices.
Any notices, requests, demands or other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been given when delivered personally, one (1) day after being
sent by recognized overnight courier service with all charges prepaid or charged
to the sender's account, or three (3) days after being mailed by certified mail,
return receipt requested, addressed to the party being notified at the address
of such party first set forth above, or at such other address as such party may
hereafter have designated by notice; provided, however, that any notice of
change of address shall not be effective until its receipt by the party to be
charged therewith. Copies of any notices or other communications to the
Corporation shall simultaneously be sent by first class mail to IDF
International, Inc., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx X. Xxxxx, Chairman. A copy of any notice sent to the Employee shall be
simultaneously sent to Xxxxxx Xxxxxx, Esq. Xxxxxxxxxx, Sandler, Kohl, Fisker &
Xxxxxx, 00 Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000, facsimile no. (908)
526-9173.
9. General.
(a) Neither this Agreement nor any of the terms or conditions
hereof may be waived, amended or modified except by means of a written
instrument duly executed by the party to be charged therewith. Any waiver or
amendment shall only be applicable in the specific instance, and shall not
constitute or be construed as a waiver or amendment in any other or subsequent
instance. No failure or delay on the part of either party in respect of any
enforcement of obligations hereunder shall in any manner affect such party's
right to seek or effect enforcement at any other time or in respect of any other
required performance.
(b) The captions and Section headings used in this Agreement
are for convenience of reference only, and shall not affect the construction or
interpretation of this Agreement or any of the provisions hereof.
(c) This Agreement, and all matters or disputes relating to
the validity, construction, performance or enforcement hereof, shall be
governed, construed and controlled by and under the laws of the State of
Delaware applicable to contracts entered into and performed wholly within
Delaware.
(d) This Agreement shall be binding upon and shall inure to
the sole and exclusive benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns, and no other person or entity shall have any right to rely on this
Agreement or to claim or derive any benefit herefrom absent the express written
consent of the party to be charged with such reliance or benefit; provided, that
neither this Agreement nor any rights or obligations hereunder may be assigned
by either party without the express prior written consent of the other party.
(e) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original hereof, but all of
which together shall constitute one and the same instrument.
(f) Except for any legal or judicial proceeding which may be
brought for injunctive and/or any other equitable relief as contemplated by
Section 5(d) above, any dispute involving the interpretation or application of
this Agreement shall be resolved by final and binding arbitration in accordance
with the terms, conditions and procedures set forth in the Merger Agreement.
(g) This Agreement constitutes the sole and entire agreement
and understanding between the parties hereto as to the subject matter hereof,
and supersedes all prior discussions, agreements and understandings of every
kind and nature between them as to such subject matter.
(h) If any provision of this Agreement is held invalid or
unenforceable, either in its entirety or by virtue of its scope or application
to given circumstances, such provision shall thereupon be deemed modified only
to the extent necessary to render same valid, or not applicable to given
circumstances, or excised from this Agreement, as the situation may require; and
this Agreement shall be construed and enforced as if such provision had been
included herein as so modified in scope or application, or had not been included
herein, as the case may be.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the date first set forth above.
TECHSTAR COMMUNICATIONS, INC. IDF INTERNATIONAL, INC.
By:________________________ By: ___________________________
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: Chairman Title: Chairman
THE EMPLOYEE:
________________________________
XXXXXX XXXXXXX
