- Death. In the event of Employee's death during the term hereof, the Company shall have no further obligations to make payments or otherwise under this Agreement, except that the Company shall pay to Employee's estate (i) within ten (10) days after the date of Employee's death any (A) any unpaid accrued Base Salary pursuant to Section 3(a)(i), above, and (B) Incentive Bonus pursuant to Section 3(a)(ii), above in each case to which Employee was entitled on the date of death pursuant to the terms of that section and (C) any amount due to Employee as of the date of death as reimbursement of expenses under Section 3(d), above; and (ii) within sixty (60) days after the end of the Year in which Employee died, if the Budgeted Net Earnings are met for the Year in question, an amount equal to the Incentive Bonus pursuant to Section 3(a)(ii), above, which would have been payable to Employee for the Year during which Employee died had Employee been employed by the Company on the last day of that Year.
- Disability. If Employee becomes physically or mentally disabled during the term hereof so that he is unable to perform the services required of Employee pursuant to this Agreement for an aggregate of six (6) months in any twelve (12) month period (a "Disability"), the Company, at its option, may terminate Employee's employment hereunder (the date of such termination, the "Disability Date") and, thereafter, Employee shall not be deemed to be employed hereunder (except that Employee's obligations under Section 6, below, shall remain in full force and effect) and the Company shall have no further obligations to make payments or otherwise under this Agreement, except as provided in this Section 5(b). In the event of a Disability, the Company shall pay to Employee (i) within ten (10) days after the Disability Date (A) any unpaid accrued Base Salary pursuant to Section 3(a)(i), above, and (B) any Incentive Bonus payable pursuant to Section 3(a)(ii), above, in each cas e to which Employee was entitled on the Disability Date pursuant to the terms of those Sections and (C) any amount due to Employee as of the Disability Date as reimbursement of expenses under Section 3(d), above; and(ii) within sixty (60) days after the end of the Year in which the Disability Date occurs, if the Budgeted Net Earnings are met for the Year in question, an amount equal to the Incentive Bonus pursuant to Section 3(a)(ii), above, which Employee would have been entitled to receive during the Year in which the Disability Date occurs had Employee been employed by the Company on the last day of that Year. Nothing in this Agreement is intended to cause the Company to be in violation of the Americans with Disabilities Act.
- For Cause by Company. The Company may at any time during the term hereof, without any prior notice, terminate Employee's employment hereunder upon the occurrence of any of the following events: (i) a material breach by Employee of this Agreement; (ii) a material violation by Employee of any lawful written policy or directive of the Company or any Affiliate applicable to Employee specifically, or to officers or employees of the Company or any Affiliate generally; (iii) Employee's excessive alcoholism or drug abuse that substantially impairs the ability of Employee to perform Employee's duties hereunder; (iv) gross negligence by the Employee in the performance of his
duties under this Agreement that results in damage to the Company or any Affiliate; (v) violation by Employee of any lawful direction from the Board provided such direction is not inconsistent with Employee's duties and responsibilities to the Company or any Affiliate hereunder; (vi) fraud, embezzlement or other criminal conduct by Employee; (vii) intentional or reckless conduct that results in damage to the Company or any Affiliate, or could reasonably be expected to result in damage to the Company; or (viii) the committing by Employee of an act involving moral turpitude that results in damage to the Company or any Affiliate, or could reasonably be expected to result in damage to the Company or any Affiliate. If the Company terminates Employee's employment under this Agreement pursuant to this Section 5(c), the Company shall have no further obligations to make payments or otherwise under this Agreement, except that Employee shall be entitled to receive any (i) unpaid accrued Base Salary pursuant t o Section 3(a)(i), above, through the date that is thirty (30) days after the date that the Company gives written notice of such termination to Employee (the "Termination Notice Date"), (ii) Incentive Bonus that is accrued pursuant to Section 3(a)(ii), above, and unpaid as of the date of such termination and (iii) any amount due to Employee under this Agreement as of the date of such termination, reimbursement of expenses under Section 3(d), above, in each case within sixty (60) days after the Termination Notice Date. Notwithstanding the foregoing, Employee shall, for all purposes, cease to be deemed to be employed by the Company as of the date of any termination of Employee pursuant to this Section 5(c), irrespective of whether written notice of termination is given on such date.
- For Cause by Employee. Employee may at any time during the term hereof terminate this Agreement upon (i) a material breach by the Company of this Agreement on five (5) days prior written notice, or (ii) a Change in Control (as defined below), on the terms described below. In the event that Employee terminates this Agreement pursuant to clause (i) above, then the Company shall pay to Employee within ten (10) days after the date of such termination an amount equal to (A) the Base Salary then payable, but then unpaid, for the full term of this Agreement pursuant to Section 3(a)(i), above; (B) any Incentive Bonus then payable, pursuant to Section 3(a)(ii), above, but unpaid, and (C) any amount due to Employee as of the date of such termination including as reimbursement of expenses under Section 3(d), above; and (ii) within sixty (60) days after the end of the Year in which Employee was terminated, if the Budgeted Net Earnings are met for the Year in question, an amount equal to t he Incentive Bonus pursuant to Section 3(a)(ii), above, which Employee would have been payable to Employee for the Year during which Employee's employment terminated had Employee been employed by the Company on the last day of that Year.
For purposes of this Section 5(d), a "Change in Control" of the Company shall be deemed to occur if (i) all or substantially all of the assets of the Company are sold or otherwise disposed of or the Company is liquidated or dissolved or adopts a plan of liquidation, (ii) during any period of twelve (12) consecutive months, Present Directors and/or New Directors cease for any reason to constitute at least half of the Board (for purposes of the preceding clause, "Present Directors" shall mean individuals who, at the beginning of such consecutive 24 month period, were members of the Board and"New Directors" shall mean any director whose election by the Board or whose nomination for election by the Company's shareholders was approved by a vote of at least two-thirds of the directors then still in office who were Present Directors or New Directors); or (iii) any of the following circumstances has occurred otherwise than through a transaction or transactions arranged by, or consum mated with the prior approval of the Board: (A) any transaction as a result of which a change in control of the Company would be required to be reported in response to Item 1 (a) of the Current Report on Form 8-K as in effect on the date hereof, pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company
is then subject to such reporting requirement, otherwise than through an arrangement or arrangements consummated with the prior approval of the Board; (B) any "person" or "group" within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act; (x) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of twenty percent (20%) or more of the combined voting power of then outstanding securities of the Company, or (y) acquires by proxy or otherwise the right to vote for the election of directors, for any merger or consolidation of the Company or for any other matter or question, more than 20% of the then outstanding voting securities of the Company, except that a person or group shall be deemed to be a beneficial owner of all securities that such person or group has the right to acquire regardless of whether such right is immediately exercisable or only exercisable after the passage of time or (C) any "person" or "group" within the meaning of Sections 13 (d) and 14 (d) (2) of the Exchange Act) that is the ("beneficial owner" as defined in Rule 13d-3 under the Exchange Act of 20% or more of the then outstanding voting securities of the Company commences soliciting proxies.
In the event of a Change in Control, this Agreement shall continue in effect until December 31, 2003 unless the Employee terminates this Agreement as provided below. In the event a Change in Control occurs on or before January 1, 2003, Employee may terminate this Agreement within six (6) months after the date of such Change in Control. In the event a Change in Control occurs after January 1, 2003, Employee may terminate this Agreement on or before the date that is mid-way between the date of the Change in Control and December 31, 2003. Any such termination shall be by written notice to the Board at least thirty (30) days prior to the proposed termination date; provided, however, that if the Change in Control is on or after December 1, 2003, then the aforesaid notice shall be given at any time on or after the Change in Control and prior to or on the termination date. The period of time between the Change in Control and the date of the notice of termination referenced in the preceding sentence is referred to herein as the "Change in Control Period." In the event that Employee so notifies the Company that he wishes to terminate this Agreement, then Employee shall be entitled to receive from the Company, within ten (10) days after the end of the Change in Control Period, (i) an amount equal to twice the Base Salary pursuant to Section 3(a)(i), above, then in effect and (ii) any Incentive Bonus then payable, pursuant to Section 3(a)(ii), above but unpaid, and (iii) any amount due to Employee as of the date of such termination including as reimbursement of expenses under Section 3(d), above. The exercise of any rights under this paragraph would be in lieu of any rights the Employee might have under Section 5(g), below.
- Without Cause By Company. In the event that during the term hereof the Company terminates Employee's employment hereunder other than for cause pursuant to Section 5(c) above, then the Company shall pay to Employee within ten (10) days after the date of such termination (except as otherwise provided herein) (i) if such termination occurs prior to January 1, 2002, an amount equal to (A) twice the Base Salary then in effect pursuant to Section 3(a)(i), above, as of the date of such termination, (B) any Incentive Bonus that is accrued pursuant to Section 3 (a)(ii), above, (C) any amount due to Employee as of the date of termination as reimbursement of expenses under Section 3(d), above, (D) an amount equal to the Incentive Bonus pursuant to Section 3(a)(ii), above, that would have been payable to
Employee for the balance of the Year during which such termination occurs had Employee continued employment with the Company through the end of that Year, payable within sixty (60) days after the end of that Year and (E) an amount equal to the cost of Employee's health insurance provided by the Company as in effect at the time of such termination for a period of one (1) year after the date of such termination (the "Healthcare Amount"); (ii) if such termination occurs on or after January 1, 2002, but prior to January 1, 2003, an amount equal to (A) the Base Salary then in effect pursuant to Section 3(a)(i), above, as of the date of such termination, from the date of such termination through December 31, 2003, (B) one-half of the Base Salary then in effect pursuant to Section 3(a)(i), above, as of the date of such termination, (C) any Incentive Bonus that is accrued pursuant to Section 3(a)(ii), above, and unpaid as of the date of such termination, (D) any amount due to Employee as of the date of termination as reimbursement of expenses under Section 3(d), above, (E) an amount equal to the Incentive Bonus pursuant to Section 3(a)(ii), above, that would have been payable to Employee for the balance of the Year during which such termination occurs had Employee continued employment with the Company through that Year and (F) the Healthcare Amount; and (iii) if such termination occurs on or after January 1, 2003, an amount equal to (A) the Base Salary in effect pursuant to Section 3(a)(i), above, as of the date of such termination from the date of such termination through December 31, 2003, (B) the Base Salary then in effect pursuant to Section 3(a)(i), above, as of the date of such termination, (C) any Incentive Bonus that is accrued pursuant to Section 3(a)(ii) above, and unpaid as of the date of such termination, (D) any amount due to Employee as of the date of termination as reimbursement of expenses under Section 3(d), above, (E) an amount equal to the Incentive Bonus pursuant to Section 3(a)(ii), a bove, that would have been payable to Employee for the balance of the Year during which such termination occurs had Employee continued employment with the Company through that Year and (F) the Healthcare Amount. Each payment described in this Section 5(e) with respect to an Incentive Bonus shall include the amount that would have been payable with respect to that Incentive Bonus after the end of the year in question.
- By Employee for Illness. In the event that during the term hereof Employee becomes ill such that, in the written opinion of a physician reasonably acceptable to the Company, it would not be advisable for Employee to continue his employment with the Company hereunder, Employee may terminate his employment hereunder upon reasonable notice to the Company and, in such event, Employee shall not be deemed to have breached this Agreement as a result of such termination. In the event of such termination by Employee, the Company shall have no further obligations to make payments or otherwise under this Agreement, except that the Company shall pay to Employee (i) within ten (10) days after the date of such termination (A) any unpaid accrued Base Salary pursuant to Section 3(a)(i), above, and (B) any Incentive Bonus payable pursuant to Section 3(a)(ii), above in each case to which Employee is entitled on the date of such termination pursuant to the terms of those Sections, (ii) any amount due to Employee as of the date of such termination as, reimbursement of expenses under Section 3(d), above; and (iii) within sixty (60) days after the end of the Year in which such Termination occurs, if the Budgeted Net Earnings are met for the Year in question, an amount equal to the Incentive Bonus pursuant to Section 3(a)(ii), above, which Employee
would have been entitled to receive during the Year in which Employee terminated employment pursuant to this Section 5(e) had Employee been employed by the Company on the last day of that Year.
- Non-Renewal. In the event that the employment of Employee hereunder continues for the full term of this Agreement and this Agreement is not renewed as of the date of termination of this Agreement for a period of at least one year on terms no less favorable to Employee, then Employee shall be entitled to receive from the Company, within fifteen (15) days after the date of such termination, an amount equal to (i) the Base Salary pursuant to Section 3(a)(i), above, in effect as of the date of termination of this Agreement; (ii) any Incentive Bonus pursuant to Section 3(a)(ii), above in each case to which Employee was entitled on the date of termination pursuant to the terms of those Sections and (iii) any amount due to Employee as of the date of termination as reimbursement of expenses under Section 3(d), above.
Leonard I. Fluxman
