EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of May 12, 1998,
is entered into by and among IFS International, Inc., a Delaware corporation
(the "Company"), whose principal executive office is located at Rensselaer
Technology Park, 000 Xxxxxx Xxxx, Xxxx, Xxx Xxxx 00000, IFS International, Inc.,
a New York corporation and a wholly owned subsidiary of the Company, and any
other subsidiary of the Company, (the Company and its subsidiaries are sometimes
collectively referred to in this Agreement as the "Companies") and Xxxxx X.
Xxxxx (the "Executive"), an individual whose address is #5 Valley View
Boulevard, Xxxx 000, Xxxxxxxxxx, Xxx Xxxx 00000 with reference to the following
facts:
RECITALS:
WHEREAS, on December 17, 1997, the Company and the Executive entered
into that certain Employment Agreement (the "Prior Agreement") whereby the
Company retained the services of the Executive as its President and Chief
Executive Officer and as the President and the Chief Executive Officer of its
wholly owned subsidiary, IFS International, Inc. to render executive and
managerial services for both companies; and
WHEREAS, pursuant to section 13.A. of the Prior Agreement, the Company
and the Executive desire to amend and restate the terms and conditions of the
Executive's employment by the Companies.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for valuable consideration, the receipt and sufficiency of
which are hereby mutually acknowledged, the parties to this Agreement
(collectively "parties" and individually a "party") agree as follows:
AGREEMENT:
1. DEFINITIONS
Set forth below are definitions of capitalized terms which are
generally used throughout this Agreement and not defined elsewhere in it:
(a) "Affiliate" means any "Person" (as defined below)
controlling, controlled by, or under common control with a party.
(b) "Board" means the Board of Directors of the Company, as
such body may be reconstituted from time to time.
(c) "Change In Control" shall mean, subject to subsections
(iv) and (v) below, the occurrence of any of the following events:
(i) An acquisition of control by an "Acquiring
Person" where, immediately after the subject acquisition, such "Person" holds
"Beneficial Ownership" of more than fifty percent (50%) of the "Total Combined
Voting Power" of the Company's then outstanding "Voting Securities". The terms
in quotations in the immediately preceding sentence shall, for purposes of this
Agreement, have the following meanings:
(A) "Acquiring Person" shall mean any
"Person" which acquires the defined percentage of securities,
with the exception of: (A) any Employee Benefit Plan (or a
trust forming a part thereof) maintained by the Companies (or
any of them), or any corporation or entity in which the
Companies (or any of them) hold fifty percent (50%) or more of
the "Voting Securities" (each, a "Controlled Subsidiary"); (B)
the Company or any Controlled Subsidiary; or (C) any "Person"
which acquires the threshold percentage of "Voting Securities"
through a "Non-Control Transaction" (as defined below);
(B) "Non-Control Transaction" shall mean any
transaction in which the stockholders of the Company
immediately before such transaction, directly or indirectly
own immediately following such transaction at least a majority
of the "Total Combined Voting Power" of the outstanding
"Voting Securities" of the surviving corporation (or other
entity) resulting from such transaction, in substantially the
same proportion as such stockholders' ownership of the "Voting
Securities" of the Company immediately before such
transaction;
(C) "Person," "Beneficial Ownership," "Total
Combined Voting Power" and "Voting Securities" shall have the
meanings ascribed to such terms in Sections 13(d) and 14(d) of
the Securities Exchange Act and Rule 13d-3 promulgated
thereunder; or
(ii) During any period of three (3) consecutive years after the date of
this Agreement, the individuals who constituted the Company's Board at the
beginning of such period (the "Incumbent Board") cease to constitute a majority
of the Company's Board, for any reason(s) other than (A) the voluntary
resignation of one or more Board members; (B) the refusal by one or more Board
members to stand for election to the Board; and/or (C) the removal of one or
more Board members for good cause; provided, however, (1) that if the nomination
or election of any new director of the Company was approved by a vote of at
least a majority of the Incumbent Board, such new director shall be deemed a
member of the Incumbent Board; and (2) 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" (as described in
Rule 14a-11 promulgated under the Securities Exchange Act of 1934), or as a
result of a solicitation of proxies or consents by or on behalf of an Acquiring
Person, other than a member of the Board (a "Proxy Contest"), or as a result of
any agreement intended to avoid or settle any Election Contest or Proxy Contest;
or
(iii) The Board or the stockholders of the Company
approve:
(A) A merger or consolidation or reorganization of the Company
with:
(1) any Controlled Subsidiary, and such transaction is not a Non-Control
Transaction; or
(2) any other corporation
or other entity, and such transaction is not a Non-Control Transaction; or
(B) A complete liquidation or dissolution of the Company, and such
transaction is not a Non-Control Transaction; or
(C) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to (1) any
Controlled Subsidiary, and such transaction is not a
Non-Control Transaction, or (2) to any other Person, and such
transaction is not a Non-Control Transaction.
(iv) Notwithstanding subsections (i) through (iii)
above, a Change In Control shall not be deemed to have occurred solely
because any Person acquired Beneficial Ownership of more than the threshold
percentage of the outstanding Voting Securities as a result of an acquisition of
Voting Securities by the Company (each, a "Redemption") which, by reducing the
number of Voting Securities outstanding, increased the percentage of outstanding
Voting Securities Beneficially Owned by such Person; provided, however, that if
(A) a Change In Control would occur as a result of a Redemption but for the
operation of this sentence, and (B) after such Redemption, such Person becomes
the Beneficial Owner of any additional Voting Securities, which increase the
percentage of the then outstanding Voting Securities Beneficially Owned by such
Person over the percentage owned as a result of the Redemption, then a Change In
Control shall be deemed to occur.
(v) Notwithstanding any other provision of this
subsection (c), if the Executive or an Affiliate of the Executive who is then
a stockholder or director of the Company, either: (i) expressly voted in favor
of the transaction constituting the Change In Control in such Person's capacity
as either a stockholder or as a director of the Company; or (ii) expressly
abstained from voting (other than by reason of an "interest" in a matter or
transaction); and/or (iii) failed or refused to vote, then the transaction shall
not constitute a Change in Control.
(d) "Disability" (or the related term "Disabled") means any of
the following: (i) the receipt of any disability insurance benefits by the
Executive; (ii) a declaration by a court of competent jurisdiction that the
Executive is legally incompetent; (iii) the Executive's material inability due
to medically documented mental or physical illness or disability to fully
perform the Executive's regular duties of his employment, for a three (3) month
continuous period, or for six (6) cumulative months within any one (1) year
continuous period; or (iv) the reasonable determination by the Board that the
Executive will not be able to fully perform the Executive's regular duties of
his employment for a three (3) month continuous period. If the Board determines
that the Executive is Disabled under subsection (iv) above, and the Executive
disagrees with the conclusion of the Board, then the Company shall engage a
qualified independent physician reasonably acceptable to the Executive to
examine the Executive at the sole expense of the Company. The determination of
such physician shall be provided in writing to the parties and shall be final
and binding upon the parties for all purposes of this Agreement. The Executive
hereby consents to examination in the manner set forth above, and waives any
physician-patient privilege arising from any such examination as it relates to
the determination of the purported disability. If the parties cannot agree upon
a physician, a physician shall be appointed by the American Arbitration
Association according to the rules and practices of the American Arbitration
Association from time-to-time in force.
(e) "Person" (other than for purposes of determining a Change
in Control) means an individual or natural person, a corporation, partnership
(limited or general), joint-venture, association, business trust, limited
liability company or partnership, trust (whether revocable or irrevocable),
pension or profit sharing plan, individual retirement account, or fiduciary or
custodial arrangement.
(f) "Termination For Cause" means a termination of the
Executive caused by a determination of two-thirds of the Board of Directors of
IFS International, Inc., a Delaware corporation, excluding the Executive if then
a member of the Board, that one of the following events has occurred:
(i) Any of the Executive's representations or warranties in this Agreement
is not materially true, accurate and/or complete;
(ii) The Executive has intentionally and continually
breached or wrongfully failed and/or refused to fulfill and/or perform
(A) any of the Executive's obligations, promises or covenants under this
Agreement, or (B) any of the warranties, obligations, promises or covenants in
any agreement (other than this Agreement) entered into between the Companies (or
any of them) and the Executive, without cure, if any, as provided in such
agreement;
(iii) The Executive has intentionally failed and/or
refused to obey any lawful and proper order or directive of the Board,
and/or the Executive has intentionally interfered with the compliance by other
employees of the Companies (or any of them) with any such orders or directives;
(iv) The Executive has intentionally breached the
Executive's fiduciary duties to the Companies (or any of them);
(v) The Executive has intentionally caused the
Companies (or any of them) to be convicted of a crime, or to incur criminal
penalties in material amounts;
(vi) The Executive has committed: (A) any act of
fraud, misrepresentation, theft, embezzlement or misappropriation, and/or
any other dishonest act against the Companies (or any of them); or (B) any other
offense involving moral turpitude, which offense is followed by conviction or by
final action of any court of law; or (C) a felony;
(vii) The Executive repeatedly and
intemperately uses alcohol or drugs, to the extent that such use (A) interferes
with
or is likely to interfere with the Executive's ability to perform the
Executive's duties, and/or (B) endangers or is likely to endanger the life,
health, safety, or property of the Executive, the Companies (or any of them), or
any other person;
(viii) The Executive has intentionally
demonstrated or committed such acts of racism, sexism or other discrimination as
would tend to bring the Companies (or any of them) into public scandal or
ridicule, or could otherwise result in material and substantial harm to the
business, reputation, operations, affairs or financial position of the Companies
(or any of them); and/or
(ix) The Executive engaged in other conduct
constituting legal cause for termination.
No act, nor failure to act, on the Executive's part
shall be considered "intentional" unless the Executive has acted, or failed to
act, with a lack of good faith and with a lack of reasonable belief that the
Executive's action or failure to act was in the best interests of the Companies
(or any of them). In the event the Executive is both Disabled and the provisions
of subsection (vii) of this section 1(f) are applicable, the Companies shall
have the right to deem such event as a Termination For Cause.
(g) "Termination By Executive For Good Reason" means the
Executive's termination of this Agreement based on his reasonable determination
that one of the following events has occurred:
(i) Any of the representations or warranties in this Agreement made by the
Companies are not materially true, accurate and/or complete;
(ii) The Companies (or any of them) intentionally and
continually breach or wrongfully fail to fulfill or perform (A) their
obligations, promises or covenants under this Agreement; or (B) any warranties,
obligations, promises or covenants in any agreement (other than this Agreement)
entered into between the Companies (or any of them) and the Executive, without
cure, if any, as provided in such agreement;
(iii) The Companies terminate this Agreement and the
Executive's employment hereunder, and such termination does not constitute
Termination For Cause;
(iv) Without the consent of the Executive, the
Companies: (A) substantially alter or materially diminish the position, nature,
status, prestige or responsibilities of the Executive from those in effect by
mutual agreement of the parties from time-to-time; (B) assign additional duties
or responsibilities to the Executive which are wholly and clearly inconsistent
with the position, nature, status, prestige or responsibilities of the Executive
then in effect; or (C) remove or fail to reappoint or re-elect the Executive to
the Executive's offices under this Agreement (as they may be changed or
augmented from time-to-time with the consent of the Executive), or as a director
of the Company, except in connection with the Disability of the Executive;
(v) Without the ratification (express or implied) of
the Executive, the Executive is removed from the Board without his
consent; or the Company fails to nominate or reappoint the Executive to the
Board (unless the Executive is deceased or Disabled, or such removal or failure
is attributable to an event which would constitute Termination For Cause), or if
the Executive is so nominated, the stockholders of the Company fail to re-elect
the Executive to the Board;
(vi) The Companies (or any of them) intentionally
require the Executive to commit or participate in any felony or other
serious crime; and/or
(vii) The Companies (or any of them) engage in other
conduct constituting legal cause for termination.
If any of the events described in this section 1(g)
occurs, and such event is reasonably susceptible of being cured, the Companies
shall be entitled to a grace period of thirty (30) days following receipt of
written notice of such event to effect such cure.
2. EMPLOYMENT OBLIGATIONS
(a) Engagement; Duties. The Companies hereby engage the
Executive as their President and Chief Executive Officer, and the Executive
accepts such engagement, upon the terms and conditions set forth below. The
Executive shall do and perform all services, acts, or things necessary or
advisable that a President and a Chief Executive Officer would customarily be
empowered and authorized to do and perform by law and under the Bylaws of the
Companies.
The Executive shall report solely to the Board of Directors of the Company.
The Executive's responsibilities with respect to the Companies may be changed or
supplemented by the Board from time-to-time, in its discretion. The Executive
shall be reasonably available to travel as the needs of the business of the
Companies may require.
(b) Performance. The Executive shall devote the Executive's
entire and undivided business time, energy, abilities and attention solely and
exclusively to the performance of the Executive's duties hereunder and the
business of the Companies. The Executive shall at all times faithfully, loyally,
conscientiously, diligently and, to the best of the Executive's ability, perform
all of the Executive's duties and obligations under this Agreement, and
otherwise promote the interests and welfare of the Companies, all consistent
with the highest and best standards of the Companies' industry. The Executive:
(i) shall strictly comply with and adhere to all applicable laws, and the
Companies' Articles of Incorporation, Bylaws and policies; (ii) shall obey all
reasonable rules and regulations and policies now in effect or as subsequently
modified governing the conduct of employees of the Companies, and (iii) shall
not commit any acts of gross negligence, willful misconduct, dishonesty, fraud
or misrepresentation, racism, sexism or other discrimination, or any other acts
which would tend to bring the Companies (or any of them) into public scandal or
ridicule, or would otherwise result in material harm to the business or
reputation of the Companies or any of them. The Companies acknowledge that the
Executive is a member of the Board of Directors of Techmetrics International
Incorporated and that the Executive is required to spend a reasonable amount of
time in fulfilling the obligations related to that position. The Companies agree
that the Executive may continue to render services to Techmetrics International
Incorporated as a member of its Board of Directors and that the time spent in
rendering such services, so long as it is reasonable, will not constitute a
breach of this Agreement.
(c) Facilities and Services. The Companies shall provide such
support staff, facilities, equipment and supplies as are reasonably necessary or
suitable for the adequate performance of the Executive's duties and obligations
under this Agreement, including technical and secretarial help and the provision
of an appropriate home computer configuration as specified by the Executive.
3. TERM
(a) Initial Term. Unless this Agreement is previously
terminated by either party as provided in sections 11 or 12 below, the Companies
hereby employ the Executive pursuant to the terms of this Agreement, and the
Executive hereby accepts such employment, for the period beginning on February
15, 1998 and ending on February 14, 2001 (the "Initial Term").
(b) Automatic Renewal; Termination by the Companies. This
Agreement will be automatically renewed for additional and consecutive one (1)
year terms (each, a "Renewal Term") following the expiration of each Initial or
Renewal Term, (each a "Term"), unless either party gives written notice to the
other party, no later than sixty (60) days prior to the expiration of the then
pending Term, of its or his election not to automatically renew this Agreement
for an additional year.
4. COMPENSATION
(a) Annual Base Salary. During the term of this Agreement, the
Companies shall pay to the Executive an annual base salary of Two Hundred
Thousand dollars ($200,000) (the "Annual Salary.") The Annual Salary shall be
subject to any Tax Withholdings and/or Employee Deductions that are applicable.
(b) Annual Bonus. The Executive and the Board shall meet no
later than 90 days from the start of each of the Company's fiscal years to
establish performance standards and goals to be met by the Executive, which
standards and goals shall be based upon earnings, cash flows, EBITDA and other
objectives that are mutually agreed to by the Executives and the Board. During
the Term, the Companies shall pay to the Executive, no later than thirty (30)
days after the completion of each fiscal year, a cash bonus which shall be
computed as no more than 50% of the Executive's Annual Salary (the "Annual
Bonus") for each year in which the performance standards and goals are met or
exceeded by the Executive. Nothing in this section shall prevent the Executive
and the Board from mutually agreeing to an alternative computation of the Annual
Bonus, which may be implemented and paid to the Executive in place of the Annual
Bonus described herein. Any Annual Bonus calculated for payment to the Executive
for the period from February 1998 through June 1, 1999 shall take into
consideration the fact that the Executive will have been employed by the
Companies for a period of sixteen (16) months (rather than twelve (12) months)
prior to the calculation of the Annual Bonus. The Companies shall, therefore,
calculate the Annual Bonus for the period starting on June 1, 1998 and ending on
May 31, 1999 and add to it an additional 33 1/3% of the Annual Bonus amount. The
Annual Bonus shall be subject to any Applicable Tax Withholdings and/or Employee
Deductions.
(c) Annual Review. Commencing on June 1, 1998, and on each
June 1st thereafter, the Annual Salary then effective shall be increased (but
not decreased) by an amount: (i) which shall reflect the increase, if any, in
the cost of living during the previous 12 months by adding to the Annual Salary
an amount computed by multiplying the Annual Salary by the percentage by which
the level of the Consumer Price Index for the Troy, New York Metropolitan Area,
as reported on June 1st of the new year by the Bureau of Labor Statistics of the
United States Department of Labor has increased over its level as of June 1st of
the prior year; and (ii) which will maintain the Executive's compensation at a
level consistent with the compensation paid to executive officers holding
similar positions in the software industry. Additionally, commencing on June 1,
1999, and on each June 1st thereafter (or more frequently if it is deemed
necessary) the Board shall review the Executive's Annual Salary to determine
whether to otherwise increase the Executive's compensation, without any
obligation by the Board to authorize such increase. Any increase to the
Executive's Annual Salary made on June 1, 1999 shall take into consideration the
fact that the Executive will have been employed by the Companies for a period of
sixteen (16) months (rather than twelve (12) months) prior to such increase. The
Companies shall, therefore, calculate the Executive's annual increase for the
period starting on June 1, 1999 and ending on May 31, 2000 and add to it an
additional 33 1/3% of such increase.
(d) Participation In Employee Benefit Plans. The Executive
shall have the same rights, privileges, benefits and opportunities to
participate in any of the Companies' employee benefit plans which may now or
hereafter be in effect on a general basis for executive officers or employees,
including its qualified retirement plans and its non-qualified deferred
compensation plans. The Companies shall provide to the Executive, at the expense
of the Companies and not the Executive: (i) health, vision and dental insurance
covering the Executive, his spouse and his dependent children; (ii) disability
insurance; (iii) term life insurance insuring the life of the Executive for the
sum of Five Hundred Thousand dollars ($500,000) with the beneficiary to be named
by the Executive; and (iv) group term life insurance coverage in the amount of
Fifty Thousand dollar ($50,000) or such greater amount as may be available to
employees under such group term plan as the Companies may adopt from time to
time. As of the date of this Agreement the Companies have not yet obtained a
Five Hundred Thousand dollar ($500,000) term life insurance policy insuring the
life of the Executive, therefore, the Companies agree that, if the Executive
dies prior to the issuance of such policy, the Companies shall pay to the
Executive's spouse, if she survives him, the sum of Three Hundred Thousand
dollars ($300,000) and to each of the Executive's two children, if they survive
him, the sum of One Hundred Thousand dollars ($100,000). The health, vision and
dental insurance shall be with such underwriters and shall contain such
provisions as the Companies, in their sole discretion, may determine from time
to time. The Companies may delete coverages and otherwise amend and change the
type and quantity of insurance coverage it provides in its sole discretion, but
in no event shall coverage be provided which is less comprehensive than coverage
then being provided to other senior management employees of the Companies. In
the event the Executive receives payments from a disability plan maintained by
the Companies (or any of them), the Companies shall have the right to offset
such payments against the Annual Salary otherwise payable to the Executive
during the period for which payments are made by such disability plan.
(e) Stock Options. The Executive acknowledges receipt of
options to purchase fifty thousand (50,000) shares of the Company's common stock
in accordance with the terms and conditions of the stock option plan in effect
at the time of the grant the options. The Executive shall also be entitled to
receive a minimum of twenty-five thousand (25,000) options to purchase the
Company's common stock on the first anniversary of the execution of this
Agreement and a minimum of twenty-five thousand (25,000) options to purchase the
Company's common stock on the second anniversary and on each succeeding
anniversary of the execution of this Agreement, the terms and conditions of such
options to be governed by the stock option plan in effect at the time of the
grant of the options. Subject to the requirements of any state or federal
securities laws of the United States, the common stock to be acquired by
exercise of the options granted hereunder shall be freely tradeable. The
Executive shall be entitled to exercise the options with cash, or will be
entitled to a "cashless" exercise using other common stock of the Company, or
will be entitled to exercise the options using any other consideration
acceptable to the Company. The provisions of this section 4(e) shall control in
the event that they conflict with the provisions of any other agreements entered
into by the Executive and the Company which govern the vesting and exercise of
options granted to the Executive, including the Company's stock option plan(s).
(f) Stock Appreciation Rights. Subject to the receipt of any
approval required by the By-laws of the Company, the General Corporation Law of
Delaware and/or any federal or state securities laws, the Company shall grant to
the Executive, upon execution of this Agreement, stock appreciation rights
("SAR") based on thirty thousand (30,000) shares of the Company's common stock
and, on each anniversary of the execution of this Agreement, the Executive shall
receive additional SARs based on thirty thousand shares (30,000) of the
Company's common stock. These grants shall be governed by a separate Stock
Appreciation Rights Agreement which shall set forth all material terms and
conditions of the SARs. Upon exercise of the SARs, the Executive shall receive
from the Companies an amount equal to the excess of the fair market value of the
SAR shares exercised over the fair market value of the SAR shares as of the date
of the grant. Such amount shall be paid to the Executive, at the Executive's
option, in cash or with the Company's common stock.
(g) Annuity. Within one (1) year from the date of this
Agreement, the Companies shall purchase for the Executive an annuity (the
"Annuity") which will pay to the Executive the sum of Forty Thousand dollars
($40,000) per year during the joint lives of the Executive and his spouse. The
Companies shall gross-up the compensation paid to the Executive to cover the
payment of any and all taxes, of any kind or nature, that are incurred by the
Executive as a result of his receipt of the Annuity.
(h) Club Memberships. During the Term, the Companies shall
maintain, on behalf of the Executive, a membership in one (1) health club and a
membership in one (1) tennis club in the greater Albany, New York area. The
membership fee for each club shall not exceed One Thousand dollars ($1,000) per
year.
(i) Payment of Compensation. The compensation to be paid hereunder shall be
paid entirely by the Company or in part by the Company and any other subsidiary,
as they may mutually agree.
5. ALLOWANCES AND LOANS
(a) Automobile Allowance. The Companies shall provide a late
model luxury automobile to the Executive for his use during the term of this
Agreement, and shall pay all purchase-installment and/or lease payments to
acquire such automobile, as well as the cost to insure the automobile. If the
Companies fail to provide the automobile during any portion of the term of this
Agreement, the Companies shall pay to the Executive the sum of Six Hundred
dollars ($600) for each month an automobile is not provided, to reimburse the
Executive for the cost of an automobile and for the payment of insurance in
connection therewith. The Companies shall additionally reimburse the Executive
for all gasoline, operation, maintenance and repair costs associated with the
Executive's use of the automobile upon submission of itemized receipts
therefore. Payment and/or provision of the aforesaid allowance shall be subject
to any applicable Tax Withholdings and/or Employee Deductions. The Executive
shall be responsible for all income taxes imposed on the Executive by reason of
the automobile allowance.
(b) Relocation Allowance. The Companies shall reimburse the
Executive for all reasonable relocation expenses actually and properly incurred
by the Executive's move to Albany, New York. Such expenses shall include:
(i) Moving Expenses. All reasonably incurred expenses to move the
Executive's home furnishings and personal property (including any vehicle) to
Albany, New York.
(ii) Expenses Related to Purchase and Sale of Residence. All customary and
usual expenses related to the sale of the Executive's home in Florida, including
up to Forty Thousand dollars ($40,000) in lost equity, subject to the receipt by
the Companies of documentation necessary to verify the loss, if incurred.
(iii) Interim Living Expenses. For the shorter of a period of twelve (12)
months or until the Executive is able to sell his residence in Florida, all
reasonable expenses related to the rental of a home and furnishings which are
incurred by the Executive. In addition, the Companies shall pay for one round
trip airfare ticket every two weeks for the Employee or his spouse for
transportation between the Company's offices and the Executive's home in Florida
(or to the home of his parents or in-laws in Georgia) during such interim
period.
(iv) Income Tax Consequences. While payment and/or provision of the
relocation expenses shall be subject to any federal or state withholding as may
be applicable, such payments to the Executive shall be grossed up to cover the
payment of any and all taxes, of any kind or nature, that are incurred by the
Executive as a result of his receipt of the foregoing allowances.
6. BUSINESS EXPENSES
During the Term of this Agreement the Executive is authorized
to incur, and the Companies shall directly pay or reimburse to the Executive,
his reasonable and necessary business expenses, duly and actually incurred in
connection with the duties and services to be performed by the Executive
pursuant to this Agreement, including without limitation entertainment, meals,
travel, lodging and other similar out-of-pocket expenses, upon the Executive's
submission to the Companies of itemized expense statements setting forth the
date, purpose and amount of the expense incurred, together with corresponding
receipts showing payment by the Executive in cases where he seeks reimbursement,
all in conformity with business expense payment and/or reimbursement policies
established by the Companies from time to time, all of which shall comply with
the substantiation requirements of any applicable taxing authorities, and
regulations promulgated by such authorities thereto, pertaining to the
deductibility of such expenses. Direct payment and/or reimbursement shall be
made by the Companies no later than fifteen (15) days from the date that the
foregoing documentation is submitted by the Executive.
7. TAX WITHHOLDINGS AND EMPLOYEE DEDUCTIONS
The Companies shall be entitled to deduct from any payments to
the Executive pursuant to the terms of this Agreement (including any payments
arising from the early termination of this Agreement), amounts sufficient to
cover any applicable federal, state, and/or local income tax withholdings and/or
deductions as may be required in connection with such payment, including without
limitation old-age and survivor's and other social security payments, state
disability and other withholdings payment as may be required by the tax laws or
regulations of any applicable jurisdiction (collectively, the "Tax
Withholdings"), as well as all other elective employee deductions applicable to
such payment such as, for example, deductions relating to any Employee Benefit
Plan in which the Executive participates (collectively, the "Employee
Deductions").
8. PERSONAL TIME-OFF
The Executive shall be entitled in each calendar year during
the term of this Agreement to such number of personal time-off days for such
purposes, including vacations and time for personal affairs ("Personal
Time-Off") as are approved by the Board, but not less than twenty (20) business
days. Personal Time-Off shall be in addition to regular paid holidays provided
to all employees of the Company. The Executive's compensation shall be paid in
full with respect to approved Personal Time-Off days. Should the Executive fail
to use all Personal Time-Off days in any calendar year, the Executive shall have
the option of (i) receiving payment for such days on a pro rata basis, or (ii)
"carrying-over" unused Personal Time-Off days to succeeding years. Personal
time-off shall be taken during a period or periods mutually satisfactory to both
the Companies and the Executive.
9. INSURANCE
If requested by the Companies, the Executive shall submit to
such physical examinations and otherwise take such actions and execute and
deliver such documents as may be reasonably necessary to enable the Companies,
at their expense and for their benefit, to obtain disability and/or life
insurance on the life of the Executive. The Executive represents and warrants
that he has no reason to believe that he is not insurable for disability or life
coverage with a reputable insurance company at rates now prevailing for healthy
persons of the Executive's age and gender.
10. NONCOMPETITION, NONSOLICITATION AND NONINTERFERENCE
AND PROPRIETARY PROPERTY AND CONFIDENTIAL
INFORMATION PROVISIONS.
(a) Noncompetition.
(1) "Applicable Definitions" For purposes of this section 10, the following
capitalized terms shall have the definitions set forth below:
i. "Business Segments" - The term "Business Segments" is defined as each of
the Companies' products or product lines.
ii. "Competitive Business" - The term "Competitive
Business" is defined as any business that directly competes with the
Companies' Business Segments, whether such business is conducted by a
proprietorship, partnership, corporation or other entity or venture.
iii. "Territory" - The term "Territory" is defined as
the geographic area (both within the United States and internationally)
in which each Business Segment is carried on including, by way of
example and not limitation, the entire geographic area in which the
Companies conduct various phases of such Business Segment, including
purchasing, production, distribution, promotional and marketing
activities, and sales.
(2) Covenant Not To Compete. The Executive hereby covenants and agrees that
during the term of this Agreement, and for a period of one (1) year from the
date this Agreement is terminated or expires, the Executive shall not, with
respect to each Business Segment and within the boundaries of the Territory
applicable to such Business Segment, without the prior written consent of the
Companies (which consent may be withheld in the sole and absolute discretion of
Companies), directly or indirectly, either alone or in association or in
connection with or on behalf of any person, firm, partnership, corporation or
other entity or venture now existing or hereafter created: (i) be or become
interested or engaged in, directly or indirectly, with any Competitive Business
including, without limitation, being or becoming an organizer, investor, lender,
partner, joint venturer, stockholder, officer, director, employee, manager,
independent sales representative, associate, consultant, agent, supplier,
vendor, vendee, lessor, or lessee to any Competitive Business, or (ii) in any
manner associate with, or aid or abet or give information or financial
assistance to any Competitive Business, or (iii) use or permit the use of the
Executive's name or any part thereof to be used or employed in connection with
any Competitive Business (collectively and severally, the "Noncompetition
Covenants"). Notwithstanding the foregoing, the provisions of this section
10(a)2 shall not be deemed to prevent the purchase or ownership by the Executive
as a passive investment of the outstanding capital shares of any publicly held
corporation, so long as any other obligation or duty under the Noncompetition
Covenants are not breached.
(3) Separate Covenants. The Noncompetition Covenants shall be construed to
be divided into separate and distinct Noncompetition Covenants with respect to
(i) each Business Segment and (ii) each matter or type of conduct described
therein. Each of such divided Noncompetition Covenants shall be separate and
distinct from all such other Noncompetition Covenants with respect to the same
or any other Business Segment.
(4) Acknowledgements. The Executive acknowledges that: (i) the covenants
and the restrictions contained in the Noncompetition Covenants are necessary,
fundamental, and required for the protection of the business of the Companies;
(ii) the Noncompetition Covenants relate to matters which are of a special,
unique and extraordinary value; and (iii) a breach of any of the Noncompetition
Covenants will result in irreparable harm and damages which cannot be adequately
compensated by a monetary award.
(5) Judicial Limitation. Notwithstanding the foregoing, if at any time a
court of competent jurisdiction holds that any portion of any Noncompetition
Covenant is unenforceable by reason of its extending for too great a period of
time or over too great a geographical area or by reason of its being too
extensive in any other respect, such Noncompetition Covenant shall be
interpreted to extend only over the maximum period of time, maximum geographical
area, or maximum extent in all other respects, as the case may be, as to which
it may be enforceable, all as determined by such court in such action.
(b) Nonsolicitation and Noninterference.
(1) Covenants. The Executive hereby covenants and agrees that during the
term of this Agreement, and for a period of two (2) years from the date this
Agreement terminates or expires, the Executive shall not, either for the
Executive's own account or directly or indirectly in conjunction with or on
behalf of any person, partnership, corporation or other entity or venture:
i. Solicit or employ or attempt to solicit or employ
any person who is then or has, within twelve (12) months prior thereto,
been an officer, partner, manager, agent or employee of the Companies
or any affiliate of the Companies whether or not such a person would
commit a breach of that person's contract of employment with the
Companies (or any of them), if any, by reason of leaving the service of
the Companies (the "Nonsolicitation Covenant"); or
ii. On behalf of, directly or indirectly, any
Competitive Business (as such term is defined in section 10 (a)1.ii.,
or for the purpose of or with the reasonably foreseeable effect of
harming the business of the Companies, solicit the business of any
person, firm or company which is then, or has been at any time during
the preceding twelve (12) months prior to such solicitation, a
customer, client, contractor, supplier or vendor of the Companies (or
any of them) (the "Noninterference Covenant)".
(2) Acknowledgments. Each of the parties acknowledges that: (i) the
covenants and the restrictions contained in the Nonsolicitation and
Noninterference Covenants are necessary, fundamental, and required for the
protection of the Companies' businesses; (ii) such Covenants relate to matters
which are of a special, unique and extraordinary value; and (iii) a breach of
either of such Covenants will result in irreparable harm and damages which
cannot be adequately compensated by a monetary award.
(3) Judicial Limitation. Notwithstanding the foregoing, if at any time,
despite the express agreement of the Companies and the Executive, a court of
competent jurisdiction holds that any portion of any Nonsolicitation or
Noninterference Covenant is unenforceable by reason of its extending for too
great a period of time or by reason of its being too extensive in any other
respect, such Covenant shall be interpreted to extend only over the maximum
period of time or to the maximum extent in all other respects, as the case may
be, as to which it may be enforceable, all as determined by such court in such
action.
(c) Proprietary Property; Confidential Information.
(1) "Applicable Definitions" For purposes of this section 10(c), the
following capitalized terms shall have the definitions set forth below:
i. "Confidential Information" - The term
"Confidential Information" is collectively and severally defined as any
information, matter or thing of a secret, confidential or private
nature, whether or not so labeled, which is connected with the business
or methods of operation of the Companies (or any of them) or concerning
any of their suppliers, customers, licensors, licensees or others with
whom the Companies (or either of them) have a business relationship,
and which has current or potential value to the Companies (or any of
them) or the unauthorized disclosure of which could be detrimental to
the Companies (or any of them). Confidential Information shall be
broadly defined and shall include, by way of example and not
limitation,: (i) matters of a business nature available only to
management and owners of the Companies of which the Executive may
become aware (such as information concerning customers, vendors and
suppliers, including their names, addresses, credit or financial
status, buying or selling habits, practices, requirements, and any
arrangements or contracts that the Companies may have with such
parties, the Companies' marketing methods, plans and strategies, the
costs of materials, the prices for which the Companies obtain or have
obtained or at which the Companies sell or have sold their products or
services, the Companies' manufacturing and sales costs, the amount of
compensation paid to employees of the Companies and other terms of
their employment, financial information such as financial statements,
budgets and projections, and the terms of any contracts or agreements
the Companies have entered into) and (ii) matters of a technical nature
(such as product information, trade secrets, know-how, formulae,
innovations, inventions, devices, discoveries, techniques, formats,
processes, methods, specifications, designs, patterns, schematics,
data, compilation of information, test results, and research and
development projects). For purposes of the foregoing, the term "trade
secrets" shall mean the broadest and most inclusive interpretation of
trade secrets as defined by the Uniform Trade Secrets Act and cases
interpreting the scope of the Uniform Trade Secrets Act.
ii. "Proprietary Property" - The term "Proprietary
Property" is collectively and severally defined as any written or
tangible property owned or used by the Companies in connection with the
business of the Companies, whether or not such property also qualifies
as Confidential Information. Proprietary Property shall be broadly
defined and shall include, by way of example and not limitation,
products, samples, equipment, files, lists, books, notebooks, records,
documents, memoranda, reports, patterns, schematics, compilations,
designs, drawings, data, test results, contracts, agreements,
literature, correspondence, spread sheets, computer programs and
software, computer print outs, other written and graphic records, and
the like, whether originals, copies, duplicates or summaries thereof,
affecting or relating to the business of Company, financial statements,
budgets, projections, invoices.
(2) Ownership of Proprietary Property. The Executive acknowledges that all
Proprietary Property which the Executive may prepare, use, observe, come into
possession of and/or control shall, at all times, remain the sole and exclusive
property of the Companies. The Executive shall, upon demand by the Companies at
any time, or upon the cessation of the Executive's employment, irrespective of
the time, manner, cause or lack of cause of such cessation, immediately deliver
to the Companies or their designated agent, in good condition, ordinary wear and
tear and damage by any cause beyond the reasonable control of the Executive
excepted, all items of the Proprietary Property which are or have been in the
Executive's possession or under his control, as well as a statement describing
the disposition of all items of the Proprietary Property beyond the Executive's
possession or control in the event that the Executive has not previously
returned such items of the Proprietary Property to the Companies.
(3) Agreement Not to Use or Divulge Confidential Information. The Executive
agrees that he will not, in any fashion, form or manner, unless specifically
consented to in writing by the Companies, either directly or indirectly use,
divulge, transmit or otherwise disclose or cause to be used, divulged,
transmitted or otherwise disclosed to any person, firm or corporation, in any
manner whatsoever (other than in the Executive's performance of duties for the
Companies or except as required by law) any Confidential Information of any
kind, nature or description. The foregoing provisions shall not be construed to
prevent the Executive from making use of or disclosing information which is in
the public domain through no fault of the Executive, provided, however, specific
information shall not be deemed to be in the public domain merely because it is
encompassed by some general information that is published or in the public
domain or in the Executive's possession prior to the Executive's employment with
the Companies.
(4) Acknowledgment of Secrecy. The Executive acknowledges that the
Confidential Information is not generally known to the public or to other
persons who can obtain economic value from its disclosure or use and that the
Confidential Information derives independent economic value thereby, and the
Executive agrees that he shall take all efforts reasonably necessary to maintain
the secrecy and confidentiality of the Confidential Information and to otherwise
comply with the terms of this Agreement.
(5) Inventions, Discoveries. The Executive acknowledges that any
inventions, discoveries or trade secrets, whether patentable or not, made or
found by the Executive in the scope of his employment with the Companies
constitute property of the Companies and that any rights therein now held or
hereafter acquired by the Executive individually or in any capacity are hereby
transferred and assigned to the Companies, and agrees to execute and deliver any
confirmatory assignments, documents or instruments of any nature necessary to
carry out the intent of this section when requested by the Companies without
further compensation therefor, whether or not the Executive is at the time
employed by the Companies. Provided, however, notwithstanding the foregoing, the
Executive shall not be required to assign his rights in any invention which the
Executive developed entirely on his own time without using the Companies'
equipment, supplies, facilities or trade secret information except for those
inventions that either:
(i) Relate at the time of conception or reduction to
practice of the invention to the Companies' business, or actual or
demonstrably anticipated research or development of the Companies; or
(ii) Result from any work performed by the Executive
for the Companies.
The Executive understands that he bears the full burden of
proving to the Companies that an invention qualifies fully under this section
10(c)(5).
11. TERMINATION OF AGREEMENT BEFORE EXPIRATION OF TERM
(a) Death or Disability. Notwithstanding any other term of
this Agreement, the applicable Term shall terminate upon the death or Disability
of the Executive.
(b) Change In Control. Notwithstanding any other term of this
Agreement, the applicable Term shall, at the election of the Executive delivered
by written notice to the Company, terminate effective upon a Change In Control.
(c) Termination of Agreement for Cause. The Board of Directors
of IFS International, Inc., a Delaware corporation, may terminate this Agreement
and the Executive's employment hereunder at any time in the event such
termination constitutes Termination For Cause, upon giving written notice to the
Executive specifying in reasonable detail (i) the event which constitutes the
cause; (ii) the pertinent facts and circumstances underlying the cause; and
(iii) the effective date of the termination (not to exceed ninety {90} days from
the date of such notice, but which date may, at the election of IFS
International, Inc., be effective upon receipt of said written notice by the
Executive). Such notice shall also afford the Executive an opportunity to be
heard in person by the Board (with the assistance of the Executive's legal
counsel, if the Executive so desires). Such hearing shall be held reasonably
promptly after such notice but, in any event, before the effective date of the
prospective termination.
(d) Termination of Agreement by Executive for Good Reason. The
Executive may terminate this Agreement and the Executive's employment hereunder
at any time in the event such termination constitutes Termination By Executive
For Good Reason, upon giving written notice to the Companies specifying in
reasonable detail (i) the event which constitutes the good reason; (ii) the
pertinent facts and circumstances underlying the good reason; and (iii) the
effective date of termination (which, in the case of an event described in
section 1(g) which is reasonably susceptible of being cured, shall not be less
than thirty {30} days from the date of such notice).
12. EFFECT OF TERMINATION ATTRIBUTABLE TO DEATH OR DISABILITY; TERMINATION
FOR CAUSE; TERMINATION BY EXECUTIVE WITHOUT GOOD REASON
In the event the Executive's employment hereunder is
terminated before the expiration of a Term, and such termination is attributable
to (i) an event defined as Death or Disability; (ii) an event defined as
Termination For Cause; and/or (iii) termination by the Executive which does not
constitute Termination By Executive For Good Reason, then all rights and
obligations of the Companies and the Executive under section 2 [Employment
Obligations], section 4 [Compensation], section 5 [Allowances], section 6
[Business Expenses] and section 8 [Personal Time-Off] shall terminate as of the
effective date of the termination; provided, however:
(a) The Companies shall pay: (i) the Executive's accrued but
unpaid Personal Time Off, (ii) six (6) months of the Executive's then current
Annual Salary, and (iii) the Executive's Annual Salary through the effective
date of the termination, on or before the close of business on such effective
date, provided, however, if the Executive is employed for less than the entire
number of business days in such pay period, the Annual Salary for such pay
period shall be prorated on the basis of the number of business days during
which the Executive was actually employed during such pay period, divided by the
actual number of business days in such pay period;
(b) The Companies shall pay the Executive's accrued but unpaid
Annual Bonus through the last date of the Executive's employment within one
hundred and twenty (120) days after the end of the fiscal period to which the
Annual Bonus relates. The amount of the Annual Bonus shall be determined by
calculating the Annual Bonus the Executive would ordinarily be entitled to for
the entire fiscal year, and then dividing such amount by a fraction wherein the
numerator equals the number of days the Executive was employed in such year and
the denominator equals the total number of calendar days in such year. The
Companies shall also pay an additional amount which shall be determined by
calculating the Annual Bonus the Executive would ordinarily be entitled to for
the entire fiscal year, and then dividing such amount in half;
(c) The Companies shall reimburse the Executive for the
automobile allowance incurred pursuant to section 5(a) prior to the effective
date of the termination and for a period of six (6) months following the
effective date of the termination;
(d) The Companies shall reimburse the Executive for any
business expenses incurred prior to the effective date of the termination,
within three (3) business days after the Executive's submission of the
Executive's expense report to the Companies;
(e) The Executive shall not be entitled to continue to
participate in any Employee Benefit Plans except to the extent provided in such
plans for terminated participants, or as may be required by applicable law.
Notwithstanding the foregoing, amounts which are vested in any Employee Benefit
Plans, including stock options and SARs, shall be payable in accordance with
such plan.
13. EFFECT OF TERMINATION WHERE TERMINATION ATTRIBUTABLE TO CHANGE IN
CONTROL; TERMINATION BY EXECUTIVE FOR GOOD REASON; TERMINATION WITHOUT CAUSE
In the event the Executive's employment hereunder is
terminated before the expiration of a Term, and such termination is attributable
to (i) an event defined as a Change in Control; (ii) an event defined as a
Termination by Executive for Good Reason; and/or (iii) termination by the Board
of Directors of IFS International, Inc., a Delaware corporation, which does not
constitute a Termination for Cause; then all rights and obligations of the
Companies and the Executive under section 2 [Employment Obligations], section 4
[Compensation], section 5 [Allowances], section 6 [Business Expenses], and
section 8 [Personal Time-Off] shall terminate as of the effective date of the
termination date; provided, however:
(a) The Companies shall pay to the Executive, in a lump sum
and without discount to present value, the Executive's then effective Annual
Salary as set forth in section 4(a), said payment to be calculated for the
balance of the Term of this Agreement;
(b) The Companies shall pay to the Executive, in a lump sum
and without discount to present value, the Executive's Annual Bonus as set forth
in section 4(b), calculated for the balance of the Term of this Agreement, which
shall be computed as 50% of the Executive's Annual Salary earned during the
twelve (12) month period immediately preceding the Executive's termination;
(c) All stock options which have been or are scheduled to be
granted during the Term of this Agreement pursuant to section 4(e) shall become
fully vested at the prevailing xxxxx xxxxx and the Companies shall pay to the
Executive a sum which shall permit the Executive to exercise, in his sole and
absolute discretion, all or some of the options;
(d) The Executive shall be entitled to exercise all SARs which
have been or are scheduled to be granted during the Term of this Agreement
pursuant to section 4(f).
(e) At the election of the Executive, the Companies shall (i)
provide to the Executive and his spouse and dependents, for a period of twelve
(12) months, medical, dental, and vision insurance and, to the Executive,
disability insurance, which benefits shall be comparable to the benefits
received by the Executive at the time of termination of his employment; or (ii)
provide to the Executive additional compensation, payable on a monthly basis,
which would approximate the cost to the Executive to obtain such comparable
benefits;
(f) The Companies shall provide to the Executive a fully paid
up life insurance policy insuring the life of the Executive in the amount of
Five Hundred Thousand dollars ($500,000);
(g) The Companies shall forgive any unpaid loans or
indebtedness owed by the Executive to the Companies or any of them;
(h) The Companies shall immediately purchase the Annuity; and
(i) The Companies shall immediately purchase the Executive's
automobile and transfer title, free and clear of all liens and encumbrances, to
the Executive;
(j) The Companies shall reimburse the Executive for the
Executive's business expenses incurred through the effective date of the
termination, within three (3) business days of the Executive's submission of the
Executive's expense report to the Companies.
The Companies shall gross-up the compensation or remuneration
paid to the Executive pursuant to subsections (a) and (b) above to cover the
payment of any and all taxes, of any kind or nature, that are incurred by the
Executive as a result of his receipt of the foregoing compensation.
The Executive shall not be required to mitigate the amount of
any payment pursuant to this section 13 by seeking other employment or
otherwise, and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.
The provisions of this section 13 shall not be deemed to prejudice the rights of
the Companies or the Executive to any remedy or damages to which such party may
be entitled by reason of a breach of this Agreement by the other party, whether
at law or equity.
14. REMUNERATION ON SALE OR TRANSFER
Irrespective of whether or not the Executive's employment is
terminated, if there is a (i) Change of Control; or (ii) transfer or sale of all
or substantially all of the assets of the Company(ies) which is not a Change of
Control; or (iii) transfer or sale of Beneficial Ownership of more than fifty
percent (50%) of the Total Combined Voting Power of the Company's then
outstanding Voting Securities which does not constitute a Change of Control,
then the Companies shall pay to the Executive an amount equal to 6% of the first
$10 million dollars in value received by the Companies (including cash,
securities, debt or any other form of property) in connection with such Change
of Control, transfer or sale, 8% of the next $10 million dollars in value
received by the Companies in connection with such Change of Control, transfer or
sale, and 10% of any value received by the Companies in excess of $20 million in
connection with such Change of Control, transfer or sale, provided, however, the
remuneration paid to the Executive pursuant to this section 14 shall, in any
event, not be less than Five Hundred Thousand dollars ($500,000). If the
Executive's employment is terminated due to a Change of Control or a transfer or
sale as contemplated by this section 14, the Companies shall: (A) buy-out from
the leasing agency, on behalf of the Executive, the automobile leased by the
Executive pursuant to section 5(a); (B) pay all reasonable relocation costs,
including the costs related to the sale of the Executive's residence in New
York; and (C) pay the reasonable expenses related to his relocation, including
the rental of a home and furnishings and the storage of his furnishings and
personal property, for the longer of (x) twelve (12) months or (y) the sale of
the Executive's residence in New York. The Companies shall gross-up the
remuneration paid to the Executive pursuant to this section 14 to cover the
payment of any and all taxes, of any kind or nature, that are incurred by the
Executive as a result of his receipt of the foregoing remuneration.
15. REPRESENTATIONS AND WARRANTIES OF PARTIES
(a) By All Parties. Each of the parties to this Agreement
hereby represents and warrants to each of the other parties to this Agreement,
each of which is deemed to be a separate representation and warranty, as
follows:
(i) Organization, Power and Authority. Such party has all requisite
corporate or other power and authority to enter into this Agreement.
(ii) Authorization and Validity of Agreement. This
Agreement has been duly executed and delivered by such party and, assuming
due authorization, execution and delivery by all of the other parties hereto, is
valid and binding upon such party in accordance with its terms, except as
limited by: (1) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditor rights generally;
and (2) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
(iii) No Breach or Conflict. Neither the execution or
delivery of this Agreement, nor the performance by such party of the
transactions contemplated herein: (i) if such party is an entity, will breach or
conflict with any of the provisions of such party's governing organizational
documents; or (ii) to the best of such party's knowledge and belief, will such
actions violate or constitute an event of default under any agreement or other
instrument to which such party is a party.
(b) By Executive. The Executive hereby represents and warrants
to the Companies that the Executive is not Disabled at the time of the execution
and delivery of this Agreement by the Executive.
16. SEAT ON BOARD OF DIRECTORS
The Executive is currently a member of the Board of Directors
of the Company. During the Term, the Company shall nominate and solicit proxies
or votes in favor of the election of the Executive to the Board of Directors of
the Company. The Executive shall serve as a member of the Board without
additional compensation unless the other members of the Board vote to pay him
the same stipend paid to other Directors who are also full time employees of the
Company.
17. MISCELLANEOUS
(a) Preparation of Agreement; Costs and Expenses. This
Agreement was prepared by the Companies solely on behalf of such party. Each
party acknowledges that: (i) he or it had the advice of, or sufficient
opportunity to obtain the advice of, legal counsel separate and independent of
legal counsel for any other party hereto; (ii) the terms of the transactions
contemplated by this Agreement are fair and reasonable to such party; and (iii)
such party has voluntarily entered into the transactions contemplated by this
Agreement without duress or coercion. Each party further acknowledges that such
party was not represented by the legal counsel of any other party hereto in
connection with the transactions contemplated by this Agreement, nor was he or
it under any belief or understanding that such legal counsel was representing
his or its interests. Except as expressly set forth in this Agreement, each
party shall pay all legal and other costs and expenses incurred or to be
incurred by such party in negotiating and preparing this Agreement; in
performing due diligence or retaining professional advisors; in performing any
transactions contemplated by this Agreement; or in complying with such party's
covenants, agreements and conditions contained herein. Each party agrees that no
conflict, omission or ambiguity in this Agreement, or the interpretation
thereof, shall be presumed, implied or otherwise construed against any other
party to this Agreement on the basis that such party was responsible for
drafting this Agreement.
(b) Cooperation. Each party agrees, without further
consideration, to cooperate and diligently perform any further acts, deeds and
things, and to execute and deliver any documents that may be reasonably
necessary or otherwise reasonably required to consummate, evidence, confirm
and/or carry out the intent and provisions of this Agreement, all without undue
delay or expense.
(c) Interpretation.
(i) Survival. All representations and warranties made by any party in
connection with any transaction contemplated by this Agreement shall survive the
execution and delivery of this Agreement, and the performance or consummation of
any transaction described in this Agreement.
(ii) Entire Agreement/No Collateral Representations. Each party expressly
acknowledges and agrees that this Agreement, and the agreements and documents
referenced herein: (1) are the final, complete and exclusive statement of the
agreement of the parties with respect to the subject matter hereof; (2)
supersede any prior or contemporaneous agreements, memorandums, proposals,
commitments, guaranties, assurances, communications, discussions, promises,
representations, understandings, conduct, acts, courses of dealing, warranties,
interpretations or terms of any kind, whether oral or written (collectively and
severally, the "prior agreements"), and in particular the Prior Agreement,, and
that any such prior agreements (and the Prior Agreement) are of no force or
effect except as expressly set forth herein; and (3) may not be varied,
supplemented or contradicted by evidence of prior agreements, or by evidence of
subsequent oral agreements. No prior drafts of this Agreement, and no words or
phrases from any prior drafts, shall be admissible into evidence in any action
or suit involving this Agreement.
(iii) Amendment; Waiver; Forbearance. Except as expressly provided herein,
neither this Agreement nor any of its terms, provisions, obligations or rights
may be amended, modified, supplemented, augmented, rescinded, discharged or
terminated (other than by performance), except by a written instrument or
instruments signed by all of the parties to this Agreement. No waiver of any
breach of any term, provision or agreement, or of the performance of any act or
obligation under this Agreement, or of any extension of time for performance of
any such act or obligation, or of any right granted under this Agreement, shall
be effective and binding unless such waiver shall be in a written instrument or
instruments signed by each party claimed to have given or consented to such
waiver. Except to the extent that the party or parties claimed to have given or
consented to a waiver may have otherwise agreed in writing, no such waiver shall
be deemed a waiver or relinquishment of any other term, provision, agreement,
act, obligation or right granted under this Agreement, or of any preceding or
subsequent breach thereof. No forbearance by a party in seeking a remedy for any
noncompliance or breach by another party hereto shall be deemed to be a waiver
by such forbearing party of its rights and remedies with respect to such
noncompliance or breach, unless such waiver shall be in a written instrument or
instruments signed by the forbearing party.
(iv) Remedies Cumulative. The remedies of each party under this Agreement
are cumulative and shall not exclude any other remedies to which such party may
be lawfully entitled.
(v) Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall,
to any extent, be determined to be invalid, illegal or unenforceable under
present or future laws, then, and in that event: (1) the performance of the
offending term or provision (but only to the extent its application is invalid,
illegal or unenforceable) shall be excused as if it had never been incorporated
into this Agreement, and, in lieu of such excused provision, there shall be
added a provision as similar in terms and amount to such excused provision as
may be possible and be legal, valid and enforceable; and (2) the remaining part
of this Agreement (including the application of the offending term or provision
to persons or circumstances other than those as to which it is held invalid,
illegal or unenforceable) shall not be affected thereby, and shall continue in
full force and effect to the fullest legal extent.
(vi) Parties in Interest. Nothing in this Agreement
shall confer any rights or remedies under or by reason of this Agreement
on any persons other than the parties hereto and their respective successors and
assigns, if any, or as may be permitted hereunder; nor shall anything in this
Agreement relieve or discharge the obligation or liability of any third person
to any party to this Agreement; nor shall any provision give any third person
any right of subrogation or action over or against any party to this Agreement.
(vii) No Reliance Upon Prior Representation. Each party acknowledges that:
(1) no other party has made any oral representation or promise which would
induce them prior to executing this Agreement to change their position to their
detriment, to partially perform, or to part with value in reliance upon such
representation or promise; and (2) such party has not so changed its position,
performed or parted with value prior to the time of the execution of this
Agreement, or such party has taken such action at its own risk.
(viii) Headings; References; Incorporation; Gender; Statutory References.
The headings used in this Agreement are for convenience and reference purposes
only, and shall not be used in construing or interpreting the scope or intent of
this Agreement or any provision hereof. References to this Agreement shall
include all amendments or renewals thereof. All cross-references in this
Agreement, unless specifically directed to another agreement or document, shall
be construed only to refer to provisions within this Agreement. Any Exhibit
referenced in this Agreement shall be construed to be incorporated in this
Agreement by such reference. As used in this Agreement, each gender shall be
deemed to include the other gender, including neutral genders appropriate for
entities, if applicable, and the singular shall be deemed to include the plural,
and vice versa, as the context requires. Any reference to statutes or laws will
include all amendments, modifications, or replacements of the specific sections
and provisions concerned.
(d) Enforcement.
(i) Applicable Law. This Agreement and the rights and remedies of each
party arising out of or relating to this Agreement (including, without
limitation, equitable remedies) shall (with the exception of the applicable
securities laws) be solely governed by, interpreted under, and construed and
enforced in accordance with the laws (without regard to the conflicts of law
principles) of the State of New York, as if this Agreement were made, and as if
its obligations are to be performed, wholly within the State of New York.
(ii) Consent to Jurisdiction; Service of Process. Any "action or
proceeding" (as such term is defined below) arising out of or relating to this
Agreement shall be filed in and heard and litigated solely before the state
courts of New York. Each party generally and unconditionally accepts the
exclusive jurisdiction of such courts and venue therein; consents to the service
of process in any such action or proceeding by certified or registered mailing
of the summons and complaint in accordance with the notice provisions of this
Agreement; and waives any defense or right to object to venue in said courts
based upon the doctrine of "forum non conveniens." The term "action or
proceeding" is defined as any and all claims, suits, actions, hearings,
arbitrations or other similar proceedings, including appeals and petitions
therefrom, whether formal or informal, governmental or non-governmental, or
civil or criminal.
(iii) Waiver of Right to Jury Trial. Each party
hereby waives such party's respective right to a jury trial of any claim or
cause of action based upon or arising out of this Agreement. Each party
acknowledges that this waiver is a material inducement to each other party
hereto to enter into the transaction contemplated hereby; that each other party
has already relied upon this waiver in entering into this Agreement; and that
each other party will continue to rely on this waiver in their future dealings.
Each party warrants and represents that such party has reviewed this waiver with
such party's legal counsel, and that such party has knowingly and voluntarily
waived its jury trial rights following consultation with such legal counsel.
(iv) Consent to Specific Performance and Injunctive Relief and Waiver of
Bond or Security. Each party acknowledges that the other party(s) hereto may, as
a result of such party's breach of its covenants and obligations under this
Agreement, sustain immediate and long-term substantial and irreparable injury
and damage which cannot be reasonably or adequately compensated by damages at
law. Consequently, each party agrees that in the event of such party's breach or
threatened breach of its covenants and obligations hereunder, the other
non-breaching party(s) shall be entitled to obtain from a court of competent
equitable relief including, without limitation, enforcement of all of the
provisions of this Agreement by specific performance and/or temporary,
preliminary and/or permanent injunctions enforcing any of the rights of such
non-breaching party(s), requiring performance by the breaching party, or
enjoining any breach by the breaching party, all without proof of any actual
damages that have been or may be caused to such non-breaching party(s) by such
breach or threatened breach and without the posting of bond or other security in
connection therewith. The party against whom such action or proceeding is
brought waives the claim or defense therein that the party bringing the action
or proceeding has an adequate remedy at law and such party shall not allege or
otherwise assert the legal position that any such remedy at law exists. Each
party agrees and acknowledges: (i) that the terms of this subsection are fair,
reasonable and necessary to protect the legitimate interests of the other
party(s); (ii) that this waiver is a material inducement to the other party(s)
to enter into the transaction contemplated hereby; (iii) that the other party(s)
has already relied upon this waiver in entering into this Agreement; and (iv)
that each party will continue to rely on this waiver in their future dealings.
Each party warrants and represents that such party has reviewed this provision
with such party's legal counsel, and that such party has knowingly and
voluntarily waived its rights following consultation with legal counsel.
(v) Recovery of Fees and Costs. If any party
institutes or should the parties otherwise become a party to any action or
proceeding based upon or arising out of this Agreement including, without
limitation, to enforce or interpret this Agreement or any provision hereof, or
for damages by reason of any alleged breach of this Agreement or any provision
hereof, or for a declaration of rights in connection herewith, or for any other
relief, including equitable relief, in connection herewith, the "prevailing
party" (as such term is defined below) in any such action or proceeding, whether
or not such action or proceeding proceeds to final judgment or determination,
shall be entitled to receive from the non-prevailing party as a cost of suit,
and not as damages, all fees, costs and expenses of enforcing any right of the
prevailing party (collectively, "fees and costs"), including without limitation,
(1) reasonable attorneys' fees and costs and expenses, (2) witness fees
(including experts engaged by the parties, but excluding shareholders, officers,
employees or partners of the parties), (3) accountants' fees, (4) fees of other
professionals, and (5) any and all other similar fees incurred in the
prosecution or defense of the action or proceeding; including, without
limitation, fees incurred in the following: (A) postjudgment motions; (B)
contempt proceedings; (C) garnishment, levy, and debtor and third party
examinations; (D) discovery; and (E) bankruptcy litigation. All of the aforesaid
fees and costs shall be deemed to have accrued upon the commencement of such
action and shall be paid whether or not such action is prosecuted to judgment.
Any judgment or order entered in such action shall contain a specific provision
providing for the recovery of attorney the aforesaid fees, costs and expenses
incurred in enforcing such judgment and an award of prejudgment interest from
the date of the breach at the maximum rate of interest allowed by law. The term
"prevailing party" is defined as the party who is determined to prevail by the
court after its consideration of all damages and equities in the action or
proceeding, whether or not the action or proceeding proceeds to final judgment
(the court shall retain the discretion to determine that no party is the
prevailing party in which case no party shall be entitled to recover its costs
and expenses under this subsection).
(e) Arbitration.
(i) Jurisdiction. The parties hereby agree that all controversies, claims
and matters of difference arising out of or in connection with to the
transactions contemplated by this Agreement (collectively, the "Controversies"),
shall, to the maximum extent allowed by law, be resolved by binding arbitration
(an "Arbitration Proceeding") before the American Arbitration Association (the
"Arbitration Authority") according to the rules and practices of the Arbitration
Authority from time-to-time in force. Without limiting the generality of the
foregoing, the following shall be considered Controversies for this purpose: (A)
all questions relating to the breach of any obligation, warranty, promise, right
or condition hereunder; (B) the failure of any party to deny or reject a claim
or demand of any other party; and (C) any question as to whether the right to
arbitrate a certain dispute exists. This agreement to arbitrate shall be
self-executing without the necessity of filing any action in any court and shall
be specifically enforceable under the prevailing arbitration law.
(ii) Initiation. A party shall institute an
Arbitration Proceeding by sending written notice of an intent to arbitrate (the
"Arbitration Notice") to the other parties and to the Arbitration Authority
pursuant to the rules and regulations of the Arbitration Authority. The
Arbitration Notice shall set forth a description of the dispute, the amount in
controversy, and the remedy sought. An Arbitration Proceeding may proceed in the
absence of any party if the Arbitration Notice has been properly given to such
party.
(iii) Selection of Arbitrator. Within ten (10) business days after receipt
of an Arbitration Notice by the parties, they shall mutually agree upon a single
arbitrator (the "Arbitrator") selected from a panel of retired judges from the
Arbitration Authority. If the parties are unable to agree upon the Arbitrator,
then the parties shall, within fifteen (15) business days after receipt of an
Arbitration Notice by the parties, obtain a list of panelists from the
Arbitration Authority equal to the number of parties plus one. The Artibration
Entity shall arrange and conduct a conference in person and/or by telephone with
all of the parties at a mutually acceptable time no earlier than ten (10)
business days, and no later than twenty (20) business days, after its delivery
of the list of panelists. At such conference, the parties shall, in such order
as determined by the Arbitration Authority, strike one name from such list (with
no party being allowed to strike a name previously stricken), and the remaining
panelist shall be the Arbitrator. In the event two or more parties desire to
strike the name of the same arbitrator, then the first party to notify the
Arbitration Authority of their decision shall be deemed to have stricken such
name, in which case such other party or parties must strike another name.
(iv) Representation. Each party shall have the right to be represented by
legal counsel throughout the Arbitration.
(v) Discovery. The parties shall have the right to engage any and all
discovery pertaining to civil litigation as they would be entitled to pursuant
to the laws of civil procedure of the state of New York.
(vi) Application of Law; Scope of Powers; Written Decision. The Arbitrator
shall apply such principles of law and shall endeavor to decide the controversy
as though the Arbitrator was a judge in a New York court of law.
(vii) Written Decision. The Arbitrator shall prepare
a written decision, signed by the Arbitrator, that shall be sent to the
parties within thirty (30) calendar days following the conclusion of the
hearing. The written statement will be supported by written findings of fact and
conclusions of law which adequately set forth the basis of the Arbitrator's
decision and which cite the statutes and precedents applied and relied upon in
reaching said decision.
(viii) Awards. The parties agree to abide by any
award, judgment, decree or order rendered in any Arbitration Proceeding by
the Arbitrator. The award, judgment, decree or order of the Arbitrator, and the
findings of the Arbitrator, shall be final, conclusive and binding upon the
parties hereto. Any judgment, decree or order of relief granted by the
Arbitrator may be entered or obtained in any court of competent jurisdiction,
state or federal, in the county in which the residence or principal office of a
non-prevailing party is located, as a basis for judgment and for the issuance of
execution for its collection and, at the election of the party making such
filing, with the clerk of one or more other courts, state or federal, having
jurisdiction over the party against whom such an award is rendered, or such
party's property.
(f) Assignment and Delegation; Successors and Assigns.
(i) Prohibition Against Assignment or Delegation. Except as specifically
provided in this Agreement, neither party may sell, license, transfer or assign
(whether directly or indirectly, or by merger, consolidation, conversion, sale
of assets, sale or exchange of securities, or by operation of law, or otherwise)
any of such party's rights or interests or delegate such party's duties or
obligations under this Agreement, in whole or in part, including to any
subsidiary or any Affiliate, without the prior written consent of the other
party, which consent may be withheld in such other party's sole discretion,
provided, however:
(A) Subject to subsections (B) and (C)
below, the Companies may, with the prior written consent of the Executive,
which consent the Executive shall not unreasonably withhold, assign all of the
rights and delegate all of the obligations of the Companies under this Agreement
to any other Person in connection with the transfer or sale of the entire
business of the Company(ies), or the merger or consolidation of the Companies
with or into any other Person, so long as such transferee, purchaser or
surviving Person shall expressly assumes such obligations of the Companies;
(B) Notwithstanding subsection (A) above to
the contrary, no assignment or transfer under subsection (A) may be
effectuated unless the proposed transferee or assignee first executes such
agreements (including a restated employment agreement) in such form as Executive
may deem reasonably satisfactory to (1) evidence the assumption by the proposed
transferee or assignee of the obligations of the Companies; and (2) to ensure
that the Executive continues to receive such rights, benefits and protections
(both legal and economic) as were contemplated by the Executive when entering
into this Agreement; and
(C) Notwithstanding subsection (A) above to the contrary: (1) any
assumption by a successor or assign under subsection (A) above shall in no way
release the Companies from any of their obligations or liabilities while a party
to this Agreement; and (2) any merger, consolidation, reorganization, sale or
conveyance under subsection (A) above shall not be deemed to abrogate the rights
of the Executive elsewhere contained in this Agreement, including without
limitation those resulting from a Change In Control.
Any purported assignment or transfer in violation of the terms of this
subsection 16(e) shall be null and void ab initio and of no force and effect,
and shall vest no rights or interests in the purported assignee or transferee.
(ii) Successors and Assigns. Subject to subsection 16(e)(i) above, each and
every representation, warranty, covenant, condition and provision of this
Agreement as it relates to each party hereto shall be binding upon and shall
inure to the benefit of such party and his, her or its respective successors and
permitted assigns, spouses, heirs, executors, administrators and personal and
legal representatives, including without limitation any successor (whether
direct or indirect, or by merger, consolidation, conversion, purchase of assets,
purchase of securities or otherwise).
(g) Counterparts; Electronically Transmitted Documents. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument, binding on all parties hereto. Any signature page of this Agreement
may be detached from any counterpart of this Agreement and reattached to any
other counterpart of this Agreement identical in form hereto by having attached
to it one or more additional signature pages. If a copy or counterpart of this
Agreement is originally executed and such copy or counterpart is thereafter
transmitted electronically by facsimile or similar device, such facsimile
document shall for all purposes be treated as if manually signed by the party
whose facsimile signature appears.
(h) Notices. Unless otherwise specifically provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively and severally called "notices") required or
permitted to be given hereunder, or which are given with respect to this
Agreement, shall be in writing, and shall be given by: (i) personal delivery
(which form of notice shall be deemed to have been given upon delivery), (ii) by
telegraph or by private airborne/overnight delivery service (which forms of
notice shall be deemed to have been given upon confirmed delivery by the
delivery agency), (iii) by electronic or facsimile or telephonic transmission,
provided the receiving party has a compatible device or confirms receipt thereof
(which forms of notice shall be deemed delivered upon confirmed transmission or
confirmation of receipt), or (iv) by mailing in the United States mail by
registered or certified mail, return receipt requested, postage prepaid (which
forms of notice shall be deemed to have been given upon the fifth {5th} business
day following the date mailed. Notices shall be addressed at the addresses first
set forth above, or to such other address as the party shall have specified in a
writing delivered to the other parties in accordance with this paragraph. Any
notice given to the estate of a party shall be sufficient if addressed to the
party as provided in this section.
WHEREFORE, the parties hereto have executed this Agreement in the City
of Albany, State of New York, as of the date first set forth above.
COMPANIES: IFS INTERNATIONAL, INC.
a Delaware corporation
By:
XxXxxxx Xxxxxxxx,
Chairman, Compensation Committee
By:
Xxxx Xxxxxxxxx,
Vice-Chairman, Board of Directors
Compensation Committee Member
IFS INTERNATIONAL, INC.
a New York corporation
By:
XxXxxxx Xxxxxxxx,
Chairman, Compensation Committee
By:
Xxxx Xxxxxxxxx,
Vice-Chairman, Board of Directors
Compensation Committee Member
EXECUTIVE: XXXXX X. XXXXX
an individual
