MANAGEMENT AGREEMENT
This Management Agreement is entered into as of January 1, 1997 between
Xxxxxxxxx Industries, Inc., a Delaware corporation, having its principal place
of business at 00000 X.X. 0xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (the "Company"),
and East Shore Ventures, Inc., a Florida corporation having its principal place
of business at 00000 X.X. 0xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (the "General
Manager").
W I T N E S S E T H:
WHEREAS, the Company desires to engage the General Manager to provide
certain management services to the Company relating to the Company's business
operations; and
WHEREAS, the General Manager is willing to render such services to the
Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company and the General Manager hereby agree as follows:
1. DEFINITIONS.
(a) The "Asset Purchase Agreement" shall mean the Asset
Purchase Agreement dated October 28, 1996 by and among Xxxxxxxxx
Industries, Inc., IASI Inc., International Aircraft Support L.P. and
Xxxxxxx Xxxx.
(b) The "Base Annual Fee" shall mean the amount set forth in
Section 3(a) of this Management Agreement.
(c) The "Board" shall mean the Board of Directors of the
Company.
(d) The "Annual Bonus" shall mean the amount set forth in
Section 3(b) of this Management Agreement.
(e) The "Management Period" shall mean the period commencing
on the date hereof and ending on the seventh anniversary of the date
hereof.
2. MANAGEMENT SERVICES TO BE RENDERED BY THE GENERAL MANAGER.
(a) The General Manager shall furnish the Company with the management
services necessary of a chief executive officer responsible for the overall
direction of the operations and administration of the business of the Company
with such powers and duties as provided for a chief executive officer of the
Company under the Company's by-laws and pursuant to the General Corporation Law
of the State of Delaware. The General Manager shall have such other incidental
powers and duties as shall be assigned from time to time by the Board.
(b) Unless the Company otherwise consents, the General Manager's
services shall be rendered through the services of Zivi X. Xxxxxx ("Xx.
Xxxxxx"), the President of the General Manager. Unless the context otherwise
requires, all references to the "General Manager" herein shall be deemed to
refer also to Xx. Xxxxxx and to any other personnel of the General Manager who
shall be engaged in the rendering of services hereunder. In performing services
and duties for the Company, the General Manager shall comply with the policies
of, and be subject to the direction of, the Board.
3. MANAGEMENT FEE AND COMPENSATION.
(a) Base Annual Fee. The Company shall pay to the General Manager a
Base Annual Fee of $240,000. During the Management Period, the General Manager's
Base Annual Fee may be reviewed and changed; however, the Company shall not pay
the General Manager a Base Annual Fee less than $240,000 during the Management
Period. Any increase in the Base Annual Fee shall not serve to limit or reduce
any other obligation to the General Manager under this Management Agreement. The
Base Annual Fee shall be paid on a twice-per-month basis in accordance with the
Company's annual payroll practices.
(b) Annual Bonus. For each calendar year commencing with the year
ending December 31, 1997, at the end of which this Management Agreement is in
effect:
(A) if the Company has net income for such year of an
amount equal to the target net income before taxes, determined
in accordance with generally accepted accounting principles in
the U.S. as in effect from time to time (the "Net Income") as
approved by the Board (or the Executive Committee of the
Board, if one exists) for such year (the "Target"), the
General Manager shall be entitled to an Annual Bonus in an
amount equal to $240,000 (the "Target Bonus"). During the
Management Period, the Target Bonus shall be adjusted to equal
any increase in the General Manager's Base Annual Fee, and the
amounts in the formulae set forth below will be accordingly
adjusted.
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(B) if the Company has Net Income for such year of
more than the Target and less than 150% of the Target, the
General Manager shall be entitled to an Annual Bonus as
calculated below:
B = $240,000 + $240,000 x (NI - T)
__________
T
where:
B = the Annual Bonus earned in such year.
T = the Target for such year.
NI = the actual Net Income for such year.
(C) if the Company has Net Income for such year of
150% of the Target or more, the General Manager shall be
entitled to an Annual Bonus of $360,000.
(D) if the Company has Net Income for such year of
less than 50% of the Target, the General Manager shall not be
entitled to an Annual Bonus.
(E) if the Company has Net Income for such year of at
least 50% of the Target but less than the Target, the General
Manager shall be entitled to an Annual Bonus as calculated
below:
B = $240,000 - ($240,000 x 2 x (T - NI))
_________________
T
where:
B = the Annual Bonus earned in such year.
T = the Target for such year.
NI = the actual Net Income for such year.
(c) Adjustment for Taxes. In addition to the amounts set forth in
Section 3(a) and 3(b) hereof for the Base Annual Fee and the Annual Bonus, the
Company shall pay to the General Manager an amount equal to the General
Manager's Federal, state and local payroll and related taxes associated with the
General Manager's salary and bonus payments to Xx. Xxxxxx.
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(d) Asset Purchase Agreement. Notwithstanding the above, payment of the
Base Annual Fee and the Annual Bonus to the General Manager assumes the closing
of the transactions contemplated by the Asset Purchase Agreement. Absent closing
of the transactions contemplated by the Asset Purchase Agreement, the terms of
this Section 3 will be renegotiated by the parties to fairly reflect the nature
and extent of the services to be rendered by the General Manager.
4. BENEFITS. In addition to the compensation payable to the General Manager as
set forth in Section 3 above, during the Management Period Xx. Xxxxxx shall be
eligible to participate in all incentive, savings, pension, welfare (including
without limitation medical, dental, disability and salary continuance insurance)
plans, practices, policies and programs applicable on or after the date hereof
to employees of the Company. In addition, the Company shall obtain and maintain
a life insurance policy on the life of Xx. Xxxxxx in the amount of $4,000,000
with a variable annuity feature mutually acceptable to the General Manager and
the Company. The Company will pay the premium on such policy for the entire
period commencing on the date hereof and ending on the seventh anniversary of
the date hereof (the "Policy Period"). Until the second anniversary of the date
hereof, the Company shall own, and shall have the right to designate the
beneficiary under, such insurance policy. The General Manager shall have the
option of causing the Company to transfer the ownership of the policy (and the
right to designate the beneficiary thereunder) to the General Manager at no cost
to the General Manager after the second anniversary of the date hereof (but the
Company will continue to pay the premium on such policy for the entire Policy
Period). If the General Manager does not exercise its option to transfer
ownership of the policy, upon the termination of the Policy Period, the Company
shall transfer the policy to the General Manager at no cost to the General
Manager. In the event that this Management Agreement is terminated (other than
for cause) prior to that time, the Company will transfer ownership of the policy
to the General Manager and pay the General Manager a lump sum payment equal to
the unpaid premium remaining through the end of the Policy Period. Such lump sum
payment shall include an amount sufficient to compensate the General Manager for
any Federal, state or local income taxes associated with the receipt of such
payment.
5. EXPENSES.
(a) Relocation Expenses. If Xx. Xxxxxx is relocated during the
Management Period the General Manager shall be entitled to repayment of
relocation expenses in an amount not greater than $10,000 in the case of any
move within the United States or $20,000 in the case of any move to outside the
United States.
(b) Other Business Expenses. During the Management Period the General
Manager shall be entitled to receive prompt reimbursement from the Company for
all reasonable business expenses incurred by the General Manager or Xx. Xxxxxx,
itemized in accordance with the Company's existing policies, practices and
procedures.
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6. FRINGE BENEFITS. During the Management Period, Xx. Xxxxxx shall be entitled
to all fringe benefits applicable on or after the date hereof to employees of
the Company, including Xx. Xxxxxx'x existing life insurance and pension
arrangements.
7. VACATION. During the Management Period, Xx. Xxxxxx shall be entitled to paid
vacation in accordance with the policies and practices applicable on or after
the date hereof to executives of the Company, provided that Xx. Xxxxxx shall be
entitled to a minimum of three weeks of paid vacation per calendar year and all
holidays that are prescribed by the Company's policies and practices. If the
Management Agreement is in effect for less than a full calendar year, the
minimum three weeks shall be prorated for the period of the year in which Xx.
Xxxxxx served pursuant to the Management Agreement. Vacation accrued but unused
at the end of a calendar year may be carried over into the following calendar
year or years; provided however that such accrued but unused vacation cannot be
carried over for more than two years. All earned, unused and accrued vacation
will be paid to the General Manager at the termination of this Agreement.
8. OFFICE AND SUPPORT STAFF. During the Management Period Xx. Xxxxxx shall be
entitled to an appropriate office or offices and with furnishings and other
appointments and with a secretary and other support staff as are usual and
customary for the executive officers of a corporation of comparable size to the
Company.
9. AUTOMOBILE. During the Management Period, the Company shall make available to
the General Manager an automobile for use by Xx. Xxxxxx and shall pay for all
expenses related thereto including, without limitation, gas and insurance.
10. THE GENERAL MANAGER'S OBLIGATIONS. During the Management Period, and
excluding any periods of vacation and sick leave to which Xx. Xxxxxx is
entitled, the General Manager agrees to cause Xx. Xxxxxx to devote substantially
all of his attention and time during normal business hours to the business and
affairs of the Company and to perform faithfully and efficiently the
responsibilities assigned to the General Manager. During the Management Period
it shall not be a violation of this Management Agreement for Xx. Xxxxxx to serve
on corporate, civic or charitable boards, deliver lectures, fulfill speaking
engagements or teach at educational institutions or manage personal investments,
so long as such activities do not significantly interfere with the performance
of his duties and responsibilities hereunder on behalf of the General Manager.
11. TERMINATION.
(a) Mutual Agreement. During the Management Period, this Management
Agreement may be terminated at any time by mutual agreement between the Company
and the General Manager on terms to be negotiated at the time of such
termination. Any such termination by mutual agreement shall be evidenced by a
written document signed by the Company and the General Manager. In the event of
a termination by mutual agreement, the Company's obligation to the General
Manager under this
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Management Agreement shall be determined by such mutual agreement as evidenced
by a written document signed by the General Manager and the Company.
(b) Death. This Management Agreement shall terminate automatically upon
Xx. Xxxxxx'x death. If this Management Agreement is terminated by reason of Xx.
Xxxxxx'x death, the Company shall have no further obligations under this
Management Agreement, other than (i) those obligations accrued, earned or vested
as of the date of Xx. Xxxxxx'x death, (ii) that portion of any Annual Bonus
determined pursuant to Section 3(b) of this Management Agreement in respect of a
prior calendar year that had been deferred, which amount shall be paid to the
General Manager as soon as practicable, and (iii) with respect to the calendar
year in which Xx. Xxxxxx'x death occurs, in the event that an Annual Bonus would
have been payable to the General Manager pursuant to Section 3(b) of this
Agreement in respect of such calendar year had Xx. Xxxxxx not died, the General
Manager shall be entitled to receive a prorated amount of such Annual Bonus
based on a fraction in which the numerator is the number of days Xx. Xxxxxx
continued service to the Company under this Management Agreement in the calendar
year in which Xx. Xxxxxx died and the denominator is 365, with such Annual Bonus
payment to be paid in one cash lump sum paid as soon as practicable following
delivery of audited financial statements for the year in which Xx. Xxxxxx dies.
In addition, Xx. Xxxxxx'x family shall be entitled to receive benefits at least
equal to the most favorable benefits provided by the Company to surviving
families of employees of the Company based on the terms of the benefit plans
referenced in Section 4 of this Management Agreement as in effect on the date of
Xx. Xxxxxx'x death.
(c) Disability. If the Company determines in good faith that Xx. Xxxxxx
has a "disability" (as defined below), it may give the General Manager written
notice of its intention to terminate this Management Agreement. In such event,
this Management Agreement shall terminate effective on the 60th day after
receipt by the General Manager of such notice. No such notice of termination by
reason of disability shall be given until Xx. Xxxxxx has experienced a period of
three consecutive months of disability and the disability is continuing. The
notice of termination shall not be effective if Xx. Xxxxxx returns to full-time
performance of his duties prior to the expiration of the 60-day notice period.
For purposes of this Management Agreement, "disability" shall mean a physical or
mental condition which, three months after its commencement, is determined to be
total and permanent by a physician selected by the Company. Xx. Xxxxxx and the
General Manager shall be entitled to all compensation and benefits provided for
under this Management Agreement during the three-month waiting period for the
disability determination and during the 60-day notice of termination period. In
the event that the Company provides long-term disability benefits for Xx.
Xxxxxx, such benefits shall not commence until after this Management Agreement
has been terminated and the Company has ceased paying compensation pursuant to
the foregoing sentence. If this Management Agreement is terminated by reason of
Xx. Xxxxxx'x disability, this Management Agreement shall terminate without
further obligations to Xx. Xxxxxx or the General Manager under this Management
Agreement, other than (i) those obligations accrued, earned or vested as of the
date of the termination, (ii) that portion of any Annual Bonus determined
pursuant to Section
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3(b) of this Management Agreement in respect of a prior calendar year that had
been deferred, which amount shall be paid to the General Manager as soon as
practicable, and (iii) with respect to the calendar year in which this
Management Agreement is terminated, in the event that an Annual Bonus would have
been payable to the General Manager pursuant to Section 3(b) of this Management
Agreement in respect of such calendar year had this Management Agreement not
terminated, the General Manager shall be entitled to a pro-rated amount of such
Annual Bonus based on a fraction in which (A) the numerator is the number of
days in the calendar year in which this Management Agreement was terminated that
Xx. Xxxxxx provided services to the Company under this Management Agreement and
which were prior to the period of Xx. Xxxxxx'x disability and (B) the
denominator is 365, with such Annual Bonus payment to be paid in one cash lump
sum paid as soon as practicable following delivery of audited financial
statements for the year in which this Management Agreement is terminated. In the
event Xx. Xxxxxx becomes disabled but returns to active service under this
Management Agreement prior to the expiration of the three-month waiting period,
or prior to the expiration of the 60-day notice of intent to terminate period,
the General Manager shall be entitled to the full amount of any Annual Bonus
payable pursuant to Section 3(b) of this Agreement in respect of the year in
which he became disabled without regard to the period of absence due to the
disability. In addition, Xx. Xxxxxx and Xx. Xxxxxx'x family shall be entitled to
receive benefits, including without limitation disability benefits, at least
equal to the most favorable benefits provided by the Company to employees of the
Company based on the terms of the benefit plans referenced in Section 4 of this
Management Agreement as in effect on the date Xx. Xxxxxx'x disability commenced.
(d) Voluntary Termination or Retirement. If Xx. Xxxxxx shall elect to
voluntarily terminate his services under this Management Agreement (other than
for "good reason" as defined in Section 11(g) below) or to retire during the
Management Period, this Management Agreement shall terminate automatically and
the Company shall have no further obligations to the General Manager under this
Management Agreement, other than those obligations accrued, earned or vested as
of the date of the termination or retirement. In the event of voluntary
termination or early retirement (prior to Xx. Xxxxxx'x 65th birthday), the
General Manager shall be entitled to receive a pro-rated amount of any Annual
Bonus payable in respect of the year of voluntary termination or early
retirement. If Xx. Xxxxxx retires upon the expiration of this Management
Agreement at the end of the Management Period, and in the event that an Annual
Bonus would have been payable to the General Manager pursuant to Section 3(b) of
this Management Agreement in respect of such calendar year had this Management
Agreement not terminated, the General Manager shall be entitled to receive a
pro-rated amount of such Annual Bonus based on a fraction in which (i) the
numerator is the number of days in the calendar year in which Xx. Xxxxxx was
terminated that he provided services to the Company under this Management
Agreement and (ii) the denominator is 365, with such Annual Bonus payment to be
paid on one cash lump sum paid as soon as practicable following delivery of
audited financial statements for the year in which this Management Agreement is
terminated.
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(e) Cause. During the Management Period, the Company may terminate this
Management Agreement for "cause," as defined below. For purposes of this
Management Agreement, "cause," shall mean:
(i) an act or acts of personal dishonesty taken by Xx. Xxxxxx
or the General Manager at the expense of or against the interests of
the Company;
(ii) repeated violations by Xx. Xxxxxx or the General Manager
of the obligations under Section 10 of this Agreement which are not
remedied within a reasonable period of time after receipt of written
notice from the Company of such violations;
(iii) any direct or indirect disclosure of any confidential
information or other special knowledge of the finances, business or
other affairs of the Company;
(iv) the conviction of Xx. Xxxxxx or the General Manager of a
felony;
or
(v) the conviction of Xx. Xxxxxx of a serious misdemeanor
involving illegal use, possession or sale of drugs, larceny, crimes of
violence or sex offenses.
(vi) the entry of a decree or order for relief in respect of
the General Manager by a court having jurisdiction in the premises, or the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the General Manager or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, in an involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law; the commencement against the General Manager of
an involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency or
other similar law, and the continuance of any such case unstayed and in effect
for a period of 30 consecutive days; or the commencement by the General Manager
of a voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or the consent by it to the entry of an order for relief in
an involuntary case under any such law or the consent by it to the appointment
of or taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the General Manager or of any
substantial part of its property, or the making by it of a general assignment
for the benefit of creditors, or the failure of the General Manager generally to
pay its debts as such debts become due or the taking of any corporate action in
furtherance of the foregoing.
If this Management Agreement is terminated for cause, this Management Agreement
shall terminate without further obligations to the General Manager or to Xx.
Xxxxxx under this Management Agreement, other than those obligations accrued,
earned or
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vested as of the date of the termination. The General Manager shall not be
entitled to any Annual Bonus in respect of the year of termination in the event
this Management Agreement is terminated for cause pursuant to this Section
11(e).
(f) Involuntary Termination. If during the Management Period the
Company terminates this Management Agreement other than for reasons set forth in
Section 11(a) through 11(e) above, it shall be deemed to be an involuntary
termination and the Company shall pay to the General Manager the following
amounts:
(i) to the extent not theretofore paid, the Company shall pay
the Base Annual Fee through the date of such involuntary termination as
well as that portion of any Annual Bonus determined pursuant to Section
3(b) of this Management Agreement in respect of a prior calendar year
which had been deferred;
(ii) the Company shall pay the General Manager on the date of
such involuntary termination an amount equal to two years of the Base
Annual Fee;
(iii) with respect to the year in which such involuntary
termination occurs, in the event that an Annual Bonus would have been
payable to the General Manager pursuant to Section 3(b) of this
Management Agreement in respect of such year had this Management
Agreement not been terminated, the General Manager shall be entitled to
receive a pro-rated amount of such Annual Bonus based on a fraction in
which (A) the numerator is the number of days in the calendar year in
which this Management Agreement terminated that Xx. Xxxxxx provided
services to the Company under this Management Agreement and (B) the
denominator is 365, which such Annual Bonus payment to be paid in one
cash lump sum paid as soon as practicable following delivery of audited
financial statements for the year in which this Management Agreement is
involuntarily terminated; and
(iv) the Company shall pay in one cash lump sum any vacation
days accrued but unused as of the date of Xx. Xxxxxx'x involuntary
termination.
(g) Good Reason. During the Management Period, the General Manager may
terminate this Management Agreement for "good reason" as defined below. For
purposes of this Management Agreement, "good reason" shall mean:
(i) the assignment to the General Manager of any duties
inconsistent in any respect with the position, duties and
responsibilities as set forth in Section 2(a) of this Management
Agreement or any action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for
this purpose any isolated, insubstantial and inadvertent action by the
Company which is not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the General
Manager;
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(ii) any failure by the Company to comply with any of the
provisions of Sections 3 through 8 of this Management Agreement
regarding the management fee, compensation, benefits, expenses, fringe
benefits, vacation and office staff, other than an isolated,
insubstantial and inadvertent action by the Company which is not taken
in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the General Manager;
(iii) the Company's requiring Xx. Xxxxxx to be based at any
office or location other than the address set forth in the first
paragraph of this Management Agreement, except for travel reasonably
required in the performance of his responsibilities; or
(iv) any failure by the Company to comply with and satisfy
Section 18 of this Management Agreement with respect to successors.
In the event that the General Manager terminates this Management Agreement for
good reason as defined in this Section 11(g), it shall be deemed to be an
"involuntary termination" as set forth in Section 11(f) above and the General
Manager shall be entitled to all payments and obligations set forth in Sections
11(f)(i) through 11(f)(iv) of this Management Agreement as if this Management
Agreement had been involuntarily terminated.
12. NOTICE OF TERMINATION. Any termination by the Company for any reason or by
the General Manager for any reason shall be communicated by a written notice
which indicates (i) the specific termination provision in this Management
Agreement relied upon, (ii) the facts and circumstances claimed to provide a
basis for such termination, and (iii) the date of termination.
13. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Management Agreement shall
prevent or limit Xx. Xxxxxx'x continuing or future participation in any benefit,
bonus, incentive or other plans, programs, policies or practices provided by the
Company and for which Xx. Xxxxxx may otherwise qualify. Amounts which are vested
benefits or which Xx. Xxxxxx is otherwise entitled to receive under any plan,
policy, practice or program of the Company at or subsequent to the termination
of this Management Agreement shall be payable in accordance with such plan,
policy, practice or program.
14. FULL SETTLEMENT. The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment or other claim, right or
action which the Company may have against the General Manager, Xx. Xxxxxx or
others. In no event shall Xx. Xxxxxx be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the General
Manager under any of the provisions of this Management Agreement. In connection
with any contest by the Company or others of the validity or enforceability of,
or liability under, any provision of this Management Agreement in which the
General Manager is ultimately successful, the Company agrees to pay, to the full
extent permitted by law, all reasonable legal fees
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and expenses, as incurred by the Company, the General Manager, Xx. Xxxxxx and
others, which the General Manager may reasonably incur as a result of any such
contest.
15. CONFIDENTIALITY.
(a) The General Manager shall hold, and cause Xx. Xxxxxx to hold, in a
fiduciary capacity for the benefit of the Company all secret, proprietary or
confidential information, knowledge or data relating to the Company and its
business, including without limitation financial information and customer lists,
which shall have been obtained by the General Manager or Xx. Xxxxxx during the
Management Period and which shall not be or become public knowledge (other than
by acts by the General Manager or Xx. Xxxxxx in violation of this Management
Agreement). Notwithstanding the foregoing, the General Manager and Xx. Xxxxxx
may disclose any such information if such information is compelled by legal
process, provided that if the General Manager or Xx. Xxxxxx is so compelled, it
or he shall provide the Company with prompt notice so that it may seek a
protective order or other remedy. In any event, the General Manager and Xx.
Xxxxxx shall furnish only that portion of the confidential information that is
legally required to be disclosed.
(b) In the event that the General Manager or Xx. Xxxxxx breaches any
provision of this Section 15, any payments or other benefits promised under this
Management Agreement shall be forfeited. In addition, the Company shall be
entitled to apply to any court of competent jurisdiction for an injunction
restraining the General Manager and Xx. Xxxxxx from committing or continuing any
violation of this Management Agreement.
16. NON-COMPETITION. The General Manager agrees, and shall cause Xx. Xxxxxx to
agree, that during the Management Period and for three years thereafter (or, if
the General Manager terminates this Management Agreement for good reason or is
terminated involuntarily, only during the Management Period), they will not,
within the continental United States, Israel, Ireland or any other country in
which the Company has operations, directly or indirectly, engage or participate
or make any financial investments in or become employed by or render advisory or
other services to or for any person, firm or corporation, or in connection with
any business activity, other than that of the Company and its subsidiaries,
directly or indirectly in competition with any of the business operations or
activities of the Company and its subsidiaries as of the date in question or, if
later, as of the date of termination of this Management Agreement, whether such
companies are presently existing or hereafter acquired. Nothing herein
contained, however, shall restrict the General Manager or Xx. Xxxxxx from making
any investments in any company whose stock is listed on a national securities
exchange or actively traded in the over-the-counter market, so long as such
investment does not give either of them the right to control or influence the
policy decisions of any such business or enterprise which is or might be
directly or indirectly in competition with any of such business operations or
activities of the Company or any of its subsidiaries.
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17. RESTRICTIONS ON SOLICITATION. The General Manager agrees that during the
Management Period and for three years thereafter, it will not, and it will cause
Xx. Xxxxxx not to:
(i) directly or indirectly solicit, raid, entice or induce any
employee of the Company or any of its subsidiaries to become an
employee of any person, firm or corporation which is, directly or
indirectly, in competition with the business or activities of the
Company or any of its subsidiaries;
(ii) directly or indirectly approach any such employee for
these purposes;
(iii) authorize or knowingly approve the taking of such
actions by other persons on behalf of any such person, firm or
corporation, or assist any such person, firm or corporation in taking
such action; or
(iv) directly or indirectly solicit, raid, entice or induce
any person, firm or corporation who or which on the date hereof is, or
at the time during the term of this Management Agreement shall be, a
customer of the Company or of any of its subsidiaries to become a
customer for the same or similar products which it purchased from the
Company or any of its subsidiaries, of any other person, firm or
corporation, and neither the General Manager nor Xx. Xxxxxx shall
approach any such customer for such purpose or authorize or knowingly
approve the taking of such actions by any other person; provided that
if the General Manager terminates this Management Agreement for good
reason or this Management Agreement is terminated involuntarily, then
this subsection (iv) shall not apply.
18. SUCCESSORS. This Management Agreement is personal to the General Manager and
Xx. Xxxxxx and without the prior written consent of the Company shall not be
assignable by either of them otherwise than by will or the laws of descent and
distribution. This Management Agreement shall inure to the benefit of and be
enforceable by the legal representatives of Xx. Xxxxxx and the successors of the
General Manager. This Management Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Management
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. The General Manager
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the General Manager to assume expressly and agree to perform this
Management Agreement in the same manner and to the same extent that the General
Manager would be required to perform if no such succession had taken place. As
used in this Management Agreement, "Company" shall mean the Company as defined
herein and any successor to its business and/or assets
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as aforesaid which assumes this Management Agreement by operation of law or
otherwise.
19. BINDING ARBITRATION. In the event that the Company and the General Manager
cannot agree on an interpretation of any provision of this Management Agreement,
or in the event that the Company fails to make any payments or otherwise fulfill
any obligations required by the terms of this Management Agreement, the Company
and the General Manager agree to resolve any such dispute through binding
arbitration. Any request for such arbitration shall be served on the other party
by written notice. The parties shall agree upon and select an arbitrator within
20 days after written demand is made by either party for such arbitration. The
arbitrator shall set a time for hearing within 60 days of his/her selection.
Each party shall have an opportunity to present evidence on the issues in
dispute before the arbitrator and each party may be represented by legal counsel
if either so desires. The decision of the arbitrator shall be rendered in
writing to both parties within 30 days of the close of the hearing. The decision
of the arbitrator shall be final and binding upon both parties. Any legal fees,
expenses or other costs incurred by the Company and the General Manager in
connection with such arbitration shall be borne by the Company.
20. INDEMNIFICATION.
(a) If the General Manager or Xx. Xxxxxx acted in good faith and in a
manner it or he reasonably believed to be in or not opposed to the best
interests of the Company, and the General Manager or Xx. Xxxxxx had no
reasonable cause to believe that its or his conduct was unlawful or detrimental
to the Company, the Company shall indemnify and hold harmless the General
Manager and its successors and Xx. Xxxxxx and his legal representatives from and
against any and all claims, losses, liabilities, damages, costs, demands, causes
of action (whether legal, equitable, administrative, civil or criminal),
judgments, settlements (subject to the last sentence of paragraph (c) hereof),
fines, court costs and other expenses of any kind or nature whatsoever,
including, without limitation, attorneys' fees and disbursements (collectively,
"Losses"), which may be threatened against, incurred or suffered by the General
Manager or its successors or Xx. Xxxxxx or his legal representatives in
connection with, relating to or arising out of, directly or indirectly, the
General Manager's or Xx. Xxxxxx'x performance, duties and responsibilities to,
for and on behalf of, the Company, including, without limitation, (i) this
Management Agreement and all actions or omissions taken thereunder and (ii) any
acts, omissions or alleged acts or omissions arising out of the General
Manager's or Xx. Xxxxxx'x activities on behalf of the Company or in furtherance
of the interests of the Company.
(b) Exception. Notwithstanding anything contained herein or in the
By-Laws of the Company, the Company shall have no obligation to indemnify the
General Manager or Xx. Xxxxxx if the Loss incurred by the General Manager or Xx.
Xxxxxx (i) arises out of an action brought directly by the Company against the
General Manager or Xx. Xxxxxx or (ii) arises, directly or indirectly, as a
result of this Management
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Agreement being terminated for cause (as such term is defined in this Management
Agreement).
(c) Notification of Claim. Promptly after receipt by the Company of
notice of any claim against the General Manager or Xx. Xxxxxx pursuant to which
the General Manager or Xx. Xxxxxx is entitled to indemnification, the Company
shall have the right to assume the defense of such claim, including the
employment of counsel of its choice. Although the General Manager and Xx. Xxxxxx
shall have the right to employ its or his own counsel, the fees and expenses of
such counsel shall be at the expense of the General Manager or Xx. Xxxxxx, as
the case may be. The Company shall not be liable for any settlement of any claim
or action effected without its written consent, provided that such consent was
not unreasonably withheld.
(d) Payment of Indemnity Amounts. The Company agrees to pay all amounts
payable in respect of Losses immediately upon its receipt of a statement with
respect thereto rendered by the General Manager or Xx. Xxxxxx, together with
appropriate supporting documentation thereof. It is the express intention of the
parties hereto that all such amounts shall be paid by the Company on or before
the date payment thereof is due, and that neither the General Manager nor Xx.
Xxxxxx shall be required at any time to bear any costs or expenses on account of
Losses.
21. MISCELLANEOUS.
(a) This Management Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(b) The captions in this Management Agreement are not part of the
provisions hereof and shall have no force or effect. This Management Agreement
may not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal representatives.
(c) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the General Manager: If to the Company:
------------------------- ------------------
East Shore Ventures, Inc. Xxxxxxxxx Industries, Inc.
00000 X.X. 0xx Xxxxxx 00000 X.X. 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxx 00000
Attn: Zivi X. Xxxxxx Attn: Xxxx Xxxxxxx
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or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(d) The invalidity or unenforceability of any provision of this
Management Agreement shall not affect the validity or enforceability of any
other provisions of this Management Agreement.
(e) A party's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
(f) This Management Agreement supersedes the prior employment agreement
between the Company and Xx. Xxxxxx, dated June 9, 1995, as amended, and contains
the entire understanding of the Company and the General Manager with respect to
the subject matter hereof.
IN WITNESS WHEREOF, this Management Agreement has been executed and
delivered on the date first above written by the undersigned.
XXXXXXXXX INDUSTRIES, INC.
By:-----------------------
Name:
Title:
EAST SHORE VENTURES, INC.
By:-----------------------
Zivi X. Xxxxxx
President
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