AMENDMENT NO. 1
to
EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement ("Amendment No. 1") is
made as of December 16, 1998, between ABC Dispensing Technologies, Inc., a
Florida corporation (the "Company") and Xxxxxxx X. Xxxxxx, Xx. (the "Employee").
WHEREAS, the Company and the Employee have entered into an Employment
Agreement dated as of March 1, 1997 (the "Original Agreement" and as amended
hereby the "Employment Agreement"); and
WHEREAS, the Board of Directors of the Company have deemed it
appropriate to amend the Original Agreement to provide better tailored
incentives for the Employee,
NOW, THEREFORE, the Company and the Employee, for good and valuable
consideration the receipt of which is hereby acknowledged, agree as follows:
1. All terms of the Original Agreement not expressly modified or
amended herein shall remain in full force and effect.
2. Employee shall receive additional compensation (the "Capital
Bonus") in an amount equal to 2% of the gross proceeds of the
sale by the Company of its capital stock or warrants to
purchase same between September 1, 1998 and June 30, 1999 if
the aggregate of such proceeds exceeds $1,000,000; provided
that (i) proceeds received by the Company as a result of the
conversion or exercise of a derivative security whether
outstanding on the date hereof or issued hereafter shall not
be considered as proceeds eligible for inclusion in the
computation of the Capital Bonus, (ii) to the extent such
gross proceeds exceed in the aggregate $3,000,000, the Capital
Bonus shall be 3% of the gross proceeds (for example, if the
Company raised $750,000, $1,500,000 or $3,400,000, the Capital
Bonus would be $0, $30,000 or $102,000, respectively), (iii)
proceeds of the sale of securities for which the Company pays
a commission to a person other than Employee shall not be
eligible for inclusion in the computation of the Capital
Bonus, (iv) proceeds received by the Company in a form other
than cash or other immediately available funds shall not be
eligible for inclusion in the computation of the Capital Bonus
and (v) for purposes of this provision, capital stock shall be
deemed to include preferred stock and common stock. The
Capital Bonus shall be paid to the Employee at the end of each
fiscal quarter of the Company based upon the proceeds of the
sale of the capital stock (or warrants to purchase same)
received during such fiscal quarter. In the event the
Employment Agreement is terminated for any reason other than
by the Company without cause (as specified in Section 5(b) of
the Original Agreement), the Employee's right to the Capital
Bonus shall cease as of the end of the fiscal quarter during
which such termination occurred. If the Employment Agreement
is terminated by the Company without cause (as specified in
Section 5(b) of the Original Agreement), the Employee shall
continue to be entitled to the Capital Bonus through June 30,
1999.
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3. Reference is made to the warrants to purchase 300,000 shares
of common stock granted to Employee by the Board of Directors
on July 15, 1996, which included 100,000 warrants vesting upon
the earlier to occur of the expiration of ten (10) years from
the date of grant or such date that the price per share of the
Company's common stock has traded at a price of $5.00 or
better for ninety (90) consecutive days (the "$5 Warrants")
and 100,000 warrants vesting upon the earlier to occur of the
expiration of 10 years from the date of grant or the date the
price per share of the Company's common stock has traded at a
price of $10.00 or better for ninety (90) consecutive days
(the "$10 Warrants"). Effective immediately, the $5 Warrants
are hereby amended to vest upon the earlier to occur of July
15, 2006 or such date the price per share of the Company's
common stock has traded at a price of $3.00 or better for
ninety (90) consecutive days and the $10 Warrants are hereby
amended to vest upon the earlier to occur on July 15, 2006 or
the date the price per share of the Company's common stock has
traded at a price of $4.00 or better for ninety (90)
consecutive days. For purposes of this section, the Company's
common stock shall be deemed to trade for a particular day at
the closing price per share for such day as reported by the
NASDAQ or similar reporting service, or if no such closing
price is available, the average of the bid and asked for such
day. The per share prices described above shall be adjusted
appropriately for stock splits and dividends.
4. In addition to the other compensation provided for elsewhere
in this Employment Agreement, in the event of a Change of
Control (as defined below) followed by the termination of the
Employee's employment by the Company without cause (other than
due to disability or death), or a constructive termination
without cause, the Employee shall receive (within thirty (30)
days of the date of such termination) a lump sum payment of
twice the base salary and incentive compensation bonus
(exclusive of any Capital Bonus) received by the Employee
during or with respect to the last completed fiscal year of
the Company. For purposes of this Agreement, a "Change of
Control" shall occur if (i) any person or group of persons
(within the meaning of Section 13 or Section 14 of the
Securities Exchange Act of 1934, as amended) shall acquire
(other than directly from the Company) beneficial ownership
(within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 20% or
more of the outstanding shares of common stock of the Company,
(ii) during any period of twelve (12) consecutive calendar
months, individuals who were directors of the Company on the
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first day of such period (or who were appointed or nominated
for election as directors of the Company by at least a
majority of the individuals who were directors on the first
day of such period or who were so elected or appointed other
than in connection with an actual or threatened proxy contest)
(the "Incumbent Board") shall cease to constitute a majority
of the Board of Directors of the Company, or (iii) there is
consummation of a complete liquidation or dissolution of the
Company or a merger, consolidation or sale of all or
substantially all of the Company's assets (collectively, a
"Business Combination") other than a Business Combination in
which all or substantially all of the stockholders of the
Company receive 50% or more of the stock of the company
resulting from the Business Combination, at least a majority
of the Board of Directors of the resulting company were
members of the Incumbent Board and after which no person owns
20% or more of the stock of the resulting corporation, which
did not own such stock immediately before the Business
Combination. For purposes of this section, the term
"constructive termination without cause" shall mean the
termination by the Employee of his employment at his
initiative following the occurrence of any of the following
events without his consent (i) a reduction in the Employee's
then current Base Salary, bonus formula, or a material
reduction of any employee benefit or prerequisite enjoyed by
him (other than as part of an across-the-board reduction
applicable to all executive officers of the Company); (ii) the
failure to elect or re-elect the Employee to the Board of
Directors or the removal of him from such position; (iii) a
material diminution in the Employee's duties or the assignment
to the Employee of duties that are materially inconsistent
with his duties or which materially impair the Employee's
ability to function as Chief Executive Officer and President
of the Company; (iv) the relocation of the Company's principal
office, or the Employee's own office location, as assigned to
him by the Company to a location more than 50 miles from
Akron, Ohio; or (v) the failure of the Company to obtain the
assumption in writing of its obligation to perform the
Employment Agreement by any successor to all or substantially
all of the assets of the Company within fifteen (15) calendar
days after a merger, consolidation, sale or similar
transition.
5. Except as otherwise expressly provided in this Amendment No.
1, nothing herein shall be deemed to amend or modify any
provision of the Original Agreement which shall remain in full
force and effect. This Amendment No. 1 is not intended to be,
nor shall it be construed to create a novation.
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6. This Amendment No. 1 shall not become effective under
counterparts hereof shall have been executed and delivered by
each party hereto.
IN WITNESS WHEREOF, the Company and the Employee have caused this
Amendment No. 1 to be executed, as of the day and year first above written.
ABC DISPENSING TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
-----------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Predisent/CEO
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxx Xx.
-----------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
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