Exhibit 10.1
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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 31st day of October,
2002 is entered into by Stronghold Technologies, Inc., a New Jersey corporation
with its principal place of business at 000 Xxxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx
Xxxxxx (the "Company"), and Xxxxxxx X. Xxxxxx, residing at 00 Xxxxx Xxxxx,
Xxxxxxx Xxxxx, Xxx Xxxxxx (the "Employee").
WHEREAS, the Company desires to employ the Employee, and the Employee
desires to be employed by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Agreement. The Company hereby agrees to employ the Employee, and
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the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on November 4, 2002 the
("Effective Date") and ending on December 31, 2006 (such period, as it may be
extended in a writing signed by the parties, the "Term"), unless sooner
terminated in accordance with the provisions of Section 6.
2. Title; Capacity. The Employee shall serve as Assistant Chief Financial
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Officer of the Company and report to the Company's Chief Executive Officer from
November 4,, 2002 until November 16, 2002, after which, the Employee shall serve
as Chief Financial Officer of the Company and report to the Company's Chief
Executive Officer. As Chief Financial Officer, you will be responsible for all
of the financial aspects of the Company, including but not limited to,
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accounting and bookkeeping, cash management, forecasting, analysis and
budgeting, plus such other or alternate duties as may from time to time be
assigned to you by the Company or its Board. The Employee shall be based at the
Company's headquarters in New Jersey, or such place or places within 50 miles of
Basking Ridge, New Jersey as the Company or its Board shall determine. The
Employee shall be subject to the supervision of, and shall have such authority
as is delegated to him by, the Board or such officer of the Company as may be
designated by the Board.
3. Exclusive Services and Best Efforts. The Employee hereby accepts such
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employment and agrees to undertake the duties and responsibilities inherent in
such position and such other duties and responsibilities as the Board or its
designee shall from time to time reasonably assign to him. The Employee agrees
to devote his entire business time, attention and energies to the business and
interests of the Company. The Employee agrees to abide by the rules,
regulations, instructions, personnel practices and policies of the Company and
any changes therein that may be adopted from time to time by the Company.
4. Compensation and Benefits.
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(a) Salary. The Company shall pay the Employee a base salary (the
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"Base Salary") at an annualized rate, as follows: (i) for the period from
November 4, 2002 through November 3, 2003, $196,000; and (ii) for the period
from November 4, 2003 through November 3, 2004, $200,000. For the two-year and
two month period commencing on November 4, 2004, the annualized base salary
shall be the salary from the previous year plus an additional amount equal to
such previous base salary multiplied by the Consumer Price Index as published
for the preceding calendar year. The Base Salary shall be payable in
installments in accordance with the Company's normal payroll schedule but no
less often than monthly. Such salary shall be subject
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to adjustment thereafter as determined by the Board in its sole discretion.
(b) Bonus. The Employee shall be eligible for the following bonuses:
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(i) Each fiscal year after fiscal year 2002, the Employee will be
eligible to receive an annual bonus based upon the Company's meeting and
exceeding its annual budget, as such has been reviewed and approved by the Board
no later than the end of its first fiscal quarter (the "Budget"), for the
Company's earnings before interest, taxes, depreciation and amortization
("EBITDA"). This bonus will be earned according to the following schedule: (i)
if the Company achieves 80-100% of EBITDA, the Employee will receive a bonus of
$20,000; (ii) if the Company achieves 101-110% of EBITDA, the Employee will
receive an additional bonus of $10,000; (iii) if the Company achieves 111-120%
of EBITDA, the Employee will receive an additional bonus of $10,000; and (iv) if
the Company achieves 121% or more of EBITDA, the Employee will receive an
additional bonus of $5,000. The bonus, if any, shall be paid in one lump sum
within 10 days of the latter of: (i) sixty (60) days after the close of the
fiscal year for which it was earned; and (ii) the date on which the Board makes
a final determination of EBITDA for the preceding fiscal year.
(ii) On each anniversary of the Employee's commencement of
employment with the Company, the Employee will be eligible to receive an annual
bonus of up to $10,000.00 as determined by the Board in its sole discretion. The
awarding of this bonus may be based upon, among other things, the Employee's
achieving any individual or Company financial goals, as determined by the Board.
Any decision by the Board not to award such a bonus in any given year shall not
give rise to a claim for breach of this Agreement by the Company. This bonus, if
any, shall be payable within sixty (60) days of the anniversary of the
Employee's employment with the Company.
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(iii) The Employee shall only be eligible to receive bonuses to
the extent the employee remains actively employed by the Company throughout the
entirety of the period (e.g., the entire fiscal year for subparagraph (i) and
the entire anniversary year for subparagraph (ii)) in order to be eligible for
any bonus herein.
(c) Fringe Benefits. The Employee shall be entitled to participate in
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all benefit programs that the Company establishes and makes available to its
employees, if any, to the extent that the Employee's position, tenure, salary,
age, health and other qualifications make him eligible to participate. The
Company may alter, modify, add to or delete its benefit plans at any time as the
Company or its Board may determine, in its sole judgment, to be appropriate.
Nothing herein shall be construed as requiring the Company to establish or
continue any particular benefit plan in discharge of its obligations under this
Agreement.
(d) Paid Time Off. The Employee shall be eligible to accrue paid time
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off pursuant to the Company's normal policies and procedures governing vacation
time or other paid time off, so long as he receives a minimum of four (4) weeks
of vacation to be accrued in the course of each 12-month period of his
employment.
(e) Car Allowance. The Company shall pay the Employee an all-inclusive
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automobile allowance each month as an expense reimbursement car allowance for
the lease or purchase and operation of a vehicle (the "Car Allowance"). The
Employee shall also be reimbursed for other reasonable business-related vehicle
expenses, including tolls and parking. The Car Allowance shall be as follows:
(i) during the first year of this Agreement, $500; (ii) during the second year
of this Agreement, $525; (iii) during the third year of this Agreement, $550;
and (iv) during the fourth year of this agreement, $575.
(f) Reimbursement of Expenses. The Company shall reimburse the
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Employee for all reasonable and necessary travel and other business expenses
incurred or paid by the Employee in connection with, or related to, the
performance of his duties, responsibilities or services under this Agreement,
upon presentation by the Employee of documentation, expense statements, vouchers
and/or such other supporting information as the Company may request, provided,
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however, that the amount available for such expenses may be fixed in advance by
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the Board.
(g) Deductions. The Company shall deduct from any pay to the Employee
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all taxes or other withholdings required by law or otherwise properly authorized
by the Employee.
5. Stock Options.
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(a) Grant. The Employee will recieve a stock option (the "Option")
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from the Company's parent company, Stronghold Technologies, Inc., a Nevada
corporation, under the Stronghold Technologies, Inc. 2002 Stock Option Plan (the
"Plan") for the purchase of an aggregate of 200,000 shares of common stock of
the Company at an option exercise price equal to $1.50 per share, the fair
market value of the underlying common stock on the date of the grant. The
maximum amount permitted by law shall be treated as an Incentive Stock Option
within the meaning of the Internal Revenue Code of 1986, as amended (the
"Code"). The Option shall be subject to all terms, limitations, restrictions and
termination provisions set forth in the Plan and in the separate option
agreement that shall be executed to evidence the grant of any option. While the
Employee is employed by the Company, the Option will become exercisable ("vest")
at the rate of 25% per year on each of the first four anniversaries of the
Employee's employment with the Company such that the entire Option will be fully
exercisable on the fourth anniversary of the Employee's Employment, if he
remains actively employed. At their sole discretion, the Board of Directors may
consider additional stock option grants during the term of this agreement.
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(b) Effect of Change in Control on Vesting. Upon a Change of Control,
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an additional 50% percent of the unvested portion of the Option shall
immediately vest and become exercisable by the Employee. In the event that,
within one year following such Change of Control, Employee's employment is
terminated without Cause, or after one year, Employee resigns his employment,
all of Employee's theretofore unvested and unexercisable stock options
(including, but not limited to, the stock options set forth in this Agreement)
shall become vested and exercisable immediately. For purposes of this Agreement,
a "Change in Control" shall mean the occurrence of any of the following:
(i) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership of any capital stock of the Company if, after such
acquisition, such Person beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) 30% or more of either (x) the
then-outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (y) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
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for purposes of this subsection (i), the following acquisitions shall not
constitute a Change in Control Event: (A) any acquisition directly from the
Company (excluding an acquisition pursuant to the exercise, conversion or
exchange of any security exercisable for, convertible into or exchangeable for
common stock or voting securities of the Company, unless the Person exercising,
converting or exchanging such security acquired such security directly from the
Company or an underwriter or agent of the Company), (B) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (C)
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any acquisition by any corporation pursuant to a Business Combination (as
defined below) which complies with clauses (x) and (y) of subsection (iii) of
this definition; or
(ii) such time as the Continuing Directors (as defined below) do
not constitute a majority of the Board (or, if applicable, the Board of
Directors of a successor corporation to the Company), where the term "Continuing
Director" means at any date a member of the Board (x) who was a member of the
Board on the date of the initial adoption of this Agreement by the Board or (y)
who was nominated or elected subsequent to such date by at least a majority of
the directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be excluded from
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this clause (y) any individual whose initial assumption of office occurred as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents, by or on behalf of a person other than the Board; or
(iii) the consummation of a merger, consolidation,
reorganization, recapitalization or share exchange involving the Company or a
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), unless, immediately following such Business
Combination, each of the following two conditions is satisfied: (x) all or
substantially all of the individuals and entities who were the beneficial owners
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding securities entitled
to vote generally in the election of directors, respectively, of the
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resulting or acquiring corporation or other form of entity in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns the Company or substantially all of the
Company's assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation or entity is referred to herein as the
"Acquiring Corporation") in substantially the same proportions as their
ownership of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, respectively, immediately prior to such Business Combination and (y)
no Person (excluding the Acquiring Corporation or any employee benefit plan (or
related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 30% or more of the
then-outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors (except to the extent
that such ownership existed prior to the Business Combination).
(iv) notwithstanding the foregoing, neither any equity financing
for the purpose of funding ongoing operations, including, but not limited to,
day to day operations and/or merger and acquisition activity by the Company
where the Company is deemed the acquirer, nor any corporate actions directly
resulting there from, shall constitute a Change in Control, as the parties
acknowledge that the Company is at a stage of its development when such
activities can be expected and anticipated.
6. Termination. The Term of this Agreement shall terminate upon the
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occurrence of any of the following:
(a) Expiration of the Term in accordance with Section 1;
(b) At the election of the Company, for Cause, immediately upon
written
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notice by the Company to the Employee. For the purposes of this Agreement,
"Cause" for termination shall be deemed to exist upon: (i) a finding by the
Board of failure of the Employee to materially perform his assigned duties for
the Company, to adhere to the terms of this Agreement, or to follow Company
policies and procedures; (ii) the Employee's commission of dishonesty, gross
negligence or misconduct, in connection with the Employee's responsibilities in
his position with the Company; (iii) the Employee's commission of any act or
conduct that subjects the Company to public disrespect or ridicule or injures
the reputation of the Company; or (iv) the conviction of the Employee of, or the
entry of a pleading of guilty or nolo contendere by the Employee to, any crime
involving moral turpitude or any felony;
(c) Upon the death or disability of the Employee. As used in this
Agreement, the term "disability" shall mean the inability of the Employee with
reasonable accommodation as may be required by State or Federal law, due to a
physical or mental disability, for a period of one hundred twenty (120) days,
whether or not consecutive, during any 360-day period to perform the services
contemplated under this Agreement. A determination of disability shall be made
by a physician satisfactory to both the Employee and the Company, provided that
if the Employee and the Company do not agree on a physician, the Employee and
the Company shall each select a physician and these two together shall select a
third physician, whose determination as to disability shall be binding on all
parties;
(d) At the election of the Employee upon not less than thirty (30)
days' prior written notice of termination; and
(e) At the election of the Company, without cause, immediately upon
written notice by the Company to the Employee.
7. Effect of Termination. Upon termination of the Agreement, the only
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remuneration to which the Employee will be entitled shall be as follows:
(a) Termination after the Expiration of the Term, for Cause or at
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Election of the Employee. In the event the Employee's employment is terminated
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after the expiration of the Term pursuant to Section 6(a), for cause pursuant to
Section 6(b), or at the election of the Employee pursuant to Section 6(d), the
Company shall pay to the Employee the compensation and benefits otherwise
payable to him/her under Section 4 through the last day of his/her actual
employment by the Company.
(b) Termination for Death or Disability. If the Employee's employment
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is terminated by death or because of disability pursuant to Section 6(c), the
Company shall pay to the estate of the Employee or to the Employee, as the case
may be, the compensation that would otherwise be payable to the Employee up to
the end of the month in which the termination of his/her employment because of
death or disability occurs.
(c) Termination Without Cause. If the Employee's employment is
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terminated by the Company without cause pursuant to Section 6(e), the Company
shall pay the Employee, for a period equal to the Severance Period, as defined
below, his then current base salary, in accordance with the Company's regular
payroll practices. The "Severance Period" shall be defined as: (i) if
termination without Cause occurs within the first six months of employment, one
month; (ii) if termination without Cause occurs within the second six months of
employment, two months; and (iii) if termination without Cause occurs after the
completion of one full year of employment, the lesser of: (y) the balance of the
Term of the Agreement; and (z) six months. The Company's obligation to pay or
provide the benefits discussed in this paragraph 7(c) shall be expressly
conditioned upon the Employee's first executing a valid general release and
waiver that is reasonably acceptable to both the Company and the employee,
releasing the
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Company, its directors, officers and employees from any and all claims under
this agreement or pursuant to your employment.
(d) Survival. The provisions of Sections 8, 9 and 10 shall survive the
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termination of this Agreement.
8. Non-Compete.
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(a) During the term of the Employee's employment with the Company
(whether or not such employment extends passed the expiration of the Term) and
for a period of twelve months after the termination thereof, the Employee will
not directly or indirectly:
(i) as an individual proprietor, partner, stockholder, officer,
employee, director, joint venturer, investor, lender, or in any other capacity
whatsoever (other than as the holder of not more than one percent (1%) of the
total outstanding stock of a publicly held company), engage in the business of
developing, producing, marketing or selling (or assist others in any way in
doing so) products and/or services of the kind or type developed or being
developed, produced, marketed, sold or provided by the Company while the
Employee was employed by the Company;
(ii) hire, recruit, solicit or induce, or attempt to induce, any
employee or contractor of the Company to terminate their employment with, or
otherwise cease their business relationship with, the Company; or
(iii) solicit, divert or take away, or attempt to divert or to
take away, the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the Company which
were actively contacted, solicited or served by the Company during the term of
the Employee's employment with the Company.
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(b) If any restriction set forth in this Section 8 is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
(c) The restrictions contained in this Section 8 are necessary for the
protection of the business and goodwill of the Company and are considered by the
Employee to be reasonable for such purpose. The Employee agrees that any breach
of this Section 8 will cause the Company substantial and irrevocable damage and
therefore, in the event of any such breach, in addition to such other remedies,
which may be available, the Company shall have the right to seek specific
performance and injunctive relief.
9. Proprietary Information.
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(a) The Employee agrees that all information and know-how, whether or
not in writing, of a private, secret or confidential nature concerning the
Company's business or financial affairs (collectively, "Proprietary
Information") is and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas, compositions,
compounds, projects, developments, plans, research data, clinical data,
financial data, personnel data, computer programs, and customer and supplier
lists. The Employee will not disclose any Proprietary Information to others
outside the Company or use the same for any unauthorized purposes without
written approval by an officer of the Company, either during or after his
employment, unless and until such Proprietary Information has become public
knowledge without fault by the Employee.
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(b) The Employee agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, laboratory notebooks, program listings, or
other written, photographic, or other tangible material containing Proprietary
Information, whether created by the Employee or others, which shall come into
his custody or possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of his duties for the
Company.
(c) The Employee agrees that his obligation not to disclose or use
information, know-how and records of the types set forth in paragraphs (a) and
(b) above, also extends to such types of information, know-how, records and
tangible property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to the Company
or to the Employee in the course of the Company's business.
10. Developments.
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(a) The Employee will make full and prompt disclosure to the Company
of all inventions, improvements, discoveries, methods, developments, software,
and works of authorship, whether patentable or not, which are created, made,
conceived or reduced to practice by the Employee or under his direction or
jointly with others during his employment by the Company, whether or not during
normal working hours or on the premises of the Company (all of which are
collectively referred to in this Agreement as "Developments").
(b) The Employee agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company) all his right, title
and interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this Section 10(b)
shall not apply to Developments which meet each of the following criteria: (i)
they do not in any way relate to the present or planned business or research and
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development of the Company; and (ii) they are made and conceived by the Employee
not during normal working hours, not on the Company's premises and not using the
Company's tools, devices, equipment or Proprietary Information.
(c) The Employee agrees to cooperate fully with the Company, both
during and after his employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments. The Employee
shall sign all papers, including, without limitation, copyright applications,
patent applications, declarations, oaths, formal assignments, assignment of
priority rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development.
11. Other Agreements. The Employee hereby represents that he/she is not
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bound by the terms of any agreement with any previous employer or other party to
refrain from using or disclosing any trade secret or confidential or proprietary
information in the course of his/her employment with the Company or to refrain
from competing, directly or indirectly, with the business of such previous
employer or any other party. The Company acknowledges that the Employee has
non-compete and non-solicitation agreements with his prior Employer, Expanets,
Inc., a provider of voice and data network solutions, and that the Employee
represents that the business of Stronghold is non-competitive with the business
of Expanets, and that no conflict exists in his acceptance of employment with
Stronghold. In addition, the Company and Employee agree that they will not
solicit employees of Expanets in violation of the Employee's agreement. The
Employee further represents that his/her performance of all the terms of this
Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data
acquired by him/her in
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confidence or in trust prior to his/her employment with the Company.
12. Notices. All notices required or permitted under this Agreement shall
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be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 12.
13. Pronouns. Whenever the context may require, any pronouns used in this
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Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
14. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement. This
Agreement shall not alter any of the Employee's rights under any equity grant,
which had been memorialized in an agreement with the Company and authorized by
the Board prior to the Effective Date.
15. Amendment. This Agreement may be amended or modified only by a written
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instrument executed by both a properly authorized executive officer and a
director of the Company and the Employee.
16. Governing Law and Jurisdiction. This Agreement shall be construed,
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interpreted and enforced in accordance with the laws of the State of New Jersey.
The parties agree that any disputes arising under this Agreement or otherwise
related to the employment of the Employee by the Company shall be brought
exclusively in the state and federal courts located in the State of New Jersey
and the parties hereby waive the defense of lack of personal jurisdiction in any
such action.
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17. Successors and Assigns. This Agreement shall be binding upon and inure
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to the benefit of both parties and their respective successors and assigns,
including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business, provided, however, that the
obligations of the Employee are personal and shall not be assigned by him.
18. Acknowledgment. The Employee states and represents that he has had an
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opportunity to fully discuss and review the terms of this agreement with an
attorney. The Employee further states and represents that he has carefully read
this Agreement, fully understands the contents herein, freely and voluntarily
assents to all of the terms and conditions hereof, and signs his name of his own
free act.
19. No Waiver. No delay or omission by the Company in exercising any right
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under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
20. Captions. The captions of the sections of this Agreement are for
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convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
21. Severability. In case any provision of this Agreement shall be invalid,
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illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
22. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original and all of which shall
constitute one in the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
STRONGHOLD TECHNOLOGIES, INC. XXXXXXX X. XXXXXX
By:/s/ Xxxxxxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxxxxxx X. Xxxxx
Chief Executive Officer
Dated: 10-31-02 Dated: 10-31-02
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