Contract
Exhibit
10.7
EMPLOYMENT AGREEMENT
dated
September 1, 2005, between Homeland Integrated Security Systems, Inc., a Florida
corporation, with a principal place of business at 0 Xxxx Xxxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 ( “Company”) and Xxx Xxxxx, an individual
residing at 000 Xxxxxxx xxxx, Xxxxxxxxx Xxxxx Xxxxxxxx. 00000
(“Executive”).
R
E C
I T A L S
Whereas,
Executive has served the Company continuously during the past year as a
principal executive officer;
Whereas,
Executive’s
leadership and services have constituted a major factor in the successful growth
and development of the Company, its subsidiaries and affiliates;
and
Whereas,
the
Company desires to employ and retain the unique experience, ability and services
of Executive as a principal executive officer and desires to retain Executive’s
services in an advisory and consulting capacity and to prevent any other
competitive business from securing his services and utilizing his experience,
background and expertise.
Whereas,
the
terms, conditions and undertakings of this Agreement were submitted to, and
duly
approved and authorized by the Company’s Board of Directors at a meeting held on
September 8, 2005.
NOW
THEREFORE
in
consideration of the mutual promises, terms, conditions and undertakings
hereinafter set forth, it is agreed between the parties as follows:
| 1. |
Employment
|
(a)
Executive
Employment:
The
Company employs Executive and Executive accepts employment in a principal
executive and managerial capacity until July 31, 2012. After January 1, 2009,
either Executive or the Company may, at any time terminate Executive’s Executive
Employment subject to the restrictions and conditions hereinafter contained
on
four (4) months prior written notice to the other party.
(b)
Automatic
Renewal:
This
Agreement shall be renewed automatically for succeeding terms of three (3)
years
each unless either party gives written notice to the other at least ninety
(90)
days prior to the expiration of any term of Executive’s or Company’s intention
not to renew pursuant to Company’s bylaws.
(c)
“Executive
Employment” Defined:“Executive
Employment” as used herein refers to the entire prior of employment of Executive
by Company, whether for the periods provided above, or whether terminated
earlier as hereinafter provided or extended by mutual agreement between the
Company and Executive.
(d)
Advisory
Period:
If
Executive’s Executive Employment is terminated as provided for in paragraph (a)
above and such termination was not with cause, then the Company shall retain
him
as an advisor and consultant for a period of two years after termination (the
“Advisory Period”).
1
2. Duties
and obligations.
(a)
Executive shall serve as Chief Technical Officer of the Company. In Executive’s
capacity, Executive shall do and perform all services, acts, or things necessary
or advisable to manage and conduct the business of Company, including the hiring
and firing of all employees, subject at all times to the policies set forth
by
the Company’s Board of Directors, and to the consent of the Board when required
by the terms of this contract, and in conformity with the By-laws of the
Company.
(b)
During the period of Executive’s Executive Employment, Executive shall devote
full time to such employment. If elected, he shall serve as a director and/or
officer of the Company and any of its subsidiaries and affiliates (hereinafter
collectively referred to as “Company Subsidiaries”) and shall perform duties
customarily incidental to such offices and all other duties the Board of
Directors of the Company and the Company Subsidiaries or affiliates, may, from
time to time, assign to Executive. If Executive is presently a member of the
Board and/or an officer of the Company and a member of the Board and/or an
officer of the Company Subsidiaries and affiliates, then Executive shall perform
duties customarily incidental to such offices and all other duties the Board
of
Directors may, from time to time assign, and have assigned to him.
(c)
During the term of employment, Executive shall diligently and conscientiously
devote his entire time, attention and effort to the tasks which Company or
its
owners shall assign to him. The expenditure of time for educational, charitable
and professional activities shall not be deemed a breach of this Agreement
if
those activities do not materially interfere with the services required under
this Agreement and shall not require the prior written consent of the Board
of
Directors. If the Executive is elected or appointed as a director or committee
member, Executive shall serve in such capacity or capacities without further
compensation unless agreed to in writing by the parties hereto. Nothing herein
shall be construed, however, to require the Executive’s election or appointment
as a director or an officer.
(d)
The
Executive shall exert his best efforts and devote substantially all of his
time
and attention to the Company's affairs. The Executive shall be in complete
charge of the operation of the Company, and shall have full authority and
responsibility, subject to the general direction, approval, and control of
the
Company's Board of Directors, for formulating policies and administering the
Company in all respects. Executive’s powers shall include the authority to hire
and fire Company personnel and to retain consultants when Executive deems
necessary to implement Company policies. Executive shall at all times, discharge
his duties in consultation with, and under the supervision of, the Company’s
Board of Directors. In the performance of Executive’s duties, Executive shall
make his principal office in such place as the Company’s Board of Directors and
Executive may, from time to time, agree.
(e)
Competitive
Activities and Restrictions.
(1)
During the term of this contract Executive shall not, directly or indirectly,
either as an employee, company, consultant, agent, principal, partner,
stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of Company without the
prior written consent of the Company, however, this limitation shall not extend
to any business dealings and relationships regarding and relating to Verge,
Inc.
2
(2)
Executive agrees that during the term of this contract and for a period of
two
(2) years after termination of this Agreement, Executive shall not directly
or
indirectly solicit, hire, recruit, or encourage any other employee of Company
to
leave Company.
(3)
Restrictive Covenant. For a period of two (2) years after the termination or
expiration of this Agreement, the Executive shall not, within a radius of fifty
(50) miles from the present place of the Company's business, directly or
indirectly, own, manage, operate, control, be employed by, participate in,
or be
connected in any manner with the ownership, management, operation, or control
of
any business similar to the type of business conducted by the Company at the
time this Agreement terminates. In the event of the Executive's actual or
threatened breach of this paragraph, the Company shall be entitled to a
preliminary restraining order and injunction restraining the Executive from
violating its provisions. Nothing in this Agreement shall be construed to
prohibit the Company from pursuing any other available remedies for such breach
or threatened breach, including the recovery of damages from the
Executive.
(4)
For a
period of twenty-four (24) months after this Agreement has been terminated
for
any reason, regardless of whether the termination is initiated by Company or
Executive, or for a period of time equal to the length of Executive's employment
with Company if such tenure is less than twenty-four (24) months, Executive
will
not, directly or indirectly, solicit any person, company, firm, or corporation
who is or was a customer of Company during a period of five (5) years prior
to
the termination of Executive's employment. Executive agrees not to solicit
such
customers on behalf of himself or any other person, firm, company, or
corporation.
(5)
The
Executive agrees that for a period of six (6) months after the termination
of
his employment with Company, regardless of whether the termination was initiated
by Company or Executive, he will not accept employment with, or act as a
consultant, contractor, advisor, or in any other capacity for, a competitor
of
the Company, or enter into competition with the Company, either by himself
or
through any entity owned or managed in whole or in part by the Executive, within
a fifty (50) mile radius of Company's office(s) in which the Executive worked,
however, this limitation shall not extend to any business dealings and
relationships regarding and relating to Verge, Inc. The term ''competitor,''
as
used herein, means any entity primarily engaged in the business of providing
delivery and management services, or primarily engaged in any other business
in
which Company engages subsequent to the date of this Agreement.
(6)
The
parties have attempted to limit Executive's right to compete only to the extent
necessary to protect Company from unfair competition. The parties recognize,
however, that reasonable people may differ in making such a determination.
Consequently, the parties hereby agree that, if the scope or enforceability
of
the restrictive covenant is in any way disputed at any time, a court or other
trier of fact may modify and enforce the covenant to the extent that it believes
the covenant is reasonable under the circumstances existing at that
time.
(7)
Executive further acknowledges that (i) in the event Executive’s employment with
Company terminates for any reason, regardless of whether the termination is
initiated by Company or Executive, Executive will be able to earn a livelihood
without violating the foregoing restrictions; and (ii) Executive’s ability to
earn a livelihood without violating such restrictions is a material condition
of
Executive’s employment with Company.
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(f)
Uniqueness
of Executive’s Services.
Executive represents and agrees that the services to be performed under the
terms of this contract are of a special, unique, unusual, extraordinary, and
intellectual character that gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in an action at law.
Executive therefore expressly agrees that Company, in addition to any other
rights or remedies that Company may possess, shall be entitled to injunctive
and
other equitable relief to prevent or remedy a breach of this contract by
Executive.
(g)
Matters
Requiring Consent of the Board of Directors:
Executive shall not, without the specific approval of Company’s Board of
Directors, do or contract to do any of the following:
(1)
Borrow on behalf of Company during any fiscal year an amount in excess of Five
Hundred Thousand ($500,000) Dollars;
(2)
Permit any customer or client of Company to become indebted to Company in an
amount in excess of One Million ($1,000,000) Dollars;
(3)
Purchase capital equipment for amounts in excess of the amounts budgeted for
expenditure by the Board of Directors;
(4)
Sell
any single capital asset of Company, other than equity issued for compensation
and services, having a market value in excess of Two Hundred Fifty Thousand
($250,000) Dollars or a total of capital assets during a fiscal year having
a
market value in excess of Two Hundred Fifty Thousand ($250,000) Dollars;
and
(5)
Commit Company to the expenditure of more than Two Million Five Hundred Thousand
($2,500,000) Dollars in the development and sale of new products and
services.
3. Vacations
and Personal days.
Executive shall be entitled to annual vacations, during which time his Salary
and compensation shall be paid, in a manner commensurate with his status as
a
principal executive, which shall be four weeks per year. Executive shall be
entitled to five (5) unauthorized absences per year and ten (10) personal days.
The personal days must be scheduled in advance and are subject to the
requirements of the Company. Any unused Vacation and Personal days can be
accrued from year to year.
4. Salary,
Compensation, Incentives and Benefits.
(a)
During the period of Executive Employment, the Company shall pay to Executive
a
salary (“Salary”), to be fixed by the Board of Directors, from time to time,
during that period. In no event, however, shall Executive’s Salary be less than
the compensation presently received by Executive. Currently and as of the date
of this Agreement, Executive is paid an annual compensation of One Hundred
Twenty Thousand ($120,000) Dollars ($10,000 per month), and in addition, a
bonus
incentive package. However, at the discretion of the CEO, the CEO can elect
to
compensate Executive with three times the value of any salary withheld in stock
options or can accrue one half of the salary in the form of a note with five
(5%) percent annual interest. The bonus incentive package will hereafter conform
to the provisions of Paragraph 4(b) below. Executive shall be paid every two
weeks. In addition, to all other remuneration provided for in this Agreement,
if
Executive serves at any time as a Director, Executive shall be entitled to
receive at the discretion of the Company, Company Subsidiaries or affiliate
a
Director’s fee for such services. Salary and compensation payments shall be
subject to withholding and other applicable taxes. Annual Salary increases
are
to be based upon a percentage of the increase in annual revenues of the Company
as further set forth hereinafter.
4
(b)
Bonus Incentive
Package.
(1)
Executive
will
receive incentive compensation equal to two percent (2%) of the Company's
''income from operations,'' defined as the Company's net income before taxes,
amortization of intangible assets and interest on long-term debt. Executive's
incentive compensation will be calculated annually based on the Company's
audited financial statements for the fiscal year, and wi1l be payable in lump
sum on July 1 of each year. Such payments will be subject to normal payroll
deductions for state and federal withholding and social security taxes. No
incentive compensation will be paid to Executive
for any
year in which the Company's income from operations is less than
$25,000.
(2)
Profit-Sharing Based on Performance.
(i)
For
each fiscal year of Company in which the net profits of Company exceed Two
Hundred Fifty Thousand ($250,000) Dollars or
the net
profits of Company for that fiscal year exceed the net profits of Company for
the previous fiscal year by Fifteen (15%) percent, whichever is less, Company
agrees to pay Executive, within three (3) months after the close of that fiscal
year, an annual profit-sharing payment equal to Twelve and one half (12.5%)
percent of that excess, provided, however, that the total amount of this payment
shall not exceed One Million ($1,000,000) Dollars. For purposes of this
subparagraph, the “net profits” shall be the net profits as reflected on either
the audited financials or the Company’s tax returns, whichever value for the net
profits is less.
(ii)
If
the employment term is terminated by Company for cause, Executive shall not
be
entitled to any portion of the annual profit-sharing payment for the fiscal
year
in which that termination occurs. However, if this contract should expire or
be
terminated for reasons other than cause, Executive shall be entitled to a
percentage of the annual profit-sharing payment equal to the percentage of
the
fiscal year worked.
(iii)
For
the purpose of determining the amount of the annual profit sharing bonus, the
net profits of Company shall be determined by a certified accountant then
employed by Company.
(3)
Stock
Bonus. Company agrees to transfer to Executive each year during the term of
Executive Employment, within one (1) month after the close of each fiscal year
during all of which the Executive served as Chief Technical Officer of the
Company, the number of shares of Company's stock equal in value to One Hundred
Thousand ($100,000) Dollars. For the purpose of determining the number of shares
to be transferred to Executive, the shares shall be valued, as of the close
of
each fiscal year, under one of the following formulas:
5
(i)
if
the Company is not publicly traded then the value of each share shall be equal
to One ($1.00) Dollar; or
(ii)
if
the Company is publicly traded then the value of each share shall computed
at a
fifteen (15%) percent discount to market based upon an average of the previous
ten (10) day closing bid price.
(4)
Stock
Option.
(i)
Company hereby grants Executive an option to purchase Five Hundred Thousand
(500,000) shares of Company's common stock at a purchase price of $0.10 per
share per year. This option may be exercised in whole or in part, but may only
be exercised in lots of Twenty Five Thousand (25,000) shares. Executive shall
not have any of the rights of, nor be treated as, a shareholder with respect
to
the shares subject to this option until Executive has exercised the option
and
has become the shareholder of record of those shares.
(ii)
This
option is not assignable.
(iii)
This option may only be exercised by Executive during the term of Executive’s
employment hereunder. However, in the event that the employment term is
terminated by Company for reasons other than for cause, Executive shall retain
the right to exercise any unused portion of the option until either the day
on
which this Agreement would have terminated naturally or two years from the
date
of termination, whichever is earlier.
(c)
Automobile.
The
Company recognizes the Executive's need for an automobile for business purposes.
It, therefore, shall provide the Executive with a monthly car allowance.
(d)
Deferred
Compensation.
If
Executive remains in the employ of Company until age Sixty-five (65), or on
earlier retirement on mutual written consent of both Executive and Company,
Company agrees to pay to Executive additional compensation, commencing with
Executive’s first full month of retirement, at the annual rate of Seventy-Five
(75%) percent of the annual salary which Executive is receiving at retirement,
payable in equal monthly installments on the last day of each month during
Executive's entire lifetime.
(e)
Salary
Continuation During Permanent Disability.
If
Executive for any reason whatsoever becomes permanently disabled so that
Executive is unable to perform the duties prescribed herein, Company agrees
to
pay Executive One Hundred (100%) percent of Executive's annual salary, payable
in the same manner as provided for the payment of salary herein, for the next
Five (5) fiscal years or the remainder of the employment term provided for
herein whichever is shorter.
(f)
Effect
of Death.
If
Executive dies during the term of this Agreement, but prior to any renewal
period which has not commenced at least thirty (30) days prior to the date
of
death, compensation payments shall continue and shall be made payable to
Executive’s widow, or, if Executive’s widow predeceases Executive, then to
Executive’s estate, in equal monthly installments. The total of these payments
shall equal the Compensation and bonuses provided for in Paragraph 4(a) above.
Such payments shall commence in the month following the date of Executive’s
death.
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(g)
This
Agreement shall not be in lieu of any rights, benefits and privileges to which
Executive may be entitled to as an Executive of the Company under any
retirement, pension, profit-sharing, insurance, hospital or other plans which
may now be in effect or which may hereafter be adopted. Executive shall have
the
same rights and privileges to participate in such plans and benefits as any
other Executive during Executive’s period of Executive Employment.
(h)
Company agrees to include Executive in the full coverage of medical, dental,
and
eye care insurance.
(i)
Executive is entitled to receive from Company all fringe benefits in effect
for
Company’s principal executive officers.
| 5. |
Advisory
Compensation.
|
(a)
Payment
and services.
During
the Advisory Period, the Company shall pay to Executive an annual compensation
equal to one-half of his Salary during the last twelve month period of
Executive’s employment (“Advisory Compensation”), to be paid in equal monthly
installments on the fifteenth (15th) day of each month. While receiving such
Advisory Compensation, Executive shall, at all reasonable times, to the extent
his physical and mental condition permits, be available to consult with and
advise the Company’s officers, directors and other representatives. If
Executive’s physical or mental condition prevents him from fulfilling his
consulting or advisory duties, Executive shall still be entitled to the Advisory
Compensation during the entire Advisory Period. The parties agree that this
advice and counsel shall not entail full time service and shall be consistent
with Executive's retirement status
(b)
Location:
Executive shall not be required, without his prior written consent, to render
advisory services at any place other than the principal place of business of
the
Company, if Executive moves more than twenty-five (25) miles away from the
Company’s principal place of business.
(c)
Restriction:
During
the Advisory Period Executive shall be deemed to be an independent contractor
and shall be permitted to engage in any business or perform services for his
own
account, provided that such business and services shall not be in competition
with, or be for a company that is in competition with, the Company or its
subsidiaries or affiliates.
6.
Expenses.
(a)
The
Company recognizes that Executive will have to incur certain out of pocket
expenses related to his services and the Company’s business and that it will be
extremely difficult to account for such expenses. It is understood that
Executive’s Salary and compensation is intended to cover all such out-of-pocket
expenses, however, Company will provide Executive with an account of Two
Thousand Five Hundred ($2,500) Dollars per month to be utilized by Executive,
in
Executive’s sole discretion, for ordinary business expenses. The Company,
however, shall reimburse Executive for any specific expenditure incurred for
travel, lodging, entertainment and similar items upon the presentation to
Company of an itemized account of such expenditures. Each such expenditure
shall
be reimbursable only if it is of a nature qualifying it as a proper deduction
on
the federal and state income tax return of Company. Notwithstanding the
foregoing, during the Advisory Period the Company shall reimburse Executive
for
all expenses incident to the rendering of advisory and consultant
services.
7
7.
Insurance.
Company
agrees to obtain a Key Man insurance policy on the life of Executive in the
face
amount of Two Million ($2,000,000) Dollars. Company further agrees to make
Fifty
(50%) percent of that insurance policy payable to the beneficiary or
beneficiaries designated by Executive. Company agrees to pay all premiums on
the
policy during the term of employment provided herein. Executive agrees to submit
to any physical examination that may be required for the purpose of Company's
obtaining life insurance on the life of Executive for the benefit of Company;
provided, however, that Company shall bear the entire cost of that examination.
Upon termination of the Executive’s employment with the Company, Company shall
arrange to transfer the costs associated with the Life Insurance policy to
the
Executive so that said coverage remains in full force and effect, and Company
further agrees to execute all documents necessary to effect such transfer and
all documents necessary to permit Executive to change the beneficiary
designations if to be deemed necessary by Executive.
8. Indemnification.
The
Company shall indemnify the Executive and hold him harmless for all acts or
decisions made by him in good faith while performing services for the Company
and Company Subsidiaries and affiliates. The Company shall also use its best
efforts to obtain coverage for him under any insurance policy now in force
or
hereinafter obtained during the term of this Agreement covering the other
officers and directors of the Company and Company Subsidiaries and affiliates
against lawsuits. The Company shall pay all expenses including attorney's fees,
actually and necessarily incurred by the Executive in connection with the
defense of such act, suit or proceeding, and in connection with any related
appeal, including the cost of court settlements.
9.
Incapacity
and Termination.
(a)
"Cause"
for termination shall mean (i) Employee's final conviction of a felony involving
a crime of moral turpitude or (ii) acts of Employee which, in the unanimous
judgment of the Board, constitute willful fraud on the part of Employee in
connection with his duties under this Agreement, including misappropriation
or
embezzlement in the performance of duties as an employee of the Company, or
willfully engaging in conduct materially injurious to the Company and in
violation of the covenants contained in this Agreement.
(b)
Termination.
This
Agreement may be terminated by the Company with the express approval of the
Board of Directors, without prior notice to Executive on account of Executive’s
gross misconduct, a violation of this Agreement, habitual neglect of the
Executive to perform his duties under this Agreement, Executive’s acts of
dishonesty or other conduct which damages the reputation or standing of the
Company, Executive’s unauthorized disclosure of confidential information or
trade secrets, dishonesty, fraud, misrepresentation or other acts of moral
turpitude as would prevent the effective performance of Executive’s duties and
Executive’s breach of Executive’s duty of loyalty to Company.
8
(c)
Termination
upon sale of Company:
Notwithstanding anything to the contrary, the Company may terminate this
Agreement by giving ten (10) days notice to the Executive if any of the
following events occur:
(1)
the
Company sells substantially all of its assets to a single purchaser or to a
group of associated purchasers;
(2)
at
least two-thirds of the outstanding corporate shares of the Company are sold,
exchanged, or otherwise disposed of, in one transaction;
(3)
the
Company elects to terminate its business or liquidate its assets;
or
(4)
there
is a merger or consolidation of the Company in a transaction in which the
Company’s s shareholders receive less than fifty (50%) percent of the
outstanding voting shares of the new or continuing corporation.
(d)
Effect
of Merger, Consolidation, transfer of assets, or Dissolution.
(1)
This
agreement shall not be terminated by any voluntary or involuntary dissolution
of
Company resulting from either a merger or consolidation in which Company is
not
the consolidated or surviving corporation, or a transfer of all or substantially
all of the assets of Company.
(2)
In
the event of any such merger or consolidation or transfer of assets, Company's
rights, benefits, and obligations hereunder shall be assigned to the surviving
or resulting corporation or the transferee of Company's assets.
(e)
If
the Executive is terminated pursuant to paragraph 9(c) or 9(d) then Executive
shall be entitled to a severance package, which shall include, a payment of
Twenty Five Million Five Hundred Thousand ($25,500,000) Dollars, payable in
six
(6) equal monthly installments unless otherwise agreed to in writing, subject
to
all applicable tax and withholding deductions, and continued inclusion at the
Executive’s option in all fringe benefits in which the Executive
participates.
(f) Notwithstanding
any provision of this agreement, if Company terminates this agreement without
cause, it shall pay Executive an amount equal to Twenty Five Million Five
Hundred Thousand ($25,500,000) Dollars.
(g)
Termination
After Change in Control.
(1)
If
there is a ''change in control'' of the Company and Executive
is
terminated other than for cause within eighteen (18) months after such change
in
control, Executive
wil1
receive a lump sum cash payment in the amount of Twenty Five Million Five
Hundred Thousand ($25,500,000) Dollars within thirty (30) days of his
termination. Executive
will
continue to be covered under all of the Company's health and major medical
plans
then in effect for a period of one (1) year after any such change in contro1
at
the Company's sole expense.
(2)
For
purposes of this Agreement, the term ''change in control'' is defined to
include: (a) a tender offer or exchange offer made and consummated for ownership
of Company stock representing fifty (50%) percent or more of the combined voting
power of the Company's outstanding securities; (b) the sale or transfer of
substantially all of the Company's assets to another corporation which is not
a
wholly-owned subsidiary of the Company; (c) any transaction relating to the
Company which must be described in accordance with item 5(f) of schedule 14A
of
Regulation 14A of the Securities and Exchange Commission; (d) any merger or
consolidation of the Company with another corporation, where less than thirty
(30%) percent of the outstanding voting shares of the surviving or resulting
corporation are owned in the aggregate by the Company's former stockholders;
or
(e) any tender offer, exchange offer, merger, sale of assets and/or contested
election which results in a total change in the composition of the Company's
Board of Directors.
9
(3)
The
amount paid to Executive
pursuant
to this Paragraph will be deemed severance pay in consideration of the
Executive's
past
services to the Company and his continued services from the date of this
Agreement. Executive
will
have no duty to mitigate his damages by seeking other employment, nor will
Executive's
severance pay hereunder be reduced or offset by any such future
earnings.
10.
Executive’s
Stock Holdings in Company
(a)
Disposition
of Stock during Lifetime.
Except
to the extent as provided for by Rule 144 of the Securities and Exchange Act,
Executive shall not dispose of any of the shares of stock of the Company now
or
hereafter owned by him except pursuant to the terms of this agreement or with
the written consent of either Xxxxx Xxxxx, Xxxxx Xxxxx or Xxxx Xxxxx, so long
as
at the applicable time these individuals are still shareholders (hereinafter
“the other Stockholders”). The word "dispose" as herein used shall mean to sell,
assign or transfer, with or without consideration, encumber, pledge,
hypothecate, or otherwise dispose of a shares of stock in the Company.
(1)
If
wishing to dispose of his shares, Executive shall first obtain the written
consent of the other Stockholders. If no such written consent is given, the
Executive shall give written notice to the Company and the other Stockholders
pursuant to the terms of paragraph 20 of his intention to make such disposition.
Within thirty (30) days after the receipt of such notice, the Company, out
of
its surplus, shall have the option, but not the obligation, to purchase all
of
the Executive’s shares of stock. The Company shall exercise its option by giving
notice thereof to the Executive and the other Stockholders within said thirty
(30) day period. If such option is not exercised by the Company, the other
Stockholders shall then have the option within a 30-day period to purchase
all
of the Executive’s shares. The exercise of this option shall be in writing and
mailed pursuant to the terms of paragraph 20 to the Executive and the Company.
In either event, whether the Company or the other Stockholders elect to
purchase, the notice accepting the offer shall specify the date for the closing
of the purchase which shall be not more than thirty (30) days after the receipt
by the Executive of such acceptance notice given by the Company or the other
Stockholders, as the case may be.
(2)
The
purchase price shall be the book value, as that term is defined hereinafter,
of
the shares as at the date of the first notice, which shall be binding on both
parties. If such option shall be exercised either in the first instance by
the
Company, or, alternatively by the other Stockholders, payment for the capital
stock shall be paid as follows: ten (10%) percent of the total purchase price
of
the Executive’s stock paid at closing and the remaining balance in equal monthly
self-amortized installments paid over a period of seven (7) years, the first
of
which shall be paid within thirty (30) days following the closing and the
remaining installments at consecutive monthly intervals thereafter, until paid,
including, interest at the then prevailing prime interest rate plus three and
one half (3 ½) points.
10
(3)
The
said installment payments shall be evidenced by a series of eighty-four (84)
negotiable, acceleratable, promissory notes made by the Company or the other
Stockholders, as the case may be, which notes are to be delivered to the
Executive at the time of closing. The notes shall bear interest at the then
prevailing prime interest rate plus three and one half (3 ½) points and shall
provide that the Company or the other Stockholders, depending upon who is the
purchaser, shall have the privilege of prepayment of all or any part of the
unpaid purchase price upon Ten (10) days prior written notice without penalty,
and that a default in the payment of any note after the expiration of fifteen
(15) days grace period shall cause the remaining unpaid notes to become due
and
payable forthwith.
(4)
If
the Company shall be the purchaser and thereafter the maker of the promissory
notes, the other Stockholders shall unconditionally guarantee payment of said
purchase price and said notes to be delivered in connection therewith. The
said
notes shall bear the unconditional endorsement of the other Stockholders who
shall not be discharged from liability as guarantor by reason of the subsequent
extension, modification or renewal of said promissory notes, or any of them
evidencing such purchase price.
(5)
If
the offer to sell is neither accepted by the Company nor by the other
Stockholders, the Executive may, thereafter, make a bona fide transfer or
dispose of their shares of stock to a prospective outside purchaser, in which
event said third party shall hold such shares subject to the terms and
conditions of this agreement and shall become a signatory thereto.
(i) The
Executive, in such case, shall give thirty (30) days prior written notice to
the
Company and the other Stockholders specifying the name and address of the
prospective outside purchaser and the terms of the proposed transaction with
said outsider. There shall be annexed to the said notice a copy of the contract,
if any, between the Executive and the outsider. The Company shall thereupon,
in
the first instance, have a further option to consummate the transaction with
the
Executive at the same price and at the same terms as specified in said notice,
or alternatively, if the Company shall be unable or shall refuse to exercise
said further option, then the other Stockholders may do so as provided herein.
(ii)
If
such further option be exercised by the Company or other Stockholders, notice
shall be given within a thirty (30) day period to the Executive of the
willingness of the Company, in the first instance, or the other Stockholders,
in
the second instance, to close the transaction on the basis offered by an
outsider. In either event, whether the Company or the other Stockholders elect
to meet the outsider's terms, the acceptance notice shall specify the date
for
the closing of the transaction which shall not be more than thirty (30) days
after the giving of notice of acceptance of the further option herein
conferred.
11
(iii) If
the
Company or the other Stockholders, for any reason whatsoever, fail to exercise
either the first option provided for under this agreement or the further option,
in either of such cases the Executive’s shares of stock shall be freed from the
restrictions of this agreement and the said shares of stock may be sold to
any
outsider upon such terms as the Executive may see fit to offer and an outsider
may see fit to accept. In such latter case, the Executive shall likewise give
thirty (30) days prior written notice to the Company and the other Stockholders
specifying the name and address of the prospective outside purchaser and the
full terms of the proposed transaction with said outsider setting forth a copy
of the contract with said outsider. If the Executive shall be permitted to,
and
shall, consummate a sale with an outsider under the provisions of this paragraph
of the agreement, in such case, the Executive shall furnish copies of all
documents executed with the outsider within five (5) days after their execution
and delivery otherwise the transaction with the outsider shall be null and
void.
If the Executive shall not effect a sale or close the transaction with any
outsider, the Executive’s shares shall, nevertheless, continue to be subject to
all the restrictions of this agreement.
(b)
Purchase
of Stock Upon Death
(1)
Obligatory
Purchase and Sale. Upon
the
death of the Executive, all of his shares of stock, or the shares of stock
to
which he or his personal representative shall be entitled, shall be sold and
transferred as hereinafter provided: The Company shall purchase from the
Executive’s personal representative, and the Executive’s personal representative
shall sell to the Company, all of the Executive’s shares of stock at the price
per share set forth in paragraph "(2)" hereof.
(2)
Purchase
Price. The
purchase price shall be the book value, as that term is defined herein at
paragraph (d) hereof, of the shares as at the date of the Executive’s death,
which shall be binding on both parties.
(3)
Terms
of Payment. The
Company shall pay to the personal representative of the Executive the purchase
price as hereinabove determined in the following manner:
(i)
By
payment of the entire available proceeds from any insurance policy maintained
as
provided for in Paragraph "7" of this agreement within thirty (30) days of
receipt thereof by the Company (unless a personal representative has not yet
been appointed, in which case payment shall be made within ten (10) days of
any
subsequent appointment) and the balance, to the extent there is any, in equal
monthly installments over a period of three (3) years. The first such
installment shall be paid within thirty (30) days following payment of the
available proceeds, and the remaining installments at consecutive monthly
intervals thereafter, until paid, together with interest at the then prevailing
prime rate plus three and one half (3 ½) points, payable with each installment
of principal, as hereinbefore provided.
(ii)
The
said installment payments shall be evidenced by a series of thirty-six (36)
negotiable, self-amortized, acceleratable, promissory notes made by the Company,
which notes are to be delivered to the personal representative of the Executive
at the time of payment of the available proceeds. The notes shall bear interest
at the then prevailing prime rate plus three and one half (3 ½) points and shall
provide that the Company shall have the privilege of prepayment of all or any
part of the purchase price upon Ten (10) days prior written notice, and that
a
default in the payment of any note after the expiration of fifteen (15) days
grace period shall cause the remaining unpaid notes to become due and payable
herewith.
12
(iii)
The
other Stockholders shall guarantee payment of the purchase price and interest,
and any notes to be delivered hereunder shall bear the endorsement of the other
Stockholders who shall not be discharged from such liability by reason of the
subsequent extension, modification or renewal of such promissory notes or any
of
them.
(4)
Failure
of Corporation to Purchase. If
the
Company , for any reason whatsoever, shall fail or refuse to purchase all of
the
shares of the Executive, then, and in such case, the obligation to purchase
shall be deemed assumed by the other Stockholders for the purpose of assuring
the estate of the Executive that his stock shall be purchased. The other
Stockholders shall thereupon assume the Company’s obligations to purchase and to
make payment for the Executive’s shares of stock as if said other Stockholders
had assumed that obligation in the first place.
(c)
Life
Insurance applied to Payment.
Upon
the death of the Executive, all the proceeds of the policies insuring his life
shall be collected and applied by the Company to the payment of the purchase
price of the Executive’s stock. In the event that the purchase price is in
excess of the insurance proceeds, the balance of the purchase price shall be
paid as appears in Paragraph (b)(3) herein. In the event that the insurance
proceeds are equal to or exceed the purchase price, the Company shall turn
over
to the representative of the Executive the entire proceeds of life insurance
in
full payment of his stock in the Corporation.
(d)
Purchase
Price
(1)
The
purchase price of any stock of the Company sold, purchased or retired pursuant
to any provision of this Agreement shall be determined based on the book value
of the Company.
(2)
The
term “book value” as it is used in this Agreement shall mean the book value of
the shares of the Company as determined by a certified public accountant then
engaged by the Company, using generally accepted accounting principles and
appraisals of fair market value of fixed assets or real property owned by the
Company. In the event of either a buy-out, or any other repurchase of shares
as
provided for in this agreement, the fair market value of fixed assets or real
property owned by the Company shall be as agreed and determined by the other
Stockholders. In the event that the other Stockholders are in disagreement
over
the fair market value of fixed assets or real property owned by the Company,
then each other Stockholder shall have the fixed assets or real property owned
by the Company appraised at his sole cost and expense, and the fair market
value
of fixed assets or real property owned by the Company will be the average of
total amount of the other Stockholder appraisals. Should their be a disagreement
over the fair market value of fixed assets or real property owned by the Company
and should the other Stockholders elect not have an appraisal as set forth
above
performed, the fair market value of fixed assets or real property owned by
the
Company shall be determined solely by the appraisal which the other Stockholder
had performed.
(3)
No
allowance of any kind shall be made for good will, trade name or similar
intangible asset(s).
13
(e)
Involuntary
Assignments
(1)
In
the event that the Executive shall be divested of title to his shares of capital
stock by involuntary sale, assignment or transfer, (as, for example, but without
limiting the generality thereof, by sale under levy of attachment or execution,
or sale in connection with bankruptcy or other court process) or transfer to
a
spouse in satisfaction of marital rights in connection with a separation or
divorce, the person, firm or corporation acquiring such stock (hereinafter
called the “Judicial Assignee"), shall take and hold such shares of capital
stock subject to all the restrictions, obligations and disabilities as was
the
Executive.
(2)
Within thirty (30) days after such stock is transferred to the Judicial Assignee
on the books of the Company, if such transfer be deemed proper by the Company,
the Company may (but shall not be obligated to), by written notice given to
the
Judicial Assignee, elect to purchase from the Judicial Assignee the stock so
acquired by him or her for:
(i) The
same
amount as the Judicial Assignee shall have paid for such stock, or
(ii) The
book
value of each share as determined in accordance with this Agreement, whichever
amount is smaller, i.e., either the amount paid or book value. If the Company
elects to purchase such stock from the Judicial Assignee, the Company may pay
for such stock in ten (10) annual installments, the first of which shall be
due
and payable within thirty (30) days after the Company gives notice to the
Judicial Assignee, as aforesaid. The Judicial Assignee, upon the making of
the
first payment by the Company, shall simultaneously therewith deliver his shares
of stock to the Company’s attorney who shall thereupon certify, in writing, that
he is holding said stock in escrow pending the full payment of the purchase
price. The Judicial Assignee shall have no voice in the management of the
Company at any time after the payment of the first installment.
(f)
Delivery
of Stock
(1)
The
Executive, Executive’s personal representative, Judicial Assignee, whichever the
seller shall be, shall deposit the stock sold in escrow with a person who is
mutually acceptable to the Purchaser and Seller. The stock shall be duly
endorsed in blank for transfer and shall be accompanied by all other documents
necessary for an effective transfer. The escrow agent shall hold such stock
endorsed in blank.
(2)
Upon
proof of payment in full of the note of the Purchaser given to the Seller under
this Agreement, the escrow agent shall turn over to the Purchaser all of the
shares deposited with him without any notice or further consent from the Seller,
duly endorsed for transfer, with the necessary documentary stamps duly affixed
and canceled.
(3)
The
fees and all other expenses of the escrow agent shall be paid one-half by the
Purchaser and one-half by the Seller.
14
(4)
The
stock held in escrow shall, in no instance, be entitled to be voted, except
that
if the is not in default in the payment of any installment of principal and
interest, such Purchaser shall have the right to vote the stock on deposit
with
the escrow agent, and the escrow agent and the Seller shall, on demand, execute
and deliver an effective proxy or proxies in favor of the Purchaser whenever
demand is made upon them for such proxy or proxies by the Purchaser. Upon
default in the payment of any installment of principal or interest, the
Purchaser shall not be entitled to vote such stock until such default is
cured.
(5)
In
the event of a sale of the majority of the stock of the Executive during his
lifetime in one single transaction(s), the Executive shall, upon the purchase
of
all his stock, be deemed to have resigned as a Director and from any office
in
the Company held by him at the time and agrees to sign, execute and deliver
to
the Company any and all instruments, including, but without limiting the
generality thereof, resignations and other documents that may be necessary
to
effectuate the foregoing.
(g)
Right
of Executive to Sell Shares to the Company upon Disability or Involuntary
Termination Without Cause.
(a)
Put
Option: If
Executive at any time from the date of this Agreement shall become Disabled
or
be terminated without Cause, Executive shall have the right and option (the
"Put
Option") to sell any or all of the Shares to the Company at a price per Share
equal as defined in Section 10(d).
(b)
Exercise
of Put Option and Closing.
Executive may exercise the Put Option by delivering to the Company written
notice of exercise within sixty days after the termination of the employment
of
Executive giving rise to the Put Option as set forth in Section (g) (a) above.
Such notice shall specify the number of Shares to be sold. If and to the extent
the Put Option is not so exercised within such sixty-day period, the Put option
shall automatically expire and terminate effective upon the expiration of such
sixty days period. At the time of delivery of notice of the exercise of the
Put
Option, Executive shall tender to the Company at its principal offices the
certificate or certificates representing the Shares which the Company is
obligated to purchase, duly endorsed in blank by Executive or with duly endorsed
stock powers attached thereto, all in form suitable for the transfer of such
Shares to the Company. Within ten (10) days of its receipt of the notice and
such Shares, the Company shall deliver to Executive a check in the amount of
the
Fair Value of a Share multiplied by the number of Shares being sold. The
purchase price may be payable, at the option of the Company, in cancellation
of
all or a portion of any outstanding indebtedness of Executive to the Company
or
in cash (by bank or cashier's check) or both.
(c)
Right
of Company to Delay Payment. If
at any
time the Company is unable to repurchase Shares pursuant to the provisions
of
this Section or if it is determined by the Board of Directors of the Company
in
their good-faith judgment that the payment of the entire purchase price of
such
Shares pursuant to this Section would be deleterious to the financial position
of the Company, the Company may elect to defer payment of all or a portion
of
such purchase price (but not any amounts then payable by the cancellation of
outstanding indebtedness of Executive to the Company). Such deferred portion
of
the purchase price shall thereafter be payable in five (5) equal annual
installments beginning on the date on which such purchase price was to be paid
but for the effect of this paragraph (c). The outstanding amount of such
installments shall bear interest at a floating rate equal to 5% per annum and
such interest shall be payable annually in arrears on each date that an
installment of principal is owing. The Company may prepay its obligations under
this paragraph (c) in whole or in part at any time, with such prepayments being
applied first to interest accrued but unpaid to the date of such prepayment
and
thereafter to installments of principal in inverse order of their maturity.
For
so long as any interest or principal remains owing under this paragraph (c),
the
Company shall not make any distribution
or
dividend to the holders of its Common Stock.
15
10. Ownership
in Company.
All
ideas, inventions, trademarks, and other developments or improvement conceived
by Executive, alone or with others, during the term of employment, whether
or
not during working hours, that are within the scope of Company's business
operations, or that relate to any Company or Company Subsidiaries work or
projects, are the exclusive property of the Company. Executive agrees to assist
the Company and Company Subsidiaries, at its expense, to obtain patents on
any
patentable ideas, inventions, trademarks, and other developments, and agrees
to
execute all documents necessary to obtain the patents in the name of the Company
or Company Subsidiaries.
11.
Nondisclosure.
Executive shall be dealing with Company's confidential information, inventions,
trade secrets, and processes which are Company's sole and exclusive property.
Executive agrees that Executive shall neither disclose to anyone, directly
or
indirectly, without the prior written consent of the Company, Company's
confidential information nor will Executive use said confidential information
outside the scope of Executive’s employment. All documents that Executive
prepares and all confidential information provided to Executive as a result
of
or related to Executive’s employment shall, at all times, remain the exclusive
property of the Company, and will remain in Company's possession on its
premises. Under no circumstances, may Executive remove any confidential
information or documents from Company's premises.
12.
Client
Information.
The
Executive acknowledges that the list of the Company's Clients and Brokers,
as
the Company may determine from time to time, is a valuable, special, and unique
asset of the Company's business. The Executive shall not, during and after
the
term of his employment, disclose all or any part of the Executive's customer
list to any person, firm, corporation, association, or other entity for any
reason or purpose. In the event of the Executive's breach or threatened breach
of this paragraph, the Company shall be entitled to a preliminary restraining
order and an injunction restraining and enjoining the Executive from disclosing
all or any part of the Company's Client list and from rendering any services
to
any person, firm, corporation, association, or other entity to whom all or
any
part of such list has been, or is threatened to be, disclosed. In addition
to or
in lieu of the above, the Company may pursue all other remedies available to
the
Company for such breach or threatened breach, including the recovery of damages
from the Executive.
13.
Trade
Secrets.
(a)
The
parties acknowledge and agree that during the term of this agreement and in
the
course of the discharge of Executive’s duties hereunder, Executive shall have
access to and become acquainted with financial, personnel, sales, scientific,
technical and other information regarding formulas, patterns, compilations,
programs, devices, methods, techniques, operations, plans and processes that
are
owned by Company, actually or potentially used in the operation of Company's
business, or obtained from third parties under an agreement of confidentiality,
and that such information constitutes Company's ''trade secrets.''
16
(b)
Executive specifically agrees that Executive shall not misuse, misappropriate,
or disclose in writing, orally or by electronic means, any trade secrets,
directly or indirectly, to any other person or use them in any way, either
during the term of this agreement or at any other time thereafter, except as
is
required in the course of Executive’s employment.
(c)
Executive acknowledges and agrees that the sale or unauthorized use or
disclosure in writing, orally or by electronic means, of any of Company's trade
secrets obtained by Executive during the course of Executive’s employment under
this agreement, including information concerning Company's actual or potential
work, services, or products, the facts that any such work, services, or products
are planned, under consideration, or in production, as well as any descriptions
thereof, constitute unfair competition. Executive promises and agrees not to
engage in any unfair competition with Company, either during the term of this
Agreement or at any other time thereafter
(d)
Executive further agrees that all files, records, documents, drawings,
specifications, equipment, software, and similar items whether maintained in
hard copy or on-line relating to Company's or Company Subsidiaries’ business,
whether prepared by Executive or others, are and shall remain exclusively the
property of Company and that they shall be removed from the premises or, if
kept
on-line, from the computer systems of Company only with the express prior
written consent of the Company.
14.
Use
of
Executive’s Name.
(a)
Company shall have the right to use the name of Executive as part of the trade
name or trademark of Company if it should be deemed advisable to do so. Any
trade name or trademark, of which the name of Executive is a part, that is
adopted by Company during the employment of Executive may be used thereafter
by
Company for as long as Company deems advisable.
(b)
Executive shall not, either during the term of this Agreement or at any time
thereafter, use or permit the use of Executive’s name in the trade name or
trademark of any other enterprise if that other enterprise is engaged in a
business similar in any respect to that conducted by Company, unless that trade
name or trademark clearly indicates that the other enterprise is a separate
entity entirely distinct from and not to be confused with Company and unless
that trade name or trademark excludes any words or symbols stating or suggesting
prior or current affiliation or connection by that other enterprise or its
employees with Company.
15.
Nontransferability.
Neither
Executive, Executive’s spouse, nor their estates shall have any right to
commute, anticipate, encumber or dispose of any payment under this Agreement.
Such payments and accompanying rights are nonassignable and nontransferable,
expect as otherwise specifically provided for in this Agreement.
16.
Breach
of the Agreement.
In the
event of any claimed breach of this Agreement, the party claimed to have
committed the breach will be entitled to written notice of the alleged breach
and a period of ten (10) days in which to remedy such breach. Executive acknowledges
and agrees that a breach of any of the covenants contained in this Agreement
will result in irreparable and continuing harm to the Company for which there
will be no adequate remedy at law. The Company will be entitled to preliminary
and permanent injunctive relief to restrain Executive
from
violating the terms and conditions of this Agreement in addition to other
available remedies, at law and in equity.
17
(1)
Executive acknowledges that: (i) compliance with Paragraphs 2(e), (f), and
(g)
is necessary to protect the Company's business and good will; (ii) a breach
of
those Paragraphs will irreparably and continually damage Company; and (iii)
an
award of money damages will not be adequate to remedy such harm.
(2)
Consequently, Executive agrees that, in the event he breaches or threatens
to
breach any of these covenants, Company shall be entitled to both: (i) a
preliminary or permanent injunction in order to prevent the continuation of
such
harm; and (ii) money damages, insofar as they can be determined, including,
without limitation, all reasonable costs and attorneys' fees incurred by the
Company in enforcing the provisions of this Agreement. Nothing in this
Agreement, however, shall prohibit Company from also pursuing any other
remedy.
(3)
If,
after the expiration of the two (2) year period referred to in Paragraph 2(e)
hereof, Executive becomes affiliated with any business that competes with
Company, either as a shareholder, manager, partner, creditor, employee,
consultant, agent or independent contractor, or a customer or account of Company
becomes a customer or account of the competing business with which Executive
is
affiliated, this fact shall be presumptive evidence that Executive has breached
the terms of this Agreement, and the burden of proving otherwise shall rest
upon
Executive.
(4)
As
money damages for the period of time during which Executive violates these
covenants, Company shall be entitled to recover the full amount of any fees,
compensation, or other remuneration earned by Executive as a result of any
such
breach.
17. Binding
Effect.
This
Agreement shall inure to the benefit of, and be binding upon, the Company,
its
successors and assigns, including without limitation, any person, partnership,
company or corporation which may acquire substantially all of the Company’s
assets or business or with or into which the Company may be liquidated,
consolidated or otherwise combined. In addition, this Agreement shall inure
to
the benefit of, and be binding upon, Executive, Executive’s heirs, distributes
and personal representatives.
18.
Waiver.
The
failure of either party to insist in any one or more instances upon performance
of any term or condition of this Agreement shall not be construed as a waiver
of
future performance. The obligations of either party with respect to such term,
covenant or condition shall continue in full force and effect.
19. Notice.
Any
notice given hereunder shall be in writing and delivered or mailed by first
class mail and either reputable overnight delivery service or registered
certified mail return receipt requested to the parties at the following
addresses:
0
Xxxx
Xxxxxx Xxxxxxxxx
Xxxxx
000
Xxxxxxxxx,
Xxxxx Xxxxxxxx
Executive:
Xxx
Xxxxx
000
Xxxxxxx xxxx
Xxxxxxxxx
XX. 28803
18
20.
Entire
Agreement.
This
Agreement supersedes all previous agreements between Executive and Company
and
contains the entire understanding and agreement between the parties with respect
to its subject matter. This Agreement cannot be amended, modified or
supplemented in any respect except by a subsequent written agreement entered
into by both Executive and Company.
21.
Headings.
Headings in this Agreement are for convenience purposes only and shall not
be
used to interpret or construe its provisions.
22.
Governing
Law.
This
Agreement shall be construed in accordance with and be governed by the laws
of
the State of Florida.
23. Arbitration.
Any
dispute or claim arising from or in any way related to this agreement shall
be
settled by arbitration in Florida at the option of Company. All arbitration
shall be conducted in accordance with the rules and regulations of the American
Arbitration Association ("AAA").
AAA shall designate a panel of three arbitrators from an approved list of
arbitrators following both parties' review and deletion of those arbitrators
on
the approved list having a conflict of interest with either party. Each party
shall pay its own expenses associated with such arbitration. A demand for
arbitration shall be made within a reasonable time after the claim, dispute
or
other matter has arisen and in no event shall such demand be made after the
date
when institution of legal or equitable proceedings based on such claim, dispute
or other matter in question would be barred by the applicable statutes of
limitations. The decision of the arbitrators shall be rendered within sixty
(60)
days of submission of any claim or dispute, shall be in writing and mailed
to
all the parties included in the arbitration. The decision of the arbitrator
shall be binding upon the parties and judgment in accordance with that decision
may be entered in any court having jurisdiction thereof.
24.
Severability.
If
any
provision of this Agreement is held to be illegal or invalid by a court of
competent jurisdiction, such provision shall be deemed to be severed and deleted
and neither such provision, nor its severance and deletion, shall affect the
validity of the remaining provisions.
IN
WITNESS HEREOF,
the
parties have executed this Agreement the day and year above
written.
Executive
Company
________________________ _____________________________
By:
Xxxxx
Xxxxx, President
Corporate
Seal
Attest:
________________________
Secretary
19
