EMPLOYMENT AGREEMENT
Exhibit
10.79
EMPLOYMENT AGREEMENT
(this “Agreement”) made and entered into in Danbury, CT, by and between Xxxxxx
Products Corp. (the “Company”), a Nevada corporation with its principal place of
business at 00 Xxx Xxxxxxxxx Xxxx, Xxxxx 00, Xxxxxxx, XX, and Xxxxx Xxxxx (the
“Executive”), effective as of the 12th
day of
December, 2006.
WHEREAS,
the operations of the Company are a complex matter requiring direction and
leadership in a variety of arenas, including financial, strategic planning,
regulatory, community relations and others;
WHEREAS,
the Executive is possessed of certain experience and expertise that qualify
him
to provide the direction and leadership required by the Company; and
WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Company
therefore wishes to employ the Executive as its Chief Executive Officer and
President
and the Executive wishes to accept such employment;
NOW,
THEREFORE, in consideration of the mutual covenants and promises hereinafter
set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Executive hereby agree
as
follows:
1. Employment.
Subject
to the terms and conditions set forth in this Agreement, the Company hereby
offers and the Executive hereby accepts employment.
2. Term.
Subject
to earlier termination as hereafter provided, this Agreement shall have a term
of two (2) years commencing on the effective date hereof. The term of this
Agreement is hereafter referred to as “the term of this Agreement” or “the term
hereof.”
3. Title
and Duties.
Executive agrees during the term of this Agreement to devote substantially
all
of his working time, attention, skill and efforts during normal working hours
to
the performance of his duties, faithfully and to the best of his abilities
and
in accordance with the supervision and direction of the Board of Directors
of
the Company (the “Board”). The Executive shall serve as Chief Executive Officer
(as of December 14, 2006) and President (as of December 12, 2006) of the Company
and shall have duties customarily associated with such positions and such other
duties as reasonably determined by the Board, in its discretion. Provided,
however, that the Executive may devote reasonable amounts of time required
for
purposes of:
(a) serving
as a director or member of a committee of an organization or corporation,
provided such activities do not involve a conflict of interest with the
Executive’s duties and responsibilities at the Company and do not interfere with
the regular and diligent performance of those duties and
responsibilities.
(b) managing
his personal investments or engaging in any other noncompeting business
activities, provided that such activities do not involve a conflict of interest
with the Executive’s duties and responsibilities at the Company and do not
interfere with the regular and diligent performance of those duties and
responsibilities.
4. Compensation
and Benefits.
As
compensation for all services performed by the Executive under and during the
term hereof and subject to performance of the Executive’s duties and of the
obligations of the Executive to the Company, pursuant to this Agreement or
otherwise:
(a) Base
Salary.
During
the term hereof, the Company shall pay the Executive
a salary at the rate of Sixty Thousand Dollars ($60,000) per annum (“Base
Salary”), payable in accordance with the payroll practices of the Company for
its executives. Executive’s Base Salary may be subject to increase by the Board
in its sole discretion.
(b) Bonus
Compensation.
Executive shall be eligible to be considered for a bonus annually during the
term hereof. The amount of such bonus, if any, shall be determined by the Board
in its sole discretion.
(c) Vacations.
During
the term hereof, the Executive shall be entitled to
twenty-five
(25) days of vacation per year, to be taken at such times and intervals as
shall
be determined by the Executive, subject to the reasonable business needs of
the
Company. Vacation shall otherwise be governed by the policies of the Company,
as
in effect from time to time.
(d) Other Benefits.
During
the term hereof and subject to any contribution generally required of Executives
of the Company, the Executive shall be entitled to participate in any and all
employee benefit plans from time to time in effect for Executives of the Company
generally, except to the extent such plans are in a category of benefit
otherwise provided to the Executive (e.g.,
severance pay). Such participation shall be subject to the terms of the
applicable plan documents and generally applicable Company policies. The Company
may alter, modify, add to or delete its employee benefit plans at any time
as
it, in its sole judgment, determines to be appropriate, without recourse by
the
Executive. The Company also agrees to provide the Executive with short term
and
long term disability benefits. In the event that the Company terminates its
group health insurance plan, the Company agrees to reimburse the Executive
for
the costs of obtaining comparable health insurance coverage during the term
of
this Agreement. The Company agrees to reimburse the Executive for the cost
of
his continued group health insurance coverage (under a prior employer’s plan)
until he receives family coverage under the Company’s group health insurance
plan.
(e)
Business
Expenses.
The
Company shall pay or reimburse the Executive for all reasonable business
expenses incurred or paid by the Executive in the performance of his duties
and
responsibilities hereunder, subject to such reasonable substantiation and
documentation as may be specified by the Company from time to time.
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(f) Company
Automobile.
The
Company will provide the Executive with a Company automobile during the term
hereof, and will reimburse the Executive for all reasonable automobile expenses.
| (g) |
Warrants.
|
(i) The
Executive has been granted (subject to execution of this Agreement) warrants
exercisable for 4,777,778 shares of the Company’s common stock, at an exercise
price of $0.11 per share (the “Initial Warrants”). Five Hundred Ninety Seven
Thousand Two Hundred Twenty Four (597,224) shares of the Initial Warrants vest
three months from December 1, 2006 (such date of December 1, 2006 being the
“Grant Date”). The remaining Four Million One Hundred Eighty Thousand Five
Hundred Fifty Four (4,180,554) shares vest in equal quarterly installments
thereafter (i.e., 597,222), with full vesting of all Initial Warrants occurring
on the two (2) year anniversary of the Grant Date. The Executive has been
granted (subject to execution of this Agreement) additional warrants exercisable
for 13,222,222 shares of the Company’s common stock (the “Additional Warrants”).
The Additional Warrants shall vest and be exercisable as follows: (i) Additional
Warrants exercisable for One Million Six Hundred Fifty Two Thousand Seven
Hundred Seventy Eight (1,652,778) Company shares shall vest, at an exercise
price of $0.12 per share, on March 31, 2007; (ii) Additional Warrants
exercisable for Six Million (6,000,000) Company shares shall vest in three
equal
installments (i.e., 2,000,000 each), at an exercise price of $0.12 per share
in
the second, third and fourth calendar quarters of 2007, provided that, (A)
in
such second calendar quarter Executive has brought one poultry or seafood plant
as a customer to the Company and (B) for each of the third and fourth calendar
quarters the Executive has brought two poultry and/or seafood plants as
customers to the Company (it being understood that in the event that Executive
has brought at least five poultry and/or seafood plants as customers to the
Company during calendar year 2007, all of the Additional Warrants described
in
this clause (ii) shall vest on the date on which the Executive brings the fifth
poultry and/or seafood plant customer to the Company during such calendar year);
(iii) Additional Warrants exercisable for Four Million (4,000,000) Company
shares shall vest, at an exercise price of $0.18 per share, in the first and
second calendar quarters of 2008, provided the Executive has brought two poultry
and/or seafood plants as customers to the Company during each such calendar
quarter (it being understood that in the event that Executive has brought at
least nine poultry and/or seafood plants as customers to the Company prior
to
July 1, 2008, all of the Additional Warrants described in clause (ii) above
and
this clause (iii) shall vest (to the extent not previously vested) on the date
on which the Executive brings the ninth poultry and/or seafood plant customer
to
the Company) and (iv) Additional Warrants exercisable for One Million Five
Hundred Sixty Nine Thousand Four Hundred Forty Four (1,569,444) Company shares
shall vest, at an exercise price of $0.18 per share, on September 30, 2008
provided the Executive has brought two poultry and/or seafood plants as
customers to the Company during the third calendar quarter in 2008 (it being
understood that in the event that Executive has brought at least eleven poultry
and/or seafood plants as customers to the Company prior to October 1, 2008,
all
of the Additional Warrants described in clauses (ii) and (iii) above and this
clause (iv) shall vest (to the extent not previously vested) on the date on
which the Executive brings the eleventh poultry and/or seafood plant customer
to
the Company). Notwithstanding the foregoing, all of the Additional Warrants
shall vest no later that the date that Executive has brought his eleventh
poultry and/or seafood plant as a customer to the Company. Vesting of the
Initial Warrants and the Additional Warrants shall cease if the Executive’s
employment under this Agreement is terminated, unless termination is by the
Company other than for Cause, by the Executive for Good Reason, or caused by
the
Executive’s death or disability. Each of the Initial Warrants and Additional
Warrants are exercisable for a ten (10) year period following the Grant Date,
provided, however, that if the Executive’s employment under this Agreement is
terminated by the Company other than for Cause, by the Executive for Good
Reason, or caused by the Executive’s death or disability, such warrants are
exercisable no later than five (5) years from the date of such termination,
resignation, death or disability (but in no case later than ten years following
the Grant Date); provided, further, that in the event the Executive’s employment
under this Agreement is terminated by the Company for Cause or by the Executive
without Good Reason, such warrants are exercisable through the date of
termination or resignation (to the extent vested).
(ii)
In
the
event the Company undergoes a Change in Control, as defined below, one hundred
percent (100%) of the then unvested portion of the Initial Warrants and
Additional Warrants shall become vested and exercisable upon the occurrence
of
such Change in Control. A “Change in Control” means the occurrence of any of the
following events: (a) the Company is a party to, or the stockholders approve,
a
merger, consolidation or reorganization with another entity (other than a
merger, consolidation or reorganization that results in the shareholders of
the
Company immediately prior to the transaction holding more than 50% of the voting
power of the surviving entity in the transaction immediately after consummation
of the transaction); (b) a sale of all, or substantially all, of the assets
of
the Company; (c) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, or any syndicate or group
deemed to be a person under Section 14(d)(2) of the Exchange Act, is or becomes
the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly
or indirectly, of shares of common stock of the Company representing 35% or
more
of the voting power of the Company’s then outstanding securities entitled to
vote in the election of directors of the Company; or (d) the Company is
dissolved or liquidated; provided
however,
that a
change in control under clause (a), (b), (c), or (d) shall not be deemed to
be a
Change in Control as a result of an acquisition of securities of the Company
by
an employee benefit plan maintained by the Company for its employees.
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(iii)
In
the
event the Executive’s employment under this Agreement is terminated by the
Company other than for Cause, by the Executive for Good Reason, or caused by
the
Executive’s death or disability, the unvested portion of the Initial Warrants
that would have otherwise vested in the succeeding two (2) calendar quarters
shall become vested and exercisable upon the occurrence of such termination,
resignation, death or disability.
5. Termination
of Employment.
Notwithstanding the provisions of Section 2 hereof, the Executive’s employment
hereunder shall terminate prior to the expiration of the term under the
following circumstances:
(a) Death.
In the
event of the Executive’s death during the term hereof, the
Executive’s
employment hereunder shall immediately and automatically terminate. In such
event, the Company shall pay to the Executive’s designated beneficiary or, if no
beneficiary has been designated by the Executive, to his estate, (i) the Base
Salary earned but not paid through the date of termination, (ii) any vacation
time earned but not used through the date of termination, (iii) any business
expenses incurred by the Executive but unreimbursed on the date of termination,
provided that such expenses and required substantiation and documentation are
submitted within sixty (60) days of termination and that such expenses are
reimbursable under Company policy; (iv) continued payment of Base Salary for
the
period of time that the Executive would have been entitled to receive such
payments under Section 5(d) below if his employment had been terminated by
the
Company other than for Cause on the date of his death; and (v) any bonus owed
to
the Executive. The Company shall have no further obligation to the Executive
hereunder.
(b) Disability.
(i) The
Company may terminate the Executive’s employment
hereunder,
upon notice to the Executive, in the event that the Executive becomes disabled
during his employment hereunder through any illness, injury, accident or
condition of either a physical or psychological nature and, as a result, is
unable to perform substantially all of his duties and responsibilities
hereunder, for one hundred twenty (120) consecutive days during any calendar
year. In the event of such termination, the Company shall pay to the Executive
(i) the Base Salary earned but not paid through the date of termination, (ii)
any vacation time earned but not used through the date of termination, and
(iii)
any business expenses incurred by the Executive but unreimbursed on the date
of
termination, provided that such expenses and required substantiation and
documentation are submitted within sixty (60) days of termination and that
such
expenses are reimbursable under Company policy.
(c) By
the
Company for Cause.
The
Company may terminate the Executive’s employment hereunder for Cause at any time
upon notice to the Executive setting forth in reasonable detail the nature
of
such Cause. The following, as determined by the Board in its reasonable
judgment, shall constitute Cause for termination:
(i)
The
Executive’s conviction of a felony or conviction of any other crime involving
moral turpitude (which specifically excludes all traffic
violations);
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(ii)
The
Executive’s theft, embezzlement, misappropriation of or intentional and
malicious infliction of material damage to the Company’s business or property;
(iii) The
Executive’s gross dereliction of duties or gross negligence if not cured by the
Executive within twenty (20) business days following notice from the Company
specifying in detail the nature of such breach; or
(iv) The
Executive’s breach of any material term of this Agreement not cured by the
Executive within twenty (20) business days following notice from the Company
specifying in detail the nature of such breach.
Upon
the
giving of notice of termination of the Executive’s employment hereunder for
Cause, the Company shall have no further obligation to the Executive, other
than
payment to the Executive of (i) the Base Salary earned but not paid through
the
date of termination, (ii) any vacation time earned but not used through the
date
of termination, and (iii) any business expenses incurred by the Executive but
unreimbursed on the date of termination, provided that such expenses and
required substantiation and documentation are submitted within sixty (60) days
of termination and that such expenses are reimbursable under Company
policy.
(d) By
the
Company Other than for Cause.
The
Company may terminate the Executive’s
employment hereunder other than for Cause at any time upon notice to the
Executive. In the event of such termination, and provided that no benefits
are
payable to the Executive under a separate severance agreement or an executive
severance plan as a result of such termination, then for a period of twenty-four
(24) months less one month for each month after the effective date hereof (but
in no case for less than twelve (12) months), the Company shall (i) continue
to
pay the Executive Base Salary at the rate in effect on the date of termination,
and any bonus to which he would have been entitled during such period and (ii)
continue to provide Executive with health insurance coverage at a level
equivalent to that provided to Executive by Company immediately prior to the
termination date. Any obligation of the Company to the Executive hereunder
is
conditioned, however, upon the Executive’s signing a mutually acceptable release
of claims. Base Salary to which the Executive is entitled hereunder shall be
payable in accordance with the normal payroll practices of the Company.
(e)
By
the
Executive for Good Reason.
The
Executive may terminate his employment hereunder for Good Reason, upon notice
to
the Company setting forth in reasonable detail the nature of such Good Reason.
The following shall constitute Good Reason for termination by the
Executive:
(i)
Failure
of the Company to continue the Executive in the positions of Chief Executive
Officer or President;
(ii)
Material
diminution in the nature or scope of the Executive’s responsibilities, duties or
authority, a Change in Control, or a request by the Company, whether written,
verbal or implied, to engage in unlawful behavior, including but not limited
to
violating SEC or NASDAQ rules or regulations;
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(iii)
Material
failure of the Company to provide the Executive the compensation and benefits
in
accordance with the terms of Section 4, excluding an inadvertent failure which
is cured within ten (10) business days following notice from the Executive
specifying in detail the nature of such failure; or
(iv)
Relocation
of Executive’s principal Company office to a location more than 50 miles from
Executive’s principal Company office on the effective date of this Agreement;
provided, however, that a relocation of Executive’s principal Company office to
the State of New Jersey shall not be deemed to be an event of Good Reason
hereunder.
In
the
event of termination in accordance with this Section 5(e), and provided that
no
benefits are payable to the Executive under a separate severance agreement
or an
executive severance plan as a result of such termination, then the Executive
will be entitled to the same pay he would have been entitled to receive had
the
Executive been terminated by the Company other than for Cause in accordance
with
Section 5(d) above; provided that the Executive satisfies all conditions to
such
entitlement, including without limitation the signing of an mutually agreeable
release.
(f) By
the
Executive Other than for Good Reason.
The
Executive may terminate his employment hereunder at any time upon thirty (30)
days’ notice to the Company. In the event of termination of the Executive
pursuant to this section 5(f), the Company shall have no further obligation
to
the Executive, other than (i) the Base Salary earned but not paid through the
date of termination, (ii) payment for any vacation time earned but not used
through the date of termination, and (iii) any business expenses incurred by
the
Executive but unreimbursed on the date of termination, provided that such
expenses and required substantiation and documentation are submitted within
sixty (60) days of termination and that such expenses are reimbursable under
Company policy. The Company may elect to waive the period of notice or any
portion thereof.
6. Effect
of Termination.
The
provisions of this Section 6 shall apply to termination due to the expiration
of
the term hereof, pursuant to Section 5 or otherwise.
(a) Payment
by the Company of any Base Salary, any Base Salary continuation, bonus and
benefits that may be due the Executive in each case under the applicable
termination provision of Section 5 shall constitute the entire obligation of
the
Company to the Executive. The Executive shall promptly give the Company notice
of all facts necessary for the Company to determine the amount and duration
of
its obligations in connection with any termination pursuant to Section 5(d)
or
5(e) hereof.
(b)
Provisions
of this Agreement shall survive any termination if so provided herein or if
necessary or desirable to accomplish the purposes of other surviving provisions,
including without limitation the obligations of the Executive under Sections
7,
8 and 9 hereof. The obligation of the Company to make payments to or on behalf
of the Executive under Section 5(d) or 5(e) hereof is expressly conditioned
upon
the Executive’s continued full performance of obligations under Sections 7, 8
and 9 hereof. The Executive recognizes that, except as expressly provided in
Section 5(d) or 5(e), no compensation is earned after termination of employment.
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7. Restrictive
Covenants.
During
the term of this Agreement and for a period of twelve (12) months from the
date
on which the Executive's employment with the Company terminates, the Executive
covenants and agrees that he shall not do any of the following:
(a)
recruit,
solicit or induce any employee, consultant, agent, director or officer of the
Company to terminate his/her employment with, or otherwise cease any
relationship with, the Company;
or
(b)
divert,
or take away any clients, customers or accounts, or prospective clients,
customers or accounts, of the Company, or any of the Company’s business with
such clients, customers or accounts which were contacted, solicited or served
by
Executive, or were directly or indirectly under Executive’s responsibility,
while Executive was employed by the Company, or the identity of which Executive
became aware during the term of employment except as agreed upon in writing
signed by a duly authorized officer of the Company.
If
any
part of this Section 7 shall be determined by a court of competent jurisdiction
to be unreasonable in duration, geographic area, or scope, then the provisions
of this Section are intended to and shall extend only for such period of time,
in such area and with respect to such activities as shall be determined by
such
court to be reasonable and all provisions hereof shall be applied to the fullest
extent permitted by law.
8. Non-Disclosure
of Confidential Information.
(a) The
Executive shall not during the term of this Agreement and for a twenty-four
(24)
month period following termination of his employment hereunder intentionally
or
negligently use or disclose to any person, firm or corporation any confidential
or proprietary information acquired by him during the course of his employment
relating to the Company (or relating to any client of the Company) except in
the
course of performing his duties for the Company. Such confidential and
proprietary information shall include, but shall not be limited to, proprietary
technology, trade secrets, patented processes, research and development data,
know-how, formulae, contractual information, pricing policies, the substance
of
agreements and arrangements with customers, suppliers and others, names of
accounts, customer and supplier lists and any other documents embodying such
confidential and proprietary information, that is not already known to the
public.
(b)
All
information and documents relating to the Company shall be the exclusive
property of the Company, and the Executive shall use his best efforts to prevent
any publication or disclosure of such information and documents. Upon
termination of the employment of the Executive with the Company, the Executive
shall not take from and will promptly return to the Company all documents,
records, customer lists, computer programs, equipment designs, technical
information, reports, writings and other similar documents containing
confidential or proprietary information of the Company, including copies
thereof, then in the Executive's possession or control.
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9. Proprietary
Rights.
Any and
all inventions, processes, procedures, systems, discoveries, designs,
configurations, technology, works of authorship, trade secrets and improvements
(whether or not patentable and whether or not they are made, conceived or
reduced to practice during working hours or using the Company's data or
facilities) (collectively, the "Inventions") which the Executive makes,
conceives, reduces to practice, or otherwise acquires during his employment
by
the Company (either solely or jointly with others), and which are related to
the
Company's present or planned business, services or products, shall be the sole
property of the Company and shall at all times and for all purposes be regarded
as acquired and held by the Executive in a fiduciary capacity for the sole
benefit of the Company. All Inventions that consist of works of authorship
capable of protection under copyright laws shall be prepared by the Executive
as
"works made for hire", with the understanding that the Company shall own all
of
the exclusive rights to such works of authorship under the United States
copyright law and all international copyright conventions and foreign laws.
The
Executive hereby assigns to the Company, without further compensation, all
such
Inventions and any and all patents, copyrights, trademarks, trade names or
applications therefor, in the United States and elsewhere, relating thereto.
The
Executive shall promptly disclose to the Company and to no other party all
such
Inventions and shall assist the Company for its own benefit in obtaining and
enforcing patents and copyright registrations on such Inventions in all
countries. Upon request, the Executive shall execute all applications,
assignments, instruments and papers and perform all acts (such as the giving
of
testimony in interference proceedings and infringement suits or other
litigation) necessary or desired by the Company to enable the Company and its
successors, assigns and nominees to secure and enjoy the full benefits and
advantages of such Inventions.
10. Right
to Injunction.
The
Company and the Executive each acknowledge that the services to be performed
by
the Executive hereunder are unique and that the Company required the Executive
to enter into this Agreement as a condition to his employment by the Company.
The Executive specifically acknowledges and agrees that the restrictions imposed
by Sections 7 and 8 are reasonable as to duration, geographic area and scope
and
are necessary for the protection of the interests of the Company. Any breach
or
threatened breach of any provision of this Agreement by the Executive shall
entitle the Company, in addition to any other remedies available to it at law
or
in equity, to bring an action in any court of competent jurisdiction to enjoin
any such breach or threatened breach and to obtain an order temporarily or
permanently enjoining any such breach or threatened breach, without posting
bond, and the Company shall be entitled to recover from the Executive the
Company’s reasonable attorneys’ fees and costs in obtaining such
relief.
11. Withholding.
All
payments made by the Company under this Agreement shall be reduced by any tax
or
other amounts required to be withheld by the Company under applicable law.
12. Assignment.
This
Agreement shall not be assignable by the Executive or the Company without the
written consent of the other party, provided, however, that the Company may
assign this Agreement to any person, partnership or corporation which acquires
all or substantially all of the assets or capital stock of the
Company.
13. Waiver,
Amendment and Alteration.
The
waiver by either party of a breach of any provision of this Agreement shall
not
operate as or be construed as a waiver of any prior or subsequent breach
thereof. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an expressly authorized representative of the
Company.
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14. Conflicting
Agreements.
The
Executive hereby represents and warrants that the execution of this Agreement
and the performance of his obligations hereunder will not breach or be in
conflict with any other agreement to which the Executive is a party or is bound
and that Executive is not now subject to any covenants against competition
or
similar covenants or any court order or other legal obligation that would affect
the performance of his obligations hereunder. The Executive will not disclose
to
or use on behalf of the Company any proprietary information of a third party
without such party’s consent.
15. Notices.
Any and
all notices, requests, demands and other communications provided for by this
Agreement shall be in writing and shall be effective when delivered in person
or
deposited in the United States mail, postage prepaid, registered or certified,
and addressed to the Executive at his last known address on the books of the
Company or, in the case of the Company, at its principal place of business,
attention of the Secretary, or to such other address as either party may specify
by notice to the other actually received.
16.
Indemnification.
During
the Executive’s employment and thereafter, the Company agrees to indemnify,
including, without limitation, advancement of all costs and fees, the Executive
from and against any liability and expenses arising by reason of Executive’s
acting as an officer or director of the Company or any of its subsidiaries,
in
accordance with and to the fullest extent permitted by law. During the term
of
this Agreement, the Company shall maintain commercially reasonable Directors
and
Officers liability insurance, under which the Executive will be a covered
person. Such liability insurance shall have such terms and policy limits of
coverage as are determined appropriate by the Board.
17. Gross-Up.
(a) In
the
event it shall be determined that any payment, benefit or distribution (or
combination thereof), whether paid or payable or distributed or distributable
pursuant to the terms of this agreement, or otherwise, by the Company, any
of
its affiliates, or one or more trusts established by the Company for the benefit
of its employees, to or for the benefit of the Executive (a “Payment”)
is
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
(the “Code”) or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest
and
penalties, hereinafter collectively referred to as the “Excise
Tax”),
the
Executive shall be entitled to receive an additional payment or payments (each,
a “Gross-Up
Payment”)
in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to one-half of the
Excise Tax imposed upon the Payments. Notwithstanding the foregoing, the parties
will work together in good faith, prior to the payment of any Payments that
could be subject to an Excise Tax, to take reasonable actions to avoid the
imposition any Excise Tax on the Executive, including by seeking shareholder
approval in a manner intended to comply with the shareholder approval exception
under Code Section 280G(b)(5).
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(b) All
determinations required to be made under this Section 17, including whether
and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and
the assumptions to be utilized in arriving at such determination, shall be
made
by a nationally recognized certified public accounting firm designated by the
Company (the “Accounting
Firm”)
which
shall provide detailed supporting calculations both to the Company and the
Executive within ten business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company; provided
that for
purposes of determining the amount of any Gross-Up Payment, the Executive shall
be deemed to pay federal income tax at the highest marginal rates applicable
to
individuals in the calendar year in which any such Gross-Up Payment is to be
made and deemed to pay state and local income taxes at the highest effective
rates applicable to individuals in the state or locality of the Executive’s
residence or place of employment in the calendar year in which any such Gross-Up
Payment is to be made, net of the maximum reduction in federal income taxes
that
can be obtained from deduction of such state and local taxes, taking into
account limitations applicable to individuals subject to federal income tax
at
the highest marginal rates. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant
to
this Section 17, shall be paid by the Company to the Executive (or to the
appropriate taxing authority on the Executive’s behalf) when the associated
Excise Tax is due. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall so indicate to the Executive in writing.
Any
determination by the Accounting Firm shall be binding upon the Company and
the
Executive. As a result of the uncertainty in the application of Section 4999
of
the Code, it is possible that the amount of the Gross-Up Payment determined
by
the Accounting Firm to be due to (or on behalf of) the Executive may be lower
than the amount actually due (“Underpayment”).
In
any such case, the Accounting Firm shall determine the amount of any
Underpayment that has occurred and any such Underpayment shall be promptly
paid
by the Company to or for the benefit of the Executive.
18. Entire
Agreement and Binding Effect.
This
Agreement contains the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior communications, agreements and
understandings, written or oral, and shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, permitted assigns
and legal representatives.
19. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument, and in pleading or proving any provision of this Agreement it shall
not be necessary to produce more than one of such counterparts.
20. Headings.
The
headings and captions in this Agreement are for convenience only and in no
way
define or describe the scope of content of any provision of this Agreement.
21.
Severability.
The provisions of this Agreement are severable. If any term or provision
hereof (or the application thereof) is held invalid or unenforceable for any
reason, the remaining provisions shall not be affected but rather shall remain
in full force and effect and shall be enforced to the fullest extent permitted
by law.
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IN
WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by
the
Company, by its duly authorized representative, and by the Executive, as of
the
date first above written.
| THE EXECUTIVE: | XXXXXX PRODUCTS CORP.: | ||
| /s/ Xxxxx Xxxxx | /s/ Xxxxxxx Kouninis | ||
|
Xxxxx Xxxxx |
Name: Xxxxxxx Kouninis |
||
|
Title:
CFO
|
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