Exhibit 10.6
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EMPLOYMENT AND NON-COMPETITION AGREEMENT
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XXXXXXXXX X'XXXXX
This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "Agreement"), dated as
of July 10, 2000, is between Stronghold Technologies, Inc., a New Jersey
corporation (the "Employer") and Xxxxxxxxx X'Xxxxx (the "Employee").
WHEREAS, the Employer desires to retain the Employee as its Vice President
- Development, and the Employee desires to serve as such on the terms and
conditions set forth below;
NOW, THEREFORE, it is hereby agreed as follows:
ss. 1. EMPLOYMENT. The Employer hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and subject to the conditions
hereinafter set forth.
ss.2. DUTIES. The Employee shall be employed as Vice President -
Development of the Employer. The Employee shall also serve, without additional
compensation, as a member of the Employer's Management Committee, which shall
not be a committee of the Board of Directors. The Employee agrees to devote his
full time and best efforts to the performance of his duties to the Employer. If
elected as such, the Employee shall also serve as a director of the Employer,
and the Employee shall be entitled to receive such compensation, if any, paid
generally to directors of the Employer.
ss.3. TERM. The initial term of employment of the Employee hereunder shall
commence on the date hereof (the "Commencement Date") and shall continue through
July 9, 2005 (the "Initial Term") unless earlier terminated pursuant to ss.6.
The term may be extended for additional one-year terms upon the written consent
of the parties hereto.
ss.4. COMPENSATION AND BENEFITS. Until the termination of the Employee's
employment hereunder, in consideration for the services of the Employee
hereunder, the Employer shall compensate the Employee as follows:
(a) Base Salary.
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(i) The Employer shall pay the Employee, in accordance with the
Employer's then current payroll practices, a base salary of
$8,500 per month ($102,000 per annum) during the first year
of the term of this Agreement; $9,333.33 per month ($112,000
per annum) during the second year of the term of this
Agreement; and $10,166.67 per month ($122,000 per annum)
during the third year of the term of this
Agreement (the "Base Salary"), payable on the last business
day of each month.
(ii) Thereafter, for each succeeding year during the term of this
Agreement, Base Salary shall be increased annually by a
percentage equal to the percentage by which the Consumers
Price Index for Urban Wage Borrowers and Clerical Workers:
Xxx Xxxx, X.X. - Xxxxxxxxxxxx Xxx Xxxxxx (0000-00 equals
100), as published by the Bureau of Labor Statistics of the
United States Department of Labor, shall have increased over
the preceding year.
(iii) The adjustment provided for in ss.4(a)(ii) shall be made as
soon after July 10 of each year as possible, but in no event
later than fifteen (15) days after the date upon which the
Bureau of Labor publishes its consumer price index
statistics for the month of June. Any portion of an increase
in the Employee's compensation retroactively due shall be
payable immediately upon determination of the adjustment. If
publication of the Consumer Price Index is discontinued, the
parties hereto shall accept comparable statistics on the
cost of living for the New York, N.Y. - Northeastern New
Jersey area as computed and published by an agency of the
United States or by a responsible financial periodical of
recognized authority then to be selected by the parties.
(iv) The Board of Directors shall consider additional increments
in Base Salary from time to time, but such consideration
shall occur at least once annually, based on the Employer's
financial condition, levels of sales and profitability, and
the performance of the Employee.
(b) Incentive Compensation.
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(i) In addition to Base Salary, the Employee shall also receive,
subject to the limitations set forth below, a commission
equal to one (1%) percent of "Net Sales", as defined below,
recognized by the Employer during each year of the term of
this Agreement commencing with the second year of the term
of this Agreement. For purposes of this Agreement the term
"Net Sales" shall mean the amount equal to the Employer's
gross sales of products and services, computed in accordance
with generally accepted accounting principles consistently
applied, less duties, shipping, sales and use taxes and
other taxes payable by the customer or client, insurance
payable by the customer or client, allowances, discounts,
credits and returns. Net Sales shall not include any sales
of the Employer's assets not in the normal course of its
business. Incentive compensation shall be paid not later
than forty-five days following completion of each year of
the term of this Agreement. Any appropriate
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adjustments to Net Sales to be made following payment of
Incentive Compensation shall be applied against the
succeeding year's incentive Compensation, or in the event of
termination of the Employment of the Employee, within thirty
(30) days following the date of the event requiring such
adjustment.
(ii) Notwithstanding anything in ss.4(b)(i) above to the
contrary, Incentive Compensation shall not exceed $8,000 for
the second year of the term of this Agreement and shall not
exceed $28,000 for any year during the balance of the term
of this Agreement.
(c) Stock Options.
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(i) Upon the later of the commencement of Employee's employment
hereunder or the adoption of the Stronghold Technologies,
Inc. 2000 Stock Option Plan (the "Option Plan"), Employee
will be granted options under the Option Plan to purchase,
at an exercise price equal to the fair market value of the
shares (estimated to be less than $1 per share), 45,000
shares of the Company's common stock. Such options shall
vest and become exercisable at any time in the next 10 years
from date of grant, provided that Employee has remained
continuously employed hereunder through the date of vesting
(or as otherwise provided herein), and the Employer achieves
the required Net Sales during the respective fiscal years
(deemed to be 1/1 to 12/31 for purposes of this section) of
the Employer set forth below. Notwithstanding the foregoing,
in the event of the termination of employment of the
Employee, all unvested Options shall immediately expire and
be of no further force or effect (unless otherwise expressly
provided herein), and any Options which have previously
vested in accordance with the table set forth below or
become vested in accordance with ss.4(c)(ii) hereof shall be
exercisable by the Employee during the ninety (90) day
period following such termination of employment (or in the
event of the death or disability, as defined below, of the
Employee, during the one year period following death or
disability), after which time they shall expire and be of no
further force or effect:
Options Vesting
Fiscal Year Net Sales Achieved and Exercisable
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2001 $2,000,000 10,000
2002 $5,000,000 10,000
$10,000,000 15,000
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2003 $10,000,000 10,000
$20,000,000 15,000
$30,000,000 or more 20,000
The number of shares which vest in any year will not be
prorated. Thus, for example, if in fiscal year 2001,
$1,000,000 of Net Sales are achieved, no options will vest.
If in fiscal year 2002, $9,000,000 of Net Sales are
achieved, only 10,000 options will vest and become
exercisable in that year. Options not exercisable with
respect to any fiscal year due to failure of the Employer to
recognize the required Net Sales as set forth above shall be
automatically terminated and be of no further force or
effect.
(ii) In the event of a "Change of Control" of the Company, as
defined below, one half of all of Employee's theretofore
unvested and unexercisable stock options (including, but not
limited to, the stock options set forth in this Section 4)
shall become vested and exercisable immediately. In the
event that, within one year following such Change of
Control, either Employee's employment is terminated without
Cause or Employee resigns his employment, all of Employee's
theretofore unvested and unexercisable stock options
(including, but not limited to, the stock options set forth
in this Section 4) shall become vested and exercisable
immediately.
(iii) Except as specifically provided herein, all stock options
granted to Employee hereunder or otherwise shall be subject
to the terms of the Option Plan. The Option Plan shall
permit, and all options granted hereunder shall provide:
(A) that they are "incentive stock options" ("ISO") within
the meaning of Section 422 of the Internal Revenue Code,
as amended, to the maximum extent permitted by law,
unless Employee agrees otherwise;
(B) that, if vested, they are exercisable for a period of
at least ten years from the date of grant, absent
termination of employment, and except for certain
change of control transactions in which both the
exercise and the termination of options may be
accelerated;
(C) that they may be exercised by surrender of a number
of shares of the Company's stock with a fair market
value equal to the exercise price at the time of
exercise, or that the Company will provide reasonable
financing (i.e. permitting the Employee to execute a
promissory note (such note to be secured by a pledge
of the stock) for the full exercise price (provided,
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that nothing in this subparagraph (c) shall require any
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terms that would cause any portion of the options be
treated as "variable options" under
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generally accepted accounting principles or otherwise
cause the Company to recognize expense for accounting
purposes upon the vesting or exercise of options so
long as the options can be structured to avoid
such effect);
(D) to the extent permitted by applicable law (including
Section 422 of the Internal Revenue Code and related
rules with respect to incentive stock options governed
thereby), that the Employee may designate a
beneficiary in the case of death, and a legal
representative in the case of disability, with full
power to exercise the options in as favorable a
manner as if the Employee had held the options, and that
the Employee shall be permitted to transfer vested
and exercisable options to members of his immediate
family or trusts or similar entities of which he or
they are the beneficiaries;
(E) The Option Plan shall give the ISO holder the ability
to specifically designate his beneficiary; if the option
holder is disabled, the legal representative of the
option holder could exercise the option on his behalf;
and exercise of the ISO by the ISO holder's estate would
also be permitted;
(F) The Option Plan shall provide that all granted but
unvested and unexercisable ISO's shall become vested and
exercisable immediately upon death or disability, with
the term of the disability to be defined by the Board
in accordance with allowable periods applicable to
ISO's;
(iv) Change of Control. For purposes of this Agreement, a "Change
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of Control" shall occur on the first date on which (A) any
person, entity, or group of persons or entities acting in
concert, becomes a "beneficial owner" (as defined in Rule
13d3 under the Securities Exchange Act of 1934), directly or
indirectly, of securities of the Company representing more
than 50% of the voting power of the then outstanding
securities of the Company with respect to the election of
directors (other than (1) Xxxxxxxxxxx X. Xxxxx, members of
his family, or entities controlled by or beneficially owned
by him or them, or (2) an entity as to which the
stockholders of the Company immediately prior to such entity
becoming a beneficial owner would own at least 50% of the
voting power of the then outstanding securities of such
entity with respect to the election of directors); (B) the
Company's Board of Directors approves or recommends for
approval by stockholders any transaction that would result
in the condition set forth in clause (A); (C) the Company's
Board of Directors approves or recommends for approval by
stockholders any transaction in the nature of a merger,
transfer of substantially all the Company's assets, or
liquidation, where the stockholders of the Company
immediately prior to such transaction, based on their prior
stock
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ownership in the Company, would own less than 50% of the
voting power with respect to the election of directors of
the securities of an entity owning or operating, directly or
indirectly, a substantial portion of the Company's
pre-transaction assets.
(c) Additional Compensation. The Employer's Board of Directors (or
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applicable committee thereof) shall at all time retain discretion
to award Employee compensation in excess of the amounts set forth
in this Agreement.
(d) Vacation. The Employee shall be entitled to four (4) weeks
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vacation each 12 month period. Any vacation shall be taken at the
reasonable and mutual convenience of the Employer and the
Employee.
(e) Insurance; Other Benefits. The Employee shall be entitled to
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participate under any group accident, life and health insurance
plans, pension and 401(k) plans and option plans which in the
future may be maintained by the Employer generally for its
employees and/or for its full-time senior executive officers, as
such employment benefits may be modified from time to time by the
Employer. The amount and extent of such coverage, if any, shall
be subject to the discretion of the Board. During the period
prior to the effective time of any health insurance plan adopted
by the Employer and the Employee's effective date of
participation therein, the Employer shall reimburse the Employee
for his out-of-pocket costs in maintaining individual health
insurance for the Employee and his spouse and children under
COBRA. The Employee will provide the Employer with appropriate
proof of payment.
(f) Car Allowance. In connection with the Employee's employment, the
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Employee shall from time to time be required to travel by
automobile on the Employer's business. Accordingly, the Employer
shall provide to the Employee an automobile allowance of $500 per
month during the first year of the term of this Agreement, $550
per month during the second year of the term of this Agreement,
and $600 per month thereafter, to be expended by the Employee on
monthly lease payments, all maintenance, service and insurance
charges. The above car allowance shall not include gasoline and
oil charges, which shall be reimbursed in accordance with ss.5
hereof.
(g) Securities Registration Rights. If the Employer hereafter submits
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for registration under the federal securities laws any initial
public offering of its equity securities, or that of any of its
affiliated companies or entities or subsidiaries, the Employee
shall have the right to sell his shares of the Company's equity
securities owned by him in said offering in such amounts and at
such times as the managing underwriter shall, in its sole
discretion, permit. If the Managing Underwriter limits the
aggregate number of shares that the Employer's shareholders may
sell in such offering, each shareholder shall be permitted to
sell an amount equal to his then percentage ownership of the
Class or Series of the Company's shares being offered, excluding
from such calculation the number of shares held by shareholders
not selling in such offering.
ss.5. EXPENSES. In addition to the foregoing, the Employer shall pay or
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reimburse the Employee for all reasonable out-of-pocket expenses properly
incurred by the Employee in the
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performance of his duties hereunder and such authorized pre-incorporation
expenses paid by the Employee on behalf of the Employer upon presentation of
appropriate vouchers therefor.
ss.6. TERMINATION. The Employee's employment hereunder shall commence on
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the Commencement Date and continue until the expiration of the Initial Term, and
any extension of such term pursuant to ss.3, except that the employment of the
Employee hereunder shall earlier terminate:
(a) Death or Disability. Upon the death of the Employee during the
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term of his employment hereunder or, at the option of the
Employer, in the event of the Employee's disability extending for
a period of ninety (90) days, whether or not continuous, within
any period of 180 days. For purposes of this Agreement,
"disability" shall mean the inability of the Employee, due to
physical or mental illness, injury or incapacity, to perform his
regular full time duties on behalf of the Employer.
(b)For Cause. For "Cause" immediately upon written notice by the
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Employer to the Employee; provided, that the Employer may not
terminate the Employee for Cause unless (i) such termination has
been approved by the affirmative vote or consent of a majority of
the directors on the Board (excluding the Employee if he is a
director) prior to the time of such termination; and (ii) not
later than 30 days prior to the effective date of such
termination, the Employee shall be given the opportunity to
appear before the Board to address the grounds for such
termination. For purposes of this Agreement, a termination shall
be for Cause only if the Board shall reasonably determine that
any one or more of the following has occurred:
(i) acceptance of any unlawful bribe or kickback with respect to
the Employer's business; or
(ii) the Employee shall have been convicted by a court of
competent jurisdiction of, or pleaded guilty or nolo
contendere to, any felony which the Board reasonably
determines in its discretion would materially affect or
impair in any way (A) the Employee's ability to perform his
duties hereunder or (B) the reputation or operation of the
Employer's business or (C) the relationship between the
Employer and its suppliers, customers or employees; or
(iii) the Employee shall have committed a breach of any of the
covenants, terms and provisions of ss.9 hereof or a material
breach of any of the covenants, terms and provisions of ss.8
hereof; or
(iv) the Employee shall have materially breached any one or more
of the provisions of this Agreement (excluding ss.ss.8 and 9
hereof) and such breach shall have continued for a period of
thirty (30)
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days after written notice to the Employee specifying such
breach in reasonable detail; or
(v) the Employee shall have refused, after explicit written
notice, to obey any lawful resolution of or direction by the
Board which is consistent with this Agreement and his duties
hereunder.
(c) Termination Without Cause. Termination without cause may occur
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upon thirty (30) days' written notice by the Employer to the
Employee, or upon thirty (30) written notice from the Employee to
the Employer. For purposes of this Agreement, the Employee shall
be deemed to have been terminated without Cause if the
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termination is (i) initiated by the Employer and not based
substantially on any reason included in the above definition of
Cause or (ii) if the Employee terminates his employment hereunder
for Good Reason upon ten (10) days' written notice to the
Employer. The Employee shall be entitled to terminate his
employment for Good Reason if any of the following occur:
(i) the Employee is assigned duties which are substantially
inconsistent with the position or responsibilities
associated with his position as Vice President of the
Employer and the Employer has not revoked such assignment
within twenty (20) days written notice from the Employee
objecting to such duties;
(ii) If the Employer shall merge or consolidate into or transfer
substantially all of its assets to, or become a majority
owned subsidiary of, another corporation, and the Employee
is not then elected and/or appointed to a position of
responsibility in any such surviving, new or purchasing
corporation substantially equivalent to that provided in
ss.2 hereof; and
(iii) The Employer violates a material provision of this Agreement
and such violation is not remedied within thirty (30) days'
written notice from the Employee specifying such violation
in detail.
(d) Rights and Remedies on Termination.
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(i) If the Employer shall terminate the Employee's employment
hereunder pursuant to ss.6(c) hereof, then (A) the Employee
shall be entitled to receive, as severance pay, payment, in
accordance with the Employer's then current payroll
practices, of his Base Salary in effect at the time of his
termination for a period of one (1) month, if termination
occurs during the first six months of the initial term of
this Agreement, and the lesser of (x) Base Salary payable
for the balance of the term of this Agreement or (y) two
months Base Salary, if termination occurs during the second
six months during the initial term of this Agreement. For
any termination pursuant to Section 6(c) hereof by the
Employer occurring after the first full year of employment
hereunder, the
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Employee shall receive as severance pay the lesser of (x)
Base Salary payable for the balance of the then existing
term of this Agreement or (y) two months' Base Salary, plus
one week's Base Salary for each full or part year worked
after the first year of employment hereunder. Employee shall
also be paid his allocable share, as a shareholder of the
Employer, of any positive balance of the Accumulated
Adjustments Account ("AAA" account for S Corporation
purposes) - i. e., his allocable share of any amounts
taxable to S Corporation shareholders, but not fully
distributed to such shareholders -- within 60 days after the
end of the fiscal year in which the Employee's employment
was terminated.
(ii) Except as otherwise set forth in this ss.6(d) or otherwise
required by law, the Employee shall not be entitled to any
severance or other compensation after termination other than
payment of any portion of his Base Salary through the
effective date of his termination, accrued Incentive
Compensation, pro rated based on the effective date of
termination, and any expense reimbursements under ss.5
hereof for expenses incurred in the performance of his
duties prior to termination. Options, which as of the
effective date of termination of employment have not become
vested and exercisable in accordance with ss.4(c)(ii)
hereof, shall automatically terminate and be of no further
force or effect.
(iii) Valuation Date for Shares Upon Termination of Employment. It
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is acknowledged that Employee shall have a major role in
preparing and implementing the business plan of Employer and
in developing certain of Employer's intellectual property
the value of which may not be realized in the event of
Employee's early termination of employment. Accordingly, in
the event of the Employer's termination of the Employee's
employment without Cause or the Employee's termination of
his Employment with Good Cause, as defined above, or upon
the death or Total Disability of the Employee, as defined in
the Stockholders Agreement, by and among the Employer and
its Stockholders, the date for appraisal of the Sales Price
of Employee's Stock (i. e., its fair market value) set forth
in section 10 of the said Shareholders Agreement, shall, at
the option of the Employee or his personal representative
exercisable within one hundred twenty (120) days after such
termination of employment, death or Total Disability, as the
case may be, be determined as of (i) the end of the fiscal
quarter immediately preceding the exercise of such option,
or (ii) the end of the last completed quarterannual period
occurring within the two (2) years after such termination of
employment or death or Total Disability, and the Closing
Date with respect to a purchase of the Employee's Stock
shall be within thirty (30) days following completion of
such appraisal; provided, however, that in the case of death
or Total Disability, the Closing shall be within 180 days
following completion of the appraisal. If the Employee or
his personal
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representative fails to exercise the above option within the
said 120-day period, he shall be deemed to have elected to
have the fair market value determined as of the end of the
fiscal quarter immediately preceding the said 120-day
period.
ss.7. INVENTIONS: ASSIGNMENT. All rights to discoveries, inventions,
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improvements, and innovations (including all data and records pertaining
thereto) related to the Employer's business, whether or not patentable,
copyrightable, registerable as a trademark, or reduced to writing, that the
Employee may discover, invent or originate during the term of his employment
hereunder or during his previous employment by or on behalf of the Employer as
an employee or consultant, either alone or with others and during working hours
or by the use of the facilities of the Employer ("Inventions"), shall be the
exclusive property of the Employer. The Employee shall promptly disclose all
Inventions to the Employer, shall execute at the request of the Employer any
assignments or other documents the Employer may deem necessary to protect or
perfect its right therein, and shall assist the Employer, at the Employer's
expense, in obtaining, defending and enforcing the Employer's rights therein.
The Employee hereby appoints the Employer as his attorney-in-fact to execute on
his behalf any assignments or other documents deemed necessary by the Employer
to protect or perfect its right to any Inventions.
ss.8. CONFIDENTIAL INFORMATION. The Employee recognizes and acknowledges
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that certain assets of the Employer, including without limitation information
regarding customers, pricing policies, methods of operation, business plans,
business strategies, proprietary computer programs or any part thereof,
including without limitation, source or object code, sales, products, profits,
costs, markets, key personnel, formulae, product applications, technical
processes, and trade secrets (hereinafter called "Confidential Information") are
valuable, special, and unique assets of the Employer and its affiliates. The
Employee shall not, during or after his term of employment, disclose any part of
the Confidential Information to any person, firm, corporation, association, or
any other entity for any reason or purpose whatsoever, directly or indirectly,
except as may be required pursuant to his employment hereunder, provided, that
Confidential Information shall in no event include (a) Confidential Information
which was generally available to the public at the time of disclosure by the
Employer or (b) Confidential Information which becomes publicly available other
than as a consequence of the breach of the Employee of his confidentiality
obligations hereunder. In the event of the termination of his employment,
whether voluntary or involuntary and whether by the Employer or the Employee,
the Employee shall deliver to the Employer all documents and data pertaining to
the Confidential information and shall not take with him any documents data of
any kind or any reproductions (in whole or in part) or extracts of any items
relating to the Confidential Information.
ss.9. NON-COMPETITION. During the term of the Employee's employment
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hereunder and for a period of one (1) year thereafter or for a period of one
year after any termination of the Employee's employment hereunder, the Employee
will not (a) engage, directly or indirectly, alone or as a shareholder (other
than as a holder of less than five percent (5%) of the common stock of any
publicly traded corporation), partner, officer, member, director, employee,
consultant or otherwise of any other business or organization that is engaged or
becomes engaged in the development and/or sale of software and/or the provision
of services which (in the specific markets penetrated by the Employer or as to
which, at or prior to the time of expiration of the initial or any
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extended term of this Agreement or at or prior to termination of the Employee's
employment, it has taken significant steps to penetrate) (i) directly compete
with the software sold by the Employer and/or with the services provided by the
Employer or (ii) compete with any other business activity of the Employer
(collectively referred to as "Competitive Business"); provided, however, that
the Employee shall not be prevented from being employed by or consulting with
any division, subsidiary or affiliate of any company engaged in a Competitive
Business so long as the division, subsidiary or affiliate of such company does
not directly or indirectly engage in any Competitive Business or (b) solicit or
encourage any officer, employee or consultant of the Employer to leave its
employ for alternative employment. If during the said one-year period the
Employee is employed or retained by another company, he shall, at least twenty
one (21) days prior to commencement of employment or other duties for such
company notify the Employer as to the name, address and telephone number of such
company and the name of his new supervisor. The Employer shall have the option
to take reasonable steps to verify that such employment shall not violate the
provisions of this Section 9. The Employee will continue to be bound by the
provisions of this ss.9 until their expiration, and shall not be entitled to any
compensation from the Employer with respect thereto except as may be provided in
ss.6(d) hereof, provided, however, that this ss.9 shall not apply if the
Employer shall default in the payment of any amount due to the Employee pursuant
to ss.6(d) hereof and shall have failed to cure such default within twenty (20)
days after written notice from the Employee specifying such default. If at any
time the provisions of this ss.9 shall be determined to be invalid or
unenforceable, by reason of being vague or unreasonable as to area, duration or
scope of activity, this ss.9 shall be considered divisible and shall become and
be immediately amended to only such area, duration and scope of activity as
shall be determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter; and the Employee agrees that this ss.9 as
so amended shall be valid and binding as though any invalid or unenforceable
provision had not been included herein.
ss. 10. INDEMNIFICATION. The Employer shall indemnify the Employee in his
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capacity as an officer and/or director of the Employer to the full extent
provided in N.J.S.A. 14A:3-5 without reference to its laws or principles
regarding conflicts of law. In connection with any dispute or proceeding arising
under this Agreement the other party shall promptly reimburse the prevailing or
substantially prevailing party for all costs, including, without limitation, the
reasonable attorneys' fees of any attorney or firm of attorneys incurred by the
prevailing or substantially prevailing party in any such dispute or proceeding
arising under this Agreement. Any termination of the Employee's services, or of
this Agreement, shall have no effect on the continuing operation of this
Section.
ss. 11. DISPUTE RESOLUTION PROCEDURE.
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This Section governs any dispute, disagreement, claim, or controversy
between the parties arising out of or relating to this Agreement or the breach
thereof, other than those arising under ss.ss.7, 8 and 9 hereof (the "Disputed
Matter"). All Disputed Matters shall be submitted to the following dispute
resolution process:
(a) Mediation. Either party may, upon written notice elect to utilize
a non-binding resolution procedure whereby each presents its case
at a hearing before an
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acceptable neutral adviser. The hearing will occur no more than
ten (10) days after a party serves written notice to use
mediation. Each party may be represented at the hearing by
attorneys. If the matter cannot be resolved at such hearing by
the parties, the neutral adviser may be asked to assist the
parties in evaluating the strengths and weaknesses of each
party's position on the merits of the disputed matter.
Thereafter, the parties shall meet and try again to resolve the
matter. If the matter cannot be resolved at such meeting, the
parties' only recourse is binding arbitration as provided for in
Subsection 11 (b) below, and the mediation proceedings will have
been without prejudice to the legal position of either party. The
parties shall each bear their respective costs incurred in
connection with the mediation procedure, except that they shall
share equally the fees and expenses of the neutral adviser and
the costs of the facility for the hearing. Both parties agree to
use their best efforts to mutually agree on the use of a facility
for which no charge will be made.
(b) (i) Arbitration. If the Disputed Matter is not submitted to
mediation or, if submitted, cannot be resolved, then either
party may within ten (10) days after the completion of
mediation (or at any time if the matter is not submitted to
mediation), as appropriate, upon written notice, submit the
Disputed Matter to formal binding arbitration in accordance
with the provisions set forth in Arbitration Provisions set
forth below.
(ii) Neither party will institute any action or proceeding
against the other party in any court concerning any Disputed
Matter other than the entry of judgment upon a decision or
an award rendered by the arbitrator pursuant to this Section
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(iii) Any dispute between the parties shall be settled by final
and binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association
(the "AAA"); provided, however, that if such Rules are
inconsistent with any provision of this Agreement, this
Agreement shall control.
(iv) Any such arbitration shall be conducted in the City of
Newark, New Jersey at a place and time mutually agreed upon
by the parties or, failing mutual agreement, selected by the
arbitrator. The arbitrator shall apply New Jersey law in
connection with the arbitration of any Disputed Matter
without regard to its principles of conflicts of law.
(v) Any arbitration shall be conducted before a single
arbitrator who shall be compensated for his services at a
rate to be determined by the AAA, in the event the parties
are not able to agree upon his or her rate of compensation,
but based upon hourly or daily consulting rates for the
neutral arbitrator reasonably consistent with such
arbitrator's normal charges or fees charged by similarly
experienced and qualified arbitrators. Within five (5) days
of notice by a party seeking arbitration under this
provision, the parties shall appoint the arbitrator. In the
event the parties cannot agree on the selection of an
arbitrator within the stated time period, the AAA rules for
the selection of an arbitrator shall be followed. In either
event, the
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arbitrator shall be required to have at least five (5) years
experience in the industry in which the Employer conducts
its principal business.
(vi) Each party shall bear its own costs and expenses of
arbitration including, but not limited to, filing fees and
attorney's fees, and each party hereby agrees to his or its
proportionate share (based on the number of parties to the
proceeding) of the administrative fees of the AAA and of the
compensation to be paid to the arbitrator in any such
arbitration and his or its proportionate share of the costs
of transcripts and other expenses of the arbitration
proceedings, subject, however, to allocation of costs and
expenses (including attorneys' fees) by the arbitrator
consistent with the award.
(vii) The parties agree to make available to the arbitrator all
nonprivileged books, records, schedules and other
information reasonably requested by the arbitrator. Such
matters are to be made available to the arbitrator at such
times as are deemed necessary by them to make his decision
as herein provided.
(viii)The arbitrator may conduct any pre-trial proceedings by
telephonic conference call rather than by a face-to-face
meeting.
(ix) The arbitrator shall, prior to rendering his decision on the
arbitration matter, afford each of the parties an
opportunity, both orally and in writing, to present any
relevant evidence (the formal rules of evidence applicable
to judicial proceeding shall not apply) and to express,
orally and/or in writing that party's point of view and
arguments as to the proper determination of the arbitration
matter; provided, however, that either party submitting
written material shall be required to deliver a copy of such
written material to the other party concurrently with the
delivery thereof to the arbitrator and such other party
shall have the opportunity to submit a written reply, a copy
of such shall also be delivered to the other party
concurrently with the delivery thereof to the arbitrator.
Oral argument shall take place only at a hearing before the
arbitrator at which all parties are afforded a reasonable
opportunity to be present and be heard.
(x) In the event of a willful default by any of the parties
hereto in appearing before the arbitrator after due written
notice shall have been given, the arbitrator is hereby
authorized to render a decision upon the testimony of the
party appearing before the arbitrator.
(xi) The arbitrator shall make a decision and award resolving the
dispute within thirty (30) days after the selection of the
arbitrator; and within fifteen (15) days of the last hearing
held concerning such dispute(s).
(xii) Any judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.
(xiii) Within thirty (30) days after the arbitrator makes his or
her decision
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and award, the arbitrator shall render findings of fact and
conclusions of law and a written opinion setting forth the
basis and reasons for any decision and award rendered and
deliver such documents to each party to this Agreement along
with a signed copy of the decision or award.
(xiv) The arbitrator chosen in accordance with these provisions
shall not have the power to alter, limit, expand, amend or
otherwise affect the terms of this Agreement or these
arbitration provisions.
ss.12. GENERAL.
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(a) Notices. All notices and other communications hereunder shall be
-------
in writing or by written telecommunication, and shall be deemed
to have been duly given if delivered personally or if mailed by
certified mail, return receipt requested, postage prepaid or sent
by written telecommunication or telecopy, to the relevant address
set forth below, or to such other address as the recipient of
such notice or communication shall have specified to the other
party hereto in accordance with this ss. 12(a):
If to the Employee, to:
Xxxxxxxxx X'Xxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
With copies to:
Xxxxxx X. Xxxx, Esq.
0000 X Xxxxxx X.X. Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
If to the Employer, to:
Stronghold Technologies, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
With copies to:
Xxxxxx X. Xxxxxx, Esq.
Podvey, Sachs, Meanor,
Catenacci, Xxxxxxx & Cocoziello
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
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(b) Equitable Remedies. Each of the parties hereto acknowledges and
-------------------
agrees that upon any breach by the Employee of his obligations
under ss.ss.7, 8 and 9 hereof, the Employer will have no adequate
remedy at law, and accordingly will be entitled to seek specific
performance and to seek other appropriate injunctive and
equitable relief.
(c) Severability. If any provision of this Agreement is or becomes
------------
invalid, illegal or unenforceable in any respect under any law,
the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired.
(d) Waivers. No delay or omission by either party hereto in
-------
exercising any right, power or privilege hereunder shall impair
such right, power or privilege, nor shall any single or partial
exercise of any such right, power or privilege preclude any
further exercise thereof or the exercise of any other right,
power or privilege.
(e) Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) Assigns. This Agreement shall be binding upon and inure to the
-------
benefit of the heirs and successors of each of the parties
hereto, including any entity which acquires substantially all of
the assets or equity interest of the Employer.
(g) Entire Agreement. This Agreement contains the entire
------------------
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and shall
not be amended except by a written instrument hereafter signed by
each of the parties hereto.
(h) Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the local law of the State of New Jersey. With
respect to any claim brought under ss.7, ss.8 or ss.9 hereof, the
parties hereby consent to and submit to the jurisdiction of the
federal and state courts located in the State of New Jersey, and
any action or suit under any of said Sections of this Agreement
shall only be brought by the parties in any federal or state
court with appropriate jurisdiction over the subject matter
established or sitting in the State of New Jersey. The parties
shall not raise in connection therewith, and hereby waive, any
defenses based upon the venue, the inconvenience of the forum, or
the lack of personal jurisdiction in any such action or suit
brought in the State of New Jersey.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date and year
first above written.
STRONGHOLD TECHNOLOGIES, INC.
15
By: /s/ Xxxxxxxxxxx X. Xxxxx
--------------------------------------------
Xxxxxxxxxxx X. Xxxxx, Chief Executive Officer
/s/ Xxxxxxxxx X'Xxxxx
------------------------------------------------
XXXXXXXXX X'XXXXX
00
