EXHIBIT 10.6
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AGREEMENT
AGREEMENT dated February 1, 1995, between ARISTO INTERNATIONAL
CORPORATION, a New York corporation having its principal office at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and XXXXXX XXXXX ("Employee").
W I T N E S S E T H:
WHEREAS, in consideration of the contribution that has been, and can
continue to be, made by Employee toward the success of the business of the
Company, the Company desires to enter into this Agreement;
NOW, THEREFORE, it is agreed as follows:
1. TERM AND OPERATION OF AGREEMENT. This Agreement shall be effective
for a term (the "Term") commencing as of the date of a Qualifying Public
Offering (as hereinafter defined) (the "Commencement Date") and ending on the
earlier of five (5) years after the Commencement Date or the termination of
Employee's employment prior to a Change in Control of the Company (as
hereinafter defined); provided, however, that if there is a Change in Control
subsequent to the Commencement Date but prior to the termination of this
Agreement in accordance with the foregoing, then the Term shall be automatically
extended for a period ending on the second anniversary of the date of such
Change in Control. "Qualifying Public Offering" shall mean the first to occur of
(i) consummation of (A) a proposed merger between the Company and The
Astro-Stream Corporation ("Astro-Stream") or (B) a transaction that would result
in the Company's shareholders owning shares of Astro-Stream or (ii) any other
transaction that results in the Company becoming a public company or the
Company's shareholders owning shares of a public company.
For purposes of this Agreement, Employee's employment by the Company
shall be deemed to be continuing (i) for any period during which, in accordance
with any contract between him and the Company ("Employment Agreement"),
provision shall be made for Employee to perform services as an employee of the
Company and Employee shall be entitled to compensation from the Company for
same, or (ii) if there is no Employment Agreement, for any period during which
Employee is in fact performing services as an employee of the Company and
receiving compensation from the Company for same.
Anything in this Agreement to the contrary notwithstanding, neither
this Agreement nor any provision hereof shall be operative until a Change in
Control has occurred, at which time this Agreement and all of its provisions
shall become operative immediately.
2. CHANGE IN CONTROL-TERMINATION OF EMPLOYMENT
AND COMPENSATION IN EVENT OF TERMINATION.
(a) After a Change in Control has occurred, Employee may
terminate his employment within two years after he has obtained actual knowledge
of the occurrence of any of the following events:
(i) Failure to elect or appoint, or re-elect or
re-appoint, Employee to, or removal of Employee from, his office and/or position
with the Company as constituted prior to the Change in Control, except in
connection with the termination of Employee's employment pursuant to
subparagraph 3(a) hereof.
(ii) A reduction in Employee's overall compensation
(including any reduction in pension or other benefit programs or perquisites) or
a significant change in the
nature or scope of the authorities, powers, functions or duties normally
attached to Employee's position with the Company as referred to in clause (i) of
subparagraph 2(a) hereof.
(iii) A determination by Employee made in good faith
that, as a result of a Change in Control, he is unable effectively to carry out
the authorities, powers, functions or duties attached to his position with the
Company as referred to in clause (i) of subparagraph 2(a) hereof, and the
situation is not remedied within thirty (30) calendar days after receipt by the
Company of written notice from Employee of such determination.
(iv) A breach by the Company of any provision of
this Agreement not covered by clauses (i), (ii) or (iii) of this subparagraph
2(a), which is not remedied within thirty (30) calendar days after receipt by
the Company of written notice from Employee of such breach
(v) A change in the location at which substantially
all of Employee's duties with the Company are to be performed to a location
which is not within a 20-mile radius of the address of the place where Employee
is performing services on the date of the Change in Control.
(vi) A failure by the Company to obtain the assumption
of, and the agreement to perform, this Agreement by any successor (within the
meaning of paragraph 8).
An election by Employee to terminate his employment under the
provisions of this subparagraph 2(a) shall not be deemed a voluntary termination
of employment by Employee for the purpose of interpreting the provisions of any
of the Company's employee benefit plans, programs or policies. Employee's right
to terminate his employment for good reason shall not be affected by his illness
or incapacity, whether physical or mental, unless the
Company shall at the time be entitled to terminate his employment under
paragraph 3(a)(ii) of this Agreement. Employee's continued employment with the
Company for any period of time less then two years after a Change in Control
shall not be considered a waiver of any right he may have to terminate his
employment pursuant to this paragraph 2(a).
(b) After a Change in Control has occurred, if Employee
terminates his employment with the Company pursuant to subparagraph 2(a) or if
Employee's employment is terminated by the Company for any reason other than
pursuant to paragraph 3(a) hereof, Employee (i) shall be entitled to his salary,
bonuses, awards, perquisites and benefits, including, without limitation,
benefits and awards under the Company's stock option plans and the Company's
pension and retirement plans and programs, through the Termination Date (as
hereinafter defined) and, in addition thereto, (ii) shall be entitled to be paid
in a lump-sum, on the Termination Date, an amount of cash (to be computed, at
the expense of the Company, by the partner of Coopers & Xxxxxxx, independent
certified public accountants to the Company or such other independent certified
accountants regularly employed by the Company (the "Accountants"), in charge of
the Company's account immediately prior to the Change in Control, whose
computation shall be conclusive and binding upon Employees and the Company)
equal to 2.99 times Employee's base amount, as defined in Section 28OG(b)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"). Such lump-sum
payment is hereinafter referred to as the "Termination Compensation". Upon
payment of the Termination Compensation, any Employment Agreement between
Employee and the Company shall terminate and be of no further force or effect;
provided, however that (x) if Employee shall, in terminating his employment with
the Company pursuant to paragraph 2(a), include in his
Notice of Termination (as hereafter defined) his election to enforce his rights
under the provisions of his Employment Agreement and not under the provisions of
this Agreement or (y) if Employee shall, within thirty calendar days after he
has obtained actual knowledge of the termination of his employment by the
Company other than pursuant to paragraph 3(a) of this Agreement, notify the
Company that he intends to enforce his rights under the Employment Agreement,
then, in each such case, any Employment Agreement between Employee and the
Company shall remain in full force effect and the provisions of this Agreement
shall terminate and be of no further force or effect and Employee shall hold,
for the benefit of the Company, any payment on account of the Termination
Compensation theretofore received by him hereunder, pending the satisfaction of
the Company's obligations to Employee under the provisions of any Employment
Agreement between Employee and the Company (whereupon Employee shall return any
such Termination Compensation to the Company).
(c) For purposes hereof, a Change in Control shall be deemed
to have occurred if there has occurred, after the Commencement Date, (i) a
change in control as the term "control" is defined in Rule 12b-2 promulgated
under the Act; (ii) when any "person" (as such term is defined in Sections
3(a)(9) and 13(d)(3) of the Act), except for an employee stock ownership trust
(or any of the trustees thereof), becomes a beneficial owner, directly or
indirectly, of securities of the Company representing twenty-five percent (25%)
or more of the Company's then outstanding securities having the right to vote on
the election of directors; (iii) during any period of not more than two
consecutive years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period constitute the
Board, and any new director (other than a director designated by a person who
has entered
into an agreement with the Company to effect a transaction described in clauses
(i), (ii), (iv), (v), (vi) or (vii) of this subparagraph 2(b)) whose election by
the Board or nomination for executive by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
were either directors at the beginning of the period or whose election or
nomination for election was previously approved, cease for any reason to
constitute at least 75% of the entire Board of Directors; (iv) when a majority
of the directors elected at any annual or special meeting of stockholders (or by
written consent in lieu of a meeting) are not individuals nominated by the
Company's incumbent Board of Directors; (v) if the shareholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the holders of voting
securities of the Company outstanding immediately prior thereto being the
holders of at least 80% of the voting securities of the surviving entity
outstanding immediately after such merger or consolidation; (vi) if the
shareholders of the Company approve a plan of complete liquidation of the
Company; or (vii) if the shareholders of the Company approve an agreement for
the sale or disposition of all or substantially all of the Company's assets.
However, the foregoing notwithstanding, no Change in Control shall be deemed to
have occurred as a result of the consummation of the transaction contemplated by
the letter of intent dated August 12, 1994 between the Company and Astro-Stream.
(d) Notwithstanding anything in this Agreement to the
contrary; Employee shall have the right, prior to the receipt by him of any
amounts due thereunder, to waive the receipt thereof or, subsequent to the
receipt by him of any amounts due hereunder, to treat some or all of such
amounts as a loan from the Company which Employee shall repay to the
Company, within 90 days from the date of receipt, with interest at the rate
provided in Section 7872 of the Code. Notice of any such waiver of treatment of
amounts received as a loan shall be given by Employee to the Company in writing
and shall be binding upon the Company.
(e) It is intended that the "present value" of the payments
and benefits to Employee, whether under this Agreement or otherwise, which are
includable in the computation of "parachute payments" shall not, in the
aggregate, exceed 2.99 times the "base amount" (the terms "present value",
"parachute payments" and "base amount" being determined in accordance with
Section 28OG-of the Code). Accordingly, if Employee receives payments or
benefits from the Company prior to payment of the Termination Compensation
which, when added to the Termination Compensation, would, in the opinion of the
Accountants, subject any of the payments or benefits to Employee to the excise
tax imposed by Section 4999 of the Code, the Termination Compensation shall be
reduced by the smallest amount necessary, in the opinion of the Accounts, to
avoid such tax. In addition, the Company shall have no obligation to make any
payment or provide any benefit to Employee subsequent to payment of the
Termination Compensation that, in the opinion of the Accountants, would subject
any of the payments or benefits to Employee to the excise tax imposed by Section
4999 of the Code. No reduction in Termination Compensation or release of the
Company from any payment or benefit obligation in reliance upon any aforesaid
opinion of the Accountants shall be permitted unless the Company shall have
provided to Employee a copy of any such opinion, specifically entitling Employee
to rely thereon, no later than the date otherwise required for payment of the
Termination Compensation or any such later payment or benefit.
3. TERMINATION BY THE COMPANY.
(a) Employee's employment may be terminated by the Company
without any further liability under this Agreement if Employee shall (i) die;
(ii) be totally unable to perform the duties and services attached to his
position with the Company for a period of not less than 365 consecutive days due
to illness or incapacity, whether physical or mental; (iii) violate any written
contractual covenant of Employee, then in effect in favor of the Company,
prohibiting Employee from competing with the Company in any manner materially
detrimental to the Company; or (iv) be convicted of a felony involving an act
against the Company, and said conviction shall not have been reserved or be
subject to further appeal, it being expressly understood, however, that
conviction for violation of a criminal statute by reason of actions taken in the
course of performance of Employee's duties as an executive of the Company shall
not be deemed to involve an act against the Company for purposes hereof unless
involving a theft, embezzlement or other fraud against the Company or any of its
officers, directors or employees, or unless involving an act of physical harm to
any of such persons.
(b) After a Change in Control has occurred, if Employee's
employment is terminated by the Company pursuant to subparagraph 3(a) hereof,
Employee (or his widow, or if she shall not survive him, any party designated by
Employee by notice to the Company, or Employee's estate, in the absence of such
notice) shall receive the sums (if any) Employee would otherwise have received
if a Change in Control had not occurred.
4. NOTICE OF TERMINATION AND TERMINATION DATE.
(a) Any termination of Employee's employment by the Company or
by Employee shall be communicated by a Notice of Termination to the other party
hereto. For purposes hereof, a "Notice of Termination" shall mean a notice which
shall state the "Termination Date" (as hereinafter defined) and the specific
reasons, and shall set forth in reasonable detail the facts and circumstances,
for such determination and, in the case of Employee's termination of employment
pursuant to paragraph 2(a)(iii) hereof, shall state that Employee has made the
good faith termination required by that subparagraph.
(b) "Termination Date" shall mean the date specified in the
Notice of Termination as the last day of Employee's employment by the Company,
which date shall not be sooner than the date on which the Notice of Termination
is given.
(c) If, within thirty (30) calendar days after any Notice of
Termination is given, or, if later, prior to the Termination date (as determined
without regard to this paragraph 4(c)), the party hereto receiving such Notice
of Termination notifies the other party hereto that a dispute exists concerning
the termination, the Termination Date shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties hereto, by
a binding arbitration award or by a final judgment, order or decree of a court
of competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Termination Date shall be extended by a notice of
dispute only if such notice is given in good faith and the party hereto giving
such notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of such dispute, the Company will
continue to pay to Employee his full compensation (including perquisites and
other benefits) in effect when the notice of dispute was given and continue
Employee as a participant in all employee benefit plans and programs in which he
was participating when the notice of dispute was given, until the dispute is
finally resolved as hereinabove provided.
5. MITIGATION. Employee shall not be required to use his best
efforts to mitigate the payment of the Termination compensation by seeking other
employment. To the extent that Employee shall, during or after the Term, receive
compensation from any other employment, the payment of Termination compensation
shall not be adjusted.
6. ARBITRATION. In the event any dispute arises between the parties
hereto, Employee and the Company shall each have the right to seek arbitration
in New York, New York under the rules of the American Arbitration Association by
giving written notice of intention to arbitrate to the other party. Any award
rendered in any such arbitration proceeding shall be non-appealable and final
and binding upon the parties hereto, and judgment thereon may be entered in any
court of competent jurisdiction. If Employee prevails in any litigation or
arbitration proceeding brought in accordance herewith, or if any such litigation
or arbitration proceeding is settled, Employee shall be entitled, to the extent
not prohibited by applicable law, to reimbursement from the Company for his
reasonable attorneys' fees and expenses incurred in connection with such
litigation or arbitration proceeding.
7. INDEMNIFICATION.
(a) The Company agrees that all rights to indemnification
existing immediately prior to a Change in Control and all rights to
indemnification existing
immediately prior to the Termination Date in favor of Employee as provided in
the respective corporate charters and by-laws of the Company and its
subsidiaries shall survive the Termination Date and shall continue in full force
and effect for a period of not less than ten years after the Termination Date.
Until the expiration of such period, the Company shall also indemnify Employee
to the fullest extent permitted by the New York Business Corporation Law;
provided that, in the event that any claim shall be asserted or made within such
ten-year period, all rights to indemnification in respect of any such claim
shall continue until disposition of such claim. Without limitation of the
foregoing, in the event that Employee becomes involved in any capacity in any
action, proceeding or investigation in connection with any activities involving
the Company occurring prior to, and including the Termination Date, the Company
will, subject to paragraph 7(b), advance to Employee his legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith.
(b) Employee shall give prompt written notice to the Company
of the commencement of any action, suit or proceeding for which indemnification
may be sought under this paragraph 7, and the Company, through counsel
reasonably satisfactory to Employee, may assume the defense thereof; provided,
however, that Employee shall be entitled to participate in any such action, suit
or proceeding with counsel of his own choice but at his own expense; and
provided further, the Employee shall be entitled to participate in any such
action, suit or proceeding with counsel of his own choice at the expense of the
Company if, in the good faith judgment of Employee's counsel, representation by
the Company's counsel may present a conflict of interest or there may be
defenses available to Employee
which are different from or in addition to those available to the Company. In
any event, if the Company fails to assume the defense within a reasonable time,
Employee may assume such defense and the reasonable fees and expenses of his
attorneys shall be borne by the Company. No action, suit or proceeding for which
indemnification may be sought shall be compromised or settled in any manner
which might adversely affect the interest of the Company without the prior
written consent of the Company. Notwithstanding anything in this Agreement to
the contrary, the Company shall not, without the written consent of Employee,
(i) settle or compromise any action, suit or proceeding or consent to the entry
of any judgment which does not include as an unconditional term thereof the
delivery by the claimant or plaintiff to Employee of a written release from all
liability in respect of such action, suit or proceeding or (ii) settle or
compromise any action, suit or proceeding in any manner that may materially and
adversely affect Employee other than as a result of money damages or other money
payments for which the Company fully pays.
(c) The Company shall cause to be maintained in effect, for
not less than two years after the Termination Date, the then current policies of
the directors' and officers' liability insurance maintained by the Company and
the Company's subsidiaries provided that the Company may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous so long as no lapse in coverage occurs as a result of such
substitution, and shall use its best efforts to provide such insurance for an
additional three years after the expiration of such two-year period, the
availability of such insurance at commercially reasonable rates (or, if not
available at reasonable rates, then the Company shall purchase similar insurance
but with such lower limits of liability, without
change in retention amounts, as may be available for a premium comparable to
that paid by the Company for the last year of such two-year period), with
respect to all matters occurring prior to and including the Termination Date;
provided that, in the event that any claim shall be asserted or made within such
period during which insurance has been or is to be provided, such insurance
shall be continued in respect of any such claim until final disposition of any
and all such claims. The Company shall pay all expenses, including reasonable
attorneys, fees, that may be incurred by Employee in enforcing the indemnity and
other obligations provided for in this paragraph 7. The covenant in this
paragraph 7 shall survive the Termination Date and shall continue without time
limit (except as expressly provided in this paragraph 7).
8. ASSIGNABILITY. This Agreement may not be assigned by Employee
and all of its terms and conditions shall be binding upon and inure to the
benefit of Employee and his heirs and legal representatives and the Company and
its successors and assignees. Successors of the Company shall include, without
limitation, any corporation or corporations acquiring directly or indirectly all
or substantially all of the assets of the Company, whether by merger,
consolidation, purchase or otherwise, and such successor shall thereafter be
deemed the "Company" for purposes hereof.
9. NOTICES. All notices, requests, demands and other communications
provided for hereby shall be in writing and shall be deemed to have been duly
given when delivered personally or sent by registered or certified mail, return
receipt requested, to the party entitled thereto at the address first above
written (in the case of the Company) or to such address as contained in the
Company's records (in the case of Employee).
10. MODIFICATION. This Agreement may be modified or amended only by
an instrument in writing signed by Employee and the Company and any provision
hereof may be waived only by an instrument in writing signed by the party hereto
against whom any such waiver is sought to be enforced.
11. SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision contained herein.
12. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
13. CAPTIONS. The captioned heading-a herein are for convenience of
reference only and are not intended and shall not be construed to have any
substantive effect.
IN WITNESS WHEREOF the parties hereto have executed this executed this
Agreement as of the date first above written.
/s/ Xxxxxx Xxxxx
________________________________
Xxxxxx Xxxxx
ARISTO INTERNATIONAL CORPORATION
By:_____________________________
Name:
Title:
/s/ Xxxxxx Xxxxxxxx
________________________________
Xxxxxx Xxxxxxxx, Director
