Exhibit 10.2
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EMPLOYMENT AGREEMENT
BETWEEN
XXXXXXX X. XXXXXXXX, XX.
AND
REFAC
Dated as of April 1, 2005
THIS EMPLOYMENT AGREEMENT (the "Agreement") made as of April 1, 2005
(the "Effective Date") between REFAC, a Delaware corporation ("REFAC"), and
Xxxxxxx X. Xxxxxxxx ("CARDONNE").
CARDONNE was heretofore employed by REFAC pursuant to the terms of an
employment agreement dated November 7, 2003 (the "Prior Agreement") with an
employment term that expired on March 31, 2005.
The parties hereto desire enter into the contractual arrangement as
set forth in this Agreement effective as of the Effective Date.
The parties hereto desire to modify the contractual arrangements
between them and replace them with this Agreement effective as of the
Effective Date.
In consideration of the premises and the respective agreements of the
parties herein contained, the parties hereto, intending to be legally bound,
agree as follows:
1. Employment. Subject to the provisions hereof, REFAC shall continue
to employ CARDONNE and CARDONNE shall continue to serve as Senior Vice
President and Chief Financial Officer of REFAC.
2. Term. The employment of CARDONNE by REFAC hereunder will continue
until December 31, 2006, unless further extended by agreement of CARDONNE and
REFAC or until sooner terminated as hereinafter provided.
3. Duties.
(a) Regular Duties. CARDONNE will continue to perform such duties and
have such powers as are customary for the chief financial officer of a
publicly-held corporation of a size and engaging in a business comparable to
the business that REFAC is then conducting.
(b) Responsible to the Board. CARDONNE will report and be directly
responsible to the Board of Directors of REFAC (the "Board") or the Chief
Executive Officer of REFAC.
(c) Time Devoted to REFAC's Affairs. CARDONNE will devote
substantially all his working time and efforts to the business and affairs of
REFAC and will not, without the prior authorization of the Board, have any
active engagement in or responsibility with respect to any business or
commercial enterprise other than REFAC or a subsidiary of REFAC; provided,
however, CARDONNE may enter into separate arrangements for his own account
with Palisade Capital Management, L.L.C. ("Palisade") and/or any of its
affiliated companies that are engaged in private equity or investment
management pursuant to which he may become a member, partner, officer,
director or stockholder of such entity or may provide consulting or
professional services thereto provided that such activities do not materially
interfere with the regular performance of his duties and responsibilities
under this Agreement.
4. Place of Performance. In connection with CARDONNE's employment by
REFAC, CARDONNE will be based in the New York City metropolitan area, except
for required travel on REFAC's business to an extent consistent with REFAC's
business requirements and his responsibilities hereunder.
5. Base Salary and Incentive Compensation.
(a) Base Salary. During the Employment Period, CARDONNE's salary will
be $200,000 per annum ("Base Salary"). Payment of such salary will be made in
accordance with REFAC's customary pay practices for senior officers and will
be subject to such payroll deductions as are required by law or by the terms
of any applicable benefit plan of REFAC.
(b) Incentive Compensation. In addition to the Base Salary as set
forth in Section 5(a) of this Agreement, the Company may, in its sole
discretion, pay to CARDONNE additional incentive compensation in cash and/or
equity upon the achievement of certain performance goals.
(c) Stock Option. In connection with the entering into of this
Agreement, REFAC shall xxxxx XXXXXXXX an option to purchase fifty thousand
(50,000) shares of REFAC common stock with an exercise price equal to the
closing price of REFAC's common stock on the date immediately preceding the
grant (the "Stock Option"). One-third of the Stock Option shall vest on the
date of grant and one-third shall vest on each of the next two (2)
anniversaries of the date of grant. Such Stock Option shall be subject to the
terms and conditions as set forth in a stock option agreement entered into by
and between REFAC and CARDONNE.
6. Fringe Benefits, Expenses and Related Matters.
(a) Expenses. During the term of CARDONNE's employment hereunder,
CARDONNE will be entitled to receive prompt reimbursement for all reasonable
expenses incurred by CARDONNE in performing services hereunder, including all
reasonable expenses of travel and living expenses while away from home on
business or at the request of and in the service of REFAC, provided that such
expenses are incurred and accounted for in accordance with the policies and
procedures established by REFAC.
(b) Other Benefits. CARDONNE will be entitled to participate in or
receive benefits under any employee benefit plan or arrangement now or in the
future made available by REFAC generally to its executive employees, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangement, including health insurance and
life insurance benefits.
(c) Vacations. CARDONNE will be entitled to four weeks of paid
vacation per calendar year, prorated for any portion thereof and to all paid
holidays given by REFAC in accordance with REFAC's regular paid holidays
policy.
7. Facilities and Support Services Furnished. REFAC will furnish
CARDONNE with office space, secretarial assistance and such other facilities
and services as shall be suitable to CARDONNE's position and adequate for the
performance of his duties as herein set forth.
8. Termination. CARDONNE's employment hereunder may be terminated
under the following circumstances:
(a) Death. CARDONNE's employment hereunder will terminate immediately
upon his death.
(b) Disability. REFAC may terminate CARDONNE's employment hereunder
if CARDONNE should become permanently disabled. For the purposes of this
Agreement, permanent disability ("Disability") means CARDONNE's inability, by
virtue of physical or mental illness or injury, to perform his regular duties
on a full-time, continuous basis for 120 consecutive days. CARDONNE's
disability will be established if a qualified medical doctor selected by the
parties so certifies in writing. If the parties are unable to agree on the
selection of such a doctor, each party will designate a qualified medical
doctor who together will select a third doctor who will make the
determination. CARDONNE will make himself available for an examination by a
doctor selected in accordance with this paragraph (b).
(c) Cause. REFAC may terminate CARDONNE's employment hereunder for
Cause at any time during the Employment Period hereof as hereinafter set
forth. For purposes of this Agreement, REFAC will have "Cause" to terminate
CARDONNE's employment hereunder upon (i) the willful and continued failure, in
the reasonable judgment of the Board, by CARDONNE to perform substantially his
duties with REFAC (other than any such failure resulting from his death or
Disability) after a written demand for substantial performance is delivered to
CARDONNE by the Board which specifically identifies the manner in which it is
believed that CARDONNE has not substantially performed his duties, or (ii) the
conviction of CARDONNE (or the entering by CARDONNE of a plea of guilty or
nolo contendere) for any felony or any lesser crime which involved REFAC or
its property. For purposes of clause (i) of this definition, no act, or
failure to act, on CARDONNE's part shall be deemed "willful" unless done, or
omitted to be done, by CARDONNE not in good faith and without reasonable
belief that this act, or failure to act, was in the best interest of REFAC.
Notwithstanding the foregoing, CARDONNE will not be deemed to have been
terminated for Cause within the meaning of clauses (i) and (ii) without (1)
reasonable notice to CARDONNE setting forth the reasons for REFAC's intention
to terminate for Cause, (2) an opportunity for CARDONNE, together with his
counsel, to be heard before the Board, and (3) delivery to CARDONNE of a
Notice of Termination, as defined in paragraph (e) of this Section 8, from the
Board finding that, in the good faith opinion of the Board, clause (i) or (ii)
hereof may be invoked, and specifying the particulars thereof in detail.
(d) Good Reason. CARDONNE may terminate his employment with REFAC for
Good Reason at any time during the Employment Period. For purposes of this
Agreement, CARDONNE will have "Good Reason" to terminate his employment with
REFAC upon: (i) the assignment to CARDONNE of any duties materially
inconsistent with his status as Chief Financial Officer of REFAC (or such
other comparable senior level executive position that is acceptable to
CARDONNE) or a substantial adverse alteration in the nature or status of his
responsibilities; (ii) a reduction by REFAC in CARDONNE 's Base Salary set
forth in Section 5 hereof; (iii) the relocation of CARDONNE 's principal place
of employment to a location more than thirty-five (35) miles from Fort Xxx,
New Jersey except where such relocation does not result in CARDONNE 'S commute
from his principal residence to his principal place of employment being
greater than such commute as of the Effective Date; (iv) the failure by REFAC
to pay to CARDONNE any portion of CARDONNE 's compensation hereunder or under
the Prior Agreement within fourteen (14) days of the date such compensation is
due; (v) a Change in Control of REFAC (as defined in below) and (vi) any other
material breach of this Agreement by REFAC which is not cured within ten (10)
days of a written notice by CARDONNE. CARDONNE 's right to terminate his
employment for Good Reason shall not be affected by his incapacity due to
physical or mental illness. CARDONNE 's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder. For purposes of this
Agreement, a Change in Control shall be deemed to have occurred when (i)
Palisade Concentrated Equity Partnership, L.P. and/or its affiliates cease(s)
to own, in the aggregate, at least thirty-five percent (35%) of the
outstanding common stock of REFAC or (ii) any person, entity or group (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) that is not affiliated with Palisade acquires in one or a series of
transaction(s) more than fifty percent (50%) of the outstanding common stock
of REFAC.
(e) Notice of Termination. Any termination of CARDONNE's employment
by REFAC or by CARDONNE (other than termination pursuant to Section 8(a))
during the Employment Period will be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" means a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of CARDONNE's employment under the provision so indicated.
(f) Date of Termination. "Date of Termination" shall mean (i) if
CARDONNE's employment is terminated by his death, the date of his death, (ii)
if CARDONNE's employment is terminated pursuant to paragraph (b) of this
Section 8, three weeks after Notice of Termination, (iii) if CARDONNE's
employment is terminated pursuant to paragraph (c) or (d) of this Section 8,
the date specified in the Notice of Termination, and (iv) if CARDONNE's
employment is terminated for any other reason, the date specified in the
Notice of Termination.
(g) CARDONNE Cooperation. From and after the earlier to occur of (i)
delivery of a Notice of Termination and (ii) termination of CARDONNE's
employment hereunder (other than termination due to CARDONNE's death) CARDONNE
will, to the best of his knowledge, disclose or provide for the disclosure to
REFAC or any successor thereof, orally or in writing as appropriate, all
information of a material nature relating to existing or prospective clients
and licensees and as to any other matters in which CARDONNE shall prior to his
Date of Termination have been personally involved or as to which CARDONNE will
have acquired special knowledge, and CARDONNE will thereafter answer to the
best of his knowledge any questions that REFAC may from time to time submit
with respect to any such aforesaid matters.
9. Compensation Upon Termination or During Disability.
(a) Disability. During any period that CARDONNE fails or is unable to
perform his duties hereunder as a result of Disability, CARDONNE will continue
to receive his full salary at the rate then in effect for such period until
his employment is terminated, provided that such payments will be reduced by
the amounts, if any, paid to CARDONNE under any disability benefit plans of
REFAC or under the Social Security disability insurance program. Following the
termination of his employment, CARDONNE's benefits will be determined in
accordance with REFAC's retirement, insurance, and other applicable programs
and plans then in effect, if any. Following the termination of CARDONNE's
employment due to Disability, REFAC will pay CARDONNE any compensation
deferred in accordance with Section 11 hereof and the Stock Option shall
become immediately vested and exercisable on the Date of Termination and shall
remain exercisable as to all shares subject thereto (by CARDONNE or his heirs,
distributees or legal representatives, as applicable) for the remainder of the
term of the Stock Option.
(b) Death. If CARDONNE 's employment should be terminated by his
death, REFAC will (i) pay any accrued salary and other compensation and
benefits through the date of death to CARDONNE 's spouse, or, if he leaves no
spouse, to his estate, (ii) pay or cause the payment to CARDONNE's
beneficiary, or if he specified no beneficiary, to his estate, the death
benefits payable pursuant to REFAC's life insurance program in effect at the
date of death, if any, (iii) pay any compensation deferred in accordance with
Section 11 hereof, to CARDONNE's spouse, or, if he leaves no spouse, to his
estate, and (iv) the Stock Option shall become immediately vested and
exercisable on the Date of Termination and shall remain exercisable as to all
shares subject thereto (by CARDONNE's heirs, distributees or legal
representatives, as applicable) for the remainder of the term of the Stock
Option.
(c) Cause. If CARDONNE's employment should be terminated by REFAC for
Cause or by CARDONNE during the Employment Period, REFAC will pay CARDONNE his
full salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus any compensation deferred in accordance
with Section 11 hereof and all other amounts to which CARDONNE is entitled as
of the Date of Termination under any benefit plan of REFAC at the time such
payments are due, and REFAC will have no further obligations to CARDONNE under
this Agreement.
(d) Without Cause. CARDONNE's employment with REFAC may not be
terminated by REFAC during the Employment Period for reasons other than those
described in Section 8(a), 8(b) or 8(c) unless, prior to such termination
CARDONNE has together with his counsel had an opportunity to appear and be
heard at a meeting of the Board which was called and held (after reasonable
notice to CARDONNE) for the purpose of considering such a termination. In the
event that CARDONNE's employment is terminated by REFAC during the Employment
Period for reasons other than those described in Section 8(a), 8(b) or 8(c),
REFAC will (i) pay CARDONNE a lump sum equal to the sum of (A) his full salary
that would have been payable for the remainder of the Employment Period absent
such termination at the rate in effect at the time Notice of Termination is
given and (B) any compensation deferred in accordance with Section 11 hereof,
(ii) provide, except to the extent that CARDONNE shall receive similar
benefits from a subsequent employer, the life, health and similar welfare
benefits which CARDONNE would have been entitled to during the remainder of
the Employment Period absent such termination and (iii) the Stock Option shall
become immediately vested and exercisable on the Date of Termination and shall
remain exercisable as to all shares subject thereto (by CARDONNE or his heirs,
distributees or legal representatives, as applicable) for the remainder of the
term of the Stock Option.
(e) Good Reason. In the event that CARDONNE's employment is
terminated by CARDONNE during the Employment Period for Good Reason, REFAC
will (i) pay CARDONNE a lump sum equal to the sum of (A) his full Base Salary
that would have been payable for the remainder of the Employment Period absent
such termination at the rate in effect at the time Notice of Termination is
given, and (B) any compensation deferred in accordance with Section 11 hereof
(ii) provide, except to the extent that CARDONNE shall receive similar
benefits from a subsequent employer, the life, health and similar welfare
benefits which CARDONNE would have been entitled to during the remainder of
the Employment Period absent such termination under any such benefit plan of
REFAC, and (iii) the Stock Option shall become immediately vested and
exercisable on the Date of Termination and shall remain exercisable as to all
shares subject thereto (by CARDONNE or his heirs, distributees or legal
representatives, as applicable) for the remainder of the term of the Stock
Option; provided, however, that in the event that CARDONNE terminates
employment for Good Reason solely as a result of a Change in Control, then
such Stock Option shall remain exercisable for a period of one (1) year
following the Date of Termination and shall thereafter expire.
(f) Mitigation of Payments. CARDONNE will not be required to mitigate
the amount of any lump sum payment or bonus entitlement provided for in this
Section 9 by reducing it by the amount of any compensation earned by CARDONNE
as the result of employment by another employer after the Date of Termination,
or otherwise. However, he will be required to mitigate the costs of the other
benefits provided for in this Section 9.
10. Noncompetition. CARDONNE will not, except as hereinafter set
forth, engage in any Competitive Activity (as hereinafter defined) during the
Employment Period or for a period of one year following the termination of
CARDONNE 's employment for any reason. For purposes of this Section,
"Competitive Activity" will mean directly or indirectly: owning, managing,
controlling, investing in, or otherwise being connected with, in any manner,
whether as an officer, director, employee, partner, investor, consultant,
lender or otherwise, any business entity or activity which is engaged in, or
is in any way related to, any business conducted by REFAC or any subsidiary
companies that it may own during the Employment Period other than businesses
that are being wound down from prior activities of REFAC. Notwithstanding the
above, nothing herein contained will prohibit CARDONNE from investing in
securities of a business entity if the securities of such entity are listed
for trading on a national securities exchange or traded in the
over-the-counter market and CARDONNE 's holdings therein represent less than
five (5%) percent of the total number of shares or principal amount of other
securities of such entity outstanding.
11. Section 162 (m). In the event that any payment or benefit
received or to be received by CARDONNE in connection with his employment by
REFAC would otherwise not be deductible (in whole or part), by REFAC as a
result of the operation of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), the delivery of the non-deductible portion of
such payment or benefit to CARDONNE by REFAC shall be deferred until the
earliest date on which it may be delivered to CARDONNE without being subject
to the limit on deductibility imposed by Section 162(m) of the Code. CARDONNE
will be paid any amount deferred pursuant to the Prior Agreement in accordance
with the terms of this Section 11.
12. Successors; Binding Agreement.
(a) Should any entity succeed (whether by purchase, merger,
consolidation or similar transaction) to all or substantially all of the
business and/or assets of REFAC, CARDONNE shall continue to perform all of his
duties and obligations hereunder.
(b) REFAC will require any successor (whether by purchase, merger,
consolidation or similar transaction) to all or substantially all of the
business and/or assets of REFAC, by agreement in form and substance reasonably
satisfactory to CARDONNE, to expressly assume and agree to perform this
Agreement in substantially the same manner and to substantially the same
extent that REFAC would be required to perform it if no such succession had
taken place.
(c) This Agreement and all rights of CARDONNE hereunder shall inure
to the benefit of and be enforceable by CARDONNE's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If CARDONNE should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to CARDONNE's devisee, legatee, or other designee or, if there be no
such designee, to CARDONNE's estate.
13. Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to CARDONNE:
Xxxxxxx X. Xxxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
If to REFAC:
REFAC
0 Xxxxxx Xxxxx - Xxxxx 000
Xxxx Xxx, Xxx Xxxxxx 00000
Copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
or to such other address as any party may have furnished to the
others in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
14. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing signed by CARDONNE and such other officer of REFAC as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth expressly in
this Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of New York without
regard to its conflicts of law principles. All compensation payable to
CARDONNE pursuant to this Agreement shall be subject to all applicable
withholding taxes, normal payroll withholding and any other amounts required
by law to be withheld.
15. Validity. If any term or provision of this Agreement or the
application thereof to any person, entity or circumstance should to any extent
be invalid or unenforceable, the remainder of this Agreement or the
application of such term or provision to any person, entity or circumstance
other than those as to which it is held invalid or unenforceable shall not be
affected thereby, and each term and provision of this Agreement (including, to
the extent permitted by law, any such term or provision which has been held to
be otherwise invalid or unenforceable) shall be deemed valid and enforceable
to the fullest extent permitted by law.
16. Counterparts and Facsimile Signature. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same
instrument. In the event that any signature is delivered via facsimile
transmission, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile signature page were an original
signature.
17. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement will be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
18. Confidentiality. As an officer and director of REFAC, CARDONNE is
privy to information generally regarded as confidential and often proprietary
with respect to REFAC, its business relationships, negotiations and
activities. Such information may include details of REFAC's business and
client relationships (past, present and prospective) and related REFAC and
client plans, products, property rights, technical and market data.
By reason of the foregoing:
(a) CARDONNE will not at any time divulge or negligently permit the
communication of any of the foregoing types of information in any way that
could conflict with the interests of REFAC, any subsidiary companies it may
own during the Employment Period or any of their respective clients, customers
or business associates.
(b) For a period of two (2) years after the Date of Termination,
neither CARDONNE nor any company which CARDONNE directly or indirectly owns,
controls or manages shall employ or solicit the employment of any present or
future employee of REFAC or any subsidiary company it may own during the
Employment Period.
19. Breach of Noncompetition and/or Confidentiality Covenant. Each of
the parties hereto acknowledges that in the event of any breach of Section 10
and/or 18 of this Agreement by XXXXXXXX, XXXXX would be irreparably harmed and
could not be made whole by monetary damages. Therefore REFAC, in addition to
any other remedy to which it may be entitled at law or in equity, may compel
specific performance of such Sections 10 and/or 18 of this Agreement, as the
case may be. CARDONNE hereby acknowledges and agrees that the covenants
contained in Sections 10 and 18 of this Agreement are reasonable and fully
necessary for the protection of the legitimate interests of REFAC and are not
oppressive to the interest of CARDONNE.
20. Entire Agreement.
(a) Except as otherwise provided in Section 20(b), as of the
Effective Date, this Agreement shall supersede the Prior Agreement in its
entirety and the Prior Agreement shall be of no further force or effect.
Subject to the foregoing, this Agreement together with the stock option
agreement sets forth the entire agreement of the parties hereto in respect of
the subject matter contained herein and supersedes all prior agreements,
promises, agreements, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or
representative of any party hereto; and any prior agreement of the parties
hereto.
(b) Notwithstanding the provisions of Section 20(a) or anything
contained herein to the contrary, it is expressly understood and agreed that
CARDONNE is entitled to the Success Bonus (as defined in the Prior Agreement)
earned by him under the Prior Agreement and that same shall be payable at the
time and in the amount specified therein.
21. Survival. The obligations of the parties set forth in Sections
8(g) and 9 through 19 of this Agreement shall survive the expiration of the
Employment Period of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
April 1, 2005.
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
-------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
REFAC
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Director
