EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") dated November 17, 2004 and
effective as of November 1, 2004 (the "Effective Date"), between MRU Holdings,
Inc., a Delaware corporation with its principal place of business located at 000
Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, its affiliates, subsidiaries,
successors and assigns (the "Company"), and Xxxxx X. XxXxxxx, an individual
residing at 00 Xxxx Xxxxxx Xxxxx, Xxxxxxxxx, XX 00000 (the "Executive").
WHEREAS, prior to the Effective Date, the Executive has both consulted for
and been employed by, and has been performing executive services for, the
Company; and
WHEREAS, the Company and the Executive (the "Parties") wish to memorialize
the terms and conditions of the Executive's employment by the Company and to
continue the Executive's services for the Company upon the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the covenants and promises contained
herein, the Parties agree as follows:
1. Interim Periods. The Parties acknowledge that during the period from
April 12, 2004 to July 8, 2004 (the "Interim Period"), the Executive served
Iempower, Inc. (acquired by the Company on July 8, 2004 and a wholly owned
subsidiary of the Company "Iempower") in the position of senior consultant and
member of Iempower's board of directors. The Parties further acknowledge that
during the Interim Period, the Executive has been entitled to receive
compensation from the Company in the amount of $1,500 per day or fractional
equivalent thereof, as applicable (the "Interim Compensation"). In full
satisfaction of the Company's obligation to pay such Interim Compensation, the
Company has issued the Executive 46,875 shares of its common stock together with
warrants to acquire 8,844 shares of common stock at an initial exercise price of
$2.00 per share. The Parties also acknowledge that during the period from July
9, 2004 until October 31, 2004 (the "Second Interim Period"), Executive served
the Company as Chairman of the Board and Interim Chief Executive Officer. The
Parties acknowledge that during the Second Interim Period, the Executive has
been entitled to compensation at the rate of $125,000 per year, with a
guaranteed bonus the pro rata portion of $50,000 per year ("Second Interim
Compensation"). In full satisfaction of the Company's obligation to pay such
Second Interim Compensation, the Company has paid to the Executive his pro-rata
salary for this period and has issued to the Executive options to acquire
410,000 shares of common stock under the Company's 2004 Omnibus Incentive Plan
(the "Plan"). These options shall vest and become exercisable on a quarterly
basis over a period of one year, with 25% of such options being vested and
exercisable on November 1, 2004 (the "Grant Date") and an additional 25% of such
options becoming vested and exercisable on the first day of each calendar
quarter thereafter until all options are fully vested. The options granted shall
be exercisable for a period of ten years following the Grant Date and shall have
an initial exercise price of $1.60.
2. Employment Period. As of the Effective Date, the Company shall employ
the Executive, and the Executive agrees to be employed by Company in the
position of Chairman of the Board of Directors and Chief Executive Officer in
accordance with the terms and subject to the conditions of this Agreement,
commencing on the Effective Date and terminating on the third anniversary of the
Effective Date (the "Scheduled Termination Date"), unless terminated in
accordance with the provisions of paragraph 12 below, in which case the
provisions of paragraph 12 shall control (the "Term"). Upon expiration of the
Term and thereafter, it shall automatically renew itself and continue in full
force and effect from year to year unless written notice of election not to
renew, or written notice of election to modify any provision of this Agreement,
is given by one party, and received by the other not later than sixty (60) days
prior to the expiration of this Agreement or any extension hereto.
The Executive affirms that, except as otherwise set forth herein, no
obligation exists between the Executive and any other entity which would prevent
or impede the Executive's immediate and full performance of every obligation of
this Agreement.
3. Position and Duties. During the Term of the Executive's employment
hereunder, the Executive shall continue to serve in, and assume duties and
responsibilities consistent with, the position of Chairman of the Board of
Directors, unless and until otherwise instructed by the Company, and shall also
serve as the Company's Chief Executive Officer. The Executive agrees to devote
his working time, as set forth in Paragraph 5 hereof, utilizing his skill,
energy and best business efforts on behalf of the Company. Notwithstanding
anything to the contrary above, the Company acknowledges and agrees that the
Executive: (i) will continue to serve as an officer and director of eLOT, Inc,
formerly a public company (and now a private holding company for intellectual
property); (ii) serve as a director of Enigma Software, a privately owned
software company (not involved in the educational finance sector); and (iii) is
and expects to continue to be involved in civic and charitable endeavors.
However, the Executive shall not engage in activities outside the scope of his
employment with the Company if such activities would detract from or interfere
with his ability to fulfill his responsibilities and duties under this Agreement
or require substantial amounts of his time or of his services. Notwithstanding
anything to the contrary contained herein, upon written notice to the Board of
Directors the Executive may hold officer and non-executive director positions
(or the equivalent position) in or at other entities not inconsistent with the
best interests of the Company so long as the Board of Directors has not provided
Executive written notice that it has determined that such activities will
interfere with his ability to perform his duties and responsibilities hereunder.
4. No Conflicts. The Executive covenants and agrees that for so long as he
is employed by the Company, he shall inform the Company of each and every
business opportunity related to the business of the Company of which he becomes
aware, and that he will not, directly or indirectly, exploit any such
opportunity for his own account, nor will he render any services to any other
person or business, acquire any interest of any type in any other business or
engage in any activities that conflict with the Company's best interests or
which is in competition with the Company.
5. Days/Hours of Work and Work Week. The Executive shall normally work
five (5) days per week and his hours of work shall be appropriate to the nature
of the Executive's duties and responsibilities with the Company, it being
recognized that such duties and responsibilities require flexibility in the
Executive's work schedule.
6. Location. For at least four days per week, the locus of the Executive's
employment with the Company shall be the Company's office located at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000. The Executive may spend one day a week at
an office in Stamford, Connecticut or at such other location within Fairfield
County, Connecticut, as the Executive may choose. The Company agrees that it
shall provide a rental allowance of $1,000.00 per month for the Executive's
Connecticut office, such allowance to be paid as the within five (5) days of the
beginning of each month, to the Executive or to such person or entity as the
Executive may direct.
7. Compensation.
(a) Base Salary. During the Term of this Agreement, the Company
shall pay, and the Executive agrees to accept, in consideration for the
Executive's services hereunder, pro rata bi-weekly payments of the annual salary
of $200,000.00, less all applicable taxes and other appropriate deductions. The
Executive's base salary shall be increased annually, effective on January 1 of
each calendar year, in an amount no less than ten percent (10%). In addition,
the Company's Board of Directors (the "Board") shall review the Executive's base
salary annually to determine whether it should be increased more than ten
percent (10%). The decision to increase the Executive's base salary more than
ten percent (10%) and the amount of any such increase shall be within the
Board's sole discretion.
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(b) Annual Bonus. During the Term of this Agreement, the Executive
shall be entitled to an annual bonus in an amount no less than $50,000.00 for
each calendar year (or pro-rata portion thereof in the case of a period of less
than twelve (12) months. The decision to pay any annual bonus to the Executive
in excess of $50,000.00, and the amount of any annual bonus increment in excess
of $50,000.00, shall be within the Board's sole discretion based on its review
of the operating performance of the Company during the fiscal year to which the
bonus pertains. Each annual bonus shall be paid by the Company to the Executive
promptly after the first meeting of the Board following the previous calendar
year, but in no case later than March 30th of each year.
8. Expenses.
(a) Business Expenses. During the Term of this Agreement, the
Executive shall be entitled to payment or reimbursement of any and all
reasonable expenses paid or incurred by him in connection with and related to
the performance of his duties and responsibilities hereunder for the Company.
All requests by the Executive for payment of reimbursement of such expenses
shall be supported by appropriate invoices, vouchers, receipts or such other
supporting documentation in such form and containing such information as the
Company may from time to time reasonably require, evidencing that the Executive,
in fact, incurred or paid said expenses.
(b) Agreement Expenses. The Company agrees that it shall reimburse
the Executive for his attorney's fees and legal expenses in the negotiation,
review and drafting of this Agreement up to the amount of $3,500.00. The
Executive shall be responsible for any such expenses in excess of $3,500.00.
9. Vacation. During the Term of this Agreement, the Executive shall be
entitled to accrue 20 vacation days, per year. The Executive shall be entitled
to carry over any accrued, unused vacation days from year to year without
limitation.
10. Stock Options/Warrants.
(a) Grant of Options. Upon the decisions of the Board of Directors
and the approval of the Company's stockholders to increase the number of shares
of common stock available under the Plan, the Company shall issue the Executive
options to acquire 250,000 shares of common stock. The per share exercise price
of options to be granted pursuant to this paragraph 10(a) shall be $3.00, the
fair market value per share of Company common voting stock on the date of this
Agreement. Such grant and each subsequent grant of options to the Executive
during the Term shall be evidenced by an Option Agreement in a form
substantially similar to Exhibit A, attached hereto and made a part hereof.
(b) Vesting and Exercise. The options to be granted pursuant to the
terms of this paragraph 10 shall vest and become exercisable on a quarterly
basis over a period of two years, with 25% of such options being vested and
exercisable on the grant date and an additional 12 1/2% of such options becoming
vested and exercisable on the first day of each calendar quarter thereafter
until all options are fully vested. The options granted shall be exercisable for
a period of ten years following the grant date. Subsequent grants of stock
options shall vest and be exercisable pursuant to the terms and conditions of
the Plan.
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(c) Accelerated Vesting. In the event the Executive's employment with
the Company is terminated by reason of Death, Disability or without Cause, all
as defined in paragraph 12 hereof, or in the event that the Executive terminates
this Agreement for Good Reason, as defined in paragraph 12 hereof, all of
Executive's granted and unvested options and warrants shall immediately vest and
become immediately exercisable by the Executive. Said options and warrants may
be exercised by the Executive, or in the event of Death or Disability by the
Executive's legal representative, as appropriate, for a period of one year
following the date of termination of the Executive's employment with the
Company.
(d) Payment. The full consideration for any shares purchased by the
Executive shall be paid in cash or on such other terms as the Parties may agree.
11. Other Benefits.
(a) During the Term of this Agreement, the Executive shall be
eligible to participate in incentive, savings, retirement (401(k)), and welfare
benefit plans, including, without limitation, health, medical, dental, vision,
life (including accidental death and dismemberment) and disability insurance
plans (collectively, "Benefit Plans"), in substantially the same manner and at
substantially the same levels as the Company makes such opportunities available
to the Company's executive employees.
(b) Notwithstanding anything contained in paragraph 11(a)
hereinabove to the contrary:
(i) The cost of the Executive's coverage under the Benefit
Plans providing health, medical, dental, vision, life (including
accidental death and dismemberment) and disability insurance, shall be
paid by the Company.
(ii) The Executive's spouse and dependent minor children will
be covered under the Benefit Plans providing health, medical, dental, and
vision benefits, and the cost of such coverage shall be paid by the
Company.
(iii) The Company shall reimburse the Executive for any
out-of-pocket expenses incurred in connection with the Benefit Plan
coverages provided in this paragraph 11 as the result of any deductible or
co-insurance provision of any insurance policy; provided, that any such
reimbursements shall not exceed Ten Thousand Dollars ($10,000.00) per
calendar year.
(iv) The Company will purchase, at its expense, long-term
disability insurance providing the Executive with payments of $10,000.00
per month until age sixty-five (65); provided however, that if the cost of
such long-term disability insurance coverage exceeds $12,000.00 per year,
the Executive shall be required to pay any premium amount in excess of
$12,000.00 per year and if the Executive chooses not to pay such excess
premium amount, the Company shall only be required to provide as much
long-term disability insurance as can be purchased for $12,000.00 per
year.
(v) The Company has purchased a directors and officers
liability insurance policy or has otherwise obtained directors and
officers liability insurance coverage, in the amount of Three Million
Dollars ($3,000,000.00), covering the Executive and commits to increase
such coverage to Five Million Dollars ($5,000,000.00) as soon as possible,
but in no event later than January 1, 2005.
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12. Termination of Employment.
(a) Death. In the event that, during the Term of this Agreement, the
Executive dies, this Agreement and the Executive's employment with the Company
shall automatically terminate and the Company shall have no further obligations
to the Executive or his heirs, administrators or executors with respect to
compensation and benefits accruing thereafter, except for the obligation to pay
the Executor's heirs, administrators or executors any earned but unpaid base
salary, unpaid pro rata annual bonus and unused vacation days accrued through
the date of death, including any carryover days. The Company shall deduct, from
all payments made hereunder, all applicable taxes, including income tax, FICA
and FUTA, and other appropriate deductions.
(b) "Disability." In the event that, during the Term of this
Agreement, the Executive shall be prevented from performing his duties and
responsibilities hereunder to the full extent required by the Company by reason
of "Disability," as defined hereinbelow, this Agreement and the Executive's
employment with the Company shall automatically terminate and the Company shall
have no further obligations to the Executive or his heirs, administrators or
executors with respect to compensation and benefits accruing thereafter, except
for the obligation to pay the Executor's heirs, administrators or executors any
earned but unpaid base salary, unpaid pro rata annual bonus and unused vacation
days accrued through the date of Disability, including any carryover days. The
Company shall deduct, from all payments made hereunder, all applicable taxes,
including income tax, FICA and FUTA, and other appropriate deductions through
the last date of the Executive's employment with the Company. For purposes of
this Agreement, "Disability" shall mean a physical or mental disability that, in
the Board's discretion, based upon the medical opinions of two qualified
physicians specializing in the area or areas of the Executive's affliction, one
of whom shall be chosen by the Board and one of whom shall be chosen by the
Executive, prevents the performance by the Executive, with or without reasonable
accommodation, of his duties and responsibilities hereunder for a continuous
period of not less than six consecutive months.
(c) "Cause."
(i) At any time during the Term of this Agreement, the Company
may terminate this Agreement and the Executive's employment hereunder for
"Cause." For purposes of this Agreement, "Cause" shall mean: (a) the
willful and continued failure of the Executive to perform substantially
his duties and responsibilities for the Company (other than any such
failure resulting from a Disability) after a written demand by the Board
for substantial performance is delivered to the Executive by the Company,
which specifically identifies the manner in which the Board believes that
the Executive has not substantially performed his duties and
responsibilities, which willful and continued failure is not cured by the
Executive within thirty (30) days of his receipt of said written demand;
(b) the conviction of, or plea of guilty or nolo contendere to a felony,
after the exhaustion of all available appeals; or (c) fraud, dishonesty,
competition with the Company, unauthorized use of any of the Company's or
any such subsidiary's trade secrets or confidential information, or gross
misconduct which is materially and demonstratively injurious to the
Company. Termination under sections 12(c)(i)(b) and 12(c)(i)(c) above
shall not be subject to cure.
(ii) Termination of the Executive for "Cause" pursuant to
paragraph 12(c)(i)(a) shall be made by delivery to the Executive of a copy
of the written demand referred to in paragraph 12(c)(i)(a), or pursuant to
paragraphs 12(c)(i)(b) or (c) by delivery to the Executive of a written
notice from the Board, either of which shall specify the basis of such
termination, the conduct justifying such termination, and the particulars
thereof and finding that in the reasonable judgment of the Board, the
conduct set forth in paragraph 12(c)(i)(a), 12(c)(i)(b) or 12(c)(i)(c), as
applicable, has occurred and that such occurrence warrants the Executive's
termination of employment. Upon receipt of such demand or notice, the
Executive, shall be entitled to appear before the Board for the purpose of
demonstrating that "Cause" for termination does not exist or that the
circumstances which may have constituted "Cause" have been cured in
accordance with the provisions of paragraph 12(c)(i). No termination shall
be final until the Board has reached a determination regarding "Cause"
following such appearance.
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(iii) Upon termination of this Agreement for "Cause," the
Company shall have no further obligations or liability to the Executive or
his heirs, administrators or executors with respect to compensation and
benefits thereafter, except for the obligation to pay the Executive any
earned but unpaid base salary, unpaid pro rata annual bonus and unused
vacation days accrued through the Executive's last day of employment with
the Company, including any carryover days. The Company shall deduct, from
all payments made hereunder, all applicable taxes, including income tax,
FICA and FUTA, and other appropriate deductions.
(d) "Good Reason."
(i) At any time during the Term of this Agreement, subject to
the conditions set forth in paragraph 12(d)(iii) below, the Executive may
terminate this Agreement and the Executive's employment with the Company
for "Good Reason." For purposes of this Agreement, "Good Reason" shall
mean the occurrence, without the Executive's consent, of any of the
following events: (a) the assignment to the Executive of duties that are
significantly different from, and that result in a substantial diminution
of, the duties that he assumed on the Start Date; (b) the assignment to
the Executive of a title that is different from and subordinate to the
title specified in paragraph 2 hereinabove; (c) a Change of Control (as
defined in paragraph 12(d)(ii) herein below); (d) relocation of the
Company's office in New York to any location which is more than one
hundred (100) miles from Executive's present home address; or (e) a
material breach of this Agreement by the Company.
(ii) For purposes of this Agreement, "Change of Control" means
the Company's Board votes to approve: (a) any consolidation or merger of
the Company pursuant to which 50 percent or more of the outstanding voting
securities of the surviving or resulting company are not owned
collectively by the common share and warrant holders of Iempower, Inc. as
of November 1, 2004 (the "Current Control Group"); (b) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company
other than any sale, lease, exchange or other transfer to any company
where the Company owns, directly or indirectly, 100 percent of the
outstanding voting securities of such company after any such transfer; (c)
any person or persons (as such term is used in Section 13(d) of the
Exchange Act of 1934, as amended), other than the Current Control Group,
shall acquire or become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) whether directly, indirectly, beneficially
or of record, of 50 percent or more of outstanding voting securities of
the Company; or (d) commencement by any entity, person, or group
(including any affiliate thereof, other than the Company) of a tender
offer or exchange offer where the offeree acquires more than 50 percent of
the then outstanding voting securities of the Company.
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(iii) The Executive shall be entitled to terminate this
Agreement and his employment with the Company for "Good Reason" provided
that he has delivered written notice to the Company of his intention to
terminate this Agreement and his employment with the Company for "Good
Reason" within five (5) business days after either (a) the date on which
the Executive receives written notice from the Company of the occurrence
of any event included within the meaning of "Good Reason" under paragraph
12(d)(i) hereof or (b) the date on which the Executive obtains actual
knowledge of the occurrence of any event included within the meaning of
"Good Reason" under paragraph 12(d)(i) hereof. Such notice, if given by
the Executive pursuant to subparagraph 12(d)(iii)(b) hereof, shall specify
in reasonable detail the circumstances claimed to provide the basis for
such termination for "Good Reason." Notwithstanding the foregoing, the
Executive shall not be entitled to terminate this Agreement and his
employment with the Company if the Company has eliminated the
circumstances constituting "Good Reason" within 30 days of its receipt
from the Executive of the written notice described in this paragraph
12(d)(iii).
(iv) In the event that the Executive terminates this Agreement
and his employment with the Company for "Good Reason," the Company shall
pay or provide to the Executive (or, following his death, to the
Executive's heirs, administrators or executors): (a) any earned but unpaid
base salary, unpaid pro rata annual bonus and unused vacation days accrued
through the Executive's last day of employment with the Company, including
any carryover days; (b) the Executive's full base salary (including
guaranteed annual ten percent (10%) increases) through the Scheduled
Termination Date; (c) the Executive's guaranteed annual bonuses in the
amount of $50,000.00 that he would have been awarded through the Scheduled
Termination Date; (d) the value of vacation days that the Executive would
have accrued through the Scheduled Termination Date; (e) continued
coverage, at the Company's expense, under all Benefits Plans in which the
Executive was a participant immediately prior to his last date of
employment with the Company, or, in the event that any such Benefit Plans
do not permit coverage of the Executive following his last date of
employment with the Company, under benefit plans that provide no less
coverage than such Benefit Plans, through the Scheduled Termination Date
("Continued Benefits"); and (f) severance pay in an amount equal to the
sum of the Executive's annual base salary in effect immediately prior to
his last date of employment with the Company. The Company shall deduct,
from all payments made hereunder, all applicable taxes, including income
tax, FICA and FUTA, and other appropriate deductions. For purposes of this
subparagraph (d), "Scheduled Termination Date" shall mean the end of the
Term if termination occurs prior to the end of the Term and shall mean the
last day of any one year renewal term if termination occurs during such
renewal term and prior to the end of such renewal term.
(v) At the Executive's option, the amounts described in
paragraphs 12(d)(iv)(b) and (c) hereinabove shall be paid to the Executive
in the same manner as they would have been paid, in accordance with the
provisions of paragraphs 7(a) and (b), had the Executive remained employed
by the Company. To exercise such option, the Executive shall deliver to
the Company written notice electing such option within ten (10) business
days after his last date of employment with the Company. If the Executive
fails to deliver such written notice within ten (10) business days after
his last date of employment with the Company, the Executive shall be
entitled to receive the amounts described in paragraphs 12(d)(iv)(b) and
(c) hereinabove in a lump sum within forty-five (45) days of his last date
of employment with the Company. The amount described in paragraph
12(d)(iv)(f) shall be paid to the Executive within forty-five (45) days of
the Executive's last date of employment with the Company.
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(vi) The Executive shall have no duty to mitigate his damages,
except that Continued Benefits shall be canceled or reduced to the extent
of any comparable benefit coverage offered to the Executive during the
period prior to the Scheduled Termination Date by a subsequent employer or
other person or entity for which the Executive performs services,
including but not limited to consulting services.
(e) Without "Cause."
(i) By The Executive. At any time during the Term of this
Agreement, the Executive shall be entitled to terminate this Agreement and
the Executive's employment with the Company without "Cause" or "Good
Reason" as these terms are defined hereinabove, by providing prior written
notice of at least thirty (30) days to the Company. Upon termination by
the Executive of this Agreement and the Executive's employment with the
Company pursuant to this paragraph 12(e)(i), the Company shall have no
further obligations to the Executive or his heirs, administrators or
executors with respect to compensation and benefits thereafter, except for
the obligation to pay the Executive (or, following his death, to the
Executive's heirs, administrators or executors) any earned but unpaid base
salary, pro rata annual bonus and unused vacation days accrued through the
Executive's last day of employment with the Company, including any
carryover days. The Company shall deduct, from all payments made
hereunder, all applicable taxes, including income tax, FICA and FUTA, and
other appropriate deductions.
(ii) By The Company. At any time during the Term of this
Agreement, the Company shall be entitled to terminate this Agreement and
the Executive's employment with the Company without "Cause," as that term
is defined in paragraph 12(c)(i) hereinabove, by providing prior written
notice of at least ninety (90) days to the Executive. Upon termination by
the Company of this Agreement and the Executive's employment with the
Company without Cause, the Company shall pay or provide to the Executive
(or, following his death, to the Executive's heirs, administrators or
executors): any earned but unpaid base salary, unpaid pro rata annual
bonus and unused vacation days accrued through the Executive's last day of
employment with the Company, including any carryover days. In addition, so
long as Executive has not and does not violate the provisions of
paragraphs 13, 14 and 15 of this Agreement, the Company shall pay or
provide to the Executive (a) the Executive's full base salary (including
guaranteed annual ten percent (10%) increases) through the Scheduled
Termination Date; (b) the Executive's guaranteed annual bonuses in the
amount of $50,000.00 that he would have been awarded through the Scheduled
Termination Date; (c) the value of vacation days that the Executive would
have accrued through the Scheduled Termination Date; (d) continued
coverage, at the Company's expense, under all Benefits Plans in which the
Executive was a participant immediately prior to his last date of
employment with the Company, or, in the event that any such Benefit Plans
do not permit coverage of the Executive following his last date of
employment with the Company, under benefit plans that provide no less
coverage than such Benefit Plans, through the Scheduled Termination Date
("Continued Benefits"); and (e) severance in an amount equal to the sum of
the Executive's annual base salary in effect immediately prior to his last
date of employment with the Company. The Company shall deduct, from all
payments made hereunder, all applicable taxes, including income tax, FICA
and FUTA, and other appropriate deductions. For purposes of this
subparagraph (e), "Scheduled Termination Date" shall mean the end of the
Term if termination occurs prior to the end of the Term and shall mean the
last day of any one year renewal term if termination occurs during such
renewal term and prior to the end of such renewal term.
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(iii) At the Executive's option, the amounts described in
paragraphs 12(d)(iv)(b) and (c) hereinabove shall be paid to the Executive
in the same manner as they would have been paid, in accordance with the
provisions of paragraphs 7(a) and (b), had the Executive remained employed
by the Company. To exercise such option, the Executive shall deliver to
the Company written notice electing such option within ten (10) business
days after his last date of employment with the Company. If the Executive
fails to deliver such written notice within ten (10) business days after
his last date of employment with the Company, the Executive shall be
entitled to receive the amounts described in paragraphs 12(d)(iv)(b) and
(c) hereinabove in a lump sum within forty-five (45) days of his last date
of employment with the Company. The amount described in paragraph
12(d)(iv)(f) shall be paid to the Executive within forty-five (45) days of
the Executive's last date of employment with the Company.
13. Confidential Information.
(a) The Executive expressly acknowledges that, in the performance of
his duties and responsibilities with the Company, he has been exposed, and will
be exposed, to the trade secrets, business and/or financial secrets and
confidential and proprietary information of the Company, its affiliates and/or
its clients or customers ("Confidential Information"). The term "Confidential
Information" means, without limitation, information or material that has actual
or potential commercial value to the Company, its affiliates and/or its clients
or customers and is not generally known to and is not readily ascertainable by
proper means to persons outside the Company, its affiliates and/or its clients
or customers.
(b) Except as authorized in writing by the Board, during the
performance of the Executive's duties and responsibilities for the Company and
until such time as any such Confidential Information becomes generally known to
and readily ascertainable by proper means to persons outside the Company, its
affiliates and/or its clients or customers, the Executive agrees to keep
strictly confidential and not use for his personal benefit or the benefit to any
other person or entity the Confidential Information, whether or not prepared or
developed by the Executive. Confidential Information includes, without
limitation, the following, whether or not expressed in a document or medium,
regardless of the form in which it is communicated, and whether or not marked
"trade secret" or "confidential" or any similar legend: (i) lists of and/or
information concerning customers, suppliers, employees, consultants, and/or
co-venturers of the Company, its affiliates or its clients or customers; (ii)
information submitted by customers, suppliers, employees, consultants and/or
co-venturers of the Company, its affiliates and/or its clients or customers;
(iii) information concerning the business of the Company, its affiliates and/or
its clients or customers, including, without limitation, cost information,
profits, sales information, prices, accounting, unpublished financial
information, business plans or proposals, markets and marketing methods,
advertising and marketing strategies, administrative procedures and manuals, the
terms and conditions of the Company's contracts and trademarks and patents under
consideration, distribution channels, franchises, investors, sponsors and
advertisers; (iv) technical information concerning products and services of the
Company, its affiliates and/or its clients or customers, including, without
limitation, product data and specifications, diagrams, flow charts, know how,
processes, designs, formulae, inventions and product development; (v) lists of
and/or information concerning applicants, candidates or other prospects for
employment, independent contractor or consultant positions at or with any actual
or prospective customer or client of Company and/or its affiliates, any and all
confidential processes, inventions or methods of conducting business of the
Company, its affiliates and/or its clients or customers; (vi) any and all
versions of proprietary computer software (including source and object code),
hardware, firmware, code, discs, tapes, data listings and documentation of the
Company, its affiliates and/or its clients or customers; (vii) any other
information disclosed to the Executive by, or which the Executive obtained under
a duty of confidence from, the Company, its affiliates and/or its clients or
customers; (viii) all other information concerning the Company not generally
known to the public which, if misused or disclosed, could reasonably be expected
to adversely affect the business of the Company, its affiliates and/or its
clients or customers.
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(c) The Executive affirms that he does not possess and will not rely
upon the protected trade secrets or confidential or proprietary information of
his prior employer(s) in providing services to the Company.
(d) In the event that the Executive's employment with the Company
terminates for any reason, the Executive shall deliver forthwith to the Company
any and all originals and copies of Confidential Information.
14. Ownership and Assignment of Inventions.
(a) The Executive acknowledges that, in connection with his duties
and responsibilities relating to his employment with the Company, he and/or
other employees of the Company working with him, without him or under his
supervision, may create, conceive of, make, prepare, work on or contribute to
the creation of, or may be asked by the Company or its affiliates to create,
conceive of, make, prepare, work on or contribute to the creation of, without
limitation, lists, business diaries, business address books (except for business
addresses and business address books not related to the Company), documentation,
ideas, concepts, inventions, designs, works of authorship, computer programs,
audio/visual works, developments, proposals, works for hire or other materials
("Inventions"). To the extent that any such Inventions relate to any actual or
reasonably anticipated business of the Company or any of its affiliates, or
falls within, is suggested by or results from any tasks assigned to the
Executive for or on behalf of the Company or any of its affiliates, the
Executive expressly acknowledges that all of his activities and efforts relating
to any Inventions, whether or not performed during his or the Company's regular
business hours, are within the scope of his employment with the Company and that
the Company owns all right, title and interest in and to all Inventions,
including, to the extent that they exist, all intellectual property rights
thereto, including, without limitation, copyrights, patents and trademarks in
and to all Inventions. The Executive also acknowledges and agrees that the
Company owns and is entitled to sole ownership of all rights and proceeds to all
Inventions.
(b) The Executive expressly acknowledges and agrees to assign to the
Company, and hereby assigns to the Company, all of the Executive's right, title
and interest in and to all Inventions, including, to the extent they exist, all
intellectual property rights thereto, including, without limitation, copyrights,
patents and trademarks in and to all Inventions.
(c) In connection with all Inventions, the Executive agrees to
disclose any Invention promptly to the Company and to no other person or entity.
The Executive further agrees to execute promptly, at the Company's request,
specific written assignments of the Executive's right, title and interest in any
Inventions, and do anything else reasonably necessary to enable the Company to
secure or obtain a copyright, patent, trademark or other form of protection in
or for any Invention in the United States or other countries.
(d) The Executive acknowledges that all rights, waivers, releases
and/or assignments granted in this paragraph 14 by the Executive are freely
assignable by the Company and are made for the benefit of the Company and its
Affiliates, subsidiaries, licensees, successors and assigns.
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15. Non-Competition And Non-Solicitation.
(a) The Executive agrees and acknowledges that the Confidential
Information that the Executive has already received and will receive are
valuable to the Company, its affiliates and/or its clients or customers, and
that its protection and maintenance constitutes a legitimate business interest
of Company, its affiliates and/or its clients or customers to be protected by
the non-competition restrictions set forth herein. The Executive agrees and
acknowledges that the non-competition restrictions set forth herein are
reasonable and necessary and do not impose undue hardship or burdens on the
Executive. The Executive also acknowledges that the products and services
developed or provided by the Company, its affiliates and/or its clients or
customers are or are intended to be sold, provided, licensed and/or distributed
to customers and clients in and throughout the United States ("the Geographic
Boundary"), and that the Geographic Boundary, scope of prohibited competition,
and time duration set forth in the non-competition restrictions set forth below
are reasonable and necessary to maintain the value of the Confidential
Information of, and to protect the goodwill and other legitimate business
interests of, the Company, its affiliates and/or its clients or customers. The
Executive also acknowledges that the business of the Company is making federal
and alternative loans to students (the "Business of the Company").
(b) The Executive hereby agrees and covenants that he shall not,
directly or indirectly, in any capacity whatsoever, including, without
limitation, as an employee, employer, consultant, principal, partner,
shareholder, officer, director or any other individual or representative
capacity (other than a holder of less than one percent (1%) of the outstanding
voting shares of any publicly held company), or whether on the Executive's own
behalf or on behalf of any other person or entity or otherwise howsoever, during
the Executive's employment with the Company and for a period of two years
following the termination of this Agreement and the Executive's employment with
the Company for any reason, in the Geographic Boundary:
(i) Engage, own, manage, operate, control, be employed by,
consult for, participate in, or be connected in any manner with the
ownership, management, operation or control of any business in competition
with the Business of the Company;
(ii) Solicit, persuade or induce any Customer: to terminate,
reduce or refrain from renewing, extending, or entering into contractual
or other relationships with the Company or to become a customer of or
enter into any contractual or other relationship with any other
individual, person or entity for the purpose of purchasing competitive
products or services; or
(iii) Recruit, hire, induce, contact, divert or solicit, or
attempt to recruit, induce, contact, divert or solicit, any employee of
the Company to leave the employment thereof, whether or not any such
employee is party to an employment agreement.
16. Indemnification. The Company hereby covenants and agrees to indemnify
the Executive to the fullest extent permitted by law and to hold the Executive
harmless fully, completely, and absolutely against and in any respects to any
and all actions, suits, proceedings, claims, demands, judgments, costs, expenses
(including attorneys' fees), losses, and damages resulting from the Executive's
good faith performance of his job duties pursuant to this Agreement. The Company
also hereby agrees to cover the Executive under a directors' and officers'
liability insurance policy at all times, with such coverage no less favorable
than that given to other executive employees of the Company.
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17. Dispute Resolution. The Parties agree that any dispute or claim,
whether based on contract, tort, discrimination, retaliation, or otherwise,
relating to, arising from, or connected in any manner with this Agreement and
the terms and conditions of the Executive's employment with the Company shall be
resolved exclusively through final and binding arbitration under the auspices of
the American Arbitration Association ("AAA"). The arbitration shall be held in
the Borough of Manhattan, New York, New York. The arbitration shall proceed in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association ("AAA") in effect at the time the claim or
dispute arose, unless other rules are agreed upon by the parties. The
arbitration shall be conducted by one arbitrator who is a member of the AAA,
unless the parties mutually agree otherwise. The arbitrators shall have
jurisdiction to determine any claim, including the arbitrability of any claim,
submitted to them. The arbitrators may grant any relief authorized by law for
any properly established claim. The interpretation and enforceability of this
paragraph of this Agreement shall be governed and construed in accordance with
the United States Federal Arbitration Act, 9. U.S.C. ss.1, et seq. More
specifically, the parties agree to submit to binding arbitration any claims for
unpaid wages or benefits, or for alleged discrimination, harassment, or
retaliation, arising under Title VII of the Civil Rights Act of 1964, the Equal
Pay Act, the National Labor Relations Act, the Age Discrimination in Employment
Act, the Americans With Disabilities Act, the Employee Retirement Income
Security Act, the Civil Rights Act of 1991, the Family and Medical Leave Act,
the Fair Labor Standards Act, Sections 1981 through 1988 of Title 42 of the
United States Code, COBRA, the New York State Human Rights Law, the New York
City Human Rights Law, and any other federal, state, or local law, regulation,
or ordinance, and any common law claims, claims for breach of contract, or
claims for declaratory relief. The Executive acknowledges that the purpose and
effect of this paragraph is solely to elect private arbitration in lieu of any
judicial proceeding he might otherwise have available to him in the event of an
employment-related dispute between him and the Company. Therefore, the Executive
hereby waives his right to have any such employment-related dispute heard by a
court or jury, as the case may be, and agrees that his exclusive procedure to
redress any employment-related claims will be arbitration.
Notwithstanding this agreement to arbitrate, the Parties agree that any
violation of paragraphs 13, 14 or 15 of this Agreement may be restrained by the
issuance of an injunction or other equitable relief by a court of competent
jurisdiction, in addition to other remedies provided by law or this Agreement.
In the event of any legal action or other proceeding arising out of or
related to or for the enforcement of this Agreement, the prevailing party shall
be entitled to recover its reasonable attorneys' fees, costs and expenses
incurred in that action or proceeding, including attorneys' fees, costs and
expenses incurred on appeal, if any, in addition to any other relief to which
such party may be entitled, from the non-prevailing party.
18. Notice. For purposes of this Agreement, notices and all other
communications provided for in this Agreement or contemplated hereby shall be in
writing and shall be deemed to have been duly given when personally delivered,
delivered by a nationally recognized overnight delivery service or when mailed
United States Certified or registered mail, return receipt requested, postage
prepaid, and addressed as follows:
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If to the Company:
MRU Holdings, Inc.
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
If to the Executive:
Xxxxx X. XxXxxxx, Xx.
00 Xxxx Xxxxxx Xxxxx,
Xxxxxxxxx, XX 00000
19. Miscellaneous.
(a) Telephones, stationery, postage, e-mail, the internet and other
resources made available to the Executive by the Company, are solely for the
furtherance of the Company's business.
(b) All issues and disputes concerning, relating to or arising out
of this Agreement and from the Executive's employment by the Company, including,
without limitation, the construction and interpretation of this Agreement, shall
be governed by and construed in accordance with the internal laws of the State
of New York, without giving effect to that State's principles of conflicts of
law.
(c) The Parties agree that any provision of this Agreement deemed
unenforceable or invalid may be reformed to permit enforcement of the
objectionable provision to the fullest permissible extent. Any provision of this
Agreement deemed unenforceable after modification shall be deemed stricken from
this Agreement, with the remainder of the Agreement being given its full force
and effect.
(d) The Company shall be entitled to equitable relief, including
injunctive relief and specific performance as against the Executive, for the
Executive's threatened or actual breach of paragraphs 13, 14 and 15 of this
Agreement, as money damages for a breach thereof would be incapable of precise
estimation, uncertain, and an insufficient remedy for an actual or threatened
breach of paragraphs 13, 14 and 15 of this Agreement. The Parties agree that any
pursuit of equitable relief in respect of paragraphs 13, 14 and 15 of this
Agreement shall have no effect whatsoever regarding the continued viability and
enforceability of paragraph 17 of this Agreement.
(e) Any waiver or inaction by the Company or the Executive for any
breach of this Agreement shall not be deemed a waiver of any subsequent breach
of this Agreement.
(f) The Parties independently have made all inquiries regarding the
qualifications and business affairs of the other which either party deems
necessary. The Executive affirms that he fully understands this Agreement's
meaning and legally binding effect. Each party has participated fully and
equally in the negotiation and drafting of this Agreement.
(g) The Executive's obligations under this Agreement are personal in
nature and may not be assigned by the Executive to any other person or entity.
This Agreement shall be enforceable by the Company and its parents, affiliates,
successors and assigns.
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(h) This instrument constitutes the entire Agreement between the
parties regarding its subject matter. When signed by all parties, this Agreement
supersedes and nullifies all prior or contemporaneous conversations,
negotiations, or agreements, oral and written, regarding the subject matter of
this Agreement. In any future construction of this Agreement, this Agreement
should be given its plain meaning. This Agreement may be amended only by a
writing signed by the Parties.
(i) This Agreement may be executed in counterparts, a counterpart
transmitted via facsimile, and all executed counterparts, when taken together,
shall constitute sufficient proof of the parties' entry into this Agreement. The
parties agree to execute any further or future documents which may be necessary
to allow the full performance of this Agreement. This Agreement contains
headings for ease of reference. The headings have no independent meaning.
THE EXECUTIVE STATES THAT HE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS
AGREEMENT AND THAT HE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION THEREOF.
THIS AGREEMENT IS EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY BOTH
PARTIES. UNDERSTOOD, AGREED, AND ACCEPTED:
Xxxxx X. XxXxxxx, Xx. MRU HOLDINGS, INC.
___________________________ By: _____________________________
Name: Xxxxxx Xxxx
Title: Executive Vice President
Date: November 17, 2004 Date: November 17, 2004
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