EXHIBIT 10.5
EMPLOYMENT CONTRACT
BETWEEN
FOOD COURT ENTERTAINMENT NETWORK, INC.
AND
XXXXX X. XXXXXXX
EMPLOYMENT CONTRACT
Agreement made the ________ day of ___________________, 1996
by and between
Corporation: Food Court Entertainment Network, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
(a Delaware Corporation)
and
Executive: Xxxxx X. Xxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
Effective Date: October 1, 1996
BACKGROUND
It is in the best interest of the Corporation and its
shareholders to secure Executive's services for the Corporation
with an employment agreement. The Corporation, as an incentive
to Executive to continue employment with the Corporation grants
compensation and other incentives as more fully set forth in this
Agreement and the attached Schedules. Executive and the
Corporation desire to enter an employment agreement under the
terms and conditions set forth below.
NOW THEREFORE, in consideration of the promises and mutual
agreements set forth in this Agreement and for other good and
valuable consideration, the parties agree as follows:
1. EMPLOYMENT
The Executive shall be employed by the Corporation in
the capacity of President and Chief Executive Officer of the
Corporation.
2. DUTIES
Executive shall serve the Corporation faithfully and to
the best of his ability, under the direction of the Chairman and
the Board of Directors. He shall devote such time, energy and
skill during regular business hours and such other hours as are
reasonably necessary to fulfill his obligations as President and
Chief Executive Officer of the Corporation. Executive shall be
responsible for the management and operation of the Corporation
and shall have such duties as are normally associated with the
position of a President and Chief Executive Officer in a
similarly situated company. He shall report to the Chairman and
the Board of Directors as required.
This Section 2 shall not be construed as preventing the
Executive from participating in businesses which do not compete
with the Company or any affiliate of the Company, where the form
or manner of such participation will not require services on the
part of the Executive in the operation of the affairs of the
business.
In addition to the foregoing, he shall be, during the
term of his employment, a Director of the Corporation.
3. COMPENSATION
The Corporation shall pay or cause to be paid to
Executive during the term of his employment the salary and
bonuses as more particularly set forth in Schedule "A" which is
attached to this Agreement and made part hereof.
4. STOCK OPTIONS
Executive shall be granted options to purchase the
Corporation's Series A common stock in accordance with the
provisions of Schedule "B" which is attached to this Agreement
and made part hereof.
5. ADDITIONAL BENEFITS
Executive shall also be entitled to any fringe benefits
which may from time to time be made available to senior
executives of the Corporation and as set forth in the personnel
policies of the Corporation, or as determined by the Board,
including but not limited to any employee benefit plan which is
qualified and exempt under Sections 401(a) and 501(a) of the
Internal Revenue Code ("Code"), and any group medical, dental,
hospitalization or insurance program.
6. EXPENSES
The Corporation shall reimburse Executive for
out-of-pocket expenditures for transportation, fuel,
entertainment, travel, meals, hotel accommodations and the like
incurred by him in the interest of the Corporation
("out-of-pocket expenses"). Executive shall from time to time
but no less frequently than each month submit vouchers, receipts
or other documentation together with appropriate written
explanation required by the Corporation to verify out-of-pocket
expenses and shall be reimbursed for the actual expenses
incurred. Corporation shall provide Executive with a reasonable
monthly allowance for automobile expenses, including cost of the
vehicle, gas, maintenance and repairs or, in the alternative, may
provide a suitable motor vehicle for use by the Executive for
conduct of business on behalf of the Corporation.
7. WORKING FACILITIES
The Corporation shall furnish Executive with such
office space at the Corporate headquarters, secretarial
assistance, and such other facilities and services, in the
discretion of the Chairman, as is appropriate of the President of
the Corporation and necessary for performance of his duties.
8. AUTHORITY TO BIND THE CORPORATION
Executive shall have authority to enter into contracts
binding upon the Corporation and to create any obligations on the
part of the Corporation in the normal course of business and as
would be expected of a chairman of a similar corporation.
Notwithstanding the foregoing, Executive shall, have authority to
enter into contracts binding the Corporation, without prior
approval with the Board of Directors, for purchases or
transactions in the ordinary course of business; provided
however, that any contract, agreement or transaction having a
value of greater than $100,000 must also have the approval of the
Chairman.
9. VACATIONS
Executive shall be entitled each year to vacation at
such time and for such duration as is reasonable and which do not
interfere with the ability of Executive to fulfill his duties and
effectively operate the Corporation. Vacations shall be
coordinated with other employees of the Corporation, shall be
consistent with Executive's duties (as more fully set forth in
Section 2 of this Agreement) and the needs of the Corporation.
10. TERM AND TERMINATION OF EMPLOYMENT
10.a. Term
Except as otherwise provided herein, the term of
employment shall be for a period of three (3) years, commencing
as of the Effective Date of this Agreement and continuing through
September 30, 1999. At the end of the initial three (3) year
term, Corporation and Executive agree to negotiate in good faith
a new contract or extension of the current contract. In the
event the Corporation and Executive fail to reach an Agreement,
Executive shall be entitled upon his termination to the sum of
his highest Minimum Base Compensation and Bonus Compensation (if
any) paid at any time under this Agreement, payable in equal
installments for one (1) year from the date of termination with
the same frequency as his salary was paid while employed
("Severance Pay"). Executive shall have no duty to mitigate
damages and should he accept other employment, Severance Pay
shall not be reduced or deducted from any other earned income.
Further, in the event the Corporation terminates
Executive other than pursuant to the provisions set forth in
Section 10.b. below, the Executive shall be, in lieu of any
additional severance pay and lieu of any bonus compensation,
entitled to continue to receive his then Minimum Base
Compensation through the remaining term of this Agreement and
continuance of benefits described in Section 5, above, or, if
longer, one (1) year. In addition, he shall be entitled to
receive the benefits and amounts described in Clauses (b), (c)
and (d) of Section 10.b.1.
10.b. Termination
10.b.1. Termination by Death. If Executive dies,
then this Agreement shall terminate immediately, except that
Executive's heirs, personal representatives or estate shall be
entitled to receive (a) his then Minimum Base Compensation for a
period of one (1) year after his death payable with the same
frequency as his salary was paid during Executive's lifetime;
(b) any accrued benefits up to the date of termination;
(c) bonuses that have accrued but not been paid; and (d) any
benefits which are to be continued or paid after the date of
termination in accordance with the terms of the corresponding
benefit plans.
10.b.2. Termination by Disability. If Executive
becomes disabled, and such disability continues for more than
three (3) consecutive months after the Onset of Disability (as
defined below) or for periods aggregating more than four (4)
months during any six-month period, then Corporation shall have
the right to terminate this Agreement immediately, except that
Executive shall be entitled to receive (a) the difference in his
then Minimum Base Compensation above any disability insurance
proceeds received from any disability policy or plan paid for or
provided by Corporation for a period of one (1) year beginning on
the date of the Onset of Disability; (b) any accrued benefits up
to the date of termination; (c) bonuses that have accrued but not
been paid; and (d) any benefits which are to be continued or paid
after the date of termination in accordance with the terms of the
corresponding benefit plans. "Onset of Disability" means the
first day on which Executive shall be unable, without reasonable
accommodation, to perform any of his duties under this Agreement
on a full time basis by reason of physical or mental incapacity,
sickness or infirmity.
In the event of a partial disability, Executive
shall be entitled to work for such time and in such capacity as
his disability permits and the Corporation shall provide such
reasonable accommodations as may be necessary.
10.b.3. For Cause. This Agreement may be
terminated by the Corporation for cause as defined below, by
providing five (5) days prior written notice from the Corporation
to the Executive upon the occurrence or act by the Executive of
any one or more of the following events:
(a) fraud,
(b) dishonesty, or
(c) other material and willful misconduct by
the Executive.
If Executive's employment is terminated for cause
pursuant to this section, Executive shall be entitled to receive
(i) his then Minimum Base Corporation accrued through the date of
termination, (ii) any accrued benefits up to the date of
termination, and (iii) any benefits which are to be continued or
paid after the date of termination in accordance with the terms
of corresponding benefit plans.
10.b.4. Mutual Agreement. This Agreement may be
terminated at any time upon mutual agreement of the parties.
10.b.5. Change in Control. Upon the occurrence
of a Change in Control, the provisions set forth in Schedule "C"
attached hereto shall apply, notwithstanding anything herein to
the contrary.
11. PROCEDURE UPON TERMINATION
Upon termination of his employment, Executive shall
promptly return to Corporation all documents (including copies)
and other materials and property of Corporation pertaining to its
business, including without limitation customer and prospect
lists, contracts, files, manuals, letters, reports and records in
his possession or control, no matter from whom or in what manner
acquired.
12. DISCOVERIES
Executive shall communicate to Corporation, in writing
when requested, and preserve as confidential information of
Corporation, all marketing concepts, software ideas and other
ideas or designs relating to the business of the Corporation
which are conceived, developed or made by Executive, whether
alone or jointly with others, at any time (during or after
business hours) during the term of Executive's employment with
Corporation (such concepts, ideas and designs are referred to as
"Executive's Discoveries") or have been made heretofore by the
Executive in relation to business of the Corporation. All of
Executive's Discoveries shall be Corporation's exclusive
property, and Executive shall, at Corporation's expense, sign all
documents and take such other actions as they may reasonably
request to confirm its ownership of Executive's Discoveries.
13. NONDISCLOSURE
At all times after the date of this Agreement, except
with Corporation's express prior written consent or in connection
with the proper performance of services under this Agreement,
Executive shall not, directly or indirectly, communicate,
disclose or divulge to any Person (as defined in Section 22
below) or use for the benefit of any Person, any confidential or
proprietary knowledge or information, no matter when or how
acquired, concerning the business of the Corporation or the
conduct and details of the business of Corporation including, but
not limited to (a) names of customers, locations, prospects and
suppliers, (b) details of contracts, proposals or other business
arrangements with clients, prospects and suppliers, (c) marketing
methods, trade secrets, and financial condition, and
(d) software, source code, technical documentation and other
information. For purposes of this Section 13, confidential
information shall not include any information which is now known
by the general public, or which becomes known by the general
public other than as a result of any improper act or omission of
Executive.
14. RESTRICTIVE COVENANT
14.a. Covenant Not To Compete or Solicit
The Corporation is in the business of broadcasting
programming and advertising to food courts in large enclosed
shopping malls throughout the United States (the "Business"). As
a material inducement to entering this Agreement, Executive
agrees and covenants that, while he is an employee of the
Corporation and for a period of two (2) years thereafter, he:
(1) shall be restricted from competing with the
Business of the Corporation, directly or indirectly on his own
behalf or through third parties, in any manner whatsoever as a
shareholder, director, officer, joint venturer, partner, sole
proprietor, investor or, in any other ownership capacity
whatsoever, or as an employee, consultant, agent, or
representative of or for a competing business within the fifty
(50) states of the United States, all territories of the United
States and Canada;
(2) shall not either directly or indirectly on
his own behalf or through third parties solicit or attempt to
solicit or do business or attempt to do business with any of the
advertisers, agencies, developers, operators, owners, clients or
customers (collectively "Customers") of the Corporation who are
or were Customers of the Corporation at any time during the
preceding two (2) years prior to his termination of employment
with respect to any of the Business of the Corporation of its
subsidiaries or affiliates; and
(3) shall not communicate with or solicit any
person or entity who is, or during a six (6) month period prior
to his termination of employment was, an employee, salesman,
contractor, agent or representative (hereinafter collectively
"Employee" or "Contractor") of the Corporation in any manner
which interferes or which might interfere with such Employee's or
Contractor's relationship with the Corporation or in an effort to
obtain such person as an employee, salesman, contractor, agent or
representative of an entity or business which competes with the
Corporation's business.
Notwithstanding the foregoing, Executive shall not be
restricted nor prohibited from acting as a business consultant,
as a developer of new media and/or communications businesses, or
as a designer and implementor of broadcast systems and
technologies, or in any other capacity in or for a broadcasting,
advertising, communications, computer, cable television or
telecommunications company.
14.b. Covenant Not to Violate Corporate Confidences
The parties agree and acknowledge that the
Executive will have access to and will become aware of
confidential information and trade secrets, including Customer
data, files, and business techniques (collectively, "Confidential
Information"), and that this Confidential Information (1) is not
generally available to the public, (2) has been compiled at the
Corporation's expense and over a substantial amount of time,
(3) is critical to the Corporation's ability to compete in the
industry in which it does business, and (4) if disclosed or
released will greatly and irreparably damage the Corporation's
business. Therefore, as a material inducement to entering into
this Agreement, Executive agrees and covenants that he will not,
while he is an Executive or during a two (2) year period
beginning on the date of termination of his employment, either
disclose or divulge this confidential information to anyone or
use this confidential information in any manner to compete with
the Corporation.
14.c. Enforcement
The Corporation may enforce the provisions of this
Section 14 by suit for damages, injunction, or both, as provided
below:
(1) The parties agree and acknowledge that the
Corporation will be irreparably injured by the breach of any
provision of this Section, and that money damages alone will not
be an appropriate measure of the harm to the Corporation from
such continuing breach. Therefore, the parties agree that
equitable relief, including specific performance of these
provisions by injunction, is an appropriate remedy for breach of
these provisions.
(2) If any portion of the provisions of this
Section or its application is construed to be invalid, illegal or
unenforceable, then the other portions and their application
shall not be affected thereby and shall be enforceable without
regard thereto. If any of the covenants are determined to be
unenforceable because of their scope, duration, geographic area
or similar factor, then the court or arbitrator making such
determination shall have the power to reduce or limit such scope,
duration, area or other factor, and such covenant shall then be
enforceable in its reduced or limited form.
15. RELATIONSHIP OF PARTIES
The relationship between the parties is that of
employer and employee. The employee shall be eligible to
participate in any plans or arrangements or distributions by the
Corporation pertaining to any profit-sharing, bonus or similar
benefits provided for regular employees, except to be extent that
such plans, arrangements or distributions are superseded by more
liberal provisions in this Agreement.
16. MANAGEMENT RESPONSIBILITY
The parties recognize that the business affairs of the
Corporation shall be managed by the Board of Directors of the
corporation in accordance with the laws of the State of Delaware
governing the organization and administration of business
corporations.
17. WAIVER OF BREACH
The waiver by either party hereto of a breach of any
provision of this Agreement shall not operate to be construed as
a waiver of any subsequent breach of the same or any other
provision of this Agreement.
18. NOTICES
All notices, consents or other communications required
or permitted to be given under this Agreement shall be in writing
and shall be deemed to have been duly given (a) when delivered
personally, (b) three business days after being mailed by first
class certified mail, return receipt requested, postage prepaid,
or (c) one business day after being sent by a reputable overnight
delivery service, postage or delivery charges prepaid, to the
parties at their respective addresses stated on the first page of
this Agreement. Notices may also be given by prepaid telegram or
facsimile and shall be effective on the date transmitted if
confirmed within 24 hours thereafter by a signed original sent in
the manner provided in the preceding sentence. Notice to
Corporation, addressed to the attention of the Corporate
Secretary, shall suffice as notice to the Corporation, provided
that a copy thereof is simultaneously sent to Xxxxxxx X. Xxxxxx,
Esquire, Xxxxxxx & Xxx, P.C., One Glenhardie Corporate Center,
0000 Xxxxxxxx Xxxx, X.X. Xxx 000, Xxxxx, Xxxxxxxxxxxx 00000-0000.
Any party may change its address for notice and the address to
which copies must be sent by giving notice of the new addresses
to the other parties in accordance with this Section 18, except
that any such change of address notice shall not be effective
unless and until received.
19. PRIOR AGREEMENTS
Executive represents to Corporation (a) that there are
no restrictions, agreements or undertakings whatsoever to which
Executive is a party which would make unlawful his execution of
this Agreement or his employment hereunder, (b) that his
execution of this Agreement or his employment hereunder do not
constitute a breach of any contract, agreement or understanding,
oral or written to which he is a party or which he is bound, and
(c) that he is free and able to execute this Agreement and to
enter into the employment contemplated hereby.
20. ASSIGNMENT
Corporation may not assign its rights and duties under
this Agreement to any party without the consent of Executive.
This Agreement, being for the personal services of Executive,
shall not be assignable by him.
21. OTHER PROVISIONS
This Agreement sets forth the entire understanding of
the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous, oral or written,
express or implied, agreements and understandings. This
Agreement shall not be modified or terminated except in writing.
No action taken by Corporation under this Agreement, including
without limitation any waiver, consent or approval, shall be
effective unless approved by Corporation's Board of Directors.
This Agreement shall inure to the benefit of and bind each of the
parties hereto and the successors and assigns of Corporation and
the personal representatives, estate and heirs of Executive.
Neither the failure nor any delay on the part of either party to
exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of the same or any other
right, remedy, power or privilege with respect to any occurrence
or be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall
be effective unless it is in writing and is signed by the party
asserted to have granted such waiver. Any headings preceding the
text of any of the Sections or Subsections of this Agreement are
inserted for convenience of reference only, and shall neither
constitute a part of this Agreement nor affect its construction,
meaning, or effect.
22. DEFINITION
Person. "Person" means any individual, corporation,
partnership, sole proprietorship, joint venture, association,
cooperative, trust, estate, governmental body, administrative
agency, regulatory authority or other entity of any nature.
23. LIMITATION ON PAYMENTS AND BENEFITS
Notwithstanding any provision of this Agreement to the
contrary, in no event shall the present value of the amounts
payable hereunder which are treated as parachute payments, when
added to any other payments made or to be made to Executive by
the Corporation which are treated as parachute payments, exceed
2.99 times the Executive's base amount. For purposes of the
preceding sentence, the terms "parachute payment" and "base
amount" shall have the meanings ascribed to such terms in Code
Section 280G, and the "present value" of such parachute payments
shall be determined in accordance with the provisions of such
section. To the extent the provisions of this Section require a
reduction in payments or benefits under this Agreement, the
Executive shall be entitled to select, within a reasonable period
of time under the circumstances, which payments or benefits shall
be reduced.
WITNESS the due execution and delivery hereof on the date
first above written.
CORPORATION: EXECUTIVE:
FOOD COURT ENTERTAINMENT
NETWORK, INC.
/s/ Xxxxxx X. Xxxx /s/ Xxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxx XXXXX X. XXXXXXX
Title: Chairman
SCHEDULE A
COMPENSATION
1. MINIMUM BASE COMPENSATION
Subject to the termination and base salary adjustment
provisions of this Agreement, Executive shall be paid an annual
minimum base salary of $150,000 for all services rendered to the
Corporation for the term of this Agreement ("Minimum Base
Compensation") in equal weekly or bi-weekly installments with a
deduction for all taxes and other amounts required to be withheld
or deducted by law.
The Minimum Base Salary shall be payable with respect
to each fiscal year commencing October 1 and ending on the
following September 30 ("Contract Fiscal Year"); provided,
however, that, on or about November 1, 1997, the Compensation
Committee of the Board of Directors shall evaluate Executive's
performance from the Effective Date of this Agreement through
October 31, 1997 and consider whether his Minimum Base
Compensation should be increased with respect to the remainder of
the then current Contract Fiscal Year.
In addition to the provisions of the preceding
paragraph, Executive's Minimum Base Compensation shall be subject
to annual review and adjustment, as deemed appropriate by the
Compensation Committee of the Board of Directors, commencing
November 1, 1997.
2. BONUS COMPENSATION
In addition to his Minimum Base Compensation, Executive
shall be entitled to bonus compensation ("Bonus Compensation") as
determined from time-to-time by the Compensation Committee of the
Board of Directors based upon the progress of the Company and the
success of the Company in completing its strategic plan.
3. SPECIAL COMPENSATION FOR EXTRAORDINARY SERVICES
Executive has, during his career prior to joining the
Corporation, developed relationships with certain companies and
certain business executives which are valuable to the
Corporation. Executive intends to pursue certain strategic
alliances and certain merger and acquisition transactions which
will be of great value to the Corporation and which will result
from Executive's relationships, credibility in the marketplace
and/or business acumen in developing such relationships and
concluding such transactions. Accordingly, if a strategic
alliance or a merger or acquisition is completed, Executive shall
be entitled to be paid additional compensation in cash, stock
options or stock bonus equal to 3.75% of the fair market value of
any such transaction.
SCHEDULE B
STOCK OPTIONS
Executive shall be granted options to purchase 475,000 shares of
the Series A common stock of the Corporation pursuant to the
provisions of its 1995 Employee Stock Option Plan. Such options
shall include the following terms and provisions:
(a) the grant date shall be the date of this Agreement
was executed by all parties or the date of final closing on
the Private Placement (defined below);
(b) the exercise price per share shall be equal to the
lower of (i) the closing bid price of the Series A Common
Stock in the over-the-counter market as reported by NASDAQ
(the "Common Stock Bid Price") on the business day
immediately preceding the first closing on the Private
Placement of Units as described in the Letter of Intent
between the Corporation and X.X. Xxxxx Investment Banking
Corp. dated October 7, 1996 (the "Private Placement") or
(ii) the average Common Stock Bid Price for 30 consecutive
business days ending on the business day immediately
preceding the first closing on the Private Placement.
(c) 175,000 options shall vest on the final closing of
the Private Placement
(d) the right to exercise 300,000 of such options
shall vest in three equal annual installments on the first,
second and third anniversaries of the final closing on the
Private Placement provided that:
(1) The first installment shall vest if and only
if the Corporation (I) reports positive
earnings before extraordinary items,
interest, taxes, depreciation and
amortization for the fiscal year ending
December 31, 1997, or (II) reports earnings
(before extraordinary items) per primary
share, as defined below, ("EPS") of at least
$0.35 for the fiscal year ending
December 31, 1998, (III) reports EPS of at
least $0.60 for the fiscal year ending
December 31, 1999; or (IV) reports EPS of at
least $0.90 for the fiscal year ending
December 31, 2000,
(2) the second installment shall vest if and only
if the Corporation achieves a target set
forth in preceding sub-clauses (1) (II),
(III) or (IV), above and
(3) the third installment shall vest if and only
if the Corporation achieves a target set
forth in sub-clauses (1) (III) or (IV),
above.
Earnings per primary share or EPS shall be calculated by
dividing the Net Income for the Corporation (before extraordinary
items) for the fiscal year by the weighted average of the number
of shares of Common Stock issued and outstanding during the
fiscal year.
Such options shall contain such additional terms and
provisions as the Compensation Committee may determine and as are
in compliance with, in all respects, the terms of the Employee
Stock Option Plan, as amended (which terms are incorporated
herein by reference).
SCHEDULE C
CHANGE IN CONTROL
1. MODIFICATION OF CONTRACT UPON CHANGE IN CONTROL
Upon the occurrence of a Change in Control, this
Agreement shall be modified as set forth below.
(a) The then remaining term shall, as of the date
of the occurrence of the Change in Control, be extended
through the day immediately preceding the third anniversary
date of such occurrence ("anniversary date"). Thereafter,
unless either party notifies the other, no later than 60
days prior to an anniversary date, of an intent not to
extend the term of this Agreement, it shall automatically be
extended for an additional year effective as of such
anniversary date.
(b) Executive shall have the right, within the
90-day period following the occurrence of an event
constituting Good Reason, to voluntarily terminate his
employment with the Corporation and receive the amounts and
benefits described in the last paragraph of Section 10.a.
Executive shall be deemed to have perfected his right to so
terminate by delivering a written notice to such effect to
the Corporation within such 90-day period and specifying a
termination date no later than the last day of such period.
2. CHANGE IN CONTROL DEFINED
For purposes of this Agreement, the term "Change in
Control" means the occurrence of any of the following events:
(a) any Person (except (i) the Corporation or any
Subsidiary of the Corporation, or (ii) any Employee Benefit
Plan (or any trust forming a part thereof) maintained by the
Corporation or any Subsidiary of the Corporation) is or
becomes the beneficial owner, directly or indirectly, of the
Corporation's securities representing 19.9% or more of the
combined voting power of the Corporation's then outstanding
securities, other than pursuant to a transaction described
in Clause (c);
(b) there occurs a sale, exchange, transfer or
other disposition of substantially all of the assets of the
Corporation to another entity, except to an entity
controlled directly or indirectly by the Corporation;
(c) there occurs a merger, consolidation, share
exchange, division or other reorganization of or relating to
the Corporation, unless--
(i) the shareholders of the Corporation
immediately before such merger, consolidation, share
exchange, division or reorganization own, directly or
indirectly, immediately thereafter at least 66-2/3% of
the combined voting power of the outstanding voting
securities of the Surviving Company in substantially
the same proportion as their ownership of the voting
securities immediately before such merger,
consolidation, share exchange, division or
reorganization; and
(ii) the individuals who, immediately before
such merger, consolidation, share exchange, division or
reorganization, are members of the Incumbent Board
continue to constitute at least two-thirds of the board
of directors of the Surviving Company; provided,
however, that if the election, or nomination for
election by the Corporation's shareholders, of any new
director was approved by a vote of at least two-thirds
of the Incumbent Board, such director shall, for the
purposes hereof, be considered a member of the
Incumbent Board; and provided further, however, that no
individual shall be considered a member of the
Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened
Election Contest or Proxy Contest, including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; and
(iii) no Person (except (A) the Corporation
or any Subsidiary of the Corporation, (B) any Employee
Benefit Plan (or any trust forming a part thereof)
maintained by the Corporation or any Subsidiary of the
Corporation, or (C) the Surviving Company or any
Subsidiary of the Surviving Company) has beneficial
ownership of 19.9% or more of the combined voting power
of the Surviving Company's outstanding voting
securities immediately following such merger,
consolidation, share exchange, division or
reorganization;
(d) a plan of liquidation or dissolution of the
Corporation, other than pursuant to bankruptcy or insolvency
laws, is adopted; or
(e) during any period of two consecutive years,
individuals who, at the beginning of such period,
constituted the Board of Directors of the Corporation cease
for any reason to constitute at least a majority of such
Board of Directors, unless the election, or the nomination
for election by the Corporation's shareholders, of each new
director was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the
beginning of the period; provided, however, that no
individual shall be considered a member of the Board of
Directors of the Corporation at the beginning of such period
if such individual initially assumed office as a result of
either an actual or threatened Election Contest or Proxy
Contest, including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to have occurred if a Person becomes the beneficial owner,
directly or indirectly, of securities representing 19.9% or more
of the combined voting power of the Corporation's then
outstanding securities solely as a result of an acquisition by
the Corporation of its voting securities which, by reducing the
number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person; provided, however,
that if a Person becomes a beneficial owner of 19.9% or more of
the combined voting power of the Corporation's then outstanding
securities by reason of share repurchases by the Corporation and
thereafter becomes the beneficial owner, directly or indirectly,
of any additional voting securities of the Corporation, then a
Change in Control shall be deemed to have occurred with respect
to such Person under Clause (a).
Notwithstanding anything contained herein to the contrary, if the
Executive's employment is terminated and he reasonably
demonstrates that such termination (i) was at the request of a
third party who has indicated an intention of taking steps
reasonably calculated to effect a Change in Control and who
effects a Change in Control, or (ii) otherwise occurred in
connection with, or in anticipation of, a Change in Control which
actually occurs, then for all purposes hereof, a Change in
Control shall be deemed to have occurred on the day immediately
prior to the date of such termination of his employment.
3. GOOD REASON DEFINED
For purposes of this Schedule "C", the term "Good
Reason" means the occurrence of any of the following events:
(a) a change in the Executive's status or
position, or any material diminution in his duties or
responsibilities;
(b) any increase in the Executive's duties
inconsistent with his position with the Corporation;
(c) any reduction in the Executive's Minimum Base
Compensation;
(d) a failure to increase the Executive's Minimum
Base Compensation, consistent with his performance review,
within 12 months of the last increase or performance
review;
(e) a failure by the Corporation to continue in
effect any Employee Benefit Plan in which the Executive
participates, including (whether or not they constitute
Employee Benefit Plans) incentive bonus, stock option, or
other qualified or nonqualified plans of deferred
compensation (i) other than as a result of the normal
expiration of such a plan, or (ii) unless such plan is
merged or consolidated into, or replaced with, a plan with
benefits which are of equal or greater value;
(f) requiring the Executive to be based at a
location further than 50 miles from the location of his
principal office immediately prior to the Change in Control;
(g) refusal to allow the Executive to attend to
matters or engage in activities in which he was permitted
to engage prior to the Change in Control;
(h) failure of the Corporation to secure the
affirmation by a Successor, within three business days prior
to a Change in Control, of this Agreement and its or the
Corporation's continuing obligations hereunder (or where the
Corporation does not have at least three business days
advance notice that a Person may become a Successor, within
one business day after having notice that such Person may
become or has become a Successor); or
(i) any purported termination of the Executive's
employment which is not in accordance with the terms of
this Agreement.
4. ADDITIONAL DEFINITIONS
For purposes of this Schedule "C", the following terms
shall have the meanings ascribed to them:
"Election Contest" means a solicitation with respect to
the election or removal of directors that is subject to the
provisions of Rule 14a-11 of the 1934 Act.
"Employee Benefit Plan" has the meaning ascribed to
such term in ERISA Section 3(3).
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended and as the same may be amended from time
to time.
"Incumbent Board" means the Board of Directors of the
Corporation as constituted at any relevant time.
"1934 Act" means the Securities Exchange Act of 1934,
as amended and as the same may be amended from time to time.
"Person" has the same meaning as such term has for
purposes of Sections 13(d) and 14(d) of the 1934 Act.
"Proxy Contest" means the solicitation of proxies or
consents by or on behalf of a Person other than the Board of
Directors of the Corporation.
"Subsidiary" means, with respect to any corporation,
any business entity of which a majority of its voting power or
its equity securities or equity interests is owned, directly or
indirectly, by such corporation.
"Successor" means any Person that succeeds to, or has
the practical ability to control (either immediately or with the
passage of time), the Corporation's business directly, by merger
or consolidation, or indirectly, by purchase of the Corporation's
voting securities or all or substantially all of its assets.
"Surviving Company" means the business entity that is a
resulting company following a merger, consolidation, share
exchange, division or other reorganization of or relating to the
Corporation.
