THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement"), made and entered
into as of November 15, 2004, by and between XXXXXX CAPITAL CORP., 000 Xxxx
Xxxxx Xxxx, Xxxxxxx, XX 00000, a Nevada Corporation ("XXXXXX"), and XXXXXX X.
XXXXXXX ("Executive").
RECITALS:
WHEREAS, the Executive wishes to become an employee of XXXXXX as its
Chief Financial Officer; and
WHEREAS, the executive wishes to devote his ability, time, effort and
energy to the affairs of XXXXXX; and
WHEREAS, XXXXXX considers the continuance of a sound and vital
management to be essential to protecting and enhancing the best interests of
XXXXXX and its shareholders; and
WHEREAS, XXXXXX desires to assure itself of retaining the services of
Executive and to reward Executive for his valuable, dedicated service to XXXXXX;
and
WHEREAS, XXXXXX and Executive believe it to be in their mutual interest
to set forth in writing the terms and conditions of the Executive's employment
by XXXXXX; and
WHEREAS, this Agreement shall govern the employment relationship
between XXXXXX and Executive from and after the effective date hereof, which
Agreement shall supercede all previous employment agreements between them,
except as defined below, either written or oral, heretofore made.
NOW, THEREFORE, in consideration of the promises and mutual promises
herein contained, XXXXXX and Executive hereto covenant and agree as follows:
1. RECITALS. The above recitals are true and correct and fully
incorporated herein and form an integral part of this agreement.
2. TERM. The term of this Agreement shall commence on January 1, 2005
("Commence Date"), or at an earlier date to be mutually agreed upon by the
parties, and shall continue through the close of business on December 31, 2007,
and shall automatically be renewed thereafter for successive thirty-six (36)
month periods, provided however, that the parties may by mutual written
agreement terminate this Agreement at any time on such terms and conditions as
such written agreement may specify and, provided further, that XXXXXX or
Executive may individually terminate at any time in accordance with the
provisions of this Agreement. Anything to the contrary herein notwithstanding,
upon reaching age sixty-five (65) (a) Executive shall retire, and (b) this
Agreement shall automatically terminate. Should XXXXXX decide not to renew this
Agreement it will provide Executive with written notice to this effect no later
than six (6) months prior to the end of this Agreement.
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In consideration of the benefits to be received by Executive hereunder, and as
an express condition of XXXXXX'x execution of this Agreement, Executive hereby
waives any claims that Executive may have arising from this Agreement relating
to age discrimination and Executive hereby releases and forever discharges
XXXXXX from any claims that Executive may have arising from this Agreement
relating to age discrimination.
3. EXECUTIVE POSITION, DUTIES AND RESTRICTIONS.
3.1 POSITION. During the term of this Agreement, Executive shall
serve as XXXXXX'x Chief Financial Officer or in a mutually
agreeable position of greater responsibility and status with
XXXXXX, and shall perform such services for XXXXXX as may be
assigned to him from time to time by the Board of Directors of
XXXXXX and which are consistent with the position of a senior
executive officer. Executive shall devote his time, attention,
energy and skills to the faithful and diligent performance of
his duties, including without limitation, participating in the
prosecution or defense of any litigation on behalf of XXXXXX,
which may include traveling as reasonably requested by XXXXXX.
Executive agrees to devote one hundred percent (100 %) of his
business time, attention, skill and efforts to the performance
of his duties and responsibilities on behalf of XXXXXX, which
shall be assigned to him from time to time by XXXXXX. "100 %
of his business time" shall mean Monday through Friday,
excluding holidays as defined in Section 4.5(b) herein.
Executive shall also devote reasonable additional time (such
as travel) from time to time as requested by XXXXXX. Nothing
in this Agreement shall preclude Executive from devoting
reasonable periods required for:
(a) serving as a Director or Member of a committee of any
organization or Corporation involving no conflict of
interest with the interests of XXXXXX; and
(b) serving as a consultant in his area of expertise (in
areas other than in connection with the business of
XXXXXX), to government, industrial, and academic panels
where it does not conflict with the interests of XXXXXX;
and
(c) managing his personal investments or engaging in any
other noncompeting business provided that such
activities do not materially interfere with the regular
performance of his duties and responsibilities under
this Agreement.
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3.2 NON-DISCLOSURE. Executive hereby acknowledges that he will
have access to certain trade secrets and confidential
information of XXXXXX and that such information constitutes
valuable, special and unique property of XXXXXX. Accordingly,
during or after the term of this Agreement Executive will not
disclose any information which is treated by XXXXXX as
confidential, including, but not limited to, information
relating to the business of XXXXXX, any of XXXXXX'x products,
customers, affairs, trade secrets, developments, methods of
distribution and any other information relating to XXXXXX
which XXXXXX shall deem proprietary, to any person, firm,
company, corporation, association, or any other entity
provided that disclosure of confidential information may be
made (i) to the extent such information is generally available
and known in the industry, through no action of Executive, or
(b) as required by law.
3.3 RETURN OF DOCUMENTS. During the term of this Agreement and at
the expiration or termination of this Agreement, Executive
shall not remove from XXXXXX, without written consent by
XXXXXX, any manuals, records, drawings, blueprints, data,
tables, calculations, letters, documents, or any copy or other
reproduction thereof, or any other property or confidential
information, of or pertaining to XXXXXX or any of its
subsidiaries for non XXXXXX business related matters. All of
the foregoing shall be returned to XXXXXX on or before the
date of expiration or termination of employment.
3.4 NO ACTIONS IN CONFLICT OF XXXXXX'X INTEREST. Executive
recognizes that the services performed by him pursuant to this
Agreement are special, unique and extraordinary. The parties
confirm that it is reasonably necessary for the protection of
XXXXXX'x goodwill that Executive agree not to act in any way
that would be detrimental to XXXXXX and constitute a conflict
of interest. Therefore, during the term of this agreement,
Executive will not, directly or indirectly, except for the
benefit of XXXXXX:
(a) solicit, cause or authorize, directly or indirectly, to
be solicited for or on behalf of himself or third
parties from parties who are or were customers of XXXXXX
(including its present and future subsidiaries and
affiliates) at any time during the term of this
Agreement, any business similar to the business
transacted by XXXXXX with such customer. This shall not
preclude Executive from soliciting the services of a
supplier or customer of XXXXXX in furtherance of a
noncompeting business; or
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(b) accept or cause or authorize, directly or indirectly, to
be accepted for or on behalf of himself or third
parties, business from any such customers of XXXXXX
(including its present and future subsidiaries and
affiliates), except as allowed in the last sentence of
Paragraph 3.4(a) above; or
(c) solicit, or cause or authorize, direct or indirectly, to
be solicited for employment for or on behalf of himself
or third parties, any persons who was at any time during
the term of this Agreement, employees of XXXXXX
(including its present and future subsidiaries and
affiliates); or
(d) employ or cause or authorize, directly or indirectly, to
be employed for or on behalf of himself or third
parties, any such employees of XXXXXX (including its
present and future subsidiaries and affiliates); or
(e) use the trade names, trademarks, or trade dress of any
of the products of XXXXXX (including its present and
future subsidiaries and affiliates); or any
substantially similar trade name, trademark or trade
dress likely to cause, or having the effect of causing,
confusion in the minds of manufacturers, customers,
suppliers and retail outlets and the public generally.
3.5 ASSIGNMENT OF INVENTIONS. If at any time during the term of
this Agreement (either alone or with others) Executive makes,
conceives, creates, discovers, invents or reduces to practice
any invention, modification, discovery, design, development,
improvement, process, software program, work of authorship,
documentation, formula, data, technique, know-how, trade
secret, or intellectual property right whatsoever or any
interest therein (whether or not patentable or registrable
under copyright, trademark or similar statutes or subject to
analogous protection (each an "Invention") that (i) relates to
the Business of XXXXXX or any of its subsidiaries or
affiliates or any customer of or supplier to XXXXXX or any of
its affiliates or any of the products or services being
developed, manufactured or sold by XXXXXX or any of its
affiliates or which may be used in relation therewith; or (ii)
results from tasks assigned to Executive by XXXXXX or any of
its subsidiaries or affiliates; or (iii) results from the use
of TASKERS premises or property (whether tangible or
intangible) owned, leased or contracted for by XXXXXX or any
of its subsidiaries or affiliates, then all such Inventions
and the benefits thereof are and shall immediately become the
sole and absolute property of XXXXXX and its assigns, as works
made for hire or otherwise. Executive hereby agrees that he
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shall promptly disclose to XXXXXX (or any person designated by
it) each such invention. Executive hereby assigns all rights
(including but not limited to, rights to any inventions,
patentable subject matter, copyrights and trademarks) he may
have or may acquire in the Inventions and all benefits and/or
rights resulting therefore to XXXXXX and its assigns without
further compensation and shall communicate, without cost or
delay, and without disclosing to others the same, all
available information relating thereto (with all necessary
plans and models) to XXXXXX. Notwithstanding anything
contained in this Agreement or in this Paragraph, any
Invention that does not relate to TASKERS business shall
remain the exclusive property of Executive and XXXXXX shall
have no claim to such invention, and under no circumstances
shall Executive have the duty or obligation to assign all
rights (including, but not limited to, rights to any
inventions, patentable subject matter, copyrights and
trademarks) he may have or may acquire to such Inventions and
all benefits and/or rights resulting therefore.
4. COMPENSATION. As full compensation to Executive for the performance
of the services hereunder and for his acceptance of the responsibilities
described herein, XXXXXX agrees to pay Executive and Executive agrees to accept
the following base compensation and other benefits:
4.1 BASE COMPENSATION. For all services rendered during the term
of this Agreement by the Executive to XXXXXX, the Executive
shall receive Base Compensation of one hundred fifty thousand
dollars (US $150,000.00) per annum ("Base Compensation").
XXXXXX shall pay Executive the Base Compensation in twelve
(12) equal monthly payments commencing on the Commencement
Date of this Agreement. The Base Compensation shall increase
to two hundred thousand dollars (US $200,000.00) per annum
when XXXXXX'x Net Revenues, as defined in Section 4.1(a)
herein, exceeds fifteen million dollars (US $15,000,000.00) on
an annualized basis for three full consecutive months. In the
event Net Revenues declines below fifteen million dollars (US
$15,000,000.00) on an annualized basis for three consecutive
months, the Executive's Base Compensation will be reduced to
one hundred fifty thousand dollars (US $150,000.00), plus
residual annual increases as a percentage of Base
Compensation, until which time as Net Revenue again on an
annualized basis reach fifteen million dollars (US
$15,000,000.00) for three consecutive months, after which
Executive will be entitled to receive Base Compensation of two
hundred thousand dollars (US $200,000.00) per annum, plus
residual annual increases. Determination of fifteen million
dollars (US $15,000,000.00) annualized Net Revenues for three
consecutive months shall be at the sole discretion of the
Board of Directors of XXXXXX.
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The effective Base Compensation will remain in effect until
the first anniversary date of this Agreement after which it
will increase annually at the greater of (1) a rate determined
by the Board of Directors of XXXXXX or (2) a rate of no less
than five percent (5 %) per annum of the then current Base
Compensation.
(a) Definition of Net Revenues. For purposes of this
agreement Net Revenues shall mean the consolidated gross
sales value from all products, services, royalty
agreements, patent agreement, license agreements,
trademark agreements, management service agreements and
all other sources of revenue as defined by generally
accepted accounting principals from XXXXXX and its
affiliates, subsidiaries, and all other legal entities
to which XXXXXX has an equity interest LESS any
discounts, allowances, returns and all other sources of
deductions from revenue as defined by generally accepted
accounting principals.
4.2 ANNUAL MANAGEMENT INCENTIVE PLAN. Executive shall be entitled
to participate in XXXXXX'x annual Management Incentive Plan
("MIP") in accordance with the terms thereof as from time to
time in effect. Such amount, and payment thereof, in part or
in total, in either cash or XXXXXX stock options, shall be at
the complete discretion of XXXXXX'x Board of Directors.
4.3 SIGN ON BONUS. Executive shall be entitled to a "Sign On
Bonus" for executing this Agreement. Such Sign on Bonus shall
be a one-time lump sum payment of eighteen thousand seven
hundred fifty dollars (US $18,750.00) payable on the
commencement date of this Agreement, or an earlier date to be
mutually agreed upon by the parties.
4.4 ADDITIONAL COMPENSATION TO EXECUTIVE. In addition to the
Compensation stated in paragraphs 4.1-4.3, inclusive,
Executive shall receive one million (1,000,000) stock options
in XXXXXX, each option at an exercise price of one dollar and
forty-five cents (US $ 1.45) per share of common stock. Such
options shall vest and be exercisable pursuant to the Notice
of Grant dated November 15, 2004. A true and correct copy of
the Notice of Grant is attached hereto as "Exhibit A".
Notwithstanding the foregoing, the vesting of the stock
options shall be pursuant to the vesting schedule contained in
the Notice of Grant ("Vesting Schedule'). In addition,
XXXXXX'x Board of Directors may, in its sole discretion, grant
Executive additional performance Compensation during any time
of this Agreement in either cash or stock options or both.
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4.5 EXECUTIVE BENEFITS. Effective on the Commencement Date of this
Agreement, unless otherwise noted, Executive shall be entitled
to participate in all employee benefit programs of XXXXXX as
set forth below in Sections 4.5 (a) -(j), inclusive, of this
Agreement or made available to XXXXXX Executives, as such
programs may be in effect from time to time.
(a) Vacation. Beginning with the Commencement date of this
Agreement, the Executive shall be entitled each year to
vacation time that totals four (4) weeks, during which
time his Base Compensation shall be paid in full.
Notwithstanding the foregoing, XXXXXX'x Board of
Directors in its discretion may grant additional paid
vacation to Executive. All vacation time shall be taken
at times and in durations convenient to XXXXXX. The
vacation time provided herein shall not be cumulative
and not carried forward to any subsequent year by the
Executive unless at the request of XXXXXX'x Board of
Directors Executive's vacation time was, in full or
part, denied due to XXXXXX related project work, then
Executive has the option to either (a) carry the unused
time forward to the next year, or (b) receive the cash
equivalent of his unused vacation time at his then
current annual Base Compensation. XXXXXX shall make such
timely payment at the conclusion of the Executive's
vacation anniversary date.
(b) Holidays. Executive shall be entitled to the following
paid XXXXXX holidays: New Year's Day, Good Friday,
Memorial Day, July 4th, Labor Day, Thanksgiving Day, the
Friday after Thanksgiving, Christmas Eve, Christmas Day,
and one floating holiday to be used at Executive's
discretion.
(c) Medical, Health, Hospitalization and Dental Insurance
Coverage. Executive, and his family, shall enjoy full
participation at no cost to him in all fringe benefits
of XXXXXX, including, without limitation, the medical,
health, hospitalization and dental insurance and other
plan or arrangement affording the Executive and his
family insurance coverage or expense or cost
reimbursement of no lesser quality than the medical,
health, hospitalization and dental insurance and other
plan or arrangement coverage and benefits currently
enjoyed by other senior level Executive employees of
XXXXXX. In the event XXXXXX does not have a medical,
health, hospitalization or dental plan, XXXXXX shall
reimburse Executive the reasonable cost of such plan in
order to enable Executive to obtain family coverage from
another source.
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(d) Life Insurance. Within sixty (60) days of the date of
this Agreement, XXXXXX shall purchase at its cost, and
maintain thereafter throughout the term of this
Agreement, life insurance on the Executive's life in an
amount no less than five hundred thousand dollars (US
$500,000.00). The life insurance will also include a
double indemnity clause to encompass the event of
accidental death of Executive while he is traveling on
XXXXXX business. The life insurance policy shall name as
beneficiary the person, or persons, Executive instructs
XXXXXX to name as beneficiary. XXXXXX shall have the
obligation to maintain said life insurance policy in
effect throughout the term of this Agreement.
(e) Disability Insurance. Within sixty (60) days of this
Agreement, XXXXXX shall purchase at it cost and maintain
in effect thereafter during the term of this Agreement
disability insurance for Executive. XXXXXX shall cause
the disability insurance policy to contain provisions
stating that, upon Executive's disability and after
customary waiting periods, the policy shall pay the
Executive sixty percent (60 %) of his full Base
Compensation during the term of Executive's disability,
not to exceed six months.
(f) Sick Days. Employee shall be entitled to participate in
XXXXXX'x paid sick day policy as such policy may be in
effect from time to time.
(g) Automobile. XXXXXX will provide Executive with the
option of a company-leased automobile similar in quality
to that of other senior level Executives.
(h) Phone Charges Reimbursement. Xxxxxx shall reimburse
Executive for the full monthly cost of his cell phone
plus any telephone costs incurred by him for use of his
private residential phone. Executive shall claim
reimbursement on XXXXXX'x expense report form.
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(i) Business Related Expenses. Executive shall be entitled
to receive proper reimbursement by XXXXXX for all
reasonable, out-of-pocket expenses, including but not
limited to travel, incurred by Executive (in accordance
with the policies and procedures established by XXXXXX
for its executives in performing services under this
Agreement, provided Executive submits reasonable
documentation (receipt, voucher, copy of credit card,
etc. of such expenses in a timely manner setting forth
the business nature of the expense.
(j) Office and Support Staff. During the term of this
Agreement, Executive shall be entitled to an office and
to secretarial and other assistants, at least equal to
those provided to other senior level management
executives of XXXXXX.
5. TERMINATION
5.1 NOTICE OF TERMINATION. Any termination by XXXXXX (other than
upon Executives death) shall be communicated by Notice of
Termination to the Executive and visa versa. For purposes of
this Agreement a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision
of this Agreement relied upon and the specific ground for
termination; (ii) sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for such
termination; and (iii) the date of termination as set forth in
this Agreement. The failure of the Executive to set forth in
the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any
right of the Executive hereunder or preclude the Executive
from asserting such fact or circumstance in enforcing his
rights hereunder.
5.2 GROUNDS & COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) Termination Due to Death. The employment of Executive
under this Agreement shall terminate upon Executive's
death. In the event of the death of Executive during the
term of his employment hereunder, the estate or any
other legal representative of Executive shall be
entitled to receive the following:
(i) Base Compensation. XXXXXX shall pay to the
Executive's estate or other legal representative
the Base Compensation as provided in Section 4.1
above, at the rate in effect through the day of
Executive's death.
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(ii) Management Incentive Plan. XXXXXX shall pay to
Executives estate or other legal representative
the product of (a) the Annual MIP payment awarded
to the Executive for the last full fiscal year,
PLUS (b) the pro-rata portion of Executives target
Management Incentive award under the current years
Management Incentive Program ("MIP") in which his
death occurs. Such pro-rata payment shall be
calculated by multiplying such target award by a
fraction, the numerator is the number of calendar
days in the current fiscal year through the date
of Executives death, and the denominator of which
is 365. XXXXXX shall pay such amount in a lump sum
within thirty (30) days of the date of Executive's
death. The payments under this Section 5.2(a)(ii)
shall be made in lieu of any and all payments
otherwise due under the MIP for the year in which
Executive's death occurs. Such payment shall be
made by XXXXXX within thirty (30) days following
Executive's death.
(iii) Deferred Compensation. XXXXXX shall pay to
Executive's estate or other legal representative
all of the amounts previously deferred by the
Executive by the Executive (together with any
accrued interest thereon) and not yet paid by
XXXXXX within thirty (30) days following
Executives death, or in accordance with the
applicable tax Code.
(iv) Accrued Vacation. XXXXXX shall pay to Executive's
estate or other legal representative the cash
equivalent of any accrued vacation pay not yet
paid by XXXXXX within thirty (30) days following
the Executive's death.
(v) Other Benefits. XXXXXX shall pay to Executive's
estate or other legal representative all of the
amounts and shall provide all benefits generally
available under the XXXXXX group life insurance
plans, other employee benefit plans, and the
policies and practices of XXXXXX, determined in
accordance with the applicable terms and
provisions of such plans, policies and practices.
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(b) Termination Due to Disability. XXXXXX may elect to
terminate employment of Executive under this Agreement
should Executive become Disabled as herein defined
provided such disability prevents the Executive from
performing his duties as defined under this Agreement.
For purposes of this Agreement "Disability" shall mean a
complete physical or mental inability, confirmed by an
independent licensed physician, that prohibits Executive
from performing substantially all of the services
described in this Agreement for a period of sixty (60)
consecutive days or ninety (90) days during any six (6)
month period. In the event of the Executive's Disability
during the term of his employment hereunder, Executive
shall be entitled to receive the following:
(i) Base Compensation. XXXXXX shall pay Executive the
Base Compensation as provided in section 4.1
above, at the rate in effect through the day
twentieth (20th) day after receipt of Notice of
Termination by XXXXXX.
(ii) Management Incentive Plan. XXXXXX shall pay to
Executive the product of (a) the Annual MIP
payment awarded to the Executive for the last full
fiscal year, PLUS (b) the pro-rata portion of
Executives target Management Incentive award under
the current years MIP in which his disability
occurs, computed and paid as in Section 5.2(a)(ii)
above substituting disability for death.
(iii) Deferred Compensation. XXXXXX shall pay to
Executive all of the amounts previously deferred
by the Executive (together with any accrued
interest thereon) and not yet paid by XXXXXX
within thirty (30) days following Executives
death, or in accordance with the applicable tax
Code.
(iv) Accrued Vacation. XXXXXX shall pay to Executive
the cash equivalent of any accrued vacation pay
not yet paid by XXXXXX within thirty (30) days
following the Executive's termination for
Disability.
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(v) Other Benefits. XXXXXX shall pay to Executive all
of the amounts and shall provide all benefits
generally available under the XXXXXX group life
insurance plans, other employee benefit plans, and
the policies and practices of XXXXXX, determined
in accordance with the applicable terms and
provisions of such plans, policies and practices.
(c) Voluntary Termination and Termination with Cause. If
Executives employment is terminated by XXXXXX pursuant
to a Termination with Cause as hereinafter defined in
Section 5.2(c)(i) below, or if Executive effects their
termination under a Voluntary Termination other than for
good reason as hereinafter defined in Section 5.2(c)(ii)
below, the Executive shall be entitled to receive
payments and benefits from XXXXXX as set forth in
Section 5.2(c)(iv) below.
(i) Termination with Cause means the termination of
the Executive's employment by an act of XXXXXX'x
Board of Directors for any of the following
reasons:
1. the Executive's conviction of a crime
involving some act of dishonesty or moral
turpitude (specifically excepting simple
misdemeanors not involving acts of dishonesty
and all traffic violations);
2. the Executive's theft, embezzlement,
misappropriation of or intentional and
malicious infliction of damage to XXXXXX'x
property or business opportunity;
3. the Executive's abuse of alcohol, drugs or
other substances as determined by an
independent medical physician; or
4. the Executive engages in gross dereliction of
duties, repeated refusal on more than two (2)
occasions to perform his assigned duties
consistent with his position or repeated
violation of XXXXXX'x written policies, on
more that two (2) occasions, after written
warning;
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5. the Executive's breach of Section 3 of this
Agreement.
(ii) Voluntary Termination-other than a Voluntary Termination
with Good Reason as defined in Section 5.2(d)(iv) of
this Agreement, Voluntary Termination means the
Executive shall have deemed to have terminated his
employment with XXXXXX if the Executive voluntarily
refuses to provide substantially all of the services
described in Section 3 of this Agreement for a period
greater than four (4) consecutive weeks. For purposes of
this Section voluntary refusal to perform services shall
not include taking a vacation in accordance with Section
4.5(a) hereof, the Executive's failure to perform
services on account of his illness or the illness of a
member of his immediate family, provided such illness is
adequately substantiated at the reasonable request of
XXXXXX, or any other absence from service with written
consent of the Board of Directors.
(iii) Date of Termination
1. Voluntary Termination. The Voluntary
Termination Date shall be the last day the
Executive performed substantially all of the
services described in Section 3 hereof.
2. Termination with Cause. If XXXXXX intends to
treat the Executive's employment termination
as a Termination With Cause based upon the
grounds described in Section 5.2(c)(vi)
above, XXXXXX shall provide the Executive
written notice of such grounds for
termination and the Executive shall have a
period of thirty (30) days to cure such cause
to the reasonable satisfaction of the
Chairman of the Board, failing which
employment shall be deemed terminated at the
end of such thirty (30) day period.
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(iv) Termination Compensation and Benefits.
1. Base Compensation. XXXXXX shall pay to the
Executive the Base Compensation as provided
in Section 4.1 above, at the rate in effect
through the Date of Termination. XXXXXX has
no additional liability beyond the
Termination Date to pay Executive any Base
Compensation.
2. Accrued Compensation. XXXXXX shall pay to
Executive within a reasonable time after the
Termination Date compensation accrued to
Executive but unpaid as of such effective
date, including any vested or accrued stock
options, shares or similar grants, management
incentive awards, vacation time, by or of
XXXXXX.
3. Deferred Compensation. XXXXXX shall pay to
Executive's all of the amounts previously
deferred by the Executive (together with any
accrued interest thereon) and not yet paid by
XXXXXX within thirty (30) days following
Executive's termination date, or in
accordance with the applicable tax Code.
4. Other Benefits. All other XXXXXX benefits
provided to Executive shall immediately
terminate at the earliest date available
under all XXXXXX group plans, policies and
practices as determined in accordance with
the applicable terms and provisions of such
plans, policies and practices.
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(d) Voluntary Termination for Good Reason and
Termination without Cause. The Executive has the
right to terminate this Agreement pursuant to a
Voluntary Termination for Good Reason as
hereinafter defined in Section 5.2(d)(vi) below
and XXXXXX has the right to terminate this
Agreement Without Cause. If the Executive shall
suffer a Voluntary Termination for Good Reason, or
if XXXXXX shall terminate the Executive Without
Cause, then the Executive shall be entitled to
receive the payments and benefits set forth in
Sections 5.2(d)(i)-(v) from XXXXXX:
(i) Base Compensation. XXXXXX shall pay to the
Executive the Base Compensation as provided
in section 4.1 above, at the rate in effect
through the Date of Termination PLUS within
thirty (30) days of the Termination date cash
compensation in a lump sum equal to five (5)
times the Executive's then current annual
(365 days) Base Compensation.
(ii) Management Incentive Plan. XXXXXX shall pay
to Executive the product of (a) the greater
of the Annual MIP payment awarded to the
Executive for the last full fiscal year or
the average Annual MIP payment awarded over
the past three years, PLUS (b) the pro-rata
portion of Executives target Management
Incentive award under the current years MIP
in which his termination occurs. Such
pro-rata payment shall be calculated computed
and paid as in Section 5.2(a)(ii) above
substituting termination following a
voluntary termination for good reason or
termination without cause for death. The
payments under this Section 5.2(d)(ii) shall
be made in lieu of any and all payments
otherwise due under the MIP for the year in
which Executive's termination occurs.
In addition, XXXXXX shall pay to the
Executive within thirty (30) days of the
Termination date, (a) cash compensation in a
lump sum equal to five (5) times the
Executive's average actual annual payments
awarded under the MIP for the past three
fiscal periods, or any parts therein, during
which Executive was employed (in the event
Executive has been employed for a period of
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less than three years when termination
occurs, or the MIP has not been in existence
for a full three year fiscal period-the
average shall be computed using Executive's
actual employment time or the actual time
the MIP was in effect) PLUS (b) cash
compensation in a lump sum equal to five (5)
times the pro-rata portion of Executives
target Management Incentive award under the
current years MIP in which his termination
occurs as calculated above in Section
5.2(a)(ii) substituting termination
following a voluntary termination for good
reason or termination without cause for
death.
(iii)Deferred Compensation. XXXXXX shall pay to
Executive's all of the amounts previously
deferred by the Executive (together with any
accrued interest thereon) and not yet paid by
XXXXXX within thirty (30) days following
Executives termination for a voluntary
termination for good reason or termination
without cause for death.
(iv) Accrued Vacation. XXXXXX shall pay to
Executive the cash equivalent of any accrued
vacation pay not yet paid by XXXXXX within
thirty (30) days following the Executive's
termination for a voluntary termination for
good reason or termination without cause for
death.
(v) Other Benefits. XXXXXX shall pay to Executive
all of the amounts and shall provide all
benefits generally available under the XXXXXX
group life insurance plans, other employee
benefit plans, and the policies and practices
of XXXXXX, determined in accordance with the
applicable terms and provisions of such
plans, policies and practices.
(vi) Meaning-"Voluntary Termination Without Cause
or Voluntary Termination for Good Reason"
means the Executive's termination of his
employment hereunder following an intentional
breach by XXXXXX of any material provision of
this Agreement if such breach continues for a
period of thirty (30) continuous day after
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the Board of Directors receive written notice
of such breach from Executive and XXXXXX
fails to cure such cause of breach to the
reasonable satisfaction of Executive,
provided such cause of breach can be cured,
failing which Executive's employment shall be
deemed terminated at the end of such thirty
(30) day period, or the shortened cure period
stated elsewhere in this Agreement. For
purposes of this Agreement such breaches
include, but are not limited, to the
following:
1. modification without the Executive's
written consent;
2. The failure of XXXXXX to permit the
Executive to exercise such
responsibilities as are consistent with
the Executive's position and are of such
nature as are usually associated with
such officers or positions of a company
engaged in relatively the same business
as XXXXXX;
3. A requirement by XXXXXX that the
Executive relocate his employment more
than fifty (50) miles from Danbury,
Connecticut without the Executive's
written consent;
4. XXXXXX'x failure to acquire and maintain
the director's/officer's insurance
required by Section 12 of this
Agreement.
6. CHANGE IN CONTROL. In the event a "Change in Control" occurs, as
defined below in Section 6.2 of this Agreement, the Executive or XXXXXX shall
have the option at any time within sixty (60) days after the Change in Control
occurs to terminate Executive's employment and Executive shall receive from
XXXXXX compensation as set forth in section 6.3 of this Agreement.
6.1 NOTICE. Written notice that a "Change in Control' has occurred
must be delivered by XXXXXX to Executive within ten (10) days
after such "Change in Control" occurs. Proper notice to
effectuate a termination upon Change in Control shall be the
date Executive or XXXXXX receives written notice which (i)
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indicates that this Employment Agreement is being terminated
on the basis of Change in Control, and, (ii) sets forth in
reasonable detail the facts and circumstances claimed to
provide a basis for such termination.
6.2 DEFINITIONS-CHANGE IN CONTROL
(a) "Acquiring Person"-means that a Person, considered alone
or together with all Control Affiliates and Associates
of that Person, is or becomes directly or indirectly the
beneficial owner of (i) securities representing at least
fifty-one percent (51 %) of XXXXXX'x then outstanding
securities entitled to vote generally in the election of
the Board, or (ii) at least fifty-one percent (51 %) of
XXXXXX'x consolidated assets.
(b) "Affiliate" means any "Subsidiary" or "Parent"
corporation (within the meaning of Section 424 of the
Code) of XXXXXX.
(c) "Board" means the Board of Directors of XXXXXX.
(d) "Control Affiliate" with respect to any Person, means
Affiliate as defined in Rule 12B-2 of the General Rules
and Regulations under the Exchange Act, as amended as of
January 1, 1990.
(e) "Exchange Act" means the Securities Exchange Act of
1934, as amended and as in effect from time to time.
(f) "Person" means any human being, firm, corporation,
partnership, or other entity. Person also includes any
human being, firm, corporation, partnership, or other
entity as defined in Section 13(d)(3) and 14(d)(2) of
the Exchange Act, as amended as of January 1, 1990. The
term Person does not include XXXXXX or any related party
within the meaning of Code Section 1563(a), 414(b) or
414(c), and the term Person does not include any
employee-benefit plan maintained by XXXXXX or by any
Related Entity, and any Person or entity organized,
appointed, or established by XXXXXX or by any subsidiary
for or pursuant to the terms of any such
employee-benefit plan, or such Person or entity is a
Person.
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(g) "Change in Control". For purposes of this Agreement a
"Change in Control" shall mean any of the following
events:
(i) In the event a Person is or becomes an Acquiring
Person;
(ii) In the event a Person enters into an agreement
that would result in that Person becoming an
Acquiring Person;
(iii) In the event that XXXXXX enters into any agreement
with Person that involves the transfer of at least
fifty-one percent (51 %) of XXXXXX'x total assets
on a consolidated basis, as reported in XXXXXX'x
consolidated financial statements filed with the
Securities and Exchange Commission, or, if XXXXXX
is not required to file consolidated financial
statements with the Securities and Exchange
Commission, similar financial statements;
(iv) In the event that XXXXXX enters into an agreement
to merge or consolidate XXXXXX or to effect a
statutory share exchange with another Person,
where the Person and its subsidiaries and
affiliates owns at least fifty-one percent (51 %)
of the company, if XXXXXX is not intended to be
the surviving or resulting entity after the
merger, consolidation, or statutory share
exchange;
(v) In the event the individuals who, as of the date
of this Agreement, are members of the Board, cease
for any reason to constitute a majority of the
members of the Board;
(vi) A complete liquidation or dissolution of XXXXXX;
(vii) Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any
Person acquired Beneficial Ownership as defined in
the Exchange Act of more than the permitted amount
of the then outstanding securities as a result of
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the acquisition of securities by XXXXXX which by
reducing the number of securities then
outstanding, increased the proportional number of
shares Beneficially Owned by the subject Person(s)
provided that if a Change in Control would occur
as a result of the acquisition of securities by
XXXXXX, and after such share acquisition by
XXXXXX, the Person becomes the Beneficial Owner of
any additional securities which increases the
percentage of the then outstanding securities
Beneficially Owned by the subject Person, then a
Change in Control shall occur.
6.3 COMPENSATION UPON TERMINATION BASED UPON CHANGE IN
CONTROL-PAYMENT OF EXCISE TAXES.
If a termination occurs and whether the Executive or XXXXXX
elects to terminate this Agreement in accordance with
paragraph 6 of this Agreement upon a Change in Control as
defined above, the Company shall pay the Executive those same
amounts at the same time as indicated in Sections
5.2(d)(i)-(v) above, inclusive substituting Termination
Following a Change in Control for Voluntary Termination for
Good Reason and Termination Without Cause, and, with regard to
Section 4.4 of this Agreement, the Executive shall have the
right, in his sole and absolute discretion, to immediately, or
at any time thereafter, exercise the stock options provided to
Executive as additional compensation under the Notice of Grant
dated November 15, 2004 attached hereto as "Exhibit A" and at
the time Executive exercises such options, XXXXXX shall cause
such stock options, and such stock options not yet vested, to
ALL (both vested and those not yet vested) immediately vest
and be freely exercisable by Executive, as if the Executive
had terminated this Agreement as a Voluntary Termination for
Good Reason (a "Termination Payment"). In addition, if the
excise tax on "excess parachute payments," as defined in
Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), will be imposed on the Executive under Code
Section 4999 as a result of the Executive's receipt of the
Termination Payment or any other payment (without regard to
the "Additional Amount" described below) which the Executive
receives or has the right to receive from XXXXXX or any of its
affiliates (the "Change of Control Benefits"), XXXXXX shall
indemnify the Executive and hold him harmless against all
claims, losses, damages, penalties, expenses and excise taxes.
To effect this indemnification, XXXXXX shall pay to Executive
the "Additional Amount" now described. The Additional Amount
shall be the amount that is sufficient to indemnify and hold
the Executive harmless from the application of Code Section
280G and 4999 of the Code, including the amount of (i) the
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excise tax that will be imposed on the Executive under Section
4999 of the Code with respect to the Change of Control
Benefits; (ii) the additional (a) excise tax under Section
4999 of the Code, (b) hospital insurance tax under Section
3111(b) of the Code, and (c) federal, state and local income
taxes for which the Executive is or will be liable on account
of the payment of the amount described in item (i) and (ii)
the further excise, hospital insurance and income taxes for
which the Executive is or will be liable on account of the
payment of the amount described in item (ii) and this item
(iii) and any other indemnification under this Section 6.3.
The Additional Amount shall be calculated and paid to
Executive at the time that the Termination Payments under this
Agreement are paid to Executive. In calculating the Additional
Amount, the highest marginal rates of federal and applicable
state and local income taxes applicable to individuals and in
effect for the year in which the Change in Control occurs
shall be used. Nothing in this Section 6.3 shall give the
Executive the right to receive indemnification from XXXXXX or
its affiliates for federal, state or local income taxes or
hospital insurance taxes payable solely as a result of the
Executives receipt of (a) the Termination Payment or (b) any
additional payment, benefit or compensation other than
additional compensation in the form of the excise tax payment
specified in item (i) above. As specified in item (ii) and
(iii) above, all income, hospital insurance and additional
excise taxes resulting from additional compensation in the
form of the excise tax payment specified in item (i) above
shall be paid to Executive.
The provisions of Section 6.3 are illustrated by the following
example:
Assume that the Termination Payment and all other Change
in Control Benefits result in a total federal, state and
local income tax and hospital insurance liability of US
$180,000.00; and an excise tax liability under Code
Section 4999 of US $70,000.00. Under such circumstances,
the Executive is solely responsible for the US
$180,000.00 income and hospital insurance tax liability;
and XXXXXX must pay to the Executive US $70,000.00, PLUS
an amount necessary to indemnify the Executive for all
federal, state and local income taxes, hospital
insurance tax, and excise taxes that will result from
the US $70,000.00 payment to the Executive and from all
further indemnification to the Executive of taxes
attributable to the initial US $70,000.00 payment.
7. AMENDMENTS; WAIVERS. This Agreement may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement of
any waiver, change, modification, extension or discharge is sought. The waiver
by either party of any right hereunder must be reduced to writing by the party
against which enforcement of the alleged waiver is sought and shall not
constitute a waiver of the subsequent exercise of such right or a waiver of any
right. Failure of either party to exercise promptly any right granted by this
Agreement, or to restrict strict performance of any obligation undertaken by the
other party herein, shall not be deemed to be a waiver of such right or of the
right to demand subsequent performance of any and all such obligations.
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8. BINDING AGREEMENT/ASSIGNMENT. The Executive acknowledges that his
services are unique and personal. Accordingly, Executive may not assign his
rights or delegate his duties or obligations under this Agreement. This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
any successors to the business of XXXXXX, Executive's heirs and the personal
representatives of the Executive's estate. This Agreement shall be binding upon
XXXXXX'x successors in interest and/or assigns of XXXXXX whether by merger,
consolidation, purchase of assets or otherwise.
9. NOTICES. All NOTICES required to be given hereunder this Agreement
shall be in writing sent certified mail, return receipt requested, postage
prepaid at the address set forth below or at such other address as the party may
subsequently designate.
A. If to Executive, then to:
Xxxxxx X. Xxxxxxx
000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
B. If to XXXXXX, then to:
Xxxxxx Capital Corp.
000 Xxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
10. HEADINGS. The headings used in this Agreement are for convenience
and shall not be deemed to curtail or affect the meaning or construction of any
provision under this Agreement.
11. WITHHOLDING. All payments or benefits to Executive under this
Agreement shall be reduced by any amount required to be withheld by XXXXXX under
Federal, State or local income tax laws or similar laws then in effect.
12. INDEMNIFICATION AND HOLD HARMLESS PROVISION. XXXXXX hereby agrees
to indemnify Executive, his heirs, successors, and assigns and hold Executive
harmless from any an all liabilities, obligations, expenses, fees and costs
(including attorney's and professional fees) of every kind, nature, and
description, which now exist or may exist now or hereafter with respect to
Executive's activities, duties, or responsibilities as Chief Financial Officer
of XXXXXX, or any subsequent position, or in relation to any of XXXXXX'x
subsidiaries, affiliates, or related entities. Such indemnification and hold
harmless benefits shall be payable by XXXXXX whenever incurred by Executive so
long as such costs or expenses relate to or arise from such activities, duties,
and responsibilities of Executive and shall not in any way be dependent upon
Executive's employment with XXXXXX. XXXXXX shall be required to purchase
adequate directors/officers insurance, or other adequate insurance insuring
XXXXXX'x obligations.
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In the event Executive is made a party to a lawsuit or is
involved in a legal proceeding in any manner (including by subpoena or as a
witness), which relates directly or indirectly to XXXXXX or the Executive's
performance of his duties under this Agreement, in which Executive in his sole
discretion believes that it is in his best interest to retain independent legal
and other professional counsel, XXXXXX shall be obligated to pay all
professional fees, costs, and expenses so incurred within thirty (30) days of a
notice provided by Executive advising of his selection of counsel.
13. VALIDITY AND GOVERNING LAW. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect. The validity, interpretation, construction and performance of this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. Venue for any action or suit brought hereunder or in
connection herewith, or relating hereto, shall lie with the Courts in and for
New York, New York.
14. ATTORNEYS FEES. In the event either party files any action or suit
regarding any of the terms of this Agreement or in relation to, or involving,
Executive's employment by XXXXXX, then the prevailing party shall be entitled to
recover upon final judgment on the merits of its or his reasonable attorney's
fee and court costs (including, without limitation, appellate attorney's fees
and court costs) incurred in bringing such action and all costs or expenses,
including, without limitation, attorney's fees and court costs, incurred in
collecting any judgment.
15. ENTIRE UNDERSTANDING; AMENDMENT. This Agreement supersedes any
prior Agreement or understandings oral or written and contains the entire
understanding of the parties relating to the employment of the Executive by
XXXXXX. It may not be changed orally but only by an agreement in writing signed
by the party or parties against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
*****
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IN WITNESS WHEREOF, XXXXXX has caused this Agreement to be executed by
its duly authorized officer and has affixed its corporate seal, and Executive
has hereunto subscribed his name, all as of the day, month and year first above
written.
In the presence of: EXECUTIVE
_____________________________ ___________________________
Name:________________________
_____________________________
Name:________________________
XXXXXX CAPITAL CORP.
__________________________________________
Name: Xxxxxx Xxxxxxx
Title: President & Chief Executive Officer
Attest:
__________________________________________
Name:
Title:
(Seal)
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EXHIBIT A
NOTICE OF GRANT
25
