MANAGEMENT AGREEMENT
Exhibit
99.1
Execution
Copy
THIS
MANAGEMENT AGREEMENT (this “Agreement”), dated as of December 30, 2008, is by
and between Material Advisors LLC (“Manager”) and Atlas Mining Co. (the
“Company”).
WHEREAS,
the Company desires to receive financial and management consulting services from
the Manager; and
WHEREAS,
the Manager desires to provide financial and management consulting services to
the Company and the compensation arrangements set forth in this Agreement are
designed to compensate the Manager for such services.
NOW,
THEREFORE, in consideration of the foregoing and the respective agreements
hereinafter set forth, the Manager and the Company agree as
follows:
1. Definitions. The
terms “Cause”, “Change in Control of the Company”, “Change in Control of the
Manager,” “Disabled” and “Good Reason” are defined in Appendix A
hereto.
2. Term of
Agreement. The term of this Agreement shall
commence on January 1, 2009 (the “Effective Date”) and will expire, unless
earlier terminated by either the Manager or the Company in accordance with
Section 9 below, on December 31, 2010, provided that the term of this Agreement
shall be automatically extended for successive one-year periods, subject to
earlier terminated by either the Manager or the Company in accordance with
Section 9 below, unless either party gives written notice of non-renewal to the
other at least 90 days prior to the expiration of the initial term or any such
successive one-year period, as applicable (the “Term”).
3. Management Services and
Personnel. The Company hereby engages the Manager, and the
Manager hereby agrees to provide services to the Company, all on the terms and
subject to the conditions set forth herein. During the Term, the
Manager will perform for the Company such services as are customarily provided
by senior management of a public company, including the services of the Chief
Executive Officer (the “Services”); provided, that unless otherwise agreed to by
the Manager and the Company, the Services will not include the performance of
services customarily provided by a Chief Financial Officer. The
Manager will provide qualified individuals (the “Management Personnel”) to
perform the Services, including Xxxxx Xxxxxxx (“Zeitoun”) who will serve as the
Company’s Chief Executive Officer and will be appointed as a member of the
Company’s board of directors (the “Board”). As Chief Executive
Officer of the Company, Zeitoun shall have such duties and responsibilities,
commensurate with such position, as are assigned by the Board from time to time
and shall report to the Board. Initially, Zeitoun, Xxxxx Xxxxxx
(“Xxxxxx”) and Xxxx Xxxxxxx (“Basroon”) will serve as the Management
Personnel. If Xxxxxx’x or Basroon’s service relationship with the
Manager terminates during the Term, the Manager shall present a qualified
candidate to replace such person for approval by the Company, which approval
shall not be unreasonably withheld. If a replacement candidate is not
approved by the Company, the Manager shall continue to present qualified
replacement candidates to the
Company
for approval until such time as a replacement is so approved. The
Manager will be solely responsible for all compensation and benefits to be paid
or provided to the Management Personnel and the Management Personnel shall not
be entitled to any direct compensation or benefits from the Company (including,
in the case of Zeitoun, for service on the Board). The Services will
include the Manager’s consulting with the Board and the Company’s management on
business and financial matters, including without limitation, matters related to
(a) new business development, creating and implementing the Company’s business
plan and overseeing and supervising the Company’s operations, (b) the
preparation of operating budgets and business plans, (c) the Company’s corporate
and financial structure, (d) the formulation of long-term business strategies,
(e) recruiting senior management, (f) financing, (g) transactions with
third-parties, including mergers and acquisitions, (h) evaluating potential sale
or exit opportunities, structuring and negotiating a sale of the Company, or
leveraged recapitalization, (i) resolving investigations and litigations
involving the Company with regard to facts and circumstances arising from and
after the Effective Date, and (j) any other management services incidental to
the forgoing or any other management or advisory services reasonably
requested by the Board from time to time and to which the Manager
agrees. Upon request of the Board, during the Term, the Manager shall
cause Zeitoun to serve as an officer and/or director of the Company’s
subsidiaries or affiliates (without compensation).
4. Management
Fee. The Company will pay the Manager a fee of $1,000,000 per
year, paid in advance in equal monthly installments of $83,333.34 (“Management
Fee”). To the extent the Company determines it to be necessary to
comply with Securities and Exchange Commission (“SEC”) disclosure or other legal
requirements, the Manager shall promptly provide the Company with a true and
correct schedule of the compensation furnished by the Manager to Zeitoun for the
services he performs on behalf of the Company.
5. Equity
Awards. On the Effective Date, and immediately before Zeitoun
becomes an officer or director of the Company, the Company will grant the
Manager a non-qualified stock option (the “$0.70 Option”). Upon the
consummation of a transaction which results in (A) the Company ceasing to be an
SEC reporting company or having less than 300 shareholders of record and (B)
Xxxxx X. Xxxx, IBS Capital LLC, The IBS Turnaround Fund, L.P., The IBS
Turnaround Fund (QP), The IBS Opportunity Fund (BVI), Ltd., or any of their
affiliates or related entities own in the aggregate more than 50% of the
outstanding equity capital of the Company immediately following the transaction
(a “Going Private Transaction”) during the Term, (i) without further action by
the Company or the Manager (or a transferee) the $0.70 Option shall
automatically be cancelled without payment of any consideration to the Manager
(or transferee), and (ii) the Company (or its successor) will grant the Manager
a non-qualified stock option (the “Going Private Option”, and together with the
$0.70 Option, the “Options”)) accompanied by a tandem stock appreciation right
(the “SAR”); provided that, during the 30 day period prior to the consummation
of a Going Private Transaction, in lieu of the cancellation and grants
contemplated by item (ii) above, the Manager may elect to have the $0.70 Option,
to the extent outstanding immediately prior to the consummation of the Going
Private Transaction, assumed and continued by the Company following the Going
Private Transaction and adjusted in a manner consistent with requirements of
Section 409A of the Internal Revenue Code of 1986, as amended, and the
regulations and guidance promulgated thereunder (collectively “Code Section
409A”) (the “Assumed Option”), in which case the Assumed Option shall also be
accompanied by a tandem SAR consistent with the terms specified
herein. The Company will provide the
Manager
with notice of its intent to enter into a Going Private Transaction at least 30
days prior to the date of such transaction and, during the 30 day period
preceding such transaction, the Manager may exercise the $0.70 Option in full
effective as of the date of the Going Private Transaction (in which case no
Going Private Option shall be granted and the Option shall not be assumed and
continued), any such exercise to be contingent on the consummation of the Going
Private Transaction. The Options and the SAR will be transferable to
any affiliate of the Manager or to any of Zeitoun’s family
members. The $0.70 Option will provide the Manager with the right to
purchase 10% of the shares of the Company’s outstanding common stock (the
“Common Stock”), subject to the terms and conditions specified herein, on a
fully diluted basis as determined on the Effective Date (after giving effect to
the transactions contemplated by Section 8). The Going Private
Option will provide the Manager with the right to purchase the same percentage
of the Company’s (or its successor’s) outstanding shares of common stock (after
giving effect to the Going Private Transaction), on a fully diluted basis, that
were subject to the $0.70 Option immediately prior to its cancellation, subject
to the terms and conditions specified herein. Except as set forth
herein, the Options shall have identical terms and conditions. The
SAR shall entitle the Manager to receive, at the Manager’s election, either
shares of Common Stock or cash equal in value to the excess of the fair market
value of a share of Common Stock on the date of exercise over the base price per
share under the SAR, as discussed below; provided, that in no event shall the
amount of such excess deliverable to the Manager in cash exceed the amount of
tax withholdings due (determined at the statutory minimum rate) with respect to
the exercise of the SAR. The number of shares of Common Stock subject
to, and the exercise or base price of, the Options and SAR shall be subject to
equitable adjustment to reflect stock splits, reverse stock splits, stock
dividends, mergers, consolidations and other similar capital adjustments as
determined by the Board in good faith.
(a) Exercise/Base
Prices. The exercise price per share under the $0.70 Option
will be $0.70. The exercise price per share under the Going Private
Option and the base price per share under the SAR will be the fair market value
per share to be paid in the Going Private Transaction to shareholders who are
not investing in the going private vehicle.
(b) Terms. The
term of the Options and SAR will be 10 years from the Effective Date, subject to
earlier termination as provided herein.
(c) Vesting.
(1) During
its term, the $0.70 Option will vest and become exercisable in 36 equal monthly
installments commencing on the first day of the first month immediately
following the Effective Date. Notwithstanding the
foregoing:
(i) the
portion of the option that would have otherwise vested through the end of the
then current Term will immediately vest and become exercisable upon the date of
the occurrence of any of the following events: (1) termination by the
Company without Cause; (2) termination by the Manager for Good Reason; or (3)
notice of non-renewal by the Company; and
(ii) 100%
of the $0.70 Option will immediately vest and become exercisable upon the date
of the occurrence of a Change in Control of the Company.
(2) During
their terms, 100% the Going Private Option and the SAR will be fully vested and
exercisable.
(d) Exercise of
Options. To the extent that the Options have become vested and
exercisable for any reason, the Options may be exercised by the Manager, in
whole or in part, at any time or from time to time prior to the expiration of
their terms, provided that (i) the Options shall immediately terminate (whether
or not then vested) upon the Company’s termination of the Manager for Cause, and
(ii) upon the termination of the Manager for any reason other than termination
by the Company for Cause, the Options shall terminate on the fifth anniversary
of the termination date of the Manager (or, if earlier, upon expiration of their
term). To the extent the $.0.70 Option has not become vested and
exercisable for any reason upon termination of the Manager, the $.0.70 Option
shall immediately terminate. The Manager may exercise the applicable
Option by delivering to the Company (i) a written notice of exercise specifying
the number of shares of Common Stock with respect to which the Option is being
exercised and (ii) payment in full of an amount equal to the exercise price
multiplied by the number of shares of Common Stock underlying the portion of the
Option exercised, the payment of which may be satisfied by (A) a cash payment,
which may be paid by check or other instrument acceptable to the Company; (B)
the Manager delivering to the Company shares of Common Stock which are already
owned by the Manager (free and clear of any liens or encumbrances) valued at the
fair market value of the exercise price on the date of exercise; (C) solely to
the extent permitted by law, cashless exercise whereby the Manager delivers
irrevocable instructions to a broker-dealer selected by Manager to sell or
margin a sufficient portion of the Common Stock with respect to which the Option
is being exercised and the broker-dealer delivers the sale or margin loan
proceeds directly to the Company to pay for the exercise price; or (E) such
other method approved or made available to another optionee by the
Company. In addition to the foregoing, the Manager may satisfy the payment
of up to 25% of the exercise price for the Going Private Option through a
partial recourse note (the “Exercise Note”). The Exercise Note will
have a 5-year term and provide for interest at the applicable federal rate and
will be secured by the shares purchased with the loan proceeds.
(e) Reduction in
Shares. To the extent that the Manager exercises the Going
Private Option or the Assumed Option, the shares of Common Stock subject to the
SAR shall be reduced by a number of shares equal to the shares as to which such
Option is exercised. To the extent
that the Manager exercises the SAR, the shares of Common Stock subject to the
Going Private Option or the Assumed Option shall all be reduced by a number of
shares equal to the shares as to which the SAR is exercised.
(f) Sale of Shares acquired
under the $0.70 Option. Following the exercise of all or a
portion of the $0.70 Option, the Company will use commercially reasonable
efforts to file and cause to become effective a Form S-8 or Form S-3
registration statement, if available to the Company, to register the sale of the
Common Stock that may be acquired by the Manager under the $0.70 Option and
shall use commercially reasonable efforts to cause such registration statement
not to misrepresent or omit a material fact until (i) such shares of Common
Stock have become eligible for sale under Rule 144 or (ii) all of the shares of
Common Stock held by the Manager and other persons whose sales of shares of
Common Stock may be aggregated with sales of the shares Manager own is less than
1% of the Company’s outstanding Common Stock. Sales of Common Stock
acquired pursuant to the $0.70 Option shall be subject to compliance with
applicable law and the Company’s xxxxxxx xxxxxxx policy.
(g) Dividends. During
the Term, the Company will provide the Manager with notice of its intent to
declare a dividend or distribution to its stockholders at least 30 days prior to
the date it sets the record date for any such dividend or
distribution. If the Company declares any dividend or distribution to
its stockholders (other than stock splits in the form of a dividend and similar
capital adjustments) at any time while the $0.70 Option is unvested, the Manager
will be entitled to receive an amount equal to the dividend or distribution that
would be paid on the shares underlying the $0.70 Option, payable in the same
form as such dividend or distribution, on the same vesting schedule as the $0.70
Option.
(h) Authorized
Shares. To the extent the Company does not have a sufficient
number of authorized and unissued or treasury shares of Company common stock to
issue to the Manager upon a valid exercise of the $0.70 Option, the Company
shall deliver to the Manager upon any such exercise an amount in cash equal to
the then current fair market value of the shares of Company common stock that
would have otherwise been issued to the Manager in connection with such
exercise, net of applicable withholdings.
6. Right to Participate in the
Going Private Transaction. The Manager shall have the right to
participate in the Going Private Transaction for up to 20% of the equity on
terms and conditions which are as favorable to the Manager as terms and
conditions available to any other person who invests in the going private
vehicle.
7. Capital
Raise. Simultaneously with the execution of this Agreement,
the Company shall receive the proceeds of the sale of shares of Common Stock at
a price per share not less than $0.35, so that the net proceeds of the sale are
at least $1,000,000.
8. Expenses. The
Manager will be solely responsible for all travel, entertainment, office and
marketing expenses and all other ordinary and necessary business expenses
incurred by the Manager and the Management Personnel in connection with the
performance of the Services.
9. Termination.
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a.
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Termination For Cause;
Resignation without Good Reason; Non-Renewal by the Manager or Termination
due to Zeitoun’s Disability or death. The Company may
terminate the Term for Cause immediately upon written notice or the
Manager may terminate the Term without Good Reason upon 30 days’ written
notice. The Company may terminate the Term upon 30 days’
written notice upon Zeitoun becoming Disabled and the Term shall
automatically terminate upon Zeitoun’s death. Upon any such
termination of the Term or if the Manager provides a notice of non-renewal
of the Term pursuant to Section 2 above, then the Manager will be entitled
to receive any Management Fee earned through the date of
termination.
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b.
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Termination Without
Cause or Resignation for Good Reason or Non-Renewal by the
Company. The Company may terminate the Term upon 30
days’ written notice without Cause (other than due to Zeitoun becoming
Disabled) and the Manager may terminate the Term upon 30 days’ written
notice for Good Reason. Upon any such
termination or if the Company provides a notice of non-renewal pursuant to
Section 2 above, then, in addition to the vesting of the Options set forth
above, the Manager will be entitled to receive any Management Fee earned
through the date of termination and a lump sum payment within 10 days
following the date of termination equal to the Management Fee that the
Manager would have otherwise received through the end of the then existing
Term.
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c.
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Resignation. Upon
termination of the Term for any reason (including by virtue of a
non-renewal of the Term by either party) or the termination of Zeitoun’s
service relationship with the Manager, Zeitoun shall resign from any and
all officer, director and other positions he then holds with the Company
and its affiliates effective as of the termination
date.
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10. Confidentiality. The
Manager will not, and the Manager will (i) cause Zeitoun not to and (ii) use
commercially reasonable efforts as to Xxxxxx and Basroon and other persons who
are employed by the Manager and provide senior executive services to the Company
to cause them to not, in each case, other than (a) in the good faith performance
of the Services, or (b) to the extent required by legal process, disclose or use
for its or their own benefit, confidential information regarding the Company,
unless such information has been previously disclosed to the public or is
generally known in the industry (other than by reason of the Manager’s breach of
this provision) or that is obtained by the Manager prior to the execution of the
Agreement or not in connection with the performance of the
Services.
11. Non-Compete/Non-Solicitation. During
the Term and for a period of one year thereafter, the Manager will not, and will
cause Zeitoun and will use commercially reasonable efforts as to other persons
who are employed by the Manager and provide senior executive services to the
Company to cause them to not, (i) directly or indirectly compete with the
Company or its affiliates, (ii) employ or solicit for employment (other than in
any general solicitation) any person who is a non-clerical employee of the
Company, unless such person ceased to be so employed for a period of at least 6
months, or (iii) solicit any customers of the Company or its affiliates with
respect to the services the Company provides to such customers.
12. Injunctive
Relief. It is impossible to measure in money the damages that
will accrue to the Company in the event that the Manager breaches any of its
obligations under Section 10 or 11 (the “Restrictive Covenants”). In
the event that the Manager breaches any of the Restrictive Covenants, in
addition to any other remedy which the Company may have, the Company shall be
entitled to seek an injunction restraining the Manager from violating such
Restrictive Covenant (without posting any bond).
13. Indemnification/Directors
and Officers Liability Insurance. The Company shall indemnify
the Manager and the Management Personnel to the fullest extent permitted by law
or its bylaws (including advancement of legal fees). The Company
shall cover the Management Personnel under its directors and officers liability
insurance both during the Term and thereafter while potential liability
exists. The Manager shall indemnify and hold harmless the Company and
its affiliates for any and all liabilities arising with respect to the
Management Personnel (i) under the Company’s employee benefit plans and programs
in effect from time to time or any workers compensation or other
employment-based laws with respect to the Management Personnel, and (ii) in
respect of any income and employment tax withholding or reporting obligations on
the amounts paid hereunder by the Company to Manager and/or the amounts and
benefits provided by Manager to the Management Personnel.
14. Legal
Fees. The Company will reimburse the Manager for the
attorneys’ fees and expenses, not in excess of
$75,000, incurred by the Manager in connection with the negotiation,
preparation and review of this Agreement and any related documents, including
the term sheet and the option agreements.
15. Independent
Contractor. The Manager and the Company agree that the Manager
shall perform services hereunder as an independent contractor, retaining control
and direction over and responsibility for its own operations and personnel.
Neither the Manager nor their directors, officers or employees shall be
considered employees or agents of the Company or its subsidiaries as a result of
this Agreement nor shall any of them have authority to contract in the name of
or bind the Company, except as expressly agreed to in writing by the Company,
including as provided in this Agreement.
16. Notices. Any notice,
report or payment required or permitted to be given or made under this Agreement
by one party to the other shall be deemed to have been duly given or made if
personally delivered or, if mailed, when mailed by registered or certified mail,
postage prepaid, to the other party at the following addresses (or at such other
address as shall be given in writing by one party to the other):
If to the
Manager:
If to the
Company:
17. Entire Agreement;
Modification. This Agreement (a) contains the complete and entire
understanding and agreement of the Manager and the Company with respect to the
subject matter hereof; and (b) supersedes all prior and contemporaneous
understandings, conditions and agreements, oral or written, express or implied,
respecting the engagement of the Manager in connection with the subject matter
hereof. This Agreement may not be amended or modified except by written
instrument executed by both the Manager and the Company.
18. Waiver of Breach. The
waiver by either party of a breach of any provision of this Agreement by the
other party shall not operate or be construed as a waiver of any subsequent
breach of that provision or any other provision hereof.
19. Assignment. The
Manager may assign its rights or obligations under this Agreement only with the
express written consent of the Company, such consent not to be unreasonably
withheld. The Company may assign its rights or obligations under this Agreement
only with the express written consent of the Manager, such consent not to be
unreasonably withheld.
20. Successors. This
Agreement and all the obligations and benefits hereunder shall inure to the
successors and permitted assigns of the parties.
21. Counterparts. This
Agreement may be executed and delivered by each party hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original and both of which taken together shall constitute one and the same
agreement.
22. Choice of Law. This
Agreement and any dispute arising hereunder shall be governed by and construed
in accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of laws provision or rule (whether of
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
York.
23. Severability. If any
provision of this Agreement is or becomes illegal, invalid or unenforceable
under any law or regulation of any jurisdiction, it shall, as to such
jurisdiction, be deemed modified to the least degree necessary to conform to the
requirements of such law or regulation, or if for any reason it is not deemed so
modified, it shall be illegal, invalid or unenforceable only to the extent set
forth in the law or regulation without affecting the legality, validity or
enforceability of such provision in any other jurisdiction or the remaining
provisions of this Agreement.
24. Code Section
409A.
(a) The
Company and the Manager agree that this Agreement is intended to either comply
with, or be exempt from, the requirements of Code Section 409A. To
the extent that this Agreement is not exempt from the requirements of Code
Section 409A, this Agreement is intended to comply with the requirements of Code
Section 409A and shall be limited, construed and interpreted in accordance with
such intent. If any provision of this Agreement would cause the
Manager to incur any additional tax or interest under Code Section 409A and
modifying it would avoid such additional tax or interest, the parties agree that
upon the Manager’s request, they shall use reasonable business efforts to in
good faith reform such provision; provided, that any such modification shall not
increase the economic burden to the Company and will, to the maximum extent
practicable, maintain the original intent and economic benefit to the Manager of
the applicable provision without violating the provisions of Code Section
409A.
(b) A
termination shall not be deemed to have occurred for purposes of any provision
of this Agreement providing for the payment of any amounts to the Manager upon
or following a termination unless such termination is also a “Separation from
Service” within the meaning of Code Section 409A and, for purposes of any such
provision of this Agreement, references to a “termination,” “termination of
employment” or like terms shall mean Separation from Service. With
regard to any payment to the Manager upon a Separation from Service that
constitutes “non-qualified deferred compensation” pursuant to Code Section 409A,
to the extent required to be delayed in compliance with Code Section
409A(a)(2)(B), such payment or benefit shall not be made or provided to the
Manager prior to the expiration of the six-month period measured from the date
of the Separation from Service. On the first day of the seventh month
following the date of the Separation from Service all payments delayed pursuant
to this Section 24(b) (whether they would have otherwise been payable in a
single sum or in installments in the absence of such delay) shall be paid the
Manager in a lump sum, and any remaining payments due to the Manager under this
Agreement shall be paid or provided in accordance with the normal payment dates
specified for them herein.
(c) If under
this Agreement, an amount is to be paid in two or more installments, for
purposes of Code Section 409A, each installment shall be treated as a separate
payment.
IN WITNESS WHEREOF, the parties have
caused this Agreement to be signed as of the date first written
above.
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ATLAS
MINING COMPANY
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By:
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Name
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Title
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MATERIAL
ADVISOR, LLC
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By:
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Name
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Title
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Appendix
A
DEFINITIONS
“Cause”
will mean (a) Zeitoun’s conviction of, or plea of guilty or nolo contendere to,
any felony or crime involving moral turpitude (other than traffic-related
offenses or as a result of vicarious liability); (b) fraud, conversion or
misappropriation by the Manager or Zeitoun involving the Company or its
employees or assets resulting in material injury to the Company; or (c) any act
or omission involving malfeasance, willful misconduct or gross negligence by the
Manager in the performance of the Services or by Zeitoun in connection with his
duties and responsibilities as Chief Executive Officer and a member of the
Board, as applicable, in either case, that relates to the Company and, if
capable of being cured, is not so cured within 15 days after receipt by the
Manager of written notice thereof, (d) a Change in Control of the Manager, or
(e) the termination of Zeitoun’s service relationship with the Manager for any
reason other than as a result of his death or becoming Disabled, which in the
case of (d) or (e), the Manager shall provide immediate written notice thereof
to the Company.
A “Change
in Control of the Company” will occur upon the first to occur of following
events: (a) a sale (or other disposition, including by lease) of all
or substantially all of the assets of the Dragon Mine, (b) a merger or
consolidation of the Company or a subsidiary with any other corporation or
entity, other than a merger or consolidation that would result in the majority
of the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity or
such surviving entity’s parent outstanding immediately after such merger or
consolidation, (c) a change in the majority of the members of the Board to
persons who were neither (x) nominated or appointed by the current Board nor (y)
nominated or appointed by directors so nominated or appointed, (d) an
acquisition by any individual, general partnership, limited partnership, limited
liability company, corporation, trust, estate, real estate investment trust
association or any other entity (each, a “Person”) or group of Persons (other
than Xxxxx X. Xxxx, IBS Capital LLC, The IBS Turnaround Fund, L.P., The IBS
Turnaround Fund (QP), The IBS Opportunity Fund (BVI), Ltd., the Company, any
Company subsidiary or any of their affiliates or related entities or any
employee benefit plan of the Company) of the outstanding securities of the
Company in a transaction or series of transactions, if immediately thereafter
such acquiring Person or group has, or would have, beneficial ownership (as
defined under either Rule 16a-1(a)(1) or Rule 16a-1(a)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) of more than fifty
percent (50%) of the combined equity interests or voting power of the Company,
or (e) the consummation of a Rule 13e-3 transaction with respect to the
Company. A reorganization of the Company into a master limited
partnership may constitute a Change in Control of the Company if the above
definition is met.
A “Change
in Control of the Manager” will occur upon the effective date of the first to
occur of the following events: (a) a sale of more than 50% percent of
the assets of the Manager, (b) a merger or consolidation of the Manager with any
other corporation or entity, other than a merger or consolidation that would
result in the majority of the voting securities of the Manager outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Manager or such surviving entity or such surviving entity’s parent
outstanding immediately after such merger or consolidation, or (c) an
acquisition by any Person or group of Persons (other than Zeitoun or a “group”
(as defined in Section 13(d)(3) of the Exchange Act) which includes Zeitoun) of
the outstanding securities of the Manager in a transaction or series of
transactions, if immediately thereafter such acquiring Person or group has, or
would have, beneficial ownership (as defined under either Rule 16a-1(a)(1) or
Rule 16a-1(a)(2) of the Exchange Act) of more than fifty percent (50%) of the
combined equity interests or voting power of the Manager.
Zeitoun
shall be considered “Disabled” if he is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months.
“Good
Reason” will mean (a) the failure by the Company to perform any of its material
obligations under this Agreement, or (c) the requirement that the
Manager’s place of service be located outside a 10 mile radius
of New York City (excluding business travel) which, in either instance, is not
cured within 15 days after receipt by the Company of written notice thereof and
provided further that such notice is delivered to the Company no more than 60
days after the occurrence of such purported Good Reason event.
