Exhibit 10.5
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EMPLOYMENT AND NON-COMPETITION AGREEMENT
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XXXXXX XXXXXX
This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "Agreement"), dated as
of August 1, 2000, is between Stronghold Technologies, Inc., a New Jersey
corporation (the "Employer") and Xxxxxx Xxxxxx (the "Employee").
WHEREAS, the Employer desires to retain the Employee as its Vice
President-Chief Technology Officer, and the Employee desires to serve as such on
the terms and conditions set forth below;
NOW, THEREFORE, it is hereby agreed as follows:
ss.1. EMPLOYMENT. The Employer hereby employs the Employee, and the
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Employee hereby accepts employment, upon the terms and subject to the conditions
hereinafter set forth.
ss.2. DUTIES. The Employee shall be employed as Vice President-Chief
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Technology Officer of the Employer. If elected as such, the Employee also agrees
to serve as Secretary of the Employer without additional compensation. The
Employee shall also serve, without additional compensation, as a member of the
Employer's Management Committee, which shall not be a committee of the Board of
Directors. The Employee agrees to devote his full time and best efforts to the
performance of his duties to the Employer. If elected as such, the Employee
shall also serve as a director of the Employer, and the Employee shall be
entitled to receive such compensation, if any, paid generally to directors of
the Employer.
ss.3. TERM. The initial term of employment of the Employee hereunder shall
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commence on the date hereof (the "Commencement Date") and shall continue
until July 31, 2005 (the "Initial Term") unless earlier terminated pursuant to
ss.6. The term may be extended for additional one-year terms upon the written
consent of the parties hereto.
ss.4. COMPENSATION AND BENEFITS. Until the termination of the Employee's
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employment hereunder, in consideration for the services of the Employee
hereunder, the Employer shall compensate the Employee as follows:
(a) Base Salary.
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(i) The Employer shall pay the Employee, in accordance with the
Employer's then current payroll practices, a base salary of
$10,500 per month during the first six (6) months of
employment and $12,500 per month commencing February 1, 2001
(the "Base Salary"), payable on the last business day of
each month.
(ii) During the second year of the term of this Agreement, Base
Salary shall be $150,000 per annum; provided, however, that
if the Employer's Net Sales, as defined in ss.4(b)(i) below,
achieved in the first year of the term of this Agreement
equal or exceed $2,000,000, the Employee's Base Salary shall
be $175,000 per annum during the said second year.
(iii) During the third year of the term of this Agreement, Base
Salary shall be $175,000 per annum; provided, however, that
if the Employer's Net Sales achieved in the second year of
the term of this Agreement equal or exceed $10,000,000, the
Employee's Base Salary shall be $200,000 per annum during
the third year and during each subsequent year during the
term of this Agreement, except as otherwise provided in
ss.4(a)(v) below.
(iv) If, based on ss.ss.4(a)(ii) and 4(a)(iii) hereof Base Salary
shall be adjusted in the second and third years of the term
of this Agreement, such adjustment shall be made as promptly
as possible after computation of Net Sales for the
applicable year of the term of this Agreement and any
retroactive portion of the increase in Base Salary shall be
paid with the first regular adjusted monthly payment of Base
Salary.
(v) During the fourth and fifth years of the term of this
Agreement, Base Salary shall be increased annually by a
percentage equal to the percentage by which the Consumers
Price Index for Urban Wage Borrowers and Clerical Workers:
Xxx Xxxx, X.X. - Xxxxxxxxxxxx Xxx Xxxxxx (0000-00 equals
100), as published by the Bureau of Labor Statistics of the
United States Department of Labor, shall have increased over
the preceding year.
(vi) The adjustment provided for in ss.4(a)(v) shall be made as
soon after August 1St of each year as possible, but in no
event later than fifteen (15) days after the date upon which
the Bureau of Labor publishes its consumer price index
statistics for the month of July. Any portion of an increase
in the Employee's compensation retroactively due shall be
payable immediately upon determination of the adjustment. If
publication of the Consumer Price Index is discontinued, the
parties hereto shall accept comparable statistics on the
cost of living for the New York, N.Y. - Northeastern New
Jersey area as computed and published by an agency of the
United States or by a responsible financial periodical of
recognized authority then to be selected by the parties.
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(vii) The Board of Directors shall consider additional increments
in Base Salary from time to time, but such consideration
shall occur at least once annually, based on the Employer's
financial condition, levels of sales and profitability, and
the performance of the Employee.
(b) Incentive Compensation.
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(i) In addition to Base Salary, the Employee shall also receive,
subject to the limitations set forth below, a commission
equal to one (1%) percent of "Net Sales", as defined
below, recognized by the Employer during each year of the
term of this Agreement commencing with the second year of
the term of this Agreement. For purposes of this Agreement
the term "Net Sales" shall mean the amount equal to the
Employer's gross sales of products and services, computed in
accordance with generally accepted accounting principles
consistently applied, less duties, shipping, sales and use
taxes and other taxes payable by the customer or client,
insurance payable by the customer or client, allowances,
discounts, credits and returns. Net Sales shall not include
any sales of the Employer's assets not in the normal course
of its business. Incentive compensation shall be paid not
later than forty-five days following completion of each year
of the term of this Agreement. Any appropriate adjustments
to Net Sales to be made following payment of Incentive
Compensation shall be applied against the succeeding year's
Incentive Compensation, or in the event of termination of
the Employment of the Employee, within thirty (30) days
following the date of the event requiring such adjustment.
(ii) Notwithstanding anything in ss.4(b)(i) above to the
contrary, Incentive Compensation shall not exceed $50,000
during any year of the term of this Agreement.
(c) Stock Options.
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(i) Upon the later of the commencement of Employee's employment
hereunder or the adoption of the Stronghold Technologies,
Inc. 2000 Stock Option Plan (the "Option Plan"), Employee
will be granted options under the Option Plan to purchase,
at an exercise price equal to the fair market value of the
shares (estimated to be less than $1 per share), 100,000
shares of the Company's common stock. Such options shall
vest and become exercisable at any time in the next 10 years
from date of grant, provided that Employee has remained
continuously employed hereunder through the date of vesting
(or as otherwise provided herein), and the Employer achieves
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the required Net Sales during the respective FISCAL YEARS
(deemed to be 1/1 to 12/31 for purposes of this section) of
the Employer set forth below. Notwithstanding the foregoing,
in the event of the termination of employment of the
Employee, all unvested Options shall immediately expire and
be of no further force or effect (unless otherwise expressly
provided herein), and any Options which have previously
vested in accordance with the table set forth below or
become vested in accordance with ss.4(c)(ii) hereof shall be
exercisable by the Employee during the ninety (90) day
period following such termination of employment (or in the
event of the death or disability, as defined below, of the
Employee, during the one year period following death or
disability), after which time they shall expire and be of no
further force or effect:
Options Vesting
Fiscal Year Net Sales Achieved and Exercisable
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2001 $2,000,000 20,000
2002 $5,000,000 15,000
$10,000,000 15,000
2003 $10,000,000 10,000
$20,000,000 15,000
$30,000,000 or more 25,000
The number of shares which vest in any year will not be prorated.
Thus, for example, if in fiscal year 2001, $1,000,000 of Net Sales are
achieved, no options will vest. If in fiscal year 2002, $9,000,000 of
Net Sales are achieved, only 15,000 options will vest and become
exercisable in that year. Options not exercisable with respect to any
fiscal year due to failure of the Employer to recognize the required
Net Sales as set forth above shall be automatically terminated and be
of no further force or effect.
(ii) In the event of a "Change of Control" of the Company, as defined
below, one half of all of Employee's theretofore unvested and
unexercisable stock options (including, but not limited to, the stock
options set forth in this Section 4) shall become vested and
exercisable immediately. In the event that, within one year following
such Change of Control, either Employee's employment is terminated
without Cause or Employee resigns his employment, all of Employee's
theretofore unvested and unexercisable stock options (including, but
not limited to, the stock options set forth in this Section 4) shall
become vested and exercisable immediately.
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(iii) Except as specifically provided herein, all stock options granted to
Employee hereunder or otherwise shall be subject to the terms of the
Option Plan. The Option Plan shall permit, and all options granted
hereunder shall provide:
(A) that they are "incentive stock options" ("ISO") within the
meaning of Section 422 of the Internal Revenue Code, as amended,
to the maximum extent permitted by law, unless Employee agrees
otherwise;
(B) that, if vested, they are exercisable for a period of at least
ten years from the date of grant, absent termination of
employment, and except for certain change of control transactions
in which both the exercise and the termination of options may be
accelerated;
(C) that they may be exercised by surrender of a number of shares of
the Company's stock with a fair market value equal to the
exercise price at the time of exercise, or that the Company will
provide reasonable financing (i.e. permitting the Employee to
execute a promissory note (such note to be secured by a pledge of
the stock) for the full exercise price (provided, that nothing in
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this subparagraph (c) shall require any terms that would cause
any portion of the options be treated as "variable options" under
generally accepted accounting principles or otherwise cause the
Company to recognize expense for accounting purposes upon the
vesting or exercise of options so long as the options can be
structured to avoid such effect);
(D) to the extent permitted by applicable law (including Section 422
of the Internal Revenue Code and related rules with respect to
incentive stock options governed thereby), that the Employee may
designate a beneficiary in the case of death, and a legal
representative in the case of disability, with full power to
exercise the options in as favorable a manner as if the Employee
had held the options, and that the Employee shall be permitted to
transfer vested and exercisable options to members of his
immediate family or trusts or similar entities of which he or
they are the beneficiaries;
(E) The Option Plan shall give the ISO holder the ability to
specifically designate his beneficiary; if the option holder is
disabled, the legal representative of the option holder could
exercise the option on his behalf; and exercise of the ISO by the
ISO holder's estate would also be permitted;
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(F) The Option Plan shall provide that all granted but unvested and
unexercisable ISO's shall become vested and exercisable
immediately upon death or disability, with the term of the
disability to be defined by the Board in accordance with
allowable periods applicable to ISO's;
(iv) Change of Control. For purposes of this Agreement, a "Change of
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Control" shall occur on the first date on which (A) any person, entity, or group
of persons or entities acting in concert, becomes a "beneficial owner" (as
defined in Rule 13d3 under the Securities Exchange Act of 1934), directly or
indirectly, of securities of the Company representing more than 50% of the
voting power of the then outstanding securities of the Company with respect to
the election of directors (other than (1) Xxxxxxxxxxx X. Xxxxx, members of his
family, or entities controlled by or beneficially owned by him or them, or (2)
an entity as to which the stockholders of the Company immediately prior to such
entity becoming a beneficial owner would own at least 50% of the voting power of
the then outstanding securities of such entity with respect to the election of
directors); (B) the Company's Board of Directors approves or recommends for
approval by stockholders any transaction that would result in the condition set
forth in clause (A); (C) the Company's Board of Directors approves or recommends
for approval by stockholders any transaction in the nature of a merger, transfer
of substantially all the Company's assets, or liquidation, where the
stockholders of the Company immediately prior to such transaction, based on
their prior stock ownership in the Company, would own less than 50% of the
voting power with respect to the election of directors of the securities of an
entity owning or operating, directly or indirectly, a substantial portion of the
Company's pre-transaction assets.
(c) Additional Compensation. The Employer's Board of Directors (or applicable
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committee thereof) shall at all time retain discretion to award Employee
compensation in excess of the amounts set forth in this Agreement.
(d) Vacation. The Employee shall be entitled to four (4) weeks vacation
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each 12 month period. Any vacation shall be taken at the reasonable and mutual
convenience of the Employer and the Employee.
(e) Insurance; Other Benefits. The Employee shall be entitled to participate
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under any group accident, life and health insurance plans, pension and 401(k)
plans and option plans which in the future may be maintained by the Employer
generally for its employees and/or for its full-time senior executive officers,
as such employment benefits may be modified from time to time by the Employer.
The amount and extent of such coverage, if any, shall be subject to the
discretion of the Board. During the period prior to the effective time of any
health insurance plan adopted by the Employer and the Employee's effective date
of participation therein, the Employer shall reimburse the Employee for his
out-of-pocket costs
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in maintaining individual health insurance for the Employee and his spouse and
children under COBRA. The Employee will provide the Employer with appropriate
proof of payment.
(f) Car Allowance. In connection with the Employee's employment, the Employee
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shall from time to time be required to travel by automobile on the Employer's
business. Accordingly, the Employer shall provide to the Employee an automobile
allowance of $500 per month during the first year of the term of this Agreement,
$550 per month during the second year of the term of this Agreement, and $600
per month thereafter, to be expended by the Employee on monthly lease payments,
all maintenance, service and insurance charges. The above car allowance shall
not include gasoline and oil charges, which shall be reimbursed in accordance
with ss.5 hereof.
(g) Securities Registration Rights. If the Employer hereafter submits for
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registration under the federal securities laws any initial public offering of
its equity securities, or that of any of its affiliated companies or entities or
subsidiaries, the Employee shall have the right to sell his shares of the
Company's equity securities owned by him in said offering in such amounts and at
such times as the managing underwriter shall, in its sole discretion, permit. If
the Managing Underwriter limits the aggregate number of shares that the
Employer's shareholders may sell in such offering, each shareholder shall be
permitted to sell an amount equal to his then percentage ownership of the Class
or Series of the Company's shares being offered, excluding from such calculation
the number of shares held by shareholders not selling in such offering.
ss.5. EXPENSES. In addition to the foregoing, the Employer shall pay or
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reimburse the Employee for all reasonable out-of-pocket expenses properly
incurred by the Employee (including without limitation the costs for renting
reasonable office space in Northern Virginia (subject to prior approval of the
Employer), in the performance of his duties hereunder and such authorized
preincorporation expenses paid by the Employee on behalf of the Employer upon
presentation of appropriate vouchers therefor.
ss.6. TERMINATION. The Employee's employment hereunder shall commence on
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the Commencement Date and continue until the expiration of the Initial Term, and
any extension of such term pursuant to ss.3, except that the employment of the
Employee hereunder shall earlier terminate:
(a) Death or Disability. Upon the death of the Employee during the
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term of his employment hereunder or, at the option of the
Employer, in the event of the Employee's disability extending for
a period of ninety (90) days, whether or not continuous, within
any period of 180 days. For purposes of this Agreement,
"disability" shall mean the inability of the Employee, due to
physical or mental illness, injury or incapacity, to perform his
regular full time duties on behalf of the Employer.
(b) For Cause. For "Cause" immediately upon written notice by the
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Employer to the Employee; provided, that the Employer may not
terminate the Employee for Cause unless (i) such termination has
been approved by the affirmative vote or
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consent of a majority of the directors on the Board (excluding
the Employee if he is a director) prior to the time of such
termination; and (ii) not later than 30 days prior to the
effective date of such termination, the Employee shall be given
the opportunity to appear before the Board to address the grounds
for such termination. For purposes of this Agreement, a
termination shall be for Cause only if the Board shall reasonably
determine that any one or more of the following has occurred:
(i) acceptance of any unlawful bribe or kickback with respect to
the Employer's business; or
(ii) the Employee shall have been convicted by a court of
competent jurisdiction of, or pleaded guilty or nolo
contendere to, any felony which the Board reasonably
determines in its discretion would materially affect or
impair in any way (A) the Employee's ability to perform his
duties hereunder or (B) the reputation or operation of the
Employer's business or (C) the relationship between the
Employer and its suppliers, customers or employees; or
(iii) the Employee shall have committed a breach of any of the
covenants, terms and provisions of ss.9 hereof or a material
breach of any of the covenants, terms and provisions of ss.8
hereof; or
(iv) the Employee shall have materially breached any one or more
of the provisions of this Agreement (excluding ss.ss.8 and 9
hereof) and such breach shall have continued for a period of
thirty (30) days after written notice to the Employee
specifying such breach in reasonable detail; or
(v) the Employee shall have refused, after explicit written
notice, to obey any lawful resolution of or direction by the
Board which is consistent with this Agreement and his duties
hereunder.
(c) Termination Without Cause. Termination without cause may occur
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upon thirty (30) days' written notice by the Employer to the
Employee, or upon thirty (30) written notice from the Employee to
the Employer. For purposes of this Agreement, the Employee shall
be deemed to have been terminated without Cause if the
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termination is (i) initiated by the Employer and not based
substantially on any reason included in the above definition of
Cause or (ii) if the Employee terminates his employment hereunder
for Good Reason upon ten (10) days' written notice to the
Employer. The Employee shall be entitled to terminate his
employment for Good Reason if any of the following occur:
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(i) the Employee is assigned duties which are substantially
inconsistent with the position or responsibilities associated
with his position as Vice President of the Employer and the
Employer has not revoked such assignment within twenty (20) days
written notice from the Employee objecting to such duties;
(ii) if the Employer shall merge or consolidate into or transfer
substantially all of its assets to, or become a majority owned
subsidiary of, another corporation, and the Employee is not then
elected and/or appointed to a position of responsibility in any
such surviving, new or purchasing corporation substantially
equivalent to that provided in ss.2 hereof; and
(iii) The Employer violates a material provision of this
Agreement and such violation is not remedied within thirty (30)
days' written notice from the Employee specifying such violation
in detail.
(iv) The Employer insists upon the Employee relocating Employee's
primary office to a place other than Northern Virginia.
(d) Rights and Remedies on Termination.
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(i) If the Employer shall terminate the Employee's employment
hereunder pursuant to ss.6(c) hereof, then (A) the Employee shall
be entitled to receive, as severance pay, payment, in accordance
with the Employer's then current payroll practices, of his Base
Salary in effect at the time of his termination for a period of
one (1) month, if termination occurs during the first six months
of the initial term of this Agreement, and the lesser of (x) Base
Salary payable for the balance of the term of this Agreement or
(y) two months Base Salary, if termination occurs during the
second six months during the initial term of this Agreement. For
any termination pursuant to Section 6(c) hereof by the Employer
occurring after the first full year of employment hereunder, the
Employee shall receive as severance pay the lesser of (x) Base
Salary payable for the balance of the then existing term of this
Agreement or (y) two months' Base Salary, plus one week's Base
Salary for each full or part year worked after the first year of
employment hereunder. Employee shall also be paid his allocable
share, as a shareholder of the Employer, of any positive balance
of the Accumulated Adjustments Account ("AAA" account for S
Corporation purposes) - i.e., his allocable share of any amounts
taxable to S Corporation shareholders, but not fully distributed
to such shareholders -- within 60 days after the end of the
fiscal year in which the Employee's employment was terminated.
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(ii) Except as otherwise set forth in this ss.6(d) or otherwise
required by law, the Employee shall not be entitled to any
severance or other compensation after termination other than
payment of any portion of his Base Salary through the effective
date of his termination, accrued Incentive Compensation, pro
rated based on the effective date of termination, and any expense
reimbursements under ss.5 hereof for expenses incurred in the
performance of his duties prior to termination. Options, which as
of the effective date of termination of employment have not
become vested and exercisable in accordance with ss.4(c)(ii)
hereof, shall automatically terminate and be of no further force
or effect.
(iii) Valuation Date for Shares Upon Termination of Employment.
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It is acknowledged that Employee shall have a major role in
preparing and implementing the business plan of Employer and in
developing certain of Employer's intellectual property the value
of which may not be realized in the event of Employee's early
termination of employment. Accordingly, in the event of the
Employer's termination of the Employee's employment without Cause
or the Employee's termination of his Employment with Good Cause,
as defined above, or upon the death or Total Disability of the
Employee, as defined in the Stockholders Agreement, by and among
the Employer and its Stockholders, the date for appraisal of the
Sales Price of Employee's Stock (i. e., its fair market value)
set forth in section 10 of the said Shareholders Agreement,
shall, at the option of the Employee or his personal
representative exercisable within one hundred twenty (120) days
after such termination of employment, death or Total Disability,
as the case may be, be determined as of (i) the end of the fiscal
quarter immediately preceding the exercise of such option, or
(ii) the end of the last completed quarterannual period occurring
within the two (2) years after such termination of employment or
death or Total Disability, and the Closing Date with respect to a
purchase of the Employee's Stock shall be within thirty (30) days
following completion of such appraisal; provided, however, that
in the case of death or Total Disability, the Closing shall be
within 180 days following completion of the appraisal. If the
Employee or his personal representative fails to exercise the
above option within the said 120-day period, he shall be deemed
to have elected to have the fair market value determined as of
the end of the fiscal quarter immediately preceding the said
120-day period.
ss.7. INVENTIONS; ASSIGNMENT. All rights to discoveries, inventions,
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improvements, and innovations (including all data and records pertaining
thereto) related to the Employer's business, whether or not patentable,
copyrightable, registerable as a trademark, or reduced to writing, that the
Employee may discover, invent or originate during the term of his employment
hereunder or during his previous employment by or on behalf of the Employer as
an employee or consultant, either alone or with others and during working hours
or by the use of the
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facilities of the Employer ("Inventions"), shall be the exclusive property of
the Employer. The Employee shall promptly disclose all Inventions to the
Employer, shall execute at the request of the Employer any assignments or other
documents the Employer may deem necessary to protect or perfect its right
therein, and shall assist the Employer, at the Employer's expense, in obtaining,
defending and enforcing the Employer's rights therein. The Employee hereby
appoints the Employer as his attorney-in-fact to execute on his behalf any
assignments or other documents deemed necessary by the Employer to protect or
perfect its right to any Inventions.
ss.8. CONFIDENTIAL INFORMATION. The Employee recognizes and acknowledges
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that certain assets of the Employer, including without limitation information
regarding customers, pricing policies, methods of operation, business plans,
business strategies, proprietary computer programs or any part thereof,
including without limitation, source or object code, sales, products, profits,
costs, markets, key personnel, formulae, product applications, technical
processes, and trade secrets (hereinafter called "Confidential Information") are
valuable, special, and unique assets of the Employer and its affiliates. The
Employee shall not, during or after his term of employment, disclose any part of
the Confidential Information to any person, firm, corporation, association, or
any other entity for any reason or purpose whatsoever, directly or indirectly,
except as may be required pursuant to his employment hereunder, provided, that
Confidential Information shall in no event include (a) Confidential Information
which was generally available to the public at the time of disclosure by the
Employer or (b) Confidential Information which becomes publicly available other
than as a consequence of the breach of the Employee of his confidentiality
obligations hereunder. In the event of the termination of his employment,
whether voluntary or involuntary and whether by the Employer or the Employee,
the Employee shall deliver to the Employer all documents and data pertaining to
the Confidential information and shall not take with him any documents data of
any kind or any reproductions (in whole or in part) or extracts of any items
relating to the Confidential Information.
ss.9. NON-COMPETITION. During the term of the Employee's employment
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hereunder and for a period of one (1) year thereafter or for a period of one
year after any termination of the Employee's employment hereunder, the Employee
will not (a) engage, directly or indirectly, alone or as a shareholder (other
than as a holder of less than five percent (5%) of the common stock of any
publicly traded corporation), partner, officer, member, director, employee,
consultant or otherwise of any other business or organization that is engaged or
becomes engaged in the development and/or sale of software and/or the provision
of services which (in the specific markets penetrated by the Employer or as to
which, at or prior to the time of expiration of the initial or any extended term
of this Agreement or at or prior to termination of the Employee's employment, it
has taken significant steps to penetrate) (i) directly compete with the software
sold by the Employer and/or with the services provided by the Employer or (ii)
compete with any other business activity of the Employer (collectively referred
to as "Competitive Business"); provided, however, that the Employee shall not be
prevented from being employed by or consulting with any division, subsidiary or
affiliate of any company engaged in a Competitive Business so long as the
division, subsidiary or affiliate of such company does not directly or
indirectly engage in any Competitive Business or (b) solicit or encourage any
officer, employee or consultant of the Employer to leave its employ for
alternative employment. If during the said one-year period the Employee is
employed or retained by another company, he shall, at least twenty one (21) days
prior to commencement of
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employment or other duties for such company notify the Employer as to the name,
address and telephone number of such company and the name of his new supervisor.
The Employer shall have the option to take reasonable steps to verify that such
employment shall not violate the provisions of this Section 9. The Employee will
continue to be bound by the provisions of this ss.9 until their expiration, and
shall not be entitled to any compensation from the Employer with respect thereto
except as may be provided in ss.6(d) hereof; provided, however, that this ss.9
shall not apply if the Employer shall default in the payment of any amount due
to the Employee pursuant to ss.6(d) hereof and shall have failed to cure such
default within twenty (20) days after written notice from the Employee
specifying such default. If at any time the provisions of this ss.9 shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this ss.9 shall be
considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter; and
the Employee agrees that this ss.9 as so amended shall be valid and binding as
though any invalid or unenforceable provision had not been included herein.
ss.10. INDEMNIFICATION. The Employer shall indemnify the Employee in his
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capacity as an officer and/or director of the Employer to the full extent
provided in N.J.S.A. 14A:3-5 without reference to its laws or principles
regarding conflicts of law. In connection with any dispute or proceeding arising
under this Agreement the other party shall promptly reimburse the prevailing or
substantially prevailing party for all costs, including, without limitation, the
reasonable attorneys' fees of any attorney or firm of attorneys incurred by the
prevailing or substantially prevailing party in any such dispute or proceeding
arising under this Agreement. Any termination of the Employee's services, or of
this Agreement, shall have no effect on the continuing operation of this
Section.
ss. 11. DISPUTE RESOLUTION PROCEDURE.
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This Section governs any dispute, disagreement, claim, or controversy
between the parties arising out of or relating to this Agreement or the breach
thereof, other than those arising under ss.ss.7, 8 and 9 hereof (the "Disputed
Matter"). All Disputed Matters shall be submitted to the following dispute
resolution process:
(a) Mediation. Either party may, upon written notice elect to utilize
a non-binding resolution procedure whereby each presents its case
at a hearing before an acceptable neutral adviser. The hearing
will occur no more than ten (10) days after a party serves
written notice to use mediation. Each party may be represented at
the hearing by attorneys. If the matter cannot be resolved at
such hearing by the parties, the neutral adviser may be asked to
assist the parties in evaluating the strengths and weaknesses of
each party's position on the merits of the disputed matter.
Thereafter, the parties shall meet and try again to resolve the
matter. If the matter cannot be resolved at such meeting, the
parties' only recourse is binding arbitration as provided for in
Subsection 11 (b) below, and the mediation proceedings will have
been without prejudice to the legal position of either party. The
parties shall each bear their respective costs incurred in
connection with the mediation procedure,
12
except that they shall share equally the fees and expenses of the
neutral adviser and the costs of the facility for the hearing.
Both parties agree to use their best efforts to mutually agree on
the use of a facility for which no charge will be made.
(b) (i)Arbitration. If the Disputed Matter is not submitted to
mediation or, if submitted, cannot be resolved, then either party
may within ten (10) days after the completion of mediation (or at
any time if the matter is not submitted to mediation), as
appropriate, upon written notice, submit the Disputed Matter to
formal binding arbitration in accordance with the provisions set
forth in Arbitration Provisions set forth below.
(ii) Neither party will institute any action or proceeding
against the other party in any court concerning any Disputed
Matter other than the entry of judgment upon a decision or an
award rendered by the arbitrator pursuant to this Section 11.
(iii) Any dispute between the parties shall be settled by final
and binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the
"AAA"); provided, however, that if such Rules are inconsistent
with any provision of this Agreement, this Agreement shall
control.
(iv) Any such arbitration shall be conducted in the City of
Newark, New Jersey at a place and time mutually agreed upon by
the parties or, failing mutual agreement, selected by the
arbitrator. The arbitrator shall apply New Jersey law in
connection with the arbitration of any Disputed Matter without
regard to its principles of conflicts of law.
(v) Any arbitration shall be conducted before a single arbitrator
who shall be compensated for his services at a rate to be
determined by the AAA, in the event the parties are not able to
agree upon his or her rate of compensation, but based upon hourly
or daily consulting rates for the neutral arbitrator reasonably
consistent with such arbitrator's normal charges or fees charged
by similarly experienced and qualified arbitrators. Within five
(5) days of notice by a party seeking arbitration under this
provision, the parties shall appoint the arbitrator. In the event
the parties cannot agree on the selection of an arbitrator within
the stated time period, the AAA rules for the selection of an
arbitrator shall be followed. In either event, the arbitrator
shall be required to have at least five (5) years experience in
the industry in which the Employer conducts its principal
business.
(vi) Each party shall bear its own costs and expenses of
arbitration including, but not limited to, filing fees and
attorney's fees, and each party hereby agrees to his or its
proportionate share (based on the number of parties to the
proceeding) of the administrative fees of the AAA and of the
compensation to be paid to the arbitrator in any such arbitration
and his or its proportionate share of the costs of transcripts
and other expenses of the arbitration proceedings, subject,
13
however, to allocation of costs and expenses (including
attorneys' fees) by the arbitrator consistent with the award.
(vii) The parties agree to make available to the arbitrator all
nonprivileged books, records, schedules and other information
reasonably requested by the arbitrator. Such matters are to be
made available to the arbitrator at such times as are deemed
necessary by them to make his decision as herein provided.
(viii) The arbitrator may conduct any pre-trial proceedings by
telephonic conference call rather than by a face-to-face meeting.
(ix) The arbitrator shall, prior to rendering his decision on the
arbitration matter, afford each of the parties an opportunity,
both orally and in writing, to present any relevant evidence (the
formal rules of evidence applicable to judicial proceeding shall
not apply) and to express, orally and/or in writing that party's
point of view and arguments as to the proper determination of the
arbitration matter; provided, however, that either party
submitting written material shall be required to deliver a copy
of such written material to the other party concurrently with the
delivery thereof to the arbitrator and such other party shall
have the opportunity to submit a written reply, a copy of such
shall also be delivered to the other party concurrently with the
delivery thereof to the arbitrator. Oral argument shall take
place only at a hearing before the arbitrator at which all
parties are afforded a reasonable opportunity to be present and
be heard.
(x) In the event of a willful default by any of the parties
hereto in appearing before the arbitrator after due written
notice shall have been given, the arbitrator is hereby authorized
to render a decision upon the testimony of the party appearing
before the arbitrator.
(xi) The arbitrator shall make a decision and award resolving the
dispute within thirty (30) days after the selection of the
arbitrator; and within fifteen (15) days of the last hearing held
concerning such dispute(s).
(xii) Any judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.
(xiii) Within thirty (30) days after the arbitrator makes his or
her decision and award, the arbitrator shall render findings of
fact and conclusions of law and a written opinion setting forth
the basis and reasons for any decision and award rendered and
deliver such documents to each party to this Agreement along with
a signed copy of the decision or award.
(xiv) The arbitrator chosen in accordance with these provisions
shall not have the power to alter, limit, expand, amend or
otherwise affect the terms of this Agreement or these arbitration
provisions.
14
ss.12. GENERAL.
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(a) Notices. All notices and other communications hereunder shall be
-------
in writing or by written telecommunication, and shall be deemed
to have been duly given if delivered personally or if mailed by
certified mail, return receipt requested, postage prepaid or sent
by written telecommunication or telecopy, to the relevant address
set forth below, or to such other address as the recipient of
such notice or communication shall have specified to the other
party hereto in accordance with this ss. 12(a):
If to the Employee, to:
Xxxxxx Xxxxxx
00000 Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
With copies to:
Xxxxxxx Xxxxxxxx, Esq.
Xxxxxx Xxxxxxxxx Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx, P.C.
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
If to the Employer, to:
Stronghold Technologies, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
With copies to:
Xxxxxx X. Xxxxxx, Esq.
Podvey, Sachs, Meanor,
Catenacci, Mldner & Cocoziello
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
(b) Equitable Remedies. Each of the parties hereto acknowledges and
-------------------
agrees that upon any breach by the Employee of his obligations
under ss.ss.7, 8 and 9 hereof, the Employer will have no adequate
remedy at law, and accordingly will be entitled to seek specific
performance and to seek other appropriate injunctive and
equitable relief.
(c) Severability. If any provision of this Agreement is or becomes
------------
invalid, illegal or unenforceable in any respect under any law,
the validity, legality and
15
enforceability of the remaining provisions hereof shall not in
any way be affected or impaired.
(d) Xxxxxxx.Xx delay or omission by either party hereto in exercising
-------
any right, power or privilege hereunder shall impair such right,
power or privilege, nor shall any single or partial exercise of
any such right, power or privilege preclude any further exercise
thereof or the exercise of any other right, power or privilege.
(e) Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) Assigns. This Agreement shall be binding upon and inure to the
-------
benefit of the heirs and successors of each of the parties
hereto, including any entity which acquires substantially all of
the assets or equity interest of the Employer.
(g) Entire Agreement.This Agreement contains the entire understanding
----------------
of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and shall
not be amended except by a written instrument hereafter signed by
each of the parties hereto.
(h) Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the local law of the State of New Jersey. With
respect to any claim brought under ss.7, ss.8 or ss.9 hereof, the
parties hereby consent to and submit to the jurisdiction of the
federal and state courts located in the State of New Jersey, and
any action or suit under any of said Sections of this Agreement
shall only be brought by the parties in any federal or state
court with appropriate jurisdiction over the subject matter
established or sitting in the State of New Jersey. The parties
shall not raise in connection therewith, and hereby waive, any
defenses based upon the venue, the inconvenience of the forum, or
the lack of personal jurisdiction in any such action or suit
brought in the State of New Jersey.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date and year
first above written.
STRONGHOLD TECHNOLOGIES, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------
Xxxxxxxxxxx X. Xxxxx, Chief Executive Officer
/s/ Xxxxxx Xxxxxx
----------------------------
XXXXXX XXXXXX
