6
Agreement
THIS AGREEMENT is made as of the 30th day of June, 1998, by and between
Top Source Technologies, Inc., a Delaware corporation (the "Company), and Xx.
Xxxxxx Xxxxxx (the "Executive").
W I T N E S S E T H THAT
WHEREAS, the Company and the Executive are parties to that certain
Employment Agreement dated as of August 18, 1993, as amended by the letter
agreement dated November 30, 1993, and as further amended by the letter
agreement effective as of June 1, 1997 (as so amended, the "Employment
Agreement"); and
WHEREAS, the initial term of employment under the Employment Agreement
was scheduled to expire on June 1, 1999; and
WHEREAS, the Company has previously acknowledged that the Executive is
entitled to resign from employment with the Company for Good Reason (as defined
in the Employment Agreement) and to receive certain benefits in connection with
such resignation as provided in the Employment Agreement; and
WHEREAS, the parties have mutually agreed that the Executive's
employment with the Company should terminate effective as of the date of this
Agreement; and
WHEREAS, the Company and the Executive desire to set forth their
agreement as to certain matters relating the such termination of employment;
NOW, THEREFORE, it is hereby agreed as follows:
1. TERMINATION OF EMPLOYMENT. The Executive's employment with the
Company shall terminate effective as of the close of business on the date of
this Agreement, and the Executive shall resign as a director and/or officer of
the Company and each its subsidiaries with effect as of such date. The Executive
shall not be required to provide any further services to the Company or any of
its subsidiaries.
2. CONSULTING PAYMENT. The Company shall pay the Executive the sum
of $32,465.82 per month for the thirty consecutive months (the "Payout Period")
commencing on July 15, 1998 and ending on December 15, 2000 (the "Monthly
Payment"). The Monthly Payment shall be payable on the fifteenth day of each
calendar month (or, if any such date is not a business day, on the next business
day following such date) during the Payout Period. The Company may deduct the
amounts payable by the Executive to the Company in repayment of certain loans
referred to in Section 4(b) of this Agreement from the corresponding Monthly
Payments.
3. STOCK OPTIONS. (a) Section 2 of the Stock Option Agreement (the
"Option Agreement"), between the Company and the Executive, dated August 18,
1993, is hereby amended in its entirety to read as follows:
Option Price. The exercise price of 400,000 of such options shall be $2.06
per share, and the exercise price of the remaining 200,000 options shall be
$3.56 per share.
(b) The Company agrees and acknowledges that all of the Options previously
granted to the Executive pursuant to the Option Agreement are fully vested and
are currently exercisable. The Company and the Executive agree further that,
notwithstanding the last sentence of Section 4(a) of the Option Agreement or
Section 6(a) (iv) of the Employment Agreement, all of the Options shall remain
exercisable through July 1, 2001.
3. CONTINUED PARTICIPATION IN BENEFIT PLANS. The Company shall
make available without cost to the Executive and his spouse and dependents,
insurance substantially comparable to the medical, life and long-term disability
insurance coverage provided pursuant to Section 5(b) of the Employment Agreement
that are in effect on the date of this Agreement for the duration of the Payout
Period or, in the event that the Company cannot obtain such benefits for the
Executive, the cash equivalent thereof, in each case plus the amount in cash,
payable on an annual basis, necessary to gross-up such benefit or payment, as
the case may be, for personal income taxes payable by the Executive with respect
to such benefits or payments or payments at the marginal rate of 41.05%. The
foregoing insurance coverage shall be included as part of any required
continuation of coverage under Part 6, Subtitle B of Title I of the Employee
Retirement Income Security Act of 1974, as amended, or any similar state or
local law ("COBRA Coverage"); provided, however, that the COBRA Coverage shall
terminate with respect to such spouse and/or dependents as of the date that the
spouse and/or dependents receive equivalent coverage and benefits under any
plans, programs and/or arrangements of a subsequent employer.
4. CERTAIN OTHER ARRANGEMENTS.
(a) The Executive hereby agrees on a best efforts basis to attempt not
to trade in any of the Company's securities for a period of 90 (ninety) days
commencing as of the date hereof.
(b) The outstanding loans in the aggregate principal amount of $105,000
(the
"Loans") previously made by the Company to the Executive pursuant to the Loan
Agreement dated August 7, 1997, between the Company and the Executive, and the
Loan Agreement dated August 7, 1997, between the Company and Executive are
hereby restructured such that the principal amount of the Loans will hereafter
be repaid by the Executive to the Company in thirty equal monthly installments
of $3,500.00 payable on the fifteenth day of each calendar month during the
Payout Period as set forth in Schedule A hereto, plus interest at the rate of 9%
per annum compounded quarterly. The Company may deduct the scheduled repayments
from the corresponding Monthly Payments payable by the Company to the Executive
during the Payout Period.
5. WAIVER OF CERTAIN RIGHTS; CONTINUING OBLIGATIONS.
(a) The Executive acknowledges and agrees that the payments and other
benefits set forth in this Agreement are in lieu of any and all amounts to which
the Executive may be entitled under the Employment Agreement as a result of his
termination of his employment by the company for "Good Reason", and the
Executive hereby waives any and all such rights and any and all claims which the
Executive had, has or may have had against the Company, any of its subsidiaries,
and any of their respective officers, directors, employees and agents, under the
Employment Agreement or otherwise arising out of or relating to the Executive's
employment by the Company. Except as provided in Section 5(b) of this Agreement,
the Employment Agreement shall terminate and shall be of no further force and
effect.
(b) Notwithstanding anything to the contrary set forth in Section 5(a)
of
Agreement, Sections 7(a) (Competition with the Company), 7(b) (Confidentiality
and Conduct), 7(c) (No Interference), 7(d) (Post-Termination Activities, 7(e)
(Equitable Relief), 8 (Indemnification) and 13 (Arbitration), of the Employment
Agreement shall survive the termination of the Executive's employment and shall
continue in full force and effect for the applicable periods specified in the
Employment Agreement or (I) in the case of Section 8 of the Employment Agreement
until the later of the date the statute of limitations has run on claims
relating to periods prior to July 1, 1998, or the date on which such claims, if
any, have been finally resolved, or (ii) in the case of Section 13, until all
payments due under this Agreement have been made. The Company shall continue to
maintain directors and officer's liability insurance covering the period prior
to July 1, 1998 until the expiration of its indemnification obligations under
this Agreement.
6. SUCCESSORS; BENEFICIARIES. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assign-able by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
have been required to perform it if no such successions had taken place. As used
in this Agreement, "Company" shall mean both the Company as defined above and
any such successor that assumes and agrees to perform this Agreement, by
operation of law or otherwise.
(d) The Executive shall be entitled, to the extent permitted under
any applicable
law, to select and change the beneficiary or beneficiaries to receive any
compensation or benefit payable hereunder following the Executive's death by
giving the Company written notice thereof. In the event of the Executive's death
or a judicial determination of his incompetence, reference in this Agreement to
the Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative.
7. MISCELLANEOUS. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
reference to principles of conflict of laws. This Agreement may not be amended
or modified except by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
(b) All notices and other communications under this Agreement shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Xx. Xxxxxx Xxxxxx
000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
If to the Company:
Top Source Technologies, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 14. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.
If any provision of this Agreement shall be held invalid or unenforceable in
part, the remaining portion of such provision, together with all other
provisions of this Agreement, shall remain valid and enforceable and continue in
full force and effect to the fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement, the Company
and the
Executive agree that the payments hereunder are for services that Executive may
render as a consultant to the Company and that the Company will not withhold
from amounts payable under this Agreement any federal, state, local or foreign
taxes from such payments unless and to the extent such withholding is required
under applicable laws or regulations. Consistent with the foregoing, it is
acknowledged and agreed that, except as specifically provided in Section 3
hereof, the Executive shall be responsible for the payment of all taxes payable
by the Executive in connection with the payments and other benefits to be
received by the Executive pursuant to this Agreement.
(e) The rights and benefits of the Executive under this Agreement may
not be
anticipated, assigned, alienated or subject to attachment, garnishment, levy,
execution or other legal or equitable process except as required by law. Any
attempt by the Executive to anticipate, alienate, assign, sell, transfer,
pledge, encumber or charge the same shall be void. Payments hereunder shall not
be considered assets of the Executive in the event of insolvency or bankruptcy.
(f) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of the Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
---------------------------
Xxxxxx Xxxxxx
TOP SOURCE TECHNOLOGIES, INC.
By: _________________________
President and CEO
Xxxx Xxxxxx, Jr.
