EMPLOYMENT AGREEMENT
AGREEMENT,
made and entered into as of March 28, 2006 by and between GVI Security Solutions
Inc., a Delaware corporation (the “Company”), and Xxxxxx Xxxxxxx (the
“Executive”).
WITNESSETH:
WHEREAS,
the Company desires to employ the Executive and to enter into an agreement
embodying the terms of such employment (this “Agreement”) and the Executive
desires to enter into this Agreement and to accept such employment, subject
to
the terms and provisions of this Agreement;
NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt of which
is
mutually acknowledged, the Company and the Executive (individually a “Party” and
together the “Parties”) agree as follows:
1. Definitions.
(a) “Affiliate”
of a specified person or entity shall mean a person or entity that directly
or
indirectly controls, is controlled by, or is under common control with, the
person or entity specified.
(b) “Annual
Bonus” shall have the meaning ascribed to such term in Section 5(b) below.
(c) “Base
Salary” shall mean the annualized salary provided for in Section 4
below.
(d) “Board”
shall mean the Board of Directors of the Company.
(e) “Cause”
shall mean:
(i) a
material breach by the Executive of any provision of this Agreement, including
but not limited to a breach of Section 3(a) below, which, if curable, is not
substantially cured within 30 days after the Executive’s receipt of written
notice from the Company;
(ii) any
conduct, action or behavior by the Executive that has or may reasonably be
expected to have a material adverse effect on the reputation of the Company
(including, without limitation, the commission of any felony or any act
involving moral turpitude or dishonesty, whether or not in connection with
the
Executive’s employment hereunder); or
(iii) commission
of any act by the Executive of gross negligence, willful malfeasance, reckless
nonfeasance or malfeasance or any willful violation of law, in performance
of
his duties with the Company.
Anything
herein to the contrary notwithstanding, the Company shall not be entitled to
terminate the Executive’s employment for Cause unless the Company gives the
Executive written notice of the event constituting “Cause” within 60 days after
the Company becomes aware of such event and, if curable, the Executive fails
to
cure such event within 30 days after receipt of such notice.
(f) “Change
in Control” shall mean any of the following:
(i) any
“person” (as such term is used in Sections 3(a)(9) and 13(d) of the Securities
Exchange Act of 1934, as amended), but excluding a person who owns more than
5%
of the outstanding shares of the Company as of the Commencement Date, becomes
a
“beneficial owner” (as such term is used in Rule 13d-3 promulgated under that
Act), of more than 50% of the Voting Stock of the Company;
(ii) the
majority of the members of the Board consists of individuals other than
Incumbent Directors, which term means the members of the Board as of the
Commencement Date; provided that any individual becoming a director subsequent
to such date whose election or nomination for election as a director was
supported by a majority of the directors who were Incumbent Directors at the
time of such election or nomination shall be an Incumbent Director;
or
(iii) all
or
substantially all of the assets of the Company are disposed of pursuant to
a
merger, consolidation or other transaction (unless the stockholders of the
Company immediately prior to such merger, consolidation or other transaction
beneficially own, directly or indirectly, in substantially the same proportion
as they owned the Voting Stock of the Company, all of the Voting Stock or other
ownership interests of the entity or entities, if any, that succeed to the
business of the Company).
For
purposes of this Change in Control definition, “Voting Stock” shall mean the
capital stock of any class or classes having general voting power, in the
absence of specified contingencies, to elect the directors of the Company.
(g) “Closing
Price” shall mean the
closing price for the common stock of the Company as officially reported on
the
relevant date (or if there were no sales on such date, the next preceding date
on which the closing price was recorded) by the principal national securities
exchange (including, for purposes hereof, the Nasdaq Stock Market) on which
the
common stock of the Company is listed or admitted to trading or, if the common
stock is not listed or admitted to trading on any national securities exchange,
the closing price as furnished by the National Association of Securities
Dealers, Inc. through Nasdaq or a similar organization if Nasdaq is no longer
reporting such information. If, on any such date the common stock is not listed
or admitted to trading on any United States national securities exchange and
is
not quoted by Nasdaq or any similar organization, the fair value of a share
of
common stock of the Company on such date, as determined in good faith by the
Board.
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(h) “Commencement
Date” shall mean March 28, 2006.
(i) “Date
of
Termination” shall mean:
(i) if
the
Executive’s employment is terminated by the Company, the date the Company
informs the Executive that his employment is so terminated;
(ii) if
the
Executive voluntarily resigns his employment, the date stated as his Date of
Termination in a written notice to the Company (provided, that the Company
may
accelerate the Date of Termination to an earlier date by providing the Executive
with notice of such action, or, alternatively, the Company may place the
Executive on paid leave during such period);
(iii) if
the
Executive’s employment is terminated by reason of death, the date of death;
or
(iv) if
the
Executive resigns his employment for Good Reason, 30 days after receipt by
the
Company of timely written notice from the Executive in accordance with Section
1(k) below unless the Company cures the event or events giving rise to Good
Reason within 30 days after receipt of such written notice.
(j) “Disability”
shall mean the Executive’s inability, due to physical or mental incapacity, to
substantially perform his duties and responsibilities for a period of 90
consecutive days as determined by a medical doctor selected by the Company
and
reasonably acceptable to the Executive.
(k) “Good
Reason” shall mean the occurrence of any of the following without the
Executive’s consent:
(i) a
material diminution in the Executive’s authority, duties or responsibilities as
set forth in Section 3 below;
(ii) a
reduction in the Executive’s Base Salary or bonus opportunity, or a failure by
the Company to grant the Option in accordance with Section 6(a)
below;
(iii) a
material breach by the Company of any provision of this Agreement which, if
curable, is not substantively cured within 30 days after the Company’s receipt
of written notice from the Executive;
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(iv) a
change
without the consent of the Executive, in the location of employment to greater
than 50 miles of the Company’s Florida office; or
(v) a
change
in reporting structure so that the Executive reports to someone other than
the
Chief Executive Officer of the Company.
Anything
herein to the contrary notwithstanding, the Executive shall not be entitled
to
resign for Good Reason unless the Executive gives the Company written notice
of
the event constituting “Good Reason” within 60 days after the Executive becomes
aware of such event and, if curable, the Company fails to cure such event within
30 days after receipt of such notice.
(l) “Option”
shall have the meaning ascribed to such term in Section 6 (a)
below.
(m) “Term”
shall have the meaning ascribed to such term in Section 2 below.
2. Term
of Employment.
The
term
of the Executive’s employment hereunder shall begin on the Commencement Date and
end at the close of business on the day before the third anniversary of the
Commencement Date (the “Term”). Within 90 days prior to the end of the Term, the
Company shall notify the Executive in writing whether or not it intends to
negotiate a new employment agreement with him. Notwithstanding the foregoing,
the Term shall end on the date on which the Executive’s employment is terminated
by either Party in accordance with the provisions herein. If the Executive’s
employment with the Company continues after the expiration of the Term, the
Executive’s employment shall be on an “at will” basis.
3. Position;
Duties and Responsibilities.
(a) During
the Term, the Executive shall be employed as the Chief Financial Officer of
the
Company and shall perform such duties and responsibilities as reasonably
determined by the Chief Executive Officer consistent with the duties and
responsibilities normally associated with such position in a company the size
and nature of the Company. The Executive, in carrying out his duties under
this
Agreement, shall report to the Chief Executive Officer of the Company. Subject
to the approval of the Board, the Executive shall be responsible for hiring
the
senior managers of the Company, including, but not limited to, a Chief Financial
Officer, Chief Operating Officer and Vice President of Sales, and shall
recommend appropriate compensation packages for such senior management to the
Board.
(b)
The
Executive agrees to devote all of his business time, energies, skills, efforts
and attention to his duties hereunder, and will not, without the prior written
consent of the Company, render any material services to any other business
concern. The Executive will use his best efforts and abilities faithfully and
diligently to promote the Company's business interests.
(c) Anything
herein to the contrary notwithstanding, nothing shall preclude the Executive
from (i) subject to the reasonable approval of the Board, serving on the boards
of directors of trade associations and/or charitable organizations, (ii)
engaging in charitable activities and community affairs and (iii) managing
his
personal investments and affairs, provided that the activities described in
the
preceding clauses (i) through (iii) do not interfere with the proper performance
of his duties and responsibilities for the Company.
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4. Base
Salary.
During
the Term, the Executive shall be paid an annualized Base Salary of $200,000,
payable in accordance with the regular payroll practices of the Company. During
the Term, the Base Salary may be increased, but not decreased, from time to
time
by the Board. The Executive shall not be entitled to any compensation for
service as a member of the Board, if elected or appointed to the Board, or
for
service as an officer or member of any board of directors of any Affiliate.
5. Annual
Bonuses.
During
the Term, the Executive shall be eligible to receive an annual incentive award
(“Annual Bonus”) of up to 50% of Base Salary based on the Executive’s
achievement of annual performance and other targets approved by the Board.
The
amount and payment of any such Annual Bonus shall be determined in accordance
with the Company’s practices for awarding annual incentive awards to senior
executives. Any Annual Bonus shall be payable when bonuses for the applicable
performance period are paid to other senior executives of the Company.
Notwithstanding the foregoing, the Board, in its sole discretion, may provide
the Executive an Annual Bonus greater than 50% of Base Salary with respect
to
any year.
6. Stock
Option Grant.
(a) Initial
Stock Option Grant.
The
Company shall grant the Executive on the Commencement Date a 10-year option
to
purchase in the aggregate 750,000 shares of the Company’s common stock (the
“Option”). The exercise price per share with respect to 250,000 shares of the
Option (“Traunch I Option Shares”) shall be equal to the Closing Price of a
share of the Company’s common stock on the day before the Commencement Date. The
exercise price per share with respect to 250,000 shares of the Option (“Traunch
II Option Shares”) shall be equal to the greater of (i) the Closing Price of a
share of the Company’s common stock on the day before the Commencement Date or
(ii) $.50. The exercise price per share with respect to the final 250,000 shares
of the Option (“Traunch III Option Shares”) shall be equal to the greater of
(iii) the Closing Price of a share of the Company’s common stock on the day
before the Commencement Date or (iv) $.78. Fifty percent of each of the Traunch
I Option Shares, Traunch II Option Shares and the Traunch III Option Shares
shall be immediately exercisable and an additional 25% of each such traunch
shall become exercisable on each of the first and second anniversary of the
Commencement Date, provided the Executive is employed by the Company on such
date.
(b)
Second Stock Option Grant.
Upon
the closing of the Company’s first capital raise after the Commencement Date,
the Company shall grant the Executive a 10-year option to purchase in the
aggregate that number of shares of the Company’s common stock equal to 1.25% of
the number of shares of common stock of the Company (or the common stock
underlying convertible securities) sold by the Company pursuant to such offering
(the “Second Option”). Notwithstanding the immediately preceding sentence, the
number of shares subject to the Second Option shall not exceed 250,000. The
exercise price per share with respect to the shares of the Second Option shall
be equal to the Closing Price of the Company’s common stock on the day before
(i) the Commencement Date or (ii) the grant of the Second Option, whichever
is
greater. The Executive’s right to be granted the Second Option under this
Section 6(b) shall terminate if the Company has not closed on a capital raise
before the second anniversary of the Commencement Date. Fifty percent of the
shares of the Second Option shall be immediately exercisable and an additional
25% of the Second Option shall become exercisable on each of the first and
second anniversary of the grant of the Second Option, provided the Executive
is
employed by the Company on such date.
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(c) Other
Conditions.
The
Executive shall be subject to the equity ownership, retention and other
requirements applicable to senior executives of the Company. Except as otherwise
expressly provided herein, the Initial Option and the Second Option shall be
governed by the applicable plan and option agreement. During the Term, the
Board
may, in its sole discretion, grant the Executive additional options to acquire
the Company’s common stock.
7. Employee
Benefit Programs.
During
the Term, the Executive shall be entitled to participate in all employee savings
and welfare benefit plans and programs made available to the Company’s
senior-level executives on a basis no less favorable than provided to other
similarly-situated executives, as such plans or programs may be in effect from
time to time, includ-ing, without limitation, savings and other retire-ment
plans or programs, medical, dental, hospitalization, short-term and long-term
disability and life insurance plans, accidental death and dismemberment
protection, travel accident insurance, and any other pension or retire-ment
plans or programs and any other employee welfare benefit plans or programs
that
may be sponsored by the Company from time to time.
8.
Reimbursement
of Business and Other Expenses; Perquisites; Vacations.
(a) During
the Term, the Executive is authorized to incur reasonable expenses in carrying
out his duties and responsibilities under this Agreement, including but not
limited to, reasonable travel and living expenses incurred by the Executive
while the Company’s executive offices are located in Dallas, and the Company
shall promptly reimburse him for all business and entertainment expenses
incurred in connection with carrying out the business of the Company, subject
to
documentation in accordance with the Company’s policy.
(b) The
Executive shall be entitled to the perquisites provided to other senior-level
executives. The Executive shall also be entitled to a car allowance of $1,000
per month.
(c) The
Executive shall be entitled to four weeks paid vacation per year.
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9. Termination
of Employment.
(a) Termination
Without Cause by the Company or Resignation for Good Reason by the Executive
prior to a Change in Control.
In the
event, prior to a Change in Control, the Executive’s employment during the Term
is terminated without Cause by the Company or the Executive resigns for Good
Reason, the Executive shall be entitled to:
(i) Base
Salary through the Date of Termination;
(ii) any
unpaid Annual Bonus earned with respect to any fiscal year preceding the Date
of
Termination;
(iii) a
pro
rated Annual Bonus for the fiscal year in which the Date of Termination occurs
(determined by multiplying the amount the Executive would have received had
employment continued through the end of such fiscal year by a fraction, the
numerator of which is the number of days during such fiscal year that the
Executive is employed by the Company and the denominator of which is 365),
payable when bonuses for such fiscal year are paid to other Company
executives;
(iv) payment
of Base Salary as salary continuation and, to the extent permitted under the
terms of the relevant plans and arrangements, all welfare benefits described
in
Paragraph 7 for a period of 12 months; provided, however, if the terms of the
Company’s group medical and/or dental plans do not permit the continued coverage
of the Executive in the plan after his termination of employment, the Company
shall pay for his premiums for continuing coverage under COBRA; provided,
further, the obligation of the Company to provide welfare benefits under this
clause (iv) (including the obligation to pay COBRA premiums) shall terminate
upon the Executive becoming eligible for welfare benefits from another
employer;
(v) provided
at least six months has expired since the date on which shares subject to the
Option last became exercisable (the “Previous Scheduled Date”), a pro rated
portion of the shares subject to the Option that would become exercisable on
the
next scheduled date for shares to become exercisable (the “Next Scheduled Date”)
shall become immediately exercisable (determined by multiplying the number
of
shares subject to the Option that would have become exercisable had employment
continued through the Next Scheduled Date by a fraction, the numerator of which
is the number of days between the Previous Scheduled Date and the Date of
Termination and the denominator of which is 365);
(vi) any
amounts earned, accrued or owing to the Executive but not yet paid under Section
8 above, including accrued vacation; and
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(vii) except
as
otherwise provided in Section 9(e) below, any additional payment and benefit
in
accordance with the applicable plans and programs of the Company.
(b) Termination
upon Death or Disability.
In the
event the Executive’s employment during the Term is terminated upon death or
Disability, the Executive (or his estate or legal representative, as the case
may be) shall be entitled to:
(i) Base
Salary through the Date of Termination;
(ii) any
unpaid Annual Bonus earned with respect to any fiscal year preceding the Date
of
Termination;
(iii) a
pro
rated Annual Bonus for the fiscal year in which the Date of Termination occurs
(determined by multiplying the amount the Executive would have received had
employment continued through the end of such fiscal year by a fraction, the
numerator of which is the number of days during such fiscal year that the
Executive is employed by the Company and the denominator of which is 365),
payable when bonuses for such fiscal year are paid to other Company
executives;
(iv) any
amounts earned, accrued or owing to the Executive but not yet paid under Section
8 above, including accrued vacation; and
(v) any
additional payment and benefit in accordance with applicable plans or programs
of the Company.
(c) Termination
by the Company for Cause or a Voluntary Resignation by the
Executive.
If,
during the Term, the Company terminates the Executive’s employment for Cause or
the Executive voluntarily resigns, the Executive shall be entitled
to:
(i) Base
Salary through the Date of Termination;
8
(ii) any
amounts earned, accrued or owing to the Executive but not yet paid under Section
8 above, including accrued vacation; and
(iii) any
additional payment and benefit in accordance with the applicable plans or
programs of the Company.
(d) Termination
Without Cause by the Company or Resignation for Good Reason by the Executive
on
or after a Change in Control.
If,
during the Term, the Executive’s employment is terminated on or within 12 months
after a Change in Control without Cause by the Company or the Executive resigns
for Good Reason, the Executive shall be entitled to:
(i) Base
Salary through the Date of Termination;
(ii) any
unpaid Annual Bonus earned with respect to any fiscal year preceding the Date
of
Termination and any unpaid portion of the Signing Bonus;
(iii) a
pro
rated Annual Bonus for the fiscal year in which the Date of Termination occurs
(determined by multiplying one-half of the Executive Base Salary by a fraction,
the numerator of which is the number of days during such fiscal year that the
Executive is employed by the Company and the denominator of which is
365);
(iv) a
payment
of 200% Base Salary and to the extent permitted under the terms of the relevant
plans and arrangements, all welfare benefits described in Paragraph 7 for a
period of 24 months; provided, however, if the terms of the Company’s group
medical plan does not permit the continued coverage of the Executive in the
plan
after his termination of employment, the Company shall pay for his premiums
for
continuing coverage under COBRA; provided, further, the obligation of the
Company to provide welfare benefits under this clause (iv) (including the
obligation to pay COBRA premiums) shall terminate upon the Executive becoming
eligible for welfare benefits from another employer;
(v) all
of
the shares subject to the Option shall become immediately
exercisable;
(vi) any
amounts earned, accrued or owing to the Executive but not yet paid under Section
8 above, including accrued vacation; and
(vii) except
as
otherwise provided in Section 9(e) below, any additional payment and benefit
in
accordance with the applicable plans and programs of the Company.
Subject
to the provisions of Section 9(h) below, the payments described in clauses
(i),
(ii) and (iii) of this Section 9(d) shall be payable to the Executive within
30
days of the Date of Termination.
(e) Exclusivity
of Benefits; Release of Claims.
Any
payments provided pursuant to Section 9(a) or (d) above shall be in lieu of
any
salary continuation arrangements under any other severance program of the
Company. Notwithstanding anything herein to the contrary, in order to be
entitled to the payments, rights and other entitlements in Section 9(a) or
(d)
above, the Executive shall be required to execute and deliver a general release
of claims against the Company in the form supplied by the Company and not revoke
such release within the applicable revocation period.
(f) Nature
of Payments.
Any
amounts due under this Section 9 are in the nature of severance payments
considered to be reasonable by the Company and are not in the nature of a
penalty.
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(g) Resignation.
Notwithstanding any other provision of this Agreement, upon the termination
of
the Executive’s employment for any reason, unless otherwise requested by the
Board, he shall immediately resign from the Board if he were then a member,
from
all boards of directors of any Affiliate of the Company of which he may be
a
member, and as a trustee of, or fiduciary to, any employee benefit plans of
the
Company or any Affiliate. The Executive hereby agrees to execute any and all
documentation of such resignations upon request by the Company, but he shall
be
treated for all purposes as having so resigned upon termination of his
employment, regardless of when or whether he executes any such
documentation.
(h) This
Agreement is intended to comply with Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”). Notwithstanding any provision herein to the
contrary, this Agreement shall be interpreted, operated and administered
consistent with this intent. In that regard, any payment in connection with
the
Executive’s termination of employment shall not be made earlier than six (6)
months after the Date of Termination to the extent required by Code Section
409A(a)(2)(B)(i).
10. Confidentiality;
Assignment of Rights.
(a) During
the Term and thereafter, other than in the ordinary course of performing his
duties for the Company or as required in connection with providing any
cooperation to the Company pursuant to Section 13 below, the Executive agrees
that he shall not disclose to anyone or make use of any trade secret or
proprietary or confidential information of the Company or any Affiliate of
the
Company, including such trade secret or proprietary or confidential information
of any customer or other entity to which the Company owes an obligation not
to
disclose such information, which he acquires during the course of his
employment, including, but not limited to, records kept in the ordinary course
of business, except when required to do so by a court of law, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent or actual jurisdiction to order him to divulge, disclose
or make accessible such information. In the event the Executive is requested
to
disclose information as contemplated in the preceding sentence, the Executive
agrees, unless otherwise prohibited by law, to give the Company prompt written
notice of any request for disclosure in advance of the Executive making such
disclosure in order to permit the Company a reasonable opportunity to challenge
such disclosure. The foregoing shall not apply to information that (i) was
known
to the public prior to its disclosure to the Executive; or (ii) becomes known
to
the public subsequent to disclosure to the Executive through no wrongful act
of
the Executive or any representative of the Executive.
(b) The
Executive hereby sells, assigns and transfers to the Company all of his right,
title and interest in and to all inventions, discoveries, improvements and
copyrightable subject matter (the “rights”) which during the course of his
employment are made or conceived by him, alone or with others, and which are
within or arise out of any general field of the Company’s business or arise out
of any work he performs, or information he receives regarding the business
of
the Company, while employed by the Company. The Executive shall fully disclose
to the Company as promptly as available all information known or possessed
by
him concerning the rights referred to in the preceding sentence, and upon
request by the Company and without any further remuneration in any form to
him
by the Company, but at the expense of the Company, execute all applications
for
patents and for copyright registration, assignments thereof and other
instruments and do all things which the Company may deem necessary to vest
and
maintain in it the entire right, title and interest in and to all such
rights.
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(c) Except
as
otherwise may be required by law, the Executive agrees that at the time of
the
termination of employment, whether at the instance of the Executive or the
Company, and regardless of the reasons therefore, or at any other time requested
by the Company, he will deliver to the Company, and not keep or deliver to
anyone else, any and all notes, files, memoranda, papers and, in general, any
and all physical matter and computer files and other media containing
information, including any and all documents relating to the conduct of the
business of the Company or any of its Affiliates which are in his possession
or
control, except for (i) any documents for which the Company has given written
consent to removal at the time of termination of the Executive’s employment and
(ii) any information the Executive reasonably believes may be necessary for
his
tax purposes.
11. Non-Competition;
Non-Solicitation.
(a) While
employed and for 12 months following the termination of the Executive’s
employment with the Company, the Executive agrees that he shall not, other
than
in the ordinary course of performing his duties hereunder or as agreed by the
Company in writing, engage in a “Competitive Business,” directly or indirectly,
as an individual, partner, shareholder, director, officer, principal, agent,
employee, trustee, consultant, or in any relationship or capacity, in any
geographic location in which the Company or any of its Affiliates is engaged
in
business. The Executive shall not be deemed to be in violation of this Section
11(a) by reason of the fact that he owns or acquires, solely as an investment,
up to two percent (2%) of the outstanding equity securities (measured by value)
of any entity. With respect to an entity which is engaged in both a Competitive
Business and a non-Competitive Business, the Executive may provide services
to
the non-Competitive Business provided that the Competitive Business is not
the
principal or predominant business of such entity and the Executive does not
render any services or advice, directly or indirectly, to the Competitive
Business.
“Competitive
Business” shall mean a business that the Company or any of its Affiliates is
engaged in or intending to enter at the time of the alleged violation.
(b) The
Executive agrees that while employed and for a period of 12 months following
the
termination of the Executive’s employment with the Company, he will not, without
the prior written consent of the Company, directly or indirectly, hire any
employee or independent contractor of the Company or any of its Affiliates,
or
knowingly solicit or encourage any such employee or independent contractor
to
leave the employ of the Company or its Affiliates, as the case may be.
(c) The
Executive agrees that while employed and for a period of 12 months following
the
termination of the Executive’s employment with the Company, he will not, without
the prior written consent of the Company, knowingly solicit or encourage any
customer or supplier of the Company or any of its Affiliates to reduce or cease
its business with the Company or any such Affiliate or otherwise knowingly
interfere with the relationship of the Company or any Affiliate with its
customers or suppliers.
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12. Injunctive
and Other Relief.
The
Executive expressly agrees and acknowledges any breach or threatened breach
of
any obligation under Section 10, 11 or 14 hereof will cause the Company
irreparable harm for which there is no adequate remedy at law, and as a result
of this the Company, in addition to any other remedies it may be entitled to,
shall be entitled to the issuance by a court of competent jurisdiction of an
injunction, restraining order or other equitable relief in favor of itself,
without the necessity of posting a bond, restraining the Executive from
committing or continuing to commit any such violation. If the Company defers
or
withholds payment of any amount otherwise payable under this Agreement on the
basis of an asserted violation of any provision of Section 10, 11 or 14, and
it
is subsequently finally determined that the Executive did not commit such
violation, the Company shall promptly pay all such unpaid amounts to the
Executive from the date such payments should have been made under this Agreement
until the date they are actually paid, together with interest at the prime
rate
set by the Citibank.
13. Cooperation.
Following
the Date of Termination, upon reasonable request by the Company, the Executive
shall cooperate with the Company with respect to any litigation or other dispute
relating to any matter in which he was involved or had knowledge during his
employment with the Company. The Company shall reimburse the Executive for
all
reasonable out-of-pocket costs, such as travel, hotel and meal expenses,
incurred by the Executive in providing any cooperation pursuant to this Section
13. The Company shall make its attorney available to advise the Executive or
if,
in the reasonable opinion of the Company’s attorney, a conflict arises which
would prevent the Company’s attorney from advising the Executive, the Company
shall reimburse the Executive for reasonable legal fees incurred in providing
any cooperation pursuant to this Section 13.
14. Non-Disparagement.
The
parties hereto shall not during the Term or thereafter denigrate, ridicule
or
intentionally criticize each other, their Affiliates or any of their respective
products, services, employees, officers or directors, including, without
limitation, by way of news interviews or the expression of personal views,
opinions or judgments to the media.
15. The
Executive’s Representations.
The
Executive represents and warrants to the Company that his entering into and
performing his obligations under this Agreement will not violate any agreement
between the Executive and any other person, firm or organization. The Executive
also represents and warrants that he will not use or disclose any confidential
or proprietary information of any prior employer in the course of performing
his
duties for the Company or any of its Affiliates.
16. Assignability;
Binding Nature.
12
This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, heirs (in the case of the Executive) and assigns.
For purposes of this Section 16, a successor to the Company shall be limited
to
an entity which shall have acquired substantially all of the business and/or
assets of the Company and shall have expressly assumed (whether by agreement
or
operation of law) and agreed to perform this Agreement in the same manner and
to
the same extent that the Company would be required to perform if no such
succession had taken place. No rights or obligations of the Executive under
this
Agreement may be assigned or transferred by the Executive other than his rights
to compensation and benefits, which may be transferred only by will, operation
of law or in accordance with Section 23 below.
17. Payroll
Deductions.
All
applicable federal, state and local withholding taxes, and deductions authorized
by the Executive or by law, shall be deducted from all payments set forth in
this Agreement.
18. Entire
Agreement.
This
Agreement contains the entire understanding and agreement between the Parties
concerning the subject matter hereof and supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written
or
oral, between the Parties with respect thereto. In the event of any
inconsistency between any provision of this Agreement and any other provision
of
any other plan, policy or program of, or other agreement with, the Company,
the
provisions of this Agreement shall control.
19. Amendment
or Waiver.
No
provision in this Agreement may be amended unless such amendment is agreed
to in
writing and signed by the Executive and an authorized officer of the Company.
No
waiver by either Party of any breach by the other Party of any condition or
provision contained in this Agreement to be performed by such other Party shall
be deemed a waiver of a similar or dissimilar condition or provision at the
same
or any prior or subsequent time. Any waiver must be in writing and signed by
the
Party against whom it is being enforced (either the Executive or an authorized
officer of the Company, as the case may be).
20. Severability.
In
the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect to the fullest extent permitted by law.
21. Survivorship.
The
respective rights and obligations of the Parties hereunder, including, without
limitation, Section 9 (termination of employment), Section 10 (confidentiality;
assignment of rights), Section 11 (non-competition; non-solicitation), Section
12 (injunctive and other relief), Section 13 (cooperation), Section 14
(non-disparagement), Section 22 (indemnification and liability insurance) and
Section 25 (resolution of disputes), shall survive any termination of the
Executive’s employment to the extent necessary to the intended preservation of
such rights and obligations.
13
22. Indemnification
and Liability Insurance.
The
Company hereby agrees that through out the Term, the Executive shall be covered
by any general liability insurance policy, including, but not limited to, any
directors and officers insurance, that other directors and officers of the
Company are covered by and agrees to indemnify the Executive and hold him
harmless, both during the Term and thereafter, to the fullest extent permitted
under the by-laws of the Company against and in respect to any and all actions,
suits, proceedings, claims, demands, judgments, costs, expenses (including
reasonable attorneys’ fees), losses, and damages resulting from the Executive’s
good faith performance of his duties as an officer or director of the
Company.
23. Beneficiaries/References.
The
Executive shall be entitled, to the extent permitted under applicable plans,
agreements or law, to select and change a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following the Executive’s
death by giving the Company written notice thereof. In the event of the
Executive’s death or a judicial determination of his incompetence, reference in
this Agreement to the Executive shall be deemed, where appropriate, to refer
to
his beneficiary, estate or other legal representative.
24. Governing
Law.
This
Agreement shall be governed by and construed and interpreted in accordance
with
the laws of Florida without reference to principles of conflicts of law,
provided, however, that Federal law shall apply to the interpretation or
enforcement of Section 25 below.
25. Resolution
of Disputes.
Except
as
otherwise provided in Section 12 above, any dispute arising under or relating
to
this Agreement shall be resolved by confidential and binding arbitration, to
be
held in the County of Palm Beach in the state of Florida before a single
arbitrator in accordance with the rules and procedures of the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Each Party shall be responsible for its own costs and
expenses, including attorneys’ fees incurred in connection with the arbitration,
and neither Party shall be liable for punitive or exemplary
damages.
26. Notices.
Any
notice given to a Party shall be in writing and shall be deemed to have been
given (i) when delivered personally, (ii) three days after being sent by
certified or registered mail, postage prepaid, return receipt requested or
(iii)
two days after being sent by overnight courier (provided that a written
acknowledgement of receipt is obtained by the overnight courier), with any
such
notice duly addressed to the Party concerned at the address indicated below
or
to such other address as such Party may subsequently give such notice of in
accordance with this Section 26:
14
If
to the
Company:
GVI
Security Solutions Inc.
0000
Xxxxx Xxxxxx Xxxxx
Xxxxxxxxx,
XX 00000
Attention:
Chairman of the Board of Directors
If
to the
Executive:
Xxxxxx
Xxxxxxx
0000
XX
00xx
Xxxxxx
Xxxx
Xxxxx, XX 00000
27. Excise
Tax.
Notwithstanding
anything in this Agreement to the contrary, in the event that any payment,
distribution, grant, vesting or benefit made or provided to or for the benefit
of the Executive in connection with this Agreement or his employment with the
Company or the termination thereof (a “Change in Control Payment”) is determined
to be subject to any excise tax (“Excise Tax”) imposed by Section 4999 of the
Code (or any successor to such section), if it is determined that, on an
after-Excise Tax basis, the Executive’s economic benefit would be increased if
the Company reduced the Change in Control Payments to be provided to the
Executive to the extent necessary to avoid the imposition of the Excise Tax,
the
Company shall reduce such Change in Control Payments to the Executive. The
determination regarding the Excise Tax will be made by an expert on the issues
related to the Excise Tax selected by the Company and approved by the Executive.
The same expert will be used for the determination of any other Excise Taxes
due
relating to a Change in Control for any other employee of the Company. In making
its determination regarding the Excise Tax, the expert shall take into account
all facts and circumstances, including without limitation, the fact that part
of
the Change in Control Payments is being paid by the Company to the Executive
in
consideration for the non-compete and non-solicitation covenants contained
in
Section 11 hereof.
28. Headings.
The
headings of the sections contained in this Agreement are for convenience only
and shall not be deemed to control or affect the meaning or construction of
any
provision of this Agreement.
29. Counterparts.
This
Agreement may be executed in two or more counterparts.
[The
remaining part of this page was intentionally left blank.]
15
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
By:
__________________________________
Name:
Title:
THE
EXECUTIVE
_____________________________________
Xxxxxx
Xxxxxxx
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