EXHIBIT 10.42
EMPLOYMENT AGREEMENT
This employment agreement (this "AGREEMENT") dated as of February 14, 2003, is
entered into by and between MOTORCAR PARTS & ACCESSORIES, INC., a New York
corporation currently having an address at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000 (together with its subsidiaries and affiliates, the "COMPANY"),
and Xxxxxx Xxxxx, an individual residing at 0000 Xxxxxxxx Xxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 (the "EXECUTIVE").
WITNESSETH:
WHEREAS, the COMPANY desires to employ EXECUTIVE as its Chairman of the Board,
President and Chief Executive Officer and EXECUTIVE desires to be so employed by
the COMPANY, all upon the terms and subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT; PRIOR AGREEMENTS. Subject to and upon the terms and
conditions contained in this AGREEMENT, the COMPANY hereby agrees to
employ EXECUTIVE and EXECUTIVE agrees to be employed by the COMPANY,
for the period set forth in Paragraph 2 hereof, to render the services
to the COMPANY, its affiliates and/or subsidiaries as described in
Paragraph 3 hereof. Each of the Consulting Agreement dated as of
December 1, 1999 and the Agreement for Consulting Services dated as of
May 9, 2002, both between the COMPANY and the EXECUTIVE (the "PRIOR
AGREEMENTS") shall terminate as of the date hereof (the "COMMENCEMENT
DATE"); provided, however, that any payments due and payable to the
EXECUTIVE under the PRIOR AGREEMENTS as of the COMMENCEMENT DATE shall
be paid as provided therein.
2. TERM. EXECUTIVE'S term of employment under this AGREEMENT shall
commence on the COMMENCEMENT DATE and shall continue for a period
through and including March 31, 2006 (the "EMPLOYMENT TERM"), unless
extended in writing by both parties or earlier terminated pursuant to
the terms and conditions set forth herein.
3. DUTIES.
(a) EXECUTIVE shall be employed as the COMPANY'S Chairman of the
Board, President and Chief Executive Officer and shall report
to the COMPANY'S Board of Directors. It is agreed that
EXECUTIVE shall perform his service in the COMPANY'S Torrance,
California, facilities, or any other facilities mutually
agreeable to the parties.
(b) EXECUTIVE agrees to abide by all By-Laws and applicable
policies of the Company promulgated from time to time by the
Board of Directors of the COMPANY and its constituent
committees (together with its appropriate committees, the
"BOARD OF DIRECTORS").
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4. EXCLUSIVE SERVICES AND BEST EFFORTS. EXECUTIVE shall devote all of his
working time, attention, best efforts and ability to the service of the
COMPANY, its affiliates and subsidiaries during the term of this
AGREEMENT.
5. COMPENSATION. As compensation for his services and covenants hereunder,
the COMPANY shall pay EXECUTIVE the following:
(a) Base Salary; Benefits. The COMPANY shall pay EXECUTIVE a base
salary ("SALARY") of Five Hundred Thousand Dollars ($500,000)
per year. The EXECUTIVE shall receive such additional benefits
as are usually provided from time-to-time to senior executives
of the COMPANY.
(b) Bonus. EXECUTIVE shall participate in the COMPANY'S Executive
Bonus Program as adopted and amended from time to time by the
COMPANY'S Board of Directors. The COMPANY'S Executive Bonus
Program shall be adopted and effective no later than with
respect to fiscal periods beginning April 1, 2003.
(c) Stock Option. As additional consideration for the services to
be performed by EXECUTIVE, the COMPANY granted EXECUTIVE, on
March 3, 2003, an option to purchase 100,000 shares of the
COMPANY'S common stock, pursuant to the COMPANY'S 1994 Stock
Option Plan, at an exercise price of $2.16 per share. Such
option shall be immediately exercisable with respect to
one-half of such shares and on the first anniversary thereof
with respect to the remaining such shares. Upon the
termination of this AGREEMENT for any reason, or the
expiration of the options for any reason, EXECUTIVE shall
have, for a period of 90 days from such termination or
expiration, the option, but not the obligation, to sell for
cash all or any part of the option, and all or any of the
underlying shares if any or all of the options have been
exercised, to the COMPANY for (i) with respect to each share
remaining subject to the option, the closing price of the
COMPANY'S common stock on the trading day immediately
preceding termination or expiration (or, if the COMPANY'S
stock is not then publicly traded, the fair market value
thereof as determined by negotiation between the COMPANY and
the EXECUTIVE) minus the exercise price and (ii) with respect
to each share purchased pursuant to the option and held by the
EXECUTIVE, the closing price of the COMPANY'S common stock on
the trading day immediately preceding termination or
expiration(or, if the COMPANY'S stock is not then publicly
traded, the fair market value thereof as determined by
negotiation between the COMPANY and the EXECUTIVE).
(d) Certain Transaction Fees. In the event of one or more
"PROPOSED TRANSACTIONS" (as defined in Exhibit A hereto)
occurring during the term of this AGREEMENT, EXECUTIVE shall
receive, as additional compensation with respect to each
PROPOSED TRANSACTION, a fee as set forth in Exhibit A hereto
(the "TRANSACTION FEES").
6. BUSINESS EXPENSES. EXECUTIVE shall be reimbursed for, and entitled to
advances (subject to repayment to the COMPANY if not actually incurred
by EXECUTIVE) with respect to, only those business expenses incurred by
him which are reasonable and necessary
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for EXECUTIVE to perform his duties under this AGREEMENT in accordance
with policies established from time to time by the COMPANY.
7. EXECUTIVE BENEFITS.
(a) EXECUTIVE shall be entitled to four (4) weeks paid vacation
each year during the EMPLOYMENT TERM.
(b) The COMPANY may withhold from any benefits payable to
EXECUTIVE all federal, state, local and other taxes and
amounts as shall be required pursuant to law, rule or
regulation. All of the benefits to which EXECUTIVE may be
entitled which are not specifically described herein may be
changed from time to time or withdrawn at any time in the sole
discretion of the COMPANY, so long as any such change or
withdrawal are applicable to all of the relevant COMPANY
executives and to the relevant executives of any company which
may control the COMPANY.
(c) During the EMPLOYMENT TERM the COMPANY shall provide to
executive an automobile allowance in the amount of Fifteen
Hundred Dollars ($1500.00) per month, payable monthly. In lieu
of such allowance, the Company may, at its option, elect to
provide EXECUTIVE an automobile of a make, model and year
mutually agreeable to the COMPANY and EXECUTIVE, all costs of
which, including fuel, oil, insurance, repairs, maintenance
and other expenses, shall be the responsibility of the
COMPANY.
(d) During the EMPLOYMENT TERM, if EXECUTIVE does not elect
medical insurance coverage for himself and his eligible family
through the COMPANY, he shall receive as an allowance for such
medical insurance an amount equal to the then cost which would
be incurred by the COMPANY in supplying such coverage for
EXECUTIVE and his eligible family.
8. DEATH AND DISABILITY.
(a) The EMPLOYMENT TERM shall terminate on the date of EXECUTIVE'S
death, in which event EXECUTIVE'S accrued SALARY, BONUS and
TRANSACTION FEES, if any, reimbursable expenses and benefits,
including accrued but unused vacation time, owing to EXECUTIVE
through the date of EXECUTIVE'S death, shall be paid to the
EXECUTIVE'S estate, and EXECUTIVE'S estate shall assume
EXECUTIVE'S rights under the 1994 Stock Option Plan and the
related rights under this AGREEMENT. EXECUTIVE'S estate will
not be entitled to any other compensation upon termination of
this AGREEMENT pursuant to this Paragraph 8 (a)
(b) If, during the EMPLOYMENT TERM, in the opinion of a duly
licensed physician selected by COMPANY and reasonably
acceptable to the EXECUTIVE, EXECUTIVE, because of physical or
mental illness or incapacity, shall become substantially
unable to perform the duties and services required of him
under this AGREEMENT for a period of 180 ) consecutive days ,
the COMPANY may, upon at least ten (10) days' prior written
notice given at any time after the expiration of
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such 180 ) day period to EXECUTIVE of its intention to do so,
terminate this AGREEMENT as of such date as may be set forth
in the notice. In case of such termination, EXECUTIVE shall be
entitled to receive his accrued SALARY, BONUS and TRANSACTION
FEES, if any, reimbursable expenses and benefits owing to
EXECUTIVE through the date of termination. In addition,
EXECUTIVE shall be entitled to receive the benefits payable
pursuant to the POLICY described in Paragraph 8(c) below.
EXECUTIVE will not be entitled to any other compensation upon
termination of this AGREEMENT pursuant to this Paragraph 8
(b).
(c) During the period ending no later than June 30, 2003, the
COMPANY and the EXECUTIVE agree to negotiate in good faith to
provide EXECUTIVE, at the COMPANY'S expense, with the benefit
of an appropriate amount and term and terms of disability
insurance. The EXECUTIVE understands and agrees that this
Section 8(c) shall not require the COMPANY to agree to any
particular disability terms or policy, but to, in the
COMPANY'S judgment, negotiate with EXECUTIVE with respect to
disability insurance. Any agreement reached by the parties
with respect to providing such insurance to EXECUTIVE shall be
evidenced by a written amendment to this AGREEMENT signed by
the COMPANY and the EXECUTIVE.
9. TERMINATION.
(a) The COMPANY may terminate the employment of EXECUTIVE for
Cause (as hereinafter defined); provided, however, that such
termination shall only become effective if the COMPANY (acting
upon duly adopted resolutions of the Board) shall first give
EXECUTIVE written notice of the material breach or default,
which notice shall (i) identify in reasonable detail the
manner in which the COMPANY believes that EXECUTIVE has
breached or defaulted under this AGREEMENT or in the
performance of his duties and (ii) indicate the steps required
to cure such breach or default, and EXECUTIVE shall fail
within 20 business days after receipt of such notice to
substantially remedy or correct the same. Upon any such
termination, the COMPANY shall be released from any and all
further obligations under this AGREEMENT, except that the
COMPANY shall be obligated to pay EXECUTIVE his accrued
SALARY, BONUS and TRANSACTION FEES, if any, reimbursable
expenses and benefits owing to EXECUTIVE through the day on
which EXECUTIVE is terminated. EXECUTIVE will not be entitled
to any other compensation upon termination of this AGREEMENT
pursuant to this Paragraph 9 (a).
(b) As used in this AGREEMENT, the term "Cause" shall mean: (i)
the willful failure of EXECUTIVE to perform his duties
pursuant to Paragraph 3 hereof, which failure is not cured by
EXECUTIVE as described in subparagraph (a) above, or (ii) the
commission by EXECUTIVE of an act involving moral turpitude,
dishonesty, theft or fraudulent business conduct.
(c) EXECUTIVE may voluntarily terminate this AGREEMENT for Good
Reason. For purposes of this AGREEMENT, "Good Reason" shall
mean the occurrence of a Change in Control, as defined below,
of the COMPANY. In the event of a
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Change in Control, EXECUTIVE may voluntarily terminate this
AGREEMENT for Good Reason within 90 days of such event by
giving written notice thereof to COMPANY.
(d) For purposes of this AGREEMENT, a "Change in Control" shall
have occurred if:
(i) any "person", as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than the COMPANY, any trustee or
other fiduciary holding securities under an employee benefit
plan of the COMPANY, any corporation owned, directly or
indirectly, by the stockholders of the COMPANY in
substantially the same proportions as their ownership of stock
of the COMPANY, Xxx Xxxxx, Xxxxxxx Xxxxx or any affiliate or
family relative of either of them, or any trust for the
benefit thereof), individually or as a group, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
COMPANY representing 30% or more of the combined voting power
of the COMPANY'S then outstanding securities;
(ii) the shareholders of the COMPANY approve a merger or
consolidation of the COMPANY with any other corporation, other
than (A) a merger or a consolidation which would result in the
voting securities of the COMPANY outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 80% of the combined voting
power of the voting securities of the COMPANY or such
surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the COMPANY (or similar
transaction) in which no "person" (as hereinabove defined)
acquires more than 30% of the combined voting power of the
COMPANY's then outstanding securities; or
(iii) the shareholders of the COMPANY approve an agreement
for the sale or disposition by the COMPANY of all or
substantially all of the COMPANY'S assets.
(e) If EXECUTIVE shall voluntarily terminate this AGREEMENT
pursuant to the provisions of Subparagraph 9(c), then the COMPANY shall
pay EXECUTIVE'S Salary and benefits through March 31, 2006 at the
annual rate in effect immediately prior to the Termination Date. For
the purposes of the foregoing payments, the foregoing annual SALARY
rate shall be the rate paid to EXECUTIVE without regard to any
purported reduction or attempted reduction of such rate by the COMPANY.
EXECUTIVE shall not be required to mitigate the amount of any payment
provided for in this Paragraph 9 by seeking employment or otherwise,
nor shall the amount of any payment or benefit provided for in this
Paragraph 9 be reduced by any compensation earned by EXECUTIVE as the
result of consultancy with or employment by another entity, by
retirement benefits, by offset against any amount claimed to be owed by
EXECUTIVE to the COMPANY, or otherwise.
10. DISCLOSURE OF INFORMATION AND RESTRICTIVE COVENANT. EXECUTIVE
acknowledges that, by his employment, he has been and will be in a
confidential relationship with the COMPANY and will have access to
confidential information and trade secrets of the
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COMPANY, its subsidiaries and affiliates. Confidential information and
trade secrets include, but are not limited to, customer, supplier, and
client lists, marketing, distribution and sales strategies and
procedures, operational and equipment techniques, business plans and
system, quality control procedures and systems, special projects and
technological research, including projects, research and reports for
any entity or client or any project, research, report or the like
concerning sales or manufacturing or new technology, EXECUTIVE
compensation plans and any other information relating thereto, and any
other records, files, drawings, inventions, discoveries, applications,
processes, data, and information concerning the business of the COMPANY
which are not in the public domain. EXECUTIVE agrees that in
consideration of the execution of this AGREEMENT by the COMPANY:
(a) EXECUTIVE will not, during the term of this AGREEMENT or at
any time thereafter, use, or disclose to any third party,
trade secrets or confidential information of the COMPANY,
including but not limited to, confidential information or
trade secrets belonging or relating to the COMPANY, its
subsidiaries, affiliates, customers and clients or proprietary
processes or procedures of the COMPANY, its subsidiaries,
affiliates, customers and clients. Proprietary processes and
procedures shall include, but shall not be limited to, all
information which is known or intended to be known only to
executives of the COMPANY or others in a confidential
relationship with the COMPANY or its respective subsidiaries
and affiliates which relates to business matters.
(b) EXECUTIVE will not, during the term of this AGREEMENT,
directly or indirectly, under any circumstance other than at
the direction and for the benefit of the COMPANY, engage in or
participate in any business activity, including, but not limit
to, acting as a director, franchiser or franchisee,
proprietor, syndicate member, shareholder or creditor or with
a person having any other relationship with any other
business, company, firm occupation or business activity, in
any geographic area within the United States that is, directly
or indirectly, competitive with any business completed by the
COMPANY or any of its subsidiaries or affiliates during the
term of this AGREEMENT or thereafter. Should EXECUTIVE own 5%
or less of the issued and outstanding shares of a class of
securities of a corporation the securities of which are traded
on a national securities exchange or in the over-the-counter
market, such ownership shall not cause EXECUTIVE to be deemed
a shareholder under this Paragraph 10 (b).
(c) EXECUTIVE will not, during the term of this AGREEMENT, on his
behalf or on behalf of any other business enterprise, directly
or indirectly, under any circumstance other than at the
direction and for the benefit of the COMPANY, solicit or
induce any creditor, customer, supplier, officer, EXECUTIVE or
agent of the COMPANY or any of its subsidiaries or affiliates
to sever its relationship with or leave the employ of any such
entities.
(d) This Paragraph 10 and Paragraphs 11, 12 and 13 hereof shall
survive the expiration or termination of this AGREEMENT for
any reason.
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(e) It is expressly agreed by EXECUTIVE that the nature and scope
of each of the provisions set forth above in this Paragraph 10
are reasonable and necessary. If, for any reason, any aspect
of the above provisions as it applies to EXECUTIVE is
determined by a court of competent jurisdiction to be
unreasonable, or unenforceable, the provision shall only be
modified to the minimum extent required to make the provisions
reasonable and/or enforceable, as the case may be. EXECUTIVE
acknowledges and agrees that his services are of a unique
character and expressly grants to the COMPANY or any
subsidiary, successor or assignee of the COMPANY, the right to
enforce the provisions above through the use of all remedies
available at law or in equity, including, but not limited to,
injunctive relief.
11. COMPANY PROPERTY.
(a) Any patents, inventions, discoveries, applications or process,
designs, devised, planned, applied, created, discovered or
invented by EXECUTIVE in the course of EXECUTIVE'S employment
under this AGREEMENT and which pertain to any aspect of the
COMPANY'S or its respective subsidiaries' or affiliates'
business shall be the sole and absolute property of the
COMPANY, and EXECUTIVE shall make prompt report thereof to the
COMPANY and promptly execute any and all documents reasonably
requested to assure the COMPANY the full and complete
ownership thereof.
(b) All records, files, lists, including computer generated lists,
drawings, documents, equipment and similar items relating to
the COMPANY'S business which EXECUTIVE shall prepare or
receive from the COMPANY shall remain the COMPANY'S sole and
exclusive property. Upon termination of this AGREEMENT,
EXECUTIVE shall promptly return to the COMPANY all property of
the COMPANY in his possession. EXECUTIVE further represents
that he will not copy or cause to be copied, print out or
cause to be printed out any software, documents or other
materials originating with or belonging to the COMPANY.
EXECUTIVE additionally represents that, upon termination of
his employment with the COMPANY, he will not retain in his
possession any such software, documents or other materials.
12. REMEDY. It is mutually understood and agreed that EXECUTIVE'S services
are special, unique, unusual, extraordinary and of an intellectual
character giving them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in an action at law.
Accordingly, in the event of any breach of this AGREEMENT by EXECUTIVE,
including but not limited to, the breach of the non-disclosure,
non-solicitation and non-compete clauses of Paragraph 10 hereof, the
COMPANY shall be entitled to equitable relief by way of injunction or
otherwise in addition to damages the COMPANY may be entitled to
recover.
13. REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. In order to induce the
COMPANY to enter into this AGREEMENT, EXECUTIVE hereby represents and
warrants to the COMPANY as follows: (i) EXECUTIVE hereby has the legal
capacity and unrestricted right to execute and deliver this AGREEMENT
and to perform all of his obligations hereunder; (ii) the execution and
delivery of this AGREEMENT by EXECUTIVE and the
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performance of his obligations hereunder will not will not violate or
be in conflict with any fiduciary or other duty, instrument, agreement,
document, ,arrangement or other understanding to which EXECUTIVE is a
party or by which he is or may be bound or subject; and (iii) EXECUTIVE
is not a party to any instrument, agreement, document, arrangement or
other understanding with any person (other than the COMPANY) requiring
or restricting the use or disclosure of any confidential information or
the provision of any employment, consulting or other services, except
any confidentiality agreements unrelated to the COMPANY'S industry and
having no relationship or impact of any kind whatsoever with respect to
this AGREEMENT and the transactions contemplated hereby.
14. NOTICES. All notices given hereunder shall be in writing and shall be
deemed effectively given when hand-delivered or mailed, if sent by
registered or certified mail, return receipt requested, addressed to
EXECUTIVE at his address set forth on the first page of this AGREEMENT
or to the COMPANY at its address set forth on the first page of this
AGREEMENT or to such changed address as may be properly noticed
hereunder.
15. ENTIRE AGREEMENT. This AGREEMENT constitutes the entire understanding
of the parties with respect to its subject matter and no change,
alteration or modification hereof may be made except in writing signed
by the parties hereto. Any prior or other agreements, promises,
negotiations or representations not expressly set forth in this
AGREEMENT are of no force or effect.
16. SEVERABILITY. If any provision of the Agreement shall be unenforceable
under any applicable law, then notwithstanding such unenforceability,
the remainder of this AGREEMENT shall continue in full force and
effect.
17. WAIVERS, MODIFICATIONS. No amendment, modification or waiver of any
provision of this AGREEMENT shall be effective unless the same shall be
in writing and signed by each of the parties hereto, and then such
waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
18. INDEMNIFICATION. COMPANY shall indemnify EXECUTIVE against any and all
claims of third parties arising out of his earlier services to the
COMPANY and out of the performance of his duties pursuant to this
AGREEMENT to the fullest extent permitted by law.
19. ASSIGNMENT. Neither this AGREEMENT, nor any of EXECUTIVE'S rights,
powers, duties or obligation hereunder, may be assigned by EXECUTIVE.
This AGREEMENT shall be binding upon and inure to the benefit of
EXECUTIVE and his heirs and legal representatives and the COMPANY and
its successors and assigns.
20. APPLICABLE LAW. This AGREEMENT shall be deemed to have been made,
drafted, negotiated and the transactions contemplated hereby
consummated and fully performed in the State of California, without
regard to the conflicts of law rules thereof. Nothing contained in this
AGREEMENT shall be construed so as to require the commission of any act
contrary to law, and whenever there is any conflict between any
provision of this AGREEMENT and any statue, law, ordinance, order or
regulation, contrary to which the parties hereto have no legal right to
contract, the latter shall prevail, but in such event any
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provision of this AGREEMENT so affected shall be curtailed and limited
only to the extent necessary to bring it within applicable legal
requirements.
21. ARBITRATION; JURISDICTION AND VENUE; PREVAILING PARTY. All disputes or
controversies between COMPANY and EXECUTIVE arising out of, in
connection with or relating to this AGREEMENT shall be exclusively
heard, settled and determined by arbitration before a retired Federal
or California judge to be held in the City of Los Angeles, County of
Los Angeles. The arbitration shall be administered by JAMS pursuant to
its Comprehensive Arbitration Rules and Procedures. The parties also
agree that judgment may be entered on the arbitrator's award by any
court having jurisdiction thereof and the parties consent to the
jurisdiction of any court located in the City of Los Angeles, County of
Los Angeles, for this purpose. The arbitrator shall allocate all of the
costs of the arbitration, including the fees of the arbitrator and the
reasonable attorneys' fees and expenses of the prevailing party,
against the party who did not prevail.
22. FULL UNDERSTANDING. EXECUTIVE represents and agrees that he fully
understands his rights to discuss all aspects of this AGREEMENT with
his private attorney, that to the extent, if any, that he desires, he
availed himself of this right, that he has carefully read and fully
understands all of the provisions of this AGREEMENT, that he is
competent to execute this AGREEMENT, that his agreement to execute the
Agreement has not been obtained by any duress and that he freely and
voluntarily enters into it, and that he has read this document in its
entirety and fully understands the meaning, intent and consequences of
this document.
23. COUNTERPARTS. This AGREEMENT may be executed in any number of
counterparts, each of which shall be deemed an original and all of
which taken together shall constitute one and the same agreement.
24. LEGAL REPRESENTATION. The parties hereto acknowledge that each has been
represented by independent counsel of such party's own choice
throughout all of the negotiations which preceded the execution of this
Employment Agreement and in connection with the preparation and
execution of this Employment Agreement or has had the opportunity to do
so and has not availed himself of it.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of the date
first above written.
MOTORCAR PARTS & ACCESSORIES, INC.
By: _____________________________
Name: _____________________________
Title: _____________________________
______________________________
XXXXXX XXXXX
ACKNOWLEDGED BY THE BOARD OF DIRECTORS
OF MOTORCAR PARTS & ACCESSORIES, INC.:
______________________________
Xxxxxxx Xxxx
______________________________
Xxx Xxxxx
______________________________
Xxxxxx Xxxxxxxxxx
______________________________
Xxxxxx Xxxxxx
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EXHIBIT A
As part of EXECUTIVE'S obligations to the COMPANY, EXECUTIVE will identify
prospective buyers and sellers who may be interested in acquiring or selling
businesses or lines of businesses upon terms and conditions and in a form
satisfactory to COMPANY (including any transaction resulting in a change of
control, and without regard to form, sometimes described herein as a "PROPOSED
TRANSACTION").
In the event of a closing of any PROPOSED TRANSACTION(s) at any time during the
term of this AGREEMENT, EXECUTIVE shall be entitled to a fee as provided in this
Paragraph. In any such event, the COMPANY shall pay EXECUTIVE a transaction fee
upon the closing of a PROPOSED TRANSACTION in an amount (the "TRANSACTION FEE")
equal to 1% of the "total consideration." The "total consideration" shall equal
(a) the sum of all cash consideration paid by the acquirer plus all Non-Cash
Consideration (as defined below) received as consideration for the transaction,
including any contingent payments of cash or securities and the aggregate amount
of any dividends (other than normal quarterly or annual cash dividends) or other
distributions declared by the acquired entity in connection with a PROPOSED
TRANSACTION, reduced by (b) any cash payments or any Non-Cash Consideration
subsequently returned to the acquirer pursuant to the agreement (the "Purchase
Agreement") out of an escrow account, through an offset against an earn-out
amount or through another holdback arrangement, regardless of the reason for
such return. "Non-Cash Consideration" shall have the following meaning: (i)
publicly traded securities shall be valued at the average of their closing
prices (as reported in The Wall Street Journal), for the five trading days
immediately prior to closing of the transaction between COMPANY and the other
party and (ii) any other non-cash consideration shall be valued at the fair
market value thereof as determined in good faith by the Board of Directors of
COMPANY. Debt assumed by the acquirer shall not constitute consideration or
Non-Cash Consideration for purposes of calculating the TRANSACTION FEE.
Subject to the terms and conditions of this paragraph, the TRANSACTION FEE shall
be deemed earned and payable upon receipt of the total consideration at the
closing with respect to a PROPOSED TRANSACTION and, with respect to contingent
or deferred payments, whether pursuant to promissory notes or other securities,
if any, from time to time, only upon the receipt thereof by the seller or holder
of its equity interests. If for any reason whatsoever, including, without
limitation, the act, omission, negligence or willful default of any party,
including the COMPANY, a PROPOSED TRANSACTION is not consummated, then EXECUTIVE
shall not be entitled to any TRANSACTION FEE. The TRANSACTION FEE shall, at
COMPANY'S sole option, be payable in kind, depending upon the form of
consideration paid by the acquirer, in the same proportions of cash and
securities as paid by the acquirer. In the event that the Purchase Agreement
provides that all or any part of the total consideration paid shall be deposited
into an escrow account at closing (the "ESCROWED PORTION"), then the amount of
the TRANSACTION FEE proportional to the ESCROWED PORTION shall not be payable
until the ESCROWED PORTION is released. If the ESCROWED PORTION is released in
installments, then a portion of EXECUTIVE'S TRANSACTION FEE will be payable in
proportion to each installment released and EXECUTIVE shall not be entitled to
receive any amount with respect to any ESCROWED PORTION which is returned to the
acquirer. However, in any instance where any cash or securities which have
previously been distributed to the seller or holder of its equity interests are
required to be returned to the acquirer for any reason, EXECUTIVE shall not be
required to return any portion of the TRANSACTION FEE. EXECUTIVE hereby agrees
that any
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securities received by him as part of the TRANSACTION FEE hereunder shall be
acquired and held subject to the same restrictions, if any, applicable to the
securities issued by the acquirer or any affiliate thereof and that securities
delivered to EXECUTIVE may bear an appropriate legend with respect to any such
restrictions.
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