AMENDED EMPLOYMENT AGREEMENT
AMENDED
EMPLOYMENT AGREEMENT
THIS
AMENDED EMPLOYMENT AGREEMENT (“Agreement”) dated September 27, 2007 (the
“Amendment Date”), between MRU Holdings, Inc., a Delaware corporation with its
principal place of business located at 000 Xxxxxxx Xxxxxx 00xx 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”) entered into an Employment
Agreement dated November 17, 2004 (the “Initial Agreement”) which was effective
as of November 1, 2004 (the “Effective Date”); and
WHEREAS,
the Parties wish to amend the Initial Agreement in order to continue Executive’s
employment by the Company upon the terms and conditions set forth herein and
otherwise to continue the terms and conditions of the Executive’s employment as
set forth in the Initial Agreement (as amended herein, the
“Agreement”).
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 vested and became 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. Periods
of Service.
(a)
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 October 31, 2008 (the “Scheduled Termination Date”), unless
terminated in accordance with the provisions of paragraph 11 below, in which
case the provisions of paragraph 11 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.
(b) Additional
Service.
Provided that this Agreement has not been terminated by reason of Death,
Disability or Cause, all as defined in paragraph 11 hereof, then, in the event
that the Executive’s employment hereunder is not renewed in accordance with
paragraph 2(a) after the Scheduled Termination Date, the Executive shall
nevertheless continue to serve the Company for a minimum period of one year
after the expiration of the Term either (i) as a member of the Company’s Board
of Directors, in which case the Company shall take all appropriate action to
nominate the Executive for election as a Director or (ii) as a member of the
Board of Directors of a Subsidiary of the Company, as defined in the MRU
Holdings, Inc. Amended and Restated 2004 Incentive Plan.
(c) 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.
3. 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.
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4. 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.
5. Location.
For at
least three days per week, the locus of the Executive’s employment with the
Company shall be the Company’s office located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
XX 00000. The Executive may spend two days 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 $1,200.00 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.
6. 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 which shall remain at its current rate
until January 1, 2008 at which time Executive’s annual salary shall increase to
$250,000, 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, beginning on January 1, 2009, 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.
(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.
7. 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.
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(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 and
Amended Agreement up to the amount of $3,500.00. The Executive shall be
responsible for any such expenses in excess of $3,500.00.
8. 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.
9. 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 has granted the Executive options to acquire 250,000
shares of common stock on September 20, 2005 and 200,000 shares of common stock
on January 9, 2006. The
per
share
exercise price of options granted prior to the Amendment Date pursuant to this
paragraph 9(a) is $ 3.00 and $3.85 respectively, the fair market value per
share
of Company common voting stock on the date of issuance. The Executive shall,
in
the discretion of the Board of Directors and subject to the terms of the Plan
and any subsequent stock incentive plan as may be approved by the Company’s
stockholders, continue to be eligible to be granted further options after the
Amendment Date. 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 granted on September 20, 2005 pursuant to the terms of this paragraph
9
vest and became 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 12½% of such options becoming vested and exercisable on the first day
of each calendar quarter thereafter until all options became fully vested.
The
options granted on January 9, 2006 became exercisable on an annual basis over
a
period of three years, with 33.3% of such options being vested and exercisable
one year after the grant date and an additional 33.3% of such options becoming
vested and exercisable two years after the grant date thereafter until all
options became 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.
(c) Accelerated
Xxxxxxx.Xx
the
event the Executive’s employment with the Company is terminated by reason of
Death, Disability or without Cause, all as defined in paragraph 11 hereof,
or in
the event that the Executive terminates this Agreement for Good Reason, as
defined in paragraph 11 hereof, or in the event that the Executive shall no
longer be employed in the position of Chairman of the Board and Chief Executive
Officer for any reason other than a termination for Cause, 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. Subject to the terms
and
conditions of the Plan and any subsequent stock incentive plan, the Option
Agreement shall permit cashless exercise of options by the
Executive.
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10. 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 10(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 10 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.
11. 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.
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(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 paragraphs 11(c)(i)(b) and 11(c)(i)(c) above shall not be
subject to cure.
(ii) Termination
of the Executive for “Cause” pursuant to paragraph 11(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 11(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 11(c)(i)(a), 11(c)(i)(b) or
11(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 11(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 11(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 11(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.
(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 11(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 11(d)(i) hereof. Such notice, if given by the Executive
pursuant to subparagraph 11(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 11(d)(iii).
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(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 11(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 6(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 11(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 11(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.
(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 11(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.
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(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 11(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 (ii), “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.
(iii) At
the
Executive’s option, the amounts described in paragraphs 11(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 6(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 11(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 11(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.
-9-
12. 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; and (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.
(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.
-10-
13. 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 13 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.
14. 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”).
-11-
(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.
15. 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.
16. 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 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. §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.
-12-
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.
17. 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:
If
to the
Company:
MRU
Holdings, Inc.
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
XX 00000
If
to the
Executive:
Xxxxx
X.
XxXxxxx, Xx.
00
Xxxx
Xxxxxx Xxxxx,
Xxxxxxxxx,
XX 00000
18. 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.
-13-
(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 12, 13 and 14 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 12, 13
and
14 of this Agreement. The Parties agree that any pursuit of equitable relief
in
respect of paragraphs 12, 13 and 14 of this Agreement shall have no effect
whatsoever regarding the continued viability and enforceability of paragraph
16
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.
(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:
-14-
Xxxxx X. XxXxxxx, Xx. | MRU HOLDINGS, INC. |
/s/ Xxxxx X. XxXxxxx, Xx. |
By: /s/
Xxxxxxx Xxxxx
Name:
Xxxxxxx Xxxxx
Title: Lead
Independent Director
|
Dated: November
17, 2004
Amended as of: September 27, 2007
|
Dated: November
17, 2004
Amended as of: September 27,
2007
|
-15-