Exhibit 10.22
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of February 2,
2005 by and among STONEPATH GROUP, INC., a Delaware corporation (the
"Employer"), and XXXXXX XXXXXX (the "Executive").
RECITALS
WHEREAS, the Employer considers it essential and in the best interests
of its stockholders to xxxxxx the employment of key management personnel and
desires to engage the services of the Executive on the terms and conditions
hereinafter set forth; and
WHEREAS, Executive desires to render services to the Employer on the
terms and conditions provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, hereby
agree as follows:
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, the following terms have
the meanings specified or referred to in this Section 1:
"Agreement" means this Employment Agreement, as amended from
time to time.
"Basic Compensation" shall include base salary, as well as any
bonuses that have been declared and are payable pursuant to Section 3.1(b) of
this Agreement.
"Board of Directors" means the board of directors of Employer.
"Change of Control" shall be deemed to occur if (A) there
occurs a sale, exchange, transfer or other disposition of 50% or more in value
of the assets of Employer to another Person or entity, except to an entity
controlled directly or indirectly by Employer; (B) there occurs a merger,
consolidation or other reorganization of Employer in which Employer is not the
surviving entity, provided Persons who were shareholders of Employer prior to
the transaction continue to own less than 50% of the outstanding securities of
the acquiror immediately following the transaction; (C) there occurs a merger,
consolidation or other reorganization of Employer in which the Employer is the
surviving entity, provided Persons who were shareholders of Employer prior to
the transaction continue to own less than 50% of the outstanding securities of
the surviving entity following the transaction; (D) a plan of liquidation or
dissolution of Employer other than pursuant to bankruptcy or insolvency laws is
adopted. Notwithstanding the foregoing, a "change of control" shall not be
deemed to have occurred for purposes of this Agreement (i) in the event of a
sale, exchange, transfer or other disposition of substantially all of the assets
of Employer to, or a merger, consolidation or other reorganization of Employer
with, any entity in which Executive (alone or with other officers) has, directly
or indirectly, at least a 25% equity or ownership interest; or (ii) in a
transaction otherwise commonly referred to as a "management leveraged buy-out",
as a result of which Executive (alone or with other officers) has, directly or
indirectly, at least a 25% equity or ownership interest; or (E) should Xxxxxx X.
Xxxxxx no longer be the Chairman of the Company and the direct superior of
Xxxxxx Xxxxxx
"Code" means the Internal Revenue Code of 1986, as amended.
"Disability" shall mean once the Executive is unable for the
"Disability Period" (as hereafter defined) to perform the essential functions of
the Executive's duties with reasonable accommodation. The disability of the
Executive will be determined by a medical doctor selected by written agreement
of the Employer and the Executive upon the request of either party by notice to
the other. If the Employer and the Executive cannot agree on the selection of a
medical doctor, each of them will select a medical doctor and the two medical
doctors will attempt to make a determination of disability. If they cannot
agree, they will select a third medical doctor who will determine whether the
Executive has a disability. The determination of the third medical doctor
selected under this provision will be binding on both parties. The Executive
must submit to a reasonable number of examinations by the medical doctor making
the determination of disability under this provision, and the Executive hereby
authorizes the disclosure and release to the Employer of such determination and
all supporting medical records. If the Executive is not legally competent, the
Executive's legal guardian or duly authorized attorney-in-fact will act in the
Executive's stead for the purposes of submitting the Executive to the
examinations, and providing the authorization of disclosure, required under this
provision.
"Disability Period" shall mean 180 consecutive days or 180
days during any twelve (12) month period; or such lesser number of days as
elapse until disability insurance benefits commence under any disability
insurance coverage furnished by Employer to Executive, if any.
"Effective Date" means October 14, 2004.
"Employment Period" means the term of the Executive's
employment under this Agreement as defined in Section 2.2.
"For Cause" shall mean: (a) any violation of a law, rule or
regulation other than minor traffic violations, which causes or is likely to
cause material damages to the Employer, including without limitation, any
violation of the Foreign Corrupt Practices Act; (b) a breach of fiduciary duty
for personal profit; (c) fraud, dishonesty or other acts of willful misconduct
in the rendering of services on behalf of the Employer or relating to the
Executive's employment; (d) willful misconduct by the Executive which would
cause the Employer to violate any state or federal law relating to sexual
harassment or age, sex or other prohibited discrimination or any violation of
written policy of the Employer or any successor entity adopted in respect to
such law; (e) failure to follow Employer work rules or the lawful instructions
(written or otherwise) of the Board of Directors of the Employer or a
responsible executive to whom the Executive directly or indirectly reports,
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provided compliance with such directive was reasonably within the scope of the
Executive's duties and the Executive was given notice that his or her conduct
could give rise to termination and such conduct is not, or could not be, cured
within ten (10) days thereafter; or (f) any violation by the Executive of the
terms of this Agreement; provided, however, that in order to terminate Executive
For Cause, Employer must first provide Executive with thirty (30) days written
notice of the particular For Cause events alleged by Employer; however, in the
event of a For Cause event specified at sub-sections (e) and (f) above, the
thirty (30) day notice period must be accompanied with a right to cure within
such thirty (30) day period.
"Good Reason" shall mean, unless Executive shall have
consented in writing thereto, any of the following: (i) a reduction in
Executive's title, duties, responsibilities or status which are inconsistent
with Executive's position with Employer; (ii) a reduction by Employer in
Executive's base salary or material reduction in fringe benefits; or (iii) the
breach by Employer of any material agreement or obligation under this Agreement;
any of such events to be preceded by notice from Executive to Employer and a
thirty (30) day right to cure.
"Person" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, or
governmental body.
2. EMPLOYMENT TERMS AND DUTIES
2.1 EMPLOYMENT
Commencing on the Effective Date, the Employer agrees to
employ the Executive for the term of this Agreement upon the terms and
conditions set forth in this Agreement, and the Executive agrees to commence
employment for Employer also upon the terms and conditions set forth in this
Agreement.
2.2 TERM
Subject to the provisions of Section 6, the Employment Period
for the Executive's employment under this Agreement will be five (5) years,
beginning on the Effective Date, and expiring on October 14, 2009, or as earlier
permitted under this Agreement.
2.3 DUTIES
The Executive will serve as the President of Employer with
responsibility for the administrative functions of Employer and with such other
responsibilities as are assigned or delegated to the Executive by the Board of
Directors or Xxxxxx X. Xxxxxx. The Executive agrees to perform in good faith and
to the best of his ability all services which may be required of him hereunder
and will devote his full-time efforts and business time, skill, attention and
energies as are reasonably necessary to perform his duties and responsibilities
under this Agreement and to promote the success of the Employer's business.
Executive may continue to engage in the following activities: (a) attending
board of directors' or like meetings of other companies in which Executive or an
affiliate has invested or in which Executive has been elected to serve, and (b)
managing his personal investments, provided that such activities set forth in
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(a) and (b) (individually or collectively) do not in the good faith view of
Employer's Board of Directors materially interfere or conflict with the
performance of Executive's duties or responsibilities under this Agreement.
3. COMPENSATION
3.1 BASIC COMPENSATION
(a) Base Salary. The Executive will be paid an annual base
salary of $200,000 through January 31, 2005 and at least $250,000 thereafter as
provided below (the latter being the "Base Salary"), which will be payable in
equal periodic installments according to the Employer's customary payroll
practices, but no less frequently than monthly. The Executive's Base Salary will
be reviewed by Employer's Board of Directors not less frequently than annually,
and may be adjusted upward or downward by Employer, but in no event will the
Base Salary be less than $250,000 per year commencing February 1, 2005.
(b) Bonus. Executive shall also be eligible to receive an
annual incentive bonus, the amount of which will be determined at the discretion
of the Employer.
(c) General Benefits. The Executive will, during the
Employment Period, be permitted to participate in such pension, profit sharing,
life insurance, hospitalization, major medical, and other employee benefit plans
of the Employer that may be in effect from time to time, to the extent the
Executive is eligible under the terms of those plans (collectively, the
"Benefits"). The Executive shall also be entitled to such other fringe benefits
as are now or may become available to all of Employer's other executive
officers.
3.2 OPTIONS
Employer granted to Executive options to purchase up to two
hundred thousand (200,000) shares of its common stock at an exercise price per
share equal to the closing price of the Employer's common stock on the American
Stock Exchange on the Effective Date (the "Options"). The Options were granted
under and subject to the Employer's Amended and Restated 2000 Stock Incentive
Plan and under the terms and conditions of the Stock Option Agreement dated as
of the Effective Date. The Options shall fully vest upon a Change of Control.
4. EXPENSE REIMBURSEMENT
The Employer will pay reasonable expenses incurred by the
Executive in the performance of the Executive's duties pursuant to this
Agreement, including without limitation reasonable expenses incurred by the
Executive in traveling to and from Employer's offices from Executive's home in
Laguna Beach, California, attending conventions, other business meetings and for
promotional expenses, provided that any such activities must be related to
Employer's business and all individual expenses (or those aggregated for a
single convention, seminar or other business trip) greater than $2,000 must be
approved by either Employer's Chief Executive Officer or Employer's Compensation
Committee (or if Employer has no Compensation Committee, its Board of
Directors). The Executive must file expense reports with respect to such
expenses in accordance with the Employer's policies.
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5. VACATIONS AND HOLIDAYS
The Executive will be entitled to three (3) weeks paid
vacation each calendar year in accordance with the vacation policies of the
Employer in effect for its Executive officers from time to time. The Executive
will also be entitled to the paid holidays and other paid leave set forth in the
Employer's policies. Vacation days during any calendar year that are not used by
the Executive during such calendar year may be used in any subsequent calendar
year; provided, however, that no more than six (6) weeks' paid vacation may be
accrued or carried forward. Accrued but unused vacation days will be paid for by
Employer in certain instances upon the termination of this Agreement as provided
for in Section 6.2 hereafter.
6. TERMINATION
6.1 EVENTS OF TERMINATION
The Executive's employment pursuant to this Agreement
may be terminated by Employer on the following grounds:
(a) upon the death of the Executive;
(b) upon the disability of the Executive immediately
upon notice from either party to the other;
(c) For Cause (following the expiration of any
applicable notice period from Employer to Executive); or
(d) at the discretion of Employer other than For
Cause.
The Executive may terminate his employment on the
following grounds:
(e) without Good Reason, provided that Executive
gives Employer at least thirty (30) days prior written notice of his termination
of employment; or
(f) for Good Reason (following the expiration of any
applicable notice period from Executive to Employer).
6.2 TERMINATION PAY
Effective upon the termination of Executive's
employment, the Employer will be obligated to pay the Executive (or, in the
event of his death, his designated beneficiary as defined below) the
compensation provided in this Section 6.2:
(a) Termination by the Employer For Cause or
Termination by Executive Without Good Reason. If the Employer terminates
Executive's employment For Cause or Executive resigns or terminates his
employment for other than Good Reason, Executive will be entitled to receive his
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Basic Compensation through the date such termination is effective, but will not
be entitled to any accrued bonus compensation for the calendar year during which
such termination occurs (other than for any bonus compensation paid to Executive
prior to such termination).
(b) Termination upon Disability. If Executive's
employment is terminated by either party as a result of the Executive's
Disability, the Employer will pay the Executive his Basic Compensation through
the remainder of the calendar quarter during which such termination is effective
and for the lesser of (i) six consecutive months thereafter, or (ii) the period
until disability insurance benefits commence under any disability insurance
coverage furnished by the Employer to Executive. Executive shall also be
entitled to receive that part of Executive's accrued bonus compensation, if any,
for the calendar year during which his disability occurs, prorated through the
end of the calendar quarter during which his termination is effective. If this
Agreement is terminated as a result of Executive's disability, Executive shall
fully vest at the time of such termination in and to that number of Options as
if Executive had remained employed by Employer for a period of one year
following his disability and Executive shall have the full term of such Options
in which to exercise any or all of them, notwithstanding any accelerated
exercise period contained in such Option.
(c) Termination upon Death. If Executive's employment
is terminated because of the Executive's death, Executive's estate will be
entitled to receive his Basic Compensation through the end of the calendar month
in which his death occurs and that part of the Executive's accrued bonus
compensation, if any, for the calendar year during which his death occurs,
prorated through the end of the calendar month during which his death occurs. If
Executive's employment is terminated as a result of the Executive's death,
Executive shall fully vest at the time of such termination in and to that number
of Options as if Executive had remained employed by the Employer for a period of
one year following his death and Executive shall have the full term of such
Options in which to exercise any or all of them, notwithstanding any accelerated
exercise period contained in any such Option.
(d) Termination by Executive For Good Reason or
Termination by Employer Without Cause. If Executive's employment is terminated
by Executive for Good Reason, or if Executive's employment is terminated by
Employer other than For Cause, then (i) Employer shall continue to pay to
Executive his Basic Compensation (including for this purpose Executive's annual
bonus) for the remaining term under this Agreement and (ii) the Options plus all
other stock, options or other equity rights in Employer which Executive received
in connection with his employment by Employer shall become immediately 100%
vested and Executive shall have the full term of such Options in which to
exercise any or all of them, notwithstanding any accelerated exercise period
contained in any such Option.
(e) Termination by Executive For Good Reason or
Termination by Employer Without Cause Following a Change of Control. If
following a Change of Control Executive's employment is terminated by Executive
for Good Reason or by Employer other than For Cause, then Employer shall within
ten (10) days after the date of termination pay to Executive in cash: (i) an
amount equal to 2.99 times Executive's Basic Compensation calculated at the rate
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in effect on the date of termination; (ii) current and carried-over unused
vacation days; and (iii) all other amounts to which Executive is entitled,
including (A) any bonus to which Executive would have been entitled had he
remained employed by Employer for a period of five (5) years following the date
of termination, (B) any expense reimbursement amounts accrued to the effective
date of termination, and (C) any amounts under any other benefit plan of the
Employer, in each case at the time such payments are due. Also, for five years
following the date of termination, the Employer shall continue to provide
Executive with all fringe benefits or the economic equivalent thereof he was
receiving as of the date of termination, including, without limitation, all
health, life and disability insurance he was receiving immediately prior to the
date of termination, or the economic equivalent thereof, as if he were actually
employed for that period. Moreover, any Options held by Executive which were not
fully exercisable on the date of Executive's termination pursuant to this
Section 6 shall vest and immediately become fully exercisable by Executive upon
the date of termination, and Executive shall have the full term of such Options
in which to exercise any or all of them, notwithstanding any accelerated
exercise period contained in any such Option.
Executive shall have the right to elect with respect to the payment to
him of 2.99 times his Basic Compensation pursuant to Section 6.2(e)(i) above to
take such payment in the form of either (x) a single sum payment in cash or (y)
securities of the Employer equal in value to the amount of such payment, with
such securities valued for purposes hereof at 75% of the average closing price
for the last 20 trading days on the principal exchange on which the securities
were listed. The Employer further agrees to include the shares acquired
hereunder by Executive, at its sole cost and expense, in a registration
statement to be filed with the Securities and Exchange Commission providing for
the resale of such shares in an open market or private transaction, within sixty
(60) days after the date of the distribution of such shares.
7. TAX INDEMNITY PAYMENTS
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by Employer or any affiliates to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to the terms of
the Agreement or otherwise but determined without regard to any additional
payments required under this Section 7 (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code or any successor provision
(collectively, "Section 4999"), or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any Federal, state or local income and employment
taxes and Excise Tax (and any interest and penalties imposed with respect to any
such taxes) imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
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(b) All determinations required to be made under this Section
7, including whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumption to be utilized in arriving at such
determination, shall be made by Employer's public accounting firm (the
"Accounting Firm") which shall provide detailed supporting calculations both to
Employer and Executive within fifteen (15) business days of the receipt of
notice from Executive that there has been a Payment, or such earlier time as is
requested by Employer. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group affecting the Change
of Control, Executive may appoint another nationally recognized public
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Employer. Any
Gross-Up Payment, as determined pursuant to this Section 7, shall be paid by
Employer to Executive within five (5) days of the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by Executive, it shall furnish Executive with a written opinion that
failure to report the Excise Tax on Executive's applicable federal income tax
return would not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon Employer and
Executive.
(c) Executive shall notify Employer in writing of any claim by
the Internal Revenue Service that, if successful, would require a payment by
Employer, or a change in the amount of the payment by Employer, of the Gross-Up
Payment and Employer shall be responsible to make such payment to Executive.
Such notification shall be given as soon as practicable after Executive is
informed in writing of such claim and shall apprise Employer of the nature of
such claim and the date on which such claim is required to be paid; provided
that the failure to give any notice pursuant to this Section 7(c) shall not
impair Executive's rights under this Section 7 except to the extent Employer is
materially prejudiced thereby. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which Executive gives such
notice to Employer (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If Employer notifies Executive in
writing prior to the expiration of such period that it desires to contest such
claim, Executive shall:
(1) give Employer any information reasonably requested by
Employer;
(2) take such action in connection with contesting such claim
as Employer shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by Employer;
(3) cooperate with Employer in good faith in order to
effectively contest such claim; and
(4) permit Employer to participate in any proceedings relating
to such claim;
provided, however, that Employer shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax-basis, for any Excise Tax or income, employment or other tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 7(c), Employer shall control all
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proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect to such claim and may, at its
sole option, either direct Executive to pay the tax claimed and xxx for a refund
or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as Employer
shall determine; provided, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of Executive with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Employer's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority
8. CHARACTER OF TERMINATION PAYMENTS; MITIGATION
The amounts payable to Executive upon any termination of this
Agreement shall be considered severance pay in consideration of past services
rendered on behalf of the Employer and his continued service from the date
hereof to the date he becomes entitled to such payments. Executive shall have no
duty to mitigate his damages by seeking other employment and, should Executive
actually receive compensation from any such other employment, the payments
required hereunder shall not be reduced or offset by any such other
compensation.
9. CONFIDENTIALITY AND RELATED MATTERS.
9.1 NON-DISCLOSURE COVENANT
Employer and the Executive acknowledge that the services to be
performed by the Executive under this Agreement are unique and valuable and
that, as a result of the Executive's employment, the Executive will be in a
relationship of confidence and trust with Employer and will come into possession
of "Confidential Information" (i) owned or controlled by Employer and its
subsidiaries and affiliates; (ii) in the possession of Employer and its
subsidiaries and affiliates and belonging to third parties; or (iii) conceived,
originated, discovered or developed, in whole or in part, by the Executive
during the term of this Agreement and relating to his duties for the Employer
under this Agreement. As used herein "Confidential Information" means trade
secrets and other confidential or proprietary business, technical, personnel or
financial information of Employer, whether or not the Executive's work product,
in written, graphic, oral or other tangible or intangible forms, including but
not limited to specifications, samples, records, data, computer programs,
drawings, diagrams, models, consumer names, ID's or e-mail addresses, business
or marketing plans, studies, analyses, projections and reports, communications
by or to attorneys (including attorney-client privileged communications), memos
and other materials prepared by attorneys or under their direction (including
attorney work product), and software systems and processes that are not readily
available to the public, even it is not specifically marked as a trade secret or
confidential, unless Employer advises the Executive otherwise in writing or
unless the information has been shared by Employer with entities not bound by
non-disclosure agreements. In consideration of the compensation and benefits to
be paid or provided to the Executive by the Employer under this Agreement, the
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Executive agrees not to directly or indirectly use or disclose to anyone, either
during or after the Employment Period, except in the performance of his duties
of his employment with Employer or with Employer's prior written consent, any
Confidential Information of Employer. This non-disclosure covenant does not
apply to information that is disclosed or becomes public through another source
that is not bound by a confidentiality agreement with Employer; which Executive
is required to disclose pursuant to court order, subpoena or applicable law
(provided that Executive will use reasonable efforts to provide Employer with
prompt notice of any such requests or requirement so that Employer may seek an
appropriate protective order); or which is disclosed in any proceeding to
enforce or interpret this Agreement. The Executive agrees that in the event of
the termination of the Executive's employment for any reason, the Executive will
deliver to Employer, upon request, all property belonging to Employer, including
all documents and materials of any nature pertaining to the Executive's work
with Employer and will not take with him any documents or materials of any
description, or any reproduction thereof of any description, containing or
pertaining to any Confidential Information.
9.2 WORK MADE FOR HIRE
Executive recognizes and understands that Executive's duties
at the Employer may include the preparation of materials, including without
limitation written or graphic materials, and that any such materials conceived
or written by Executive shall be done as "work made for hire" as defined and
used in the Copyright Act of 1976, 17 U.S.C. xx.xx. 1 et seq. In the event of
publication of such materials, Executive understands that since the work is a
"work made for hire", the Employer will solely retain and own all rights in said
materials, including right of copyright.
9.3 DISCLOSURE OF WORKS AND INVENTIONS/ASSIGNMENT OF PATENTS
In consideration of the promises set forth herein, Executive
agrees to disclose promptly to the Employer, or to such person whom the Employer
may expressly designate for this specific purpose (its "Designee"), any and all
works, inventions, discoveries and improvements authored, conceived or made by
Executive during the period of employment and related to the business or
activities of the Employer, and Executive hereby assigns and agrees to assign
all of Executive's interest in the foregoing to the Employer or to its Designee.
Executive agrees that, whenever he is requested to do so by the Employer,
Executive shall execute any and all applications, assignments or other
instruments which the Employer shall deem necessary to apply for and obtain
Letters Patent or Copyrights of the United States or any foreign country or to
otherwise protect the Employer's interest therein. Such obligations shall
continue beyond the termination or nonrenewal of Executive's employment with
respect to any works, inventions, discoveries and/or improvements that are
authored, conceived of, or made by Executive during the period of Executive's
employment, and shall be binding upon Executive's successors, assigns,
executors, heirs, administrators or other legal representatives.
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10. NON-COMPETITION AND NON-SOLICITATION MATTERS
10.1 NON-COMPETITION
During the term of this Agreement, except as agreed by the
Chairman in advance, the Executive agrees that he shall not work for or be
interested in any business which provides services or products which are
directly competitive with "primary" services or products offered by the Employer
or a subsidiary or affiliate of Employer at any time during his term of
employment or at the Executive's termination date (the "Non-Compete Period"). In
the event the Executive is terminated For Cause or Executive terminates for
other than Good Reason, the Non-Compete Period shall be extended until the
earlier of (i) one year; or (ii) the then scheduled expiration of the term of
this Agreement. In the event the Executive is terminated in a manner in which he
is paid severance, his Basic Compensation is continued, or he is paid a lump-sum
as though his employment had continued, the Non-Compete Period shall be extended
through the period of such severance or compensation continuation. For the
purpose of this Agreement, a product or service shall be deemed "primary" only
if such service or product constitutes a primary component of the core business
of Employer on Executive's termination date. For the further purposes of this
Agreement, the term "work for or be interested in any business" means that the
Executive is a stockholder, director, officer, employee, partner, individual
proprietor, lender or consultant with that business, but not if (i) his interest
is limited solely to the passive ownership of five percent (5%) or less of any
class of the equity or debt securities of a corporation whose shares are listed
for trading on a national securities exchange or traded in the over-the-counter
market. In the event that any part of this Section 10 is adjudged invalid or
unenforceable by any court of record, board of arbitration or judicial or quasi
judicial entity having jurisdiction thereof by reason of length of time,
geographical coverage, activities covered, or for any other reason, then the
invalid or unenforceable provisions of this covenant shall be deemed reformed
and amended to the maximum extent permissible under applicable law and shall be
enforced and enforceable as so amended in accordance with the intention of the
parties as expressed herein.
10.2 NON-SOLICITATION
During the Non-Compete Period, the Executive, except as agreed
by the Chairman, also agrees that he will not directly or indirectly: (i)
solicit the trade of, or trade with, any past, present or prospective customer
of the Employer for any business purpose that directly or indirectly competes
with the business of Employer or a subsidiary or affiliate of Employer; or (ii)
solicit or induce, or attempt to solicit or induce, any employee of Employer to
leave Employer for any reason whatsoever, or assist or participate in the hiring
of any employee of Employer to work for another entity.
11. REPRESENTATIONS OF EXECUTIVE
As a material inducement to Employer to execute this Agreement
and consummate the transactions contemplated thereby, the Executive hereby makes
the following representations to Employer, each of which are true and correct in
all material respects as of the date hereof.
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11.1 QUESTIONNAIRE
On or before the date hereof Executive has completed and
returned to Employer a Directors and Officers Questionnaire (the
"Questionnaire") which is true and correct in all material respects.
11.2 NO PRIOR AGREEMENTS
Executive represents and warrants that Executive is not a
party to or otherwise subject to or bound by the terms of any contract,
agreement or understanding which in any manner would limit or otherwise affect
Executive's ability to perform his obligations hereunder, including without
limitation any contract, agreement or understanding containing terms and
provisions similar in any manner to those contained in Sections 9 and 10 of this
Agreement. Executive further represents and warrants that his employment with
the Employer will not under any circumstances require him to disclose or use any
confidential information belonging to prior employers or other persons or
entities, or to engage in any conduct which may potentially interfere with the
contractual, statutory or common-law rights of such other employers, persons or
entities. In the event that Executive knows or learns of any facts whatsoever
which suggest that such interference might arguably occur as the result of any
proposed actions by either Executive or the Employer, Executive expressly
promises that he will immediately bring such facts to the Employer's attention.
11.3 REVIEW BY COUNSEL
Executive expressly acknowledges and represents that Executive
has been given a full and fair opportunity to review this Agreement with an
attorney of Executive's choice, and that Executive has satisfied himself, with
or without consulting with counsel, that the terms and provisions of this
Agreement, specifically including, but not limited to, the restrictive covenant
and related provisions of Section 9 hereof, are reasonable and enforceable.
11.4 NO CONFLICTS OF INTEREST
Executive covenants that, as of the date hereof, he is not
involved, except as agreed in advance by the Chairman, in any venture or
activity that could compete with Employer or which could potentially interfere
with his ability to perform under this Agreement. During the Term, he will
disclose to the Company, in writing, any and all interests he may have, whether
for profit or compensation or not, in any venture or activity which could
potentially interfere with his ability to perform under this Agreement or create
a conflict of interest for him with the Company. For purposes of this Section
11.4 only, "conflict of interest" shall mean ownership of greater than one
percent (1%) of, or $25,000 worth of equity in, another company which conducts
business similar to that undertaken by the Employer.
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11.5 EXECUTIVE'S ABILITY
Executive represents that Executive's experience and
capabilities, and the limited provisions of Section 10, are such that he will
not be prevented from earning his livelihood in businesses similar to that of
Employer. Executive acknowledges that there are a significant number of
businesses for which his qualifications and experience would render him
qualified for employment that do not constitute a competing businesses such that
his ability to become employed after the termination or nonrenewal of this
Agreement would not be impaired.
12. GENERAL PROVISIONS
12.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY
The Executive acknowledges that the injury that would be
suffered by the Employer as a result of a breach of the provisions of any
provision of Sections 9 and 10 of this Agreement would be irreparable and that
an award of monetary damages to the Employer for such a breach would be an
inadequate remedy. Consequently Employer will have the right, in addition to any
other rights it may have, to obtain injunctive relief to restrain any breach or
threatened breach or otherwise to specifically enforce any provisions of
Sections 9 and 10 of this Agreement, and the Employer will not be obligated to
post bond or other security in seeking such relief.
12.2 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power, or privilege under this Agreement will
operate as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any other
right, power, or privilege.
12.3 TOLLING PERIOD
The non-competition, non-disclosure and non-solicitation
obligations contained in Sections 9 and 10 of this Agreement shall be extended
by the length of time during which Executive shall have been in breach of any of
the provisions of such Sections 9 and 10, regardless of whether the Employer
knew or should have known of such breach.
12.4 EMPLOYER VIOLATION NOT A DEFENSE
In an action by the Employer to enforce any provision of this
Agreement, any claims asserted by Executive against the Employer shall not
constitute a defense to the Employer's action.
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12.5 INDEMNIFICATION
Employer shall indemnify and defend Executive and his heirs,
executors and administrators against any costs or expense (including reasonable
attorneys' fees and amounts paid in settlement, if such settlement is approved
by the Employer), fine, penalty, judgment and liability reasonable incurred by
or imposed upon Executive in connection with any action, suit or proceeding,
civil or criminal, to which Executive may be made a party or with which
Executive shall be threatened, by reason of Executive's being or having been an
officer or director, unless with respect to such matter Executive shall have
been adjudicated in any proceeding not to have acted in good faith or in the
reasonable belief that the action was in the best interests of the Employer, or
unless such indemnification is precluded by law, public policy, or in the
judgment of the Employer's Board of Directors, such indemnification is being
sought as a result of actions of Executive which were either: (i) grossly
negligent; (ii) reflective of Executive misconduct; (iii) in violation of rules,
regulations or laws applicable to the Employer; or (iv) in disregard of Employer
policies.
12.6 NOTICES
All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand, (b) sent by facsimile (with written confirmation of
receipt), provided that a copy is mailed by registered mail, return receipt
requested, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and facsimile numbers set forth below (or to such other
addresses and facsimile numbers as a party may designate by notice to the other
parties):
If to Employer: Stonepath Group, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxxxx Xxxxxxxxx PC
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. North, Esquire
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If to Executive: Xxxxxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
12.7 ENTIRE AGREEMENT; AMENDMENTS
This Agreement and the documents referenced herein, contain
the entire agreement between the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
between the parties hereto with respect to the subject matter hereof. This
Agreement may not be amended orally, but only by an agreement in writing signed
by the parties hereto.
12.8 GOVERNING LAW
This Agreement will be governed by the laws of the State of
Delaware without regard to conflicts of laws principles.
12.9 ARBITRATION, OTHER DISPUTES.
In the event of any dispute or controversy arising under or in
connection with this Agreement, the parties shall first promptly try in good
faith to settle such dispute or controversy by mediation under the applicable
rules of the American Arbitration Association before resorting to arbitration.
In the event such dispute or controversy remains unresolved in whole or in part
for a period of thirty (30) days after it arises, the parties will settle any
remaining dispute or controversy exclusively by arbitration in the city in which
Employer has its principal executive offices in accordance with the commercial
arbitration rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. All administration fees and arbitration fees shall be paid solely
by Employer. Notwithstanding the above, Employer shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of Section 9 or 10 hereof. The
prevailing party may recover attorneys' fees in any dispute or controversy
arising under or in connection with this Agreement.
12.10 ASSIGNABILITY, BINDING NATURE
This Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors, heirs (in the case of the
Executive) and assigns. No rights or obligations of the Executive under this
Agreement may be assigned or transferred by the Executive other than his rights
to compensation and benefits, which may be transferred only by will or operation
of law.
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12.11 SURVIVAL
The respective rights and obligations of the parties hereunder
shall survive any termination of the Executive's employment to the extent
necessary to the intended preservation of such rights and obligations.
12.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement unless otherwise specified. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
12.13 SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12.14 COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement. This Agreement (and all other agreements, documents, instruments and
certificates executed and/or delivered in connection herewith) may be executed
by facsimile signatures, each of which shall be deemed an original copy of this
Agreement (or other such agreement, document, instrument and certificate).
IMPORTANT NOTICE: THIS AGREEMENT RESTRICTS EXECUTIVE'S RIGHTS TO OBTAIN
OTHER EMPLOYMENT FOLLOWING HIS EMPLOYMENT WITH THE EMPLOYER. BY SIGNING
IT, EXECUTIVE ACKNOWLEDGES THIS FACT, AND FURTHER ACKNOWLEDGES THAT HE
HAS BEEN ADVISED BY THE EMPLOYER TO READ THE AGREEMENT CAREFULLY,
AND/OR TO CONSULT WITH COUNSEL OF HIS CHOICE CONCERNING THE LEGAL
EFFECTS OF SIGNING THE AGREEMENT, PRIOR TO SIGNING IT.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
EMPLOYER:
STONEPATH GROUP INC.
By: /s/ Xxxxxx X. Xxxxxx
Authorized Executive Officer
EMPLOYEE:
/s/ Xxxxxx Xxxxxx
XXXXXX XXXXXX
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