EXHIBIT 10.21
[LOGO] 000 Xxxx 00xx Xxxxxx, Xxxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000 o (000) 000-0000
August 31, 2001
Xxxxxx X. Xxxxxxxxx
0000 Xxx Xxxxxx
Xxxx Xxxxx, XX 00000
Re: Amended and Restated Employment Agreement
Dear Xxx:
This letter sets forth our agreement relating to your continued employment with
XxxXxxxx.xxx Inc. or any successor entity ("Company"). Further, this amended and
restated employment agreement shall replace and supercede in all respects that
certain employment agreement between you and the Company dated December 14, 2000
("Original Agreement").
1. Term. This agreement will govern the principal terms and conditions of
your employment from August 28, 2001 until August 31, 2004 (the
"Term"), and the termination thereof that occurs during, and in certain
cases as specified below, upon or following the expiration of the Term.
2. Positions; Duties. You will be employed by the Company as Executive
Vice President, General Counsel and Secretary. The foregoing executive
positions, along with any other executive or board positions you
currently or may hereafter hold for the Company or any of its
subsidiaries or other affiliates ("Affiliates"), are referred to
collectively as the "Executive Positions." You may at any time, while
continuing to serve in your other Executive Positions, resign your
position as General Counsel of the Company (or any Affiliate) without
invalidating this agreement or affecting your compensation, stock
options or any of your rights under this agreement. You will report to
the Chief Executive Officer of the Company and/or the Board of
Directors of the Company, and will perform such reasonable duties as
may be assigned to you. Your duties will include overseeing executive
matters of the Company and its subsidiaries, as well as all legal
matters of the Company and its subsidiaries. You agree to use your best
efforts to perform your duties faithfully, to devote all of your
working time, attention and energies to the business of the Company,
and while you remain employed with the Company, you will not engage in
any other business activity that is in conflict with your duties and
obligations to the Company.
3. Base Salary. You will be paid a base salary at an annual rate as
follows, payable in accordance with the normal payroll practices
established by the Company:
August 28, 2001 - August 27, 2002 ("Year 1") - $150,000
August 28, 2002 - August 29, 2003 ("Year 2") - $150,000
August 30, 2003 - August 31, 2004 ("Year 3") - $150,000
4. Incentive Bonus. In addition to your base salary, you shall be eligible
to receive the following incentive stock bonuses:
(a) Year 1 Incentive. If the average closing bid price of the
Company's common stock for Year 1 is $1.00 or greater, you shall
be granted an additional option to purchase 500,000 shares of the
Company's common stock at a price equal to 25% of the closing bid
price for the stock on the last trading day of Year 1. Such option
shall (i) be granted as of the last trading day of Year 1; (ii)
vest with respect to the entire 500,000 shares on the date of
grant of such option; (iii) terminate on the earlier of the 10
year anniversary of the date of grant of such option or the
1,095th day following the effective date of your resignation or
the termination of your employment; and (iv) be granted pursuant
to the Company's Long-Term Incentive Plan ("Year 1 Option").
(b) Year 2 Incentive. If the average closing bid price of the
Company's common stock for Year 2 is $2.00 or greater, you shall
be granted an additional option to purchase 500,000 shares of the
Company's common stock at a price equal to 25% of the closing bid
price for the stock on the last trading day of Year 2. Such option
shall (i) be granted as of the last trading day of Year 2; (ii)
vest with respect to the entire 500,000 shares on the date of
grant of such option; (iii) terminate on the earlier of the 10
year anniversary of the date of grant of such option or the
1,095th day following the effective date of your resignation or
the termination of your employment; and (iv) be granted pursuant
to the Company's Long-Term Incentive Plan ("Year 2 Option").
(c) Year 3 Incentive. If the average closing bid price of the
Company's common stock for Year 3 is $3.00 or greater, you shall
be granted an additional option to purchase 500,000 shares of the
Company's common stock at a price equal to 25% of the closing bid
price for the stock on the last trading day of Year 3. Such option
shall (i) be granted as of the last trading day of Year 3; (ii)
vest with respect to the entire 500,000 shares on the date of
grant of such option; (iii) terminate on the earlier of the 10
year anniversary of the date of grant of such option or the
1,095th day following the effective date of your resignation or
the termination of your employment; and (iv) be granted pursuant
to the Company's Long-Term Incentive Plan ("Year 3 Option").
(d) Subsidiary Incentive. If at any time during the Term the Company
is successful in creating and "spinning off" one or more
subsidiaries which, during the Term, trade on the NASDAQ Small Cap
Market, NASDAQ National Market or the American Stock Exchange
("Qualified Market(s)"), you shall be granted an option to
purchase 5% of the outstanding shares of each such subsidiary's
common stock at a price equal to 25% of the closing bid price for
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such subsidiary's stock on the first day of trading on any of the
Qualified Markets, which option shall (i) be granted on the date
which is the first date the stock of such subsidiary trades on a
Qualified Market; (ii) vest with respect to the entire 5% interest
on the date of grant of such option; (iii) terminate on the
earlier of the 10 year anniversary of the date of grant of such
option or the 1,095th day following the effective date of your
resignation or the termination of your employment; and (iv) be
granted pursuant to such subsidiary's Long-Term Incentive Plan
("Subsidiary Option"). For purposes of this Agreement, "spinning
off" a subsidiary shall mean granting as a dividend (or otherwise
distributing) to the Company's shareholders all or a portion of
the Company's stock ownership in such subsidiary.
If the Year 1 Option, Year 2 Option, Year 3 Option and/or the
Subsidiary Option are required to be issued pursuant to this agreement,
the Company shall, within 14 days after the required grant date of the
option, file with the SEC a registration statement on Form SB-2 which
will register for sale the entire number of shares under the respective
option. The Company shall use its best efforts to cause the SEC to
declare such registration statement effective within 30 days after
filing.
5. Benefits. The Company will, at all times throughout the Term, provide
you with health insurance coverage no less favorable than the health
insurance coverage currently provided by the Company to its employees
through Oxford Health Insurance, as well as such other fringe benefits
and insurance coverage as it may establish for similarly situated
employees. Since Oxford Health is not a plan which covers the state of
Florida within its network (and therefore any medical treatment you
receive in Florida will be out-of- network and subject to a higher
deductible than medical services from Oxford's in-network providers)
you shall have the option to opt out of coverage under the Oxford
Health Insurance plan, or such other plan as may be maintained by the
Company ("Primary Plan"), and substitute coverage with another
insurance plan of your choosing ("Discretionary Plan"). If you opt out
of the Primary Plan and into a Discretionary Plan, you shall assume all
premium costs in excess of that amount which the Company would have
paid for your health insurance coverage had you not opted out of the
Primary Plan.
6. Stock Options. The three (3) options granted to you under the Original
Agreement are hereby cancelled, and in their place, you are hereby
granted an option to purchase shares of XxxXxxxx.xxx Inc. common stock,
as more particularly set forth in the Option Grant Certificate
contained in Annex 1 to this agreement. The option is granted pursuant
to the Company's 1999 Long-Term Incentive Plan, as amended (the
"Plan"), and shall be subject to the terms thereof. You shall at all
times during the Term have the right to exercise your options (in whole
or in part) in a broker-assisted cashless transaction. To facilitate
this process, the Company shall maintain its current cashless exercise
program with Xxxxxxx Xxxxx Xxxxxx for your benefit. In addition,
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immediately prior to a "change in control" of the Company (as defined
in the Plan), you will receive an option to acquire 1,000,000 shares of
the Company's common stock (subject to equitable adjustment for stock
splits, etc.) at an exercise price equal to 25% of the closing bid
price of the stock immediately prior to such change in control, which
option shall be fully vested and immediately exerciseable in full and
expire on the earlier of ten years from such change in control and
three years after termination of employment ("Change in Control
Option").
7. Subsidiary Ownership Interest. You will be granted a 5% ownership
interest in the Company's subsidiary for its Hispanic/Latin operations,
if and when such subsidiary is established ("Latin Subsidiary"), which
interest shall not be subject to dilution of any kind. Should there
subsequently occur any transaction or series of related transactions in
which additional shares, units or interests are issued (or securities
exchangeable, convertible or exercisable for or into units or
interests), you will be granted such additional shares, units or
interests as may be necessary to maintain your 5% ownership interest.
Upon the establishment of the Latin Subsidiary, you and the Latin
Subsidiary shall execute such agreements and documents as are necessary
or desirable to establish properly your ownership interest in the Latin
Subsidiary.
8. Executive Equipment & Company Credit Card. To assist you in rendering
your duties in a more efficient and productive manner the Company shall
provide you (at the Company's sole cost and expense) a laptop computer,
portable color printer, digital mobile telephone (and related account),
personal digital assistant, portable digital dictation device, and such
other equipment, accessories and software as you may require from time
to time ("Executive Equipment"). The Executive Equipment shall be
provided for your exclusive use throughout the Term and shall be
upgraded once during the Term at your discretion, except for software,
which shall be upgraded as and when the software publishers issue
upgrades. You shall also be provided a Company credit card for use by
you in connection with Company travel, entertainment and other Company
matters. If you resign for any reason or the Company terminates your
employment "without cause," as defined in paragraph 11, you shall
automatically obtain ownership and title to the Executive Equipment,
without cost to you.
9. Boca Raton Office. During the Term, and any renewal term (s), you shall
be assigned to the Company's current offices at 0000 X.X. 00xx Xxxxxx,
Xxxxx X00, Xxxx Xxxxx, Xxxxxxx or such other office location in Boca
Raton, Florida as you may agree, in writing, to occupy ("Boca Raton
Office") and the Company may not require you to work from any other
office location, without your prior written consent. You shall at all
times during the Term be provided an executive assistant of your
choosing in the Boca Raton Office, who shall (a) work exclusively for
you, (b) be paid a salary and other compensation determined by you, and
(c) be provided a separate office and equipment in the Boca Raton
Office. In addition, if you resign for any reason or the Company
terminates your employment "without cause" as defined in paragraph 11,
you shall have the option to require the Company to assign to you (or
any entity controlled by you) the lease for the Boca Raton Office. In
the event you elect to take such assignment of the lease for the Boca
Raton Office (x) the assignment shall be made with no cost to, or
payment by you (or the assignee); (y) you shall, simultaneous with the
assignment, be granted title to all furniture, furnishing and equipment
now, or hereafter occupying the Boca Raton Office at no cost to you (or
the assignee) and (z) you (or the assignee) shall assume liability
under the lease for obligations arising from matters and events
occurring from and after the effective date of the assignment of the
lease by the Company.
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10. Vacation. For each calendar year of the Term you shall be entitled to
five (5) weeks paid vacation, which (a) shall fully accrue on January
1st of each year of the Term and (b) you may take at your discretion.
You may accrue and carry forward up to three (3) weeks of unused
vacation time during any calendar year to the following calendar year.
Upon (x) your removal from any of the Executive Positions "without
cause," (y) your resignation from any of the Executive Positions for
"good reason" or (z) the expiration of the Term, you shall receive a
lump sum cash payment for all accrued and unused vacation time computed
at your then current salary rate.
11. Termination. (a) You are free to resign from the Executive Positions at
any time, and the Company is free to terminate your employment at any
time. Upon any such termination or resignation, you will be entitled to
any amounts earned and accrued but not yet paid. In addition, if you
resign for "good reason", or if the Company (and/or any of its
Affiliates) terminates your employment "without cause", you will be
entitled to the following severance payments and benefits: (i)
continued medical and life insurance coverage for a period equal to the
greater of one year or the number of years and fractions thereof
between the date of such termination and the end of the Term (the
"Severance Period"), (ii) a lump sum cash payment equal to your highest
rate of annual base salary in effect during the Term multiplied by the
Severance Period, (iii) a lump sum cash payment equal to the number of
accrued and unused vacation days calculated at your then current salary
rate and (iv) accelerated vesting of all your outstanding stock
options. Such cash payments will be made within 10 days of your
termination of employment, and shall not be subject to offset for
amounts earned by you in respect of any subsequent employment, nor
shall you be required to seek any such subsequent employment.
(b) For purposes of this paragraph 11, your employment will be treated
as having been terminated by the Company "without cause" if the Company
(and/or any of its Affiliates) initiates the termination of your
employment in any of the Executive Positions during the Term or upon
the expiration of the Term (whether or not you continue your employment
in any of the Executive Positions from which you have not been
terminated), other than by reason of (i) your material dishonesty, (ii)
your material failure, refusal or neglect to perform your job functions
(other than by reason of a disability described below) that continues
after you have been provided adequate and specific written notice
thereof, (iii) your material breach of a Company policy that either
cannot be cured or is not cured after adequate and specific written
notice thereof, (iv) your conviction of a felony; (v) your willful
unauthorized disclosure of confidential information that is likely to
result in material harm to the Company, or (vi) your inability, by
reason of a physical or mental impairment, to substantially perform
your job functions for a period of six (6) consecutive months. Any
termination notice given to you by the Company or any of it's
Affiliates shall state with specificity the exact grounds for the
termination and whether such termination is for "cause" or "without
cause" pursuant to this agreement. Any termination notice not
specifying the grounds for the termination and whether such termination
is for "cause" or "without cause," shall automatically and irrevocably
be deemed a termination "without cause" pursuant to this agreement.
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(c) For purposes of this paragraph 11, you will be treated as having
resigned for "good reason" if you resign (i) following any material
breach by the Company of its obligations under this agreement that
continues after you have provided adequate and specific written notice
thereof, (ii) in connection with any proposed or actual relocation of
the Company's Florida office from the Boca Raton Office, or any
requirement that you work from an office other than the Boca Raton
Office (iii) within the one year period following (x) a change in
control (as defined in the Plan) with respect to the Company or a
change in control (as defined below) with respect to any Affiliate that
occurs during the Term or (y) your removal from any of the Executive
Positions, whether or not such removal occurs during the Term, or (iv)
upon expiration of the Term, if the Company has failed to offer you
continued employment on terms at least as favorable to you as those set
forth in this agreement. With respect to any Affiliate of the Company,
a "change in control" shall mean any transaction whereby, after giving
effect to such transaction, the beneficial owners of the Affiliate's
voting securities (or interest) prior to such transaction cease to
beneficially own, either singly or in the aggregate, at least 60% of
the voting power of the Affiliate or any successor to substantially all
of the business or assets of such Affiliate.
(d) If the Change in Control Option is required to be granted pursuant
to this agreement, the Company or its successor shall, within 14 days
after your effective resignation or termination date, file with the SEC
a registration statement which will register for immediate sale the
entire 1,000,000 shares under the Change in Control Option. The Company
or its successor shall use its best efforts to cause the SEC to declare
such registration statement effective within 30 days after filing.
12. Certain Taxes. The Company will pay to you an amount that, on an
after-tax basis (including federal income, excise and social security
taxes, and state and local income taxes), equals any excise tax that is
determined to be payable by you pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (and any
interest or penalties related to the imposition of such excise tax), by
reason of entitlements under this agreement (including this paragraph
12), as well as entitlements outside of this agreement that are
described in Section 280G(b)(2)(A)(i) of the Code. For purposes of this
paragraph 12, you shall be deemed to pay federal, state and local
income taxes at the highest marginal rate of taxation. The
determination as to the amount payable pursuant to this paragraph 12
shall be made by such nationally recognized consulting or accounting
firm as may be agreed to by the parties.
13. Withholding. The Company shall have the right to withhold from any
amount payable hereunder an amount necessary in order for the Company
to satisfy any withholding tax obligation it may have under applicable
law.
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14. Company Policies. You agree to abide by the Company's policies as may
be implemented from time to time, including the Company's Policy and
Procedures regarding Securities Transactions and Personal Conduct,
Ethics and Business Transactions, a copy of which is attached to this
Agreement as Annex 2 and which shall be executed by you simultaneous
with your execution of this agreement.
15. Confidentiality. You agree that at no time (neither during nor after
the Term) will you (i) use or disclose, or authorize any other person
or entity to use or disclose, any information relating to the Company
or its Affiliates of a confidential nature (e.g., strategic plans,
specifications for existing or future technology) other than as
necessary to further the business objectives of the Company in
accordance with the terms of your employment, or (ii) take or cause to
be taken any action which disparages the Company or any of its
personnel or is likely to expose the Company or any of its personnel to
any material liability to any person.
16. Governing Law. The terms of this agreement and the option grant
certificate, and any action arising thereunder, shall be governed by
and construed in accordance with the domestic laws of the State of New
York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
* * * *
If the foregoing is acceptable to you, kindly sign and return to me one copy of
this agreement.
Sincerely yours,
XXXXXXXX.XXX INC. AGREED TO AND ACCEPTED BY:
By: /s/ Xxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
---------------------------- ---------------------------
Name: Xxxx Xxxxxxxx Xxxxxx X. Xxxxxxxxx
Title: President & CEO
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ANNEX 1
to
Employment Agreement dated August 31, 2001
Between
XxxXxxxx.xxx Inc. and Xxxxxx X. Xxxxxxxxx
================================================================================
OPTION GRANT CERTIFICATE
================================================================================
8
XXXXXXXX.XXX INC
1999 LONG-TERM INCENTIVE PLAN
Option Grant Certificate
This Grant Certificate evidences the grant of an option pursuant to the
provisions of the 1999 Long-Term Incentive Plan (the "Plan") of XxxXxxxx.xxx Inc
(the "Company") to the individual whose name appears below (the "Grantee"),
covering the specific number of shares of Common Stock of the Company ("Stock")
set forth below, pursuant to the provisions of the Plan and on the following
express terms and conditions:
1. Name of Grantee:
Xxxxxx X. Xxxxxxxxx
2. Number of shares of Stock of the Company which are subject to this
option:
1,000,000 shares
3. Exercise price of shares subject to this option:
$0.02 per share
4. Date of grant of this option:
August 31, 2001
5. Vesting:
The entire 1,000,000 shares shall vest on August 31, 2001
6. Termination date of this option:
The earlier of the tenth anniversary of the date of grant, or
the 1,095th day following your resignation or the termination
of your employment. Notwithstanding the foregoing, this option
shall terminate immediately if such termination is for cause,
as determined by the Committee.
The Grantee hereby acknowledges receipt of a copy of the Plan as presently in
effect. The text and all of the terms and provisions of the Plan are
incorporated herein by reference, and this option is subject to these terms and
provisions in all respects.
At any time when the Grantee wishes to exercise this option, in whole or in
part, the Grantee shall submit to the Company a written notice of exercise,
specifying the exercise date and the number of shares to be exercised. Upon
exercise, the Grantee shall remit to the Company the exercise price, plus an
amount sufficient to satisfy any withholding tax obligation of the Company that
arises in connection with such exercise.
XxxXxxxx.xxx Inc AGREED TO AND ACCEPTED BY:
By: /s/ Xxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
------------------ -----------------------------
Name: Xxxx Xxxxxxxx Xxxxxx X. Xxxxxxxxx
Title: President & CEO
9
ANNEX 2
to
Employment Agreement dated August 31, 2001
between
XxxXxxxx.xxx Inc. and Xxxxxx X. Xxxxxxxxx
================================================================================
Company Policy and Procedures
Regarding
Securities Transactions
And
Personal Conduct, Ethics and Business Transactions
================================================================================
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XxxXxxxx.xxx Inc.
Acknowledgement of Receipt of Company Policy and Procedures
Enclosed is the Company's Policy and Procedures for Securities
Transactions.
References in the enclosed documents to "the Company" include
XxxXxxxx.xxx Inc. and its subsidiaries.
Please read the enclosed carefully. Violation of the policies and
procedures set forth in these materials could result in termination of your
relationship with the Company or, in some cases, civil or criminal penalties.
Once you have read the enclosed document, please sign below and return this form
to the Company's General Counsel.
If you have any Questions about the enclosed policies, please contact:
Xxxxxx X. Xxxxxxxxx, Esq.
Executive Vice President
& General Counsel
XxxXxxxx.xxx Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx X-00
Xxxx Xxxxx, XX 00000
Tel. # : (000) 000-0000
Fax # : (000) 000-0000
E-mail: xxx@xxxxxxxx.xxx
I acknowledge that I have read and understand the policy and procedures
described above and I further agree to fully comply with all the policies and
procedures set forth therein.
Dated: August 31, 2001
XXXXXX X. XXXXXXXXX
------------------------
Print Name
/s/ Xxxxxx X. Xxxxxxxxx
------------------------
Signature
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XxxXxxxx.xxx Inc.
------------------------
Policy and Procedures for Securities Transactions
------------------------
The policies and procedures set forth herein are established to xxxxxx
compliance with Federal securities laws and prevent any appearance of
impropriety by key personnel of the Company. Accordingly, these policies and
procedures apply to all officers, directors and employees of the Company, as
well as to certain consultants to the Company.
In addition, such policies and procedures apply to all securities
accounts and trading by the spouse, minor children or household relatives of,
and all securities accounts and trading which can be controlled or influenced
by, any of the foregoing individuals.
I. SECURITIES TRANSACTIONS IN THE COMPANY'S SHARES
A. Prohibition against Short Sales
Short sales of the Company's shares are prohibited.
B. Prohibitions Against Xxxxxxx Xxxxxxx
1. General Rules
1.1 Under Rule 10b-5, a director, officer, employee or
consultant who is aware of material information relating
to the Company which has not been publicly disclosed is
prohibited from trading in the Company's securities, or
directly or indirectly disclosing such information to any
person so that such person may trade in the Company's
securities. The prohibition against xxxxxxx xxxxxxx
extends to giving casual "tips" to friends, relatives and
others. Both the "tipper" and his "tippee" can be held
liable if trades result from such unauthorized
disclosures. In a few instances, disclosures made in
casual conversation during a golf game or cocktail party
have resulted in liability, so caution is advised. Xxxxxxx
xxxxxxx and the "tipping" of material non-public
information may also compel the Company to disclose
certain matters prematurely, such as pending negotiations,
that are not yet ripe for disclosure.
1.2 It is difficult to describe exhaustively what constitutes
material information, but the term generally includes any
information -- positive or negative -- which if disclosed
might have an effect on the market price of the Company's
securities or might be of significance to an investor in
determining whether to purchase, sell, or hold such
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securities. Information may be significant for this
purpose even if alone it would not determine the
investor's decision. Examples of material information
include a potential business acquisition, earnings
results, internal financial information which departs in
any way from what the market would expect, important
"product" developments, the acquisition or loss of a major
contract or an important financing transaction. Obviously
this is not an exhaustive list, and other types of
information may be deemed material at particular times.
1.3 Information is generally considered public when it has
been distributed in a manner designed to make the
information accessible to the investing public at large.
Distribution through wire services and normal business
news channels is usually sufficient. Material information
should not be considered public until the market has had a
chance to absorb it -- a process that can take several
days if the matter disclosed is complex or the information
is not widely distributed.
2. Consequences of Xxxxxxx Xxxxxxx
2.1 The consequences of xxxxxxx xxxxxxx are serious. They
include civil suits for rescission or damages by private
parties and SEC civil and criminal enforcement actions.
2.2 The SEC may also bring an action in federal court to
impose a civil penalty against a person who "controlled"
the violating person, if the "controlling person" knew or
recklessly disregarded the fact that a controlled person
(e.g., an employee of the Company) was likely to engage in
xxxxxxx xxxxxxx and failed to take action to prevent the
violation. The term "controlling person" in this context
means the Company and any person with power to influence
or control the direction or management, policies or
activities of another person, and arguably includes
directors and officers of the Company.
2.3 A person who engages in xxxxxxx xxxxxxx may be penalized
up to three times the profit gained or loss avoided, in
addition to being required to disgorge all wrongfully
obtained profits. Controlling persons may be penalized up
to the greater of $1,000,000 or three times the amount of
profit gained or loss avoided as a result of a director's,
officer's or employee's xxxxxxx xxxxxxx violation, except
that in the case of "tipping" the maximum penalty is the
profit gained or loss avoided by the "tippee." Good faith
is not a defense if the controlling person knew or had
reason to know that a director, officer or employee was
engaging in xxxxxxx xxxxxxx (or acted with reckless
disregard) and failed to take appropriate action. The SEC
has up to five years from the date of the purchase or sale
to bring an action against a controlling person.
C. Additional Restrictions on Sales by Certain Persons - Rule 144
1. The Securities Act of 1933 generally deals with the offering
and sale of securities by issuers and certain persons related
to the issuer and prohibits sales of securities by
"affiliates" (generally, persons who "control" an issuer)
without registration under the 1933 Act unless an exemption is
available. As a practical matter, these affiliates are treated
for these purposes as if they were the issuer itself and must,
in the absence of an exemption, register any sale of the
issuer's securities -- even if they bought the securities on
the open market or in a registered transaction.
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2. Rule 144 under the 1933 Act exempts affiliates from the
registration requirements of the 1933 Act in connection with
their sale of shares if the requirements of Rule 144 are met.
The Rule 144 requirements for an affiliate's sale to be exempt
from registration include: (i) there must be adequate
information about the Company in the public market, (ii) the
sales must be normal broker transactions or made directly to a
"market-maker," (iii) the volume of shares sold in any
three-month period may not exceed 1 percent of the Company's
outstanding shares, or, if higher, the average weekly reported
trading volume for the Company's shares for the preceding four
calendar weeks, and (iv) the selling stockholder must file
Form 144 with the SEC (three copies) at the time the order is
placed with the broker, unless no more than 500 shares having
an aggregate market value of not more than $10,000 are being
sold in any three-month period. For purposes of these quantity
limits, certain sales (such as those of certain close
relatives or of any other person selling in concert, as well
donees or pledges in certain cases) are aggregated with the
sales of an affiliate.
3. The 1933 Act also imposes restrictions on the sale of
securities purchased from an issuer or an affiliate of the
issuer with a view to distribution, including securities
purchased from an issuer or an affiliate in a chain of
transactions not involving a registered public offering. These
securities are "restricted securities" and may not be sold
unless the securities are registered under the Securities Act
for sale or an exemption from registration can be claimed.
Rule 144 establishes a safe harbor for the sale of restricted
securities if certain conditions are met. Rule 144 requires
that persons seeking to sell restricted securities must have
held the securities before a sale for at least one year from
the acquisition from the Company or an affiliate. The Rule
allows for "tacking" some holding periods. After one year, the
holder is permitted to sell restricted securities without
filing a registration statement covering the securities to be
sold if the requirements described in C.2 (i)-(iv) above have
been met. After holding the securities for two years, persons
who are not deemed "affiliates" may sell their shares without
restriction.
D. Ownership of the Company's Shares
1. Employees, Officers and Directors are encouraged to invest in
the Company. Nevertheless, any purchase or sale of the
Company's shares must be cleared in advance by the Company's
General Counsel. Requests for trades must be in writing or via
e-mail and no trades may be effected unless or until the
General Counsel has approved it in writing or by e-mail. A
transaction may only be effected within 5 business days from
such approval or such shorter period as may be specified by
the General Counsel when approving the transaction.
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2. To avoid even an appearance of impropriety, you should not
engage in short-term trading in the Company's shares. Any
investment in the Company's shares must be held for at least
six months. In cases of special hardship, you may request (in
writing or via e-mail) a specific exemption from this policy
in writing from the General Counsel, whose decision must be in
writing (or delivered via e-mail) and shall be final and
conclusive.
II. SECURITIES TRANSACTIONS IN PUBLICLY TRADED SECURITIES OTHER
THAN THOSE OF THE COMPANY
A. Prohibited Investments
All investments in publicly traded securities (directly or
through puts, calls or other securities based thereon or
derivative thereof) are prohibited except as expressly
permitted below.
B. Permitted Securities Investments
1. Investments in privately held securities for which there is no
public market are permitted, but the Company's General Counsel
should be informed in writing (or via e-mail) of any such
holding or investment and further notified in advance of any
initial public offering of such an investment.
2. Investment in the following publicly traded securities is
permitted at all times:
(a) United States Treasury securities and all other government
obligations issued by any country, state, municipality or
other political subdivision.
(b) Investment-grade, non-convertible debt securities.
(c) All broad based mutual funds or closed-end funds available
generally to the public.
(d) All index-based securities (such as Standard and Poor's
500, Major Markets, Value Line and Euro Top 100).
(e) Foreign currencies and foreign currency options, warrants,
futures and futures options.
C. Special Requests
1. Any special requests for permission to make or continue any
investment upon becoming subject to these policies not
expressly permitted by these policies in light of special
circumstances or hardship that might be caused by liquidation
or failure to make such an investment shall be addressed in
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writing (or via e-mail) to the General Counsel of the Company.
The General Counsel shall have the right, in his sole
discretion, to approve or disapprove any such investment or
divestiture and to impose any condition to any approval as he
may deem required.
2. The General Counsel shall also have the right to approve any
blind trust or alternative arrangement that protects the
Company's interests.
D. Compliance
1. At least annually, and at the Company's request, each person
subject to these policies will execute and submit an
acknowledgment of compliance with these policies for the
relevant period.
2. In the event that the Company, in its non-reviewable
discretion, determines that it is necessary or appropriate to
inspect the financial, tax, and/or accounting records of any
person to assure compliance with this policy, such person
shall provide the Company with any and all financial
information requested. The Company will make arrangements for
any such review to be done at the Company's expense by an
outside accounting or law firm under conditions which protect
the privacy of the person involved.
III. ADDITIONAL RESTRICTIONS
The policies and procedures set forth herein are the Company's general
policies only. The Company reserves the right to adopt supplemental policies or
impose additional restrictions or requirements as the Company may deem necessary
or useful to effect the purposes of these policies and procedures.
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XxxXxxxx.xxx Inc.
------------------------
Policy with Respect to Personal Conduct and Integrity and Ethical
Business Practices
------------------------
> The Company expects its personnel to meet a high standard of personal
integrity and ethical business practices.
> You should not profit, directly or indirectly, from ideas or
information learned or contacts developed in the course of employment
with the Company, without prior disclosure to and approval by the
Company's President. This includes not making any use of financial or
other information learned during the course of your employment.
> You should generally not accept gifts or favors from business contacts,
except trinkets of nominal value. This includes discounted merchandise
or services not available to the general public. The acceptance of cash
or its equivalent is strictly prohibited. The Company's President or
his designee must approve any gift valued at $100 or more which cannot
appropriately be refused.
> You should not participate in any outside activity that could or might
appear to interfere with your objectivity or commitment to the Company,
including
o accepting any employment outside the Company, even on personal time,
without prior approval by the President of the Company or his
designee;
o making any paid appearances without prior approval by the President
of the Company or his designee.
> You should not at any time during or after your employment with the
Company communicate or disclose confidential information (information
of a secret or confidential nature relating to the business of the
Company or its affiliates) to any person, corporation or entity.
> You should retain only reputable firms and representatives to represent
the Company and make sure they comply with both applicable law and
Company policies.
> You should not hire, supervise or do any kind of Company business with
relatives or friends without prior approval by the Company's President.
> You should not use Company resources (e.g., equipment, e-mail, Internet
access, and telephones) or the Company's name (e.g., use of Company
letterhead) in any way with respect to personal outside activities.
This includes the use of Company time for outside activities.
> Your expense reports and all other business records must be promptly
submitted, completely accurate and reflect only legitimate business
expenses.
> You should only provide business entertainment and gifts that are
ordinary, reasonable, and lawful. They must comply with the policies of
the Company and also the customer/supplier. If gifts, entertainment,
games and promotions violate customer/supplier policies or are offered
to their employees, without the employer's permission, they can look
like bribes. All gifts should be approved and properly reported.
> You should never offer or give bribes or kickbacks.
> You should not make contributions on behalf of the Company to political
candidates or political parties. It may be against the law.
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