Exhibit 10(c)
EMPLOYMENT AGREEMENT
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AGREEMENT, made this 25th day of November, 1997, by and between Human
Factors Industrial Design, Inc. ("HFID") and Xxxxxxx X. Xxxxxxxx (the
"Executive").
WHEREAS, REFAC Technology Development Corporation ("REFAC") and the
Company have entered into that certain Agreement and Plan of Merger (the "Merger
Agreement"), dated as of November 25, 1997, by and among REFAC, HFID Acquisition
Corporation ("New HFID"), HFID and the principal stockholders of HFID (the "HFID
Principals") pursuant to which New HFID will be merged with and into the Company
(the "Merger"), and, as a result of which Merger, HFID shall operate as a
subsidiary of REFAC (HFID hereinafter referred to as the "Company");
WHEREAS, the Executive has been employed by the Company and currently
serves as its President;
WHEREAS, REFAC and the Company recognize the Executive's substantial
contribution to the growth and success of the Company and desire to provide for
the continued employment of the Executive with the Company on the terms and
subject to the conditions set forth herein;
WHEREAS, Executive wishes to be so employed by the Company; and
WHEREAS, the parties hereto desire to enter into this Agreement
setting forth the terms and conditions of the employment relationship of the
Executive with the Company;
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the Executive,
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and the Executive hereby agrees to serve, subject to the provisions of this
Agreement, as an employee of the Company.
For the period during which the Executive provides services to the
Company under this Agreement (the "Employment Period"), the Executive shall
perform the duties associated with the position of President in a firm in a
similar industry and of comparable size to the Company. Such duties and
responsibilities shall include the duties and responsibilities previously
discharged by the Executive as an employee of HFID as well as any duties and
responsibilities as are from time to time assigned to the Executive by the Board
of Directors of the Company (the "Board"). The Executive agrees to devote all
of his business time, attention and energies to the performance of the duties
assigned to him hereunder, and to perform such duties faithfully, diligently and
to the best of his abilities and subject to such laws, rules, regulations and
policies from time to time applicable to the Company's employees. The Executive
agrees to refrain from engaging in any activity that does, will or could
reasonably be deemed to conflict with the best interests of the Company.
In addition, during the Employment Period, the Executive shall serve
without additional compensation as a director of the Company, subject to his
continued election to such position. During the Employment Period, the
Executive shall also serve without additional compensation as a director of
REFAC, subject to his continued election to such position. The Executive hereby
agrees that, upon the termination of his employment hereunder for any reason
other than because of his death, he shall immediately tender his resignation
from the Board and from the board of directors of REFAC, which resignation shall
be effective as of the effective date of such termination.
2. Term of Agreement. Subject to Section 7 hereof, the term of this
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Agreement (the "Term") shall commence on the effective date of the Merger, and
shall expire on December 31, 2002 (the "Initial Term"); provided, however, that
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commencing on January 1, 2003, and on each January 1 thereafter, the Term shall
automatically be extended for one (1) additional year unless, not later than
June 30 of the preceding year, the Company or the Executive shall have given
notice not to extend the Term.
3. Compensation.
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(a) Salary: During the Employment Period, the Company shall pay to
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the Executive a base salary at an annual rate of $226,840, payable in accordance
with the Company's regular payroll practices. All applicable withholding taxes
shall be deducted from such base salary payments. The Executive's base salary
shall be reviewed annually beginning on January 1, 1999, and shall be increased
each year by an amount equal to no less than five percent (5%) of the previous
year's base salary.
(b) Incentive Bonus. Unless his employment is earlier terminated
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other than pursuant to Section 7(f) hereof, during the Term the Executive will
be eligible to receive a cash bonus (an "Annual Bonus") in respect of each full
fiscal year of the Company. During the Initial Term, the amount of the Annual
Bonus shall be allocated, as determined by a majority of the HFID Principals,
from the "Earnings Pool" (as defined below), provided, that the HFID Principals,
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as a group, may not be allocated any amount exceeding eighty percent (80%) of
the Earnings Pool in any such fiscal year. Following the expiration of the
Initial Term, the Annual Bonus, if any, shall be determined by the Board in its
discretion. The Annual Bonus shall be paid in cash as soon as practicable,
but in no event later than ninety (90) days, following the end of the relevant
fiscal year.
The "Earnings Pool" shall only be calculated and shall only apply
during the Initial Term. With respect to any full fiscal year of the Company,
the "Earnings Pool" shall be an amount equal to fifty percent (50%) of the
excess, if any, of (i) the Company's EBITDA (as defined below) over (ii)
$891,000. The Earnings Pool available to current employees of the Company shall
be reduced by any amounts paid pursuant to clause (y) of Section 7(f) of this
Agreement. For purposes of this Agreement, with respect to any full fiscal year
of the Company, "EBIDTA" shall mean the Company's net income for such fiscal
year, before provision for the Earnings Pool, interest expense, income taxes,
depreciation and amortization, and less any investment income. For purposes of
this Agreement all determinations with respect to the calculation of EBITDA for
any fiscal year of the Company shall be made in accordance with generally
accepted accounting principles,
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consistently applied, by REFAC's regular independent public accountants. For
purposes of this Agreement, in computing EBIDTA for any fiscal year, any
overhead allocation by REFAC to HFID, any (A) management charges, (B) overhead
allocation by REFAC to HFID, (C) fees and expenses for patents filed with the
consent of REFAC, (D) key man life insurance payments and (E) severance payments
made pursuant to Section 7(f) shall not be taken into account, provided, that
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the Company shall be required to provide to REFAC consulting services in
connection with REFAC's evaluation of new technology submissions, and provided,
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further, that any work other than such consulting services performed for REFAC
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shall be charged to REFAC on terms no less favorable than those the Company
makes available to any of its unaffiliated clients during such fiscal year. In
addition, for any fiscal year, severance payments and benefits that may be paid
and provided pursuant to Section 7(f) hereof shall not be a charge against
EBITDA.
(c) Stock Options. Simultaneously herewith, REFAC is granting
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to the Executive an option to purchase shares of the common stock, par value
$.10 per share, of REFAC pursuant to the terms of a stock option agreement.
4. Benefits. During the Employment Period, the Executive shall be
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entitled to participate in such benefit plans and programs as are maintained by
the Company from time to time, as such plans may be amended from time to time.
The Company shall maintain disability insurance during the Employment Period for
the Executive providing benefits in amounts and on terms no less favorable to
the Executive than the disability insurance currently in effect for the
Executive, provided that the monthly premium payments in respect of such
disability insurance shall not exceed the amount REFAC pays as of the date
hereof for such disability insurance.
5. Vacation. During the Employment Period, the Executive shall be
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entitled to paid vacation pursuant to the terms of the Company's vacation
policy, which shall be consistent with the past practice of the Company. Such
vacation shall be taken at such times as will interfere as little as possible
with the performance of the Executive's duties hereunder.
6. Expenses. The Company will reimburse the Executive for
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reasonable and necessary business expenses of the Executive for travel, meals
and similar items incurred during the Employment Period in connection with the
performance of the Executive's duties, and which are consistent with such
guidelines as the senior executive officers and/or the Board of Directors of the
Company may from time to time establish. All payments for reimbursement of such
expenses shall be made to the Executive only upon the presentation to the
Company of appropriate vouchers or receipts.
7. Termination; Severance Pay.
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(a) Notwithstanding any provision of this Agreement to the
contrary, the employment of the Executive hereunder shall terminate on the first
to occur of the following:
(i) the date of the Executive's death;
(ii) the date on which the Company shall give the Executive
notice
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of termination on account of Disability (as defined below);
(iii) the date on which the Company shall give the
Executive notice of termination for Cause (as defined below);
(iv) expiration of the Term; or
(v) the date specified by the Company on the notice of
termination which shall be delivered to the Executive for termination
of employment for any reason other than the reasons set forth in (i)
through (iv), above, which date shall be no later than ninety (90)
days following the date of receipt of such notice of termination.
(b) The Company shall have the right in its discretion to
terminate the Executive's employment for "Disability," which shall be deemed the
reason for such termination if, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the full-
time performance of the Executive's duties with the Company for a period of one
hundred twenty (120) consecutive days during the Term, or a period or periods
aggregating more than one hundred twenty (120) days in any six (6) consecutive
month period during the Term. The Executive agrees to submit to such medical
examinations as may be necessary to determine whether a Disability exists,
pursuant to reasonable requests which may be made by the Company from time to
time.
(c) For purposes of this Agreement:
(i) "Cause" shall mean the occurrence of any of the following, as
reasonably determined by the Company:
(A) the willful and continued failure, in the reasonable
judgment of the Board, by the Executive to perform substantially his duties
with the Company (other than any such failure resulting from his death or
Disability) after a written demand for substantial performance is delivered
to the Executive by the Board which specifically identifies the manner in
which it is believed that the Executive has not substantially performed his
duties;
(B) the willful engaging by the Executive in conduct which
in the reasonable opinion of the Board is materially and demonstrably
injurious to the Company or any of its parents, subsidiaries or affiliates;
or
(C) the conviction of the Executive (or the entering by the
Executive of a plea of guilty or nolo contenders) for any felony or any
lesser crime which involved the Company or its property, or any of the
Company's parents, subsidiaries or affiliates or any such entity's
property.
Notwithstanding the foregoing, the Executive will not be deemed to have been
terminated for Cause within the meaning of clause (A) or (B) without (x)
reasonable notice to the Executive setting forth
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the reasons for the Company's intention to terminate for Cause, (y) an
opportunity for the Executive, together with his counsel, to be heard before the
Board, and (z) delivery to the Executive of a notice of termination from the
Board finding that, in the good faith opinion of the Board, clause (A) or (B)
hereof may be invoked, and specifying the particulars thereof in detail.
(ii) "Good Reason" shall mean, without the Executive's express written
consent, (A) the assignment to the Executive of any duties materially
inconsistent with, or the diminution of, the Executive's position, titles,
offices, duties, responsibilities and status with the Company; (B) the
relocation of the Company's principal executive offices to a location more than
75 miles from the location of such offices on the date hereof or the Company's
requiring the Executive to be based any where other than the Company's
principal executive offices except for required travel on the Company's
business; or (C) the failure by the Company to pay to the Executive any portion
of the Executive's current compensation within ten (10) business days of the
date such compensation is due.
(d) In the event the Executive's employment is terminated for
any reason, the Executive or his estate, conservator or designated beneficiary,
as the case may be, shall be entitled to payment of any earned but unpaid base
salary and accrued but unused vacation days, through the date of termination
(such amount, the "Accrued Earnings"). In addition, during the sixty (60) day
period following the effective date of termination of his employment other than
by reason of his death, the Executive shall have the right in his discretion to
purchase from the Company the policies of life insurance secured by the Company
for a purchase price equal to their respective cash surrender values. The
Company shall have no obligation to secure life insurance in addition to
policies currently in effect with respect to the Executive. Following the
payment of the Accrued Earnings, except as provided in Sections 7(e) and 7(f)
below, the Company shall have no further obligation to the Executive under this
Agreement.
(e) In the event the Executive's employment is terminated by
reason of the Executive's death or Disability, the Executive (or his
beneficiary, if applicable) shall be entitled to receive the Accrued Earnings
and the Company shall continue to pay to the Executive (or his beneficiary, if
applicable) the Executive's base salary as provided under Section 3(a) hereof
(as such base salary may have been increased) for a period of ninety (90) days
following the effective date of such termination of employment.
(f) In the event the Executive's employment is terminated for
any reason other than (i) by the Executive without Good Reason, (ii) by reason
of the Executive's death, Disability or retirement or (iii) by the Company for
Cause, the Executive (or his beneficiary, if applicable) shall be entitled to
receive the Accrued Earnings and the Company shall continue to pay to the
Executive (or his beneficiary, if applicable) (x) a lump sum in cash equal to
the Executive's base salary as provided under Section 3(a) hereof (as in effect
on the effective date of such termination) that otherwise have been payable
during the remainder of the Term and (y) an Annual Bonus as provided under
Section 3(b) hereof for the remainder of the Term (payable at such time or times
as such Annual Bonus would have been paid to the Executive were he employed by
the Company for the remainder of the Term). The amount payable under clause (y)
above shall be equal to no less than fifty percent (50%) of the Annual Bonus
earned by the Executive in respect of the last
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fiscal year completed prior to the effective date of termination; provided,
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that, if the date of such termination occurs prior to the date on which the
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determination of the Annual Bonus to be paid in respect of the first fiscal year
to be completed during the Term is made, the Executive shall be deemed to have
earned an Annual Bonus in respect of such first fiscal year equal to twelve and
one-half percent (12.5%) of the Earnings Pool in respect of such year. In
addition, in the event of such termination of employment, the Company shall
provide, except to the extent that the Executive shall receive similar benefits
from a subsequent employer, life, health, disability and similar benefits (other
than stock options which are not exercisable at the time such notice is given)
to which the Executive would have been entitled for the remainder of the Term.
(g) Notwithstanding any other provision of this Agreement, the
termination for any reason of the Executive's employment or his service on the
Board shall not affect REFAC's obligations with respect to the Contingent
Payment (as defined in the Merger Agreement).
8. Return of Company Property. The Executive agrees that following
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the termination of his employment for any reason, he shall return all property
of REFAC, the Company, its subsidiaries, affiliates and any divisions thereof he
may have managed which is then in or thereafter comes into his possession,
including, but not limited to, documents, contracts, agreements, plans,
photographs, books, notes, electronically stored data and all copies of the
foregoing as well as any other materials or equipment supplied by the Company to
the Executive.
9. Survival of Executive Covenants. The provisions set forth in
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Section 8 hereof shall remain in full force and effect after the termination of
the Executive's employment, notwithstanding the expiration of the Term or
termination of the Employment Period.
10. Entire Agreement. This Agreement sets forth the entire agreement
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between the parties with respect to its subject matter and merges and supersedes
all prior discussions, agreements and understandings of every kind and nature
between them and neither party shall be bound by any term or condition other
than as expressly set forth or provided for in this Agreement. This Agreement
may not be changed or modified without either the prior written consent of REFAC
or the unanimous written consent of the Board. Any such change or modification
must be set forth in a written agreement, signed by the parties hereto.
11. Arbitration. Any dispute or controversy arising under or in
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connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators sitting in New York, New York, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The arbitrators, in their discretion, may direct that the
successful party in any such arbitration shall be entitled to be reimbursed by
the other party for reasonable attorneys' fees and expenses incurred in
connection with such dispute or controversy.
12. Waiver. The failure of either party to this Agreement to enforce
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any of its terms, provisions or covenants shall not be construed as a waiver of
the same or of the right of such party to enforce the same. Waiver by either
party hereto of any breach or default by the other party of any term or
provision of this Agreement shall not operate as a waiver of any other breach or
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default.
13. Successors and Assignability. This Agreement is intended to bind
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and inure to the benefit of and be enforceable by the Executive and his heirs,
executors or administrators, and to bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns. This Agreement shall
not be assignable by the Executive. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business.
14. Severability. In the event that any one or more of the
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provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of the
Agreement shall not in any way be affected or impaired thereby. Moreover, if
any one or more of the provisions contained in this Agreement shall be held to
be excessively broad as to duration, activity or subject, such provisions shall
be construed by limiting and reducing them so as to be enforceable to the
maximum extent allowed by applicable law.
15. Notices. Any notice given hereunder shall be in writing and
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shall be deemed to have been given when sent by facsimile, delivered by
messenger or courier service (against appropriate receipt), or mailed by
registered or certified mail (return receipt requested), addressed as follows:
If to the Company: REFAC Technology Development Corporation
000 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
If to the Executive: [ ]
[ ]
[ ]
[ ]
or at such other address as shall be indicated to either party in writing.
Notice of change of address shall be effective only upon receipt.
16. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of New York, without regard to its
conflict of law rules.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
HUMAN FACTORS INDUSTRIAL
DESIGN, INC.
By: Xxxxxxx X. Xxxxxxxx
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Title: President
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
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AMENDMENT TO EMPLOYMENT AGREEMENT
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AMENDMENT to Employment Agreement (the "Employment Agreement") between
HUMAN FACTORS INDUSTRIAL DESIGN, INC. ("HFID") and Xxxxxxx X. Xxxxxxxx (the
"Executive"), dated November 25, 1997.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, since November 25, 1997, the Executive has been employed by HFID
pursuant to the Employment Agreement; and
WHEREAS, effective December 31, 1998, HFID , a wholly-owned subsidiary of
REFAC Technology Development Corporation ("RTDC") was merged into REFAC
International, Ltd. ("RIL"), another wholly-owned subsidiary of RTDC; and
WHEREAS, effective January 1, 1999, the business of HFID will be conducted
as a division of RIL; and
WHEREAS, the parties want to amend the Employment Agreement as set forth
herein; and
WHEREAS, RTDC has guaranteed HFID's performance of its obligations under
the Employment Agreement and confirms that such guaranty extends to the
Employment Agreement, as amended herein:
NOW, THEREFORE, in consideration of the premises and the respective
agreements of the parties herein contained, the parties hereto, intending to be
legally bound, agree as follows:
1. Definition of Terms.
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As used herein, the following terms shall have the following meanings:
1.1 "Amendment" shall mean this Amendment to the Employment Agreement
(as defined
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below).
1.2 "Employment Agreement" shall mean the Employment Agreement between
Human Factors Industrial Design, Inc. and Xxxxxxx X. Xxxxxxxx, dated November
25, 1997.
1.3 "HFID" shall mean and include the product development business
conducted by Human Factors Industrial Design, Inc., which corporation was merged
into RIL (as defined below) and, as of January 1, 1999, is being operated as a
division of RIL.
1.4 "RIL" shall mean REFAC International, Ltd., a Nevada corporation, a
wholly owned subsidiary of RTDC (as defined below).
1.5 "RTDC" shall mean REFAC Technology Development Corporation, a Delaware
corporation.
2. Amended Terms to Employment Agreement.
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2.1 Employment Term and Duties. The parties have agreed that the
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interests of the Company would be best served by having the Executive serve as
the Senior Vice President of RIL and RTDC and, for him to relinquish the
position of President of HFID as of December 31, 1998 and the position of Chief
Executive Officer when RIL and HFID relocate to its new facilities in or about
June 1, 1999.
2.1.1 Article 1 of the Employment Agreement is hereby amended to read
in its entirety as follows:
"The Company hereby agrees to employ Executive, and Executive
hereby agrees to serve, subject to the provisions of this Agreement,
as an employee of the Company.
For the period commencing January 1, 1999 and continuing
throughout the balance of the term during which Executive provides
services to the Company under this Agreement (the "Employment
Period"), Executive shall perform the duties associated with the
position of Senior Vice President of both RIL and RTDC and as a member
of the Board of Directors of each such
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corporation. He shall also serve as the Chief Executive Officer of
HFID until HFID relocate its offices to 000 Xxxxx Xxxx in Edgewater,
New Jersey in or about June, 1999, at which time he shall relinquish
such position. After such relocation, the Executive shall continue to
serve as the Chairman of HFID's Board of Directors.
As Senior Vice President of RIL and RTDC, the Executive shall be
responsible for coordinating the architectural aspects of the
Edgewater relocation. In addition, he shall work on aspects of the
corporate identity program for the entire group of RTDC companies,
work with RTDC and RIL's Chief Executive Officer in assessing business
and acquisition opportunities, act as a spokesperson (where
appropriate) for all or part of the operation of RTDC and its
subsidiaries and perform such other duties as may be assigned to him
from time to time by the RTDC Board of Directors. Executive agrees to
devote all of his business time, attention and energies to the
performance of the duties assigned to him hereunder, and to perform
such duties faithfully, diligently and to the best of his abilities
and subject to such laws, rules, regulations and policies from time to
time applicable to the Company's employees. Executive agrees to
refrain from engaging in any activity that does, will or could
reasonably be deemed to conflict with the best interests of the
Company."
2.1.2 Article 2 of the Employment Agreement is hereby amended to
provide that the term of the Employment Agreement will end on December 31,
2000. Article 2, as amended hereby, reads in its entirety as follows:
"2. Term of Agreement. The term of this Agreement (the
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"Term") commenced on the effective date of the Merger and, as amended
hereby, shall expire on December 31, 2000 (the "Initial Term");
provided, however, that commencing on January 1, 2001, and on each
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January 1 thereafter, the Term shall automatically be extended for one
(1) additional year unless, not later than June 30 of the preceding
year, the Company or Executive shall have given notice not to extend
the Term."
2.2 Vacation. Executive acknowledges and agrees that no unused
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vacation time is due him for the period prior to January 1, 1999.
2.3 Service Commitment. The parties agree that Paragraph 5 entitled
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"Vacation" is no longer appropriate and is hereby deleted and replaced by a new
Paragraph 5 entitled "Service Commitment" which reads in its entirety as
follows:
During each of calendar years 1999 and 2000, Executive agrees to
devote up to eight (8) months of service in performance of his duties
hereunder. It
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is agreed that this annual service commitment is to be undertaken at a
time that best serves the interests of the Company, however it is
understood that Executive will be provided broad flexibility in
determining how and when the non-service time of four (4) months per
year will be taken. It is understood that the four (4) months of non-
service time includes Executive's entire entitlement to vacation time.
2.4 Compensation. Commencing January 1, 1999, the Executive's
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annual salary shall be $190,545 payable in accordance with the Company's regular
payroll practices. All applicable withholding taxes shall be deducted from such
base salary payments. Executives's base salary shall be reviewed on or about
January 1, 2000 and shall be increased in year 2000 by an amount equal to no
less than five percent (5%) of the previous year's base salary.
3. Remaining Terms and Conditions
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3.1 All of the remaining terms and conditions of the Employment Agreement
shall be unaffected and shall remain in full force and effect.
4. RTDC Guaranty
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4.1 RTDC hereby confirms to Executive that its guaranty of all of
HFID's obligations to Executive under the Employment Agreement are unaffected
by the merger of HFID into RIL and extends to the Employment Agreement, as
amended hereby.
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IN WITNESS WHEREOF, the parties have executed this Amendment to the
Employment Agreement.
/s/ Xxxxxxx X. Xxxxxxxx
________________________________________
Xxxxxxx X. Xxxxxxxx
Dated: January 14, 1999
REFAC International, Ltd.
By: /s/ Xxxxxx X. Xxxxxxx
________________________________
Title: President
________________________________
Dated: January 14, 1999
REFAC Technology Development Corporation
By: /s/ Xxxxxx X. Xxxxxxx
________________________________
Title: President
________________________________
Dated: January 14, 1999
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