EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement"), dated as of October 21,
1997, is made by and between ROY ISRAEL (the "Executive") and NAM CORPORATION,
a Delaware corporation (the "Company").
WHEREAS, it is important to the Company that it have the
benefit of the Executive's services, experience and loyalty, and Executive has
indicated his willingness to provide his services on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties, subject to the terms and
conditions set forth below, intending to be legally bound, hereto agree as
follows:
1. Employment.
(a) General. The Company hereby employs the Executive and
the Executive agrees upon the terms and conditions herein set forth to serve
as Chief Executive Officer and President of the Company. At all times during
the Employment Term, as defined below, the Executive shall be the most senior
executive officer of the Company. The Executive shall devote substantially all
of his efforts to the Company, but during the term of this Agreement he is
allowed to engage in other businesses which do not compete with the Company.
(b) Duties. The duties of the Executive shall include
primary responsibility for the administration, organizational structure,
strategic direction and overall
management of the Company and such other responsibilities as the Board of
Directors of the Company may reasonably delegate to the Executive. All
employees of the Company shall report to the Executive.
2. Term of Employment. The Company hereby employs the
Executive and the Executive shall serve in the employ of the Company for a
period retroactive to July 1, 1997 (the "Commencement Date") and extending
through and including June 30, 2002 (such date and the last day of any
extended term of employment pursuant to this Section 2 being referred to as
the "Termination Date"), unless sooner terminated hereunder (the "Initial
Term"). The term of this Agreement shall be automatically renewed for
successive one (1) year periods (the "Renewal Term") unless terminated by
either the Executive or the Company by the giving of written notice of
termination at least ninety (90) days in advance of the then current
Termination Date. (The Initial Term and the Renewal Term shall be collectively
referred to herein as the "Employment Term"). At the end of the Initial Term,
the Base Salary, as defined below, for the Renewal Term, and each Renewal Term
thereafter, may be renegotiated by the Company and the Executive.
3. Compensation and Other Benefits. The Company shall pay
and provide the following compensation and other benefits to the Executive
during the Employment Term:
(a) Base Salary. The Company shall pay to the Executive a
minimum annual base salary of $225,000 (the "Base Salary") for the first year
of the Initial Term. Effective on each anniversary of the Commencement Date
during the Employment Term, the
-2-
Base Salary shall be increased to reflect increases in the Urban Consumer
Price Index for all Urban Consumers for the New York metropolitan area (or any
successor Consumer Price Index), based on data published by the Bureau of
Labor Statistics of the United States Department of Labor for the period that
corresponds with the preceding twelve month period. Such Base Salary shall be
paid in accordance with Company policy. In addition, the Company shall pay all
sums owed to the Executive from the Commencement Date until the date hereof
which are due to the retroactive application of the Commencement Date.
(b) Fringe Benefits.
(i) The Executive shall be entitled to receive twenty
(20) days paid vacation for each twelve (12) month period (the "Vacation
Time") during the Employment Term.
(ii) The Executive shall receive full health and
dental insurance coverage for the Executive and his family for which the
Company shall pay the premium. The Company shall pay Executive a gross-up
payment necessary to cover any tax liability he incurs in connection with the
payment of such health and dental insurance premiums by the Company.
(iii) The Company shall lease an automobile, to be
chosen by the Executive, for his use or the Company may reimburse the
Executive for the lease of an automobile, at the Executive's option. The
monthly lease payment by the Company for such automobile shall not exceed one
thousand dollars ($1,000), provided, however, that if the monthly lease
payment is greater than one thousand dollars ($1,000), the Executive
acknowledges that the Company shall only pay one thousand dollars ($1,000)
towards the monthly lease payment. In addition, the Company shall pay, or
reimburse Executive promptly
-3-
after receiving supporting documentation relating thereto, all taxes and all
expenses associated with the lease and use of such automobile.
(iv) The Executive shall be entitled to participate
in all employee benefit plans, programs and arrangements of the Company now or
hereafter made available to senior executives of the Company on a basis which
is no less favorable than is made available to any other senior executive of
the Company.
(v) During the Employment Term, the Company shall
maintain key man life insurance on the life of the Executive for the benefit
of the Company of at least one million dollars ($1,000,000). In addition,
during the Employment Term, the Company shall provide life insurance to the
Executive for the benefit of the Executive's estate in an amount to be
determined solely by Executive. The premiums on all such policies shall not
aggregate more than $15,000 for each policy year. The Company shall pay a tax
gross-up payment to the Executive for taxes, if any, on such premiums. All
rights of Executive with respect to any prior life insurance policies shall be
governed by the prior employment agreement.
(vi) During the Employment Term, the Company shall
maintain a long-term disability policy for the Executive which shall provide
for disability coverage of 60% of Base Salary. The Company will structure its
payments for such policy so that the receipt of the benefit by the Executive
shall not be taxable. In addition, if the Executive is taxed upon the
reimbursement or payment by the Company of such premiums, then the Company
shall pay a tax gross-up payment to compensate the Executive for such taxes,
if any.
-4-
(c) Business Expenses. During the Employment Term, the
Company shall promptly reimburse the Executive for all ordinary and necessary
travel expenses, business expenses, and other disbursements incurred by him
for or on behalf of the Company, in the performance of his duties hereunder.
The Executive shall provide the Company with an accounting of his expenses,
including written documentation when available, which accounting shall clearly
reflect which expenses are reimbursable by the Company.
(d) Bonus. The Executive may receive an annual bonus
which may consist of cash, stock options or a combination thereof (the
"Bonus") at the sole discretion of the Board of Directors or any Committee of
the Board of Directors vested with the power to determine such bonuses (the
"Committee"). The Bonus shall be payable to the Executive within thirty (30)
days after completion of the Company's annual audit.
4. Location. Except when traveling, the Executive shall work
in the Company's New York offices or in any other location selected by the
Company with the Executive's prior written approval.
5. Termination of Employment.
(a) During the Employment Term, the Executive may be
terminated only "For Cause" as that term is defined below.
(b) "For Cause" shall mean (i) wilful misconduct by the
Executive in the performance of his duties hereunder; or (ii) the Executive is
convicted of a felony. In no event shall the results of the Company's
operations or business decisions made by the Executive
-5-
constitute For Cause. The Company shall immediately notify the Executive if it
is intending to terminate this Agreement For Cause (the "Cause Notice").
(c) Any determination that For Cause exists shall only be
made after the Executive shall have been given a reasonable opportunity to
present his view of relevant facts and circumstances to the Board of Directors
of the Company and the Company shall have made a reasonable independent and
impartial investigation thereof. The Executive shall be given twenty (20) days
from receipt of the Cause Notice in which to present to the Board of Directors
his view of the relevant facts.
(d) If this Agreement is terminated pursuant to Paragraph
5(a), then this Agreement shall terminate on the date set by the Board of
Directors.
(e) If at anytime during the Employment Term, the
Executive's duties are changed ("Change-in-Duties"), without his consent, so
that he is no longer the most senior executive officer of the Company, then
such change shall be deemed a material breach of the Agreement by the Company.
In such event, the Executive shall be entitled to terminate the Agreement and
receive three times his Base Salary at the time of the Change-in-Duties. This
payment shall be paid during the one-year period following the termination of
the Agreement at the same intervals as the Base Salary had been paid prior to
such date. In addition, the Company is obligated to maintain all other
benefits under this Agreement for any period remaining under this Agreement or
for a period of one (1) year from the Change-in-Duties, whichever is longer.
6. Permanent Disability. If during the Employment Term, the
Executive shall
-6-
become Permanently Disabled (as defined below), the Company shall give thirty
(30) day written notice of termination and this Agreement shall terminate on
the last day of such period. "Permanently Disabled" shall mean the inability
of the Executive to perform the services that the Executive is required to
perform pursuant to this Agreement due to physical or mental disability which
continues for one hundred eighty (180) consecutive days. Evidence of such
disability shall be certified by a physician reasonably acceptable to both the
Executive and the Company. The Executive shall be entitled to receive (i) any
Base Salary owed through the date of termination, (ii) the Base Salary for a
period of one (1) year following the date of termination, which shall be paid
in accordance with paragraph 3(a), (iii) reimbursement for any business
expenses incurred and unpaid prior to termination, (iv) all options granted to
Executive during the Employment Term shall immediately vest, (v) all health,
dental and life insurance benefits provided for under this Agreement shall be
maintained for a period of one (1) year from the date of termination, (vi) all
accrued but unpaid Bonus amounts shall be paid within five (5) days of the
date of termination, and (vii) all disability benefits payable under the
relevant policy.
7. Death of the Executive. If the Executive dies prior to
the expiration of the Employment Term this Agreement shall terminate on the
date of death and Executive's beneficiary, designee, or estate ("Beneficiary")
shall be entitled to receive (i) any Base Salary owed though the date of
death, (ii) all accrued but unpaid Bonus amounts shall be paid within five (5)
days of the date of death, (iii) reimbursement for any business expenses
incurred and unpaid prior to the Executive's death, (iv) all options granted
to Executive shall immediately
-7-
vest, (v) all health and dental benefits provided for under this Agreement
shall be maintained for Executive's family for a period of one (1) year
following the date of death, and (vi) such death benefits payable under the
insurance policy for the benefit of the Executive's estate.
8. Trade Secrets and Proprietary Information of the Company.
(a) By virtue of his employment, Executive will have
access to, will acquire and will become acquainted with various trade secrets
and confidential and proprietary information relating to the businesses of the
Company, including but not limited to: client, employee, supplier, hearing
officer and distributor lists, contacts, addresses, information about
employees, employee relations, hearing officers, clients and suppliers,
employee handbooks, clients, price lists, costs and expenses, documents,
budgets, proposals, financial information, inventions, patterns, processes,
computer programs, specification, all records of the accounts of clients,
hearing officers, prices, schedules, and other documentation, computer
hardware and software, and any other records and books relating in any manner
whatsoever to the clients and hearing officers of the Company, whether
prepared by the Executive or otherwise, and whether situated inside or outside
the offices of the Company which are used in the operation of the businesses
of the Company.
(b) The Executive shall hold in strictest confidence and
shall not disclose or use any trade secret or confidential information of the
Company, directly or indirectly, or use them in any way, either during the
term of the Executive's employment hereunder or for one (1) year thereafter,
except as required in the course of Executive's employment with the Company.
Executive understands that the term "trade secret" or "confidential
information"
-8-
means all information concerning the Company that is not in the public domain.
In the event of a breach of this Agreement by the Company or termination
without cause, this paragraph shall be deemed null and void.
9. Non-Compete. In consideration of the compensation to be
received by Executive from the Company, Executive shall not: (a) during the
period Executive is employed with the Company, engage in, or otherwise
directly or indirectly be employed by, or act as a consultant or lender to, or
be a director, officer, employee, owner, member or partner of, any business or
organization that is or shall then be competing with the Company; and (b) for
a period of one (1) year after the termination of this Agreement, directly or
indirectly, (i) market or provide any competitive services to, or solicit any
business from, any clients of the Company or (ii) solicit or contact any
person who is employed or acts as hearing officer for the Company at the time
that Executive ceases being employed by the Company for the purpose of
employing or retaining such person as an employee, consultant or hearing
officer; provided, however, that nothing in this section shall prohibit the
Executive from employing or retaining such person where the Executive did not
initiate the contact with such person. If any restriction contained in this
section shall be deemed invalid, illegal, or unenforceable by reason of the
extent, duration, or geographical scope thereof, or otherwise, then the court
making such determination shall have the right to reduce such extent,
duration, geographical scope or other provision hereof to the fullest extent
allowed by law, and in its reduced form such restriction shall then be
enforceable in the manner contemplated hereby. In the event of a breach of the
Agreement by the Company or termination without cause, this paragraph shall be
deemed null and void.
-9-
10. Change-in-Control.
If within two (2) years after a Change-in-Control of the
Company, as defined below, (i) the Executive's employment is terminated by the
Company, except For Cause, death or the Executive becoming Permanently
Disabled; or (ii) this Agreement is terminated by the Executive because of a
Change-in-Duties, then the Executive shall receive as severance compensation,
three times the Base Salary at the then current amount. The amounts paid
pursuant to this paragraph shall be in lieu of any other payments due under
this Agreement. In addition, if any compensation is to be paid under this
paragraph, the Company shall continue to maintain all benefits provided
hereunder for one year. Such compensation shall be paid in a lump sum within
five (5) days after the termination, "Change-in-Control" shall mean:
(a) any "person" as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") (other
than a current stockholder that, directly or indirectly, owns 5% or more of
the Company's outstanding common stock or an affiliate of such 5% or greater
stockholder, collectively, the "Controlling Shareholders") and other than the
Company, any trustee, or other fiduciary holding securities under any employee
benefit plan of the Company) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities;
(b) during any 24-consecutive-month period, individuals
who at the beginning of such period constitute the Board of Directors of the
Company and any new director
-10-
whose election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof unless the
Executive has approved such change;
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 70% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation; or
(d) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of, or the Company sells or disposes of, all or
substantially all of the Company's assets.
10. Amendment; Waiver. This Agreement may not be modified,
amended or waived in any manner except by an instrument in writing signed by
all the parties hereto. Failure to exercise any rights hereunder shall not
constitute a waiver of such rights.
-11-
11. Governing Law. All matters affecting or in connection
with this Agreement, the employment of the Executive or the termination or
resignation of the Executive, are to be governed by, interpreted and construed
in accordance with the laws of the State of New York without giving effect to
the state's conflict of law principles.
12. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to be
delivered the same day if delivered by personal delivery, five (5) days from
the date if mailed by certified mail, return receipt requested, or on the day
delivered if sent by overnight carrier to addresses as follows:
If to the Executive: Roy Israel
00 Xxxxxxx Xxxx
Xxxxxx Xxxxxxx, Xxx Xxxx 00000
If to the Company: NAM Corporation
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxx, Xxx Xxxx 00000
Attn.: Board of Directors
With a copy to Xxxxxx X. Xxxxxx, Esq.
(which shall not Camhy Xxxxxxxxx & Xxxxx LLP
constitute notice): 0000 Xxxxxxxx, 00xx XX.
Xxx Xxxx, XX 00000-0000
13. Severability. Each provision hereof is intended to be
severable, and the invalidity of any portion of this Agreement shall not
affect the validity or legality of the remainder hereof.
-12-
14. Counterparts. This Agreement may be executed by the
parties hereto in counterpart, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
15. Headings. The headings of paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
16. Successors and Assigns. This Agreement shall be binding
upon any successor or assign of the Company.
17. Arbitration. The parties agree that in the event of any
dispute or controversy arising out of or in connection with this Agreement or
any alleged breach thereof (a "Dispute"), the parties shall submit the Dispute
for arbitration in New York City before three (3) arbitrators; one arbitrator
shall be chosen by the Executive, one arbitrator by the Company and the third
by the two other arbitrators. If any party fails to choose its arbitrator
within thirty (30) days after a request is made to designate an arbitrator,
then that party waives its right to choose an arbitrator and the arbitration
shall immediately go forward before the one arbitrator chosen by the
non-breaching party. The decision of the arbitrators will be final and binding
upon the parties, and the judgment of a court of competent jurisdiction may be
entered thereon. Fees of the arbitrators and the cost of arbitration shall be
borne as determined by the arbitrators.
-13-
IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement as of the date first written above.
NAM CORPORATION
By: /s/ Xxxxxxxx Xxxxxxxx-Xxxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxxxx-Xxxxxxx
Title: Vice President and Chief Financial
Officer
/s/ ROY ISRAEL
--------------------------------------------
ROY ISRAEL
-14-
