EMPLOYMENT AGREEMENT
THIS EMPLOYMENTAGREEMENT(the"Agreement"),datedas ofAugust30,2012 byandbetweenThomasKidrin(the"Executive")andWorlds OnlineInc., a Delaware corporation (the "Company").
WI TNESSETH:
WHEREAS, ExecutiveandtheCompanydesiretoenterintoanEmploymentAgreement toprovide forExecutive'semploymentby the Companyon the terms andsubject tothe conditions set forth herein.
NOW, THEREFORE,inconsiderationofthemutualpromises,representationsand warranties setforthherein,andforothergoodandvaluableconsideration, the receipt and sufficiencyof which areherebyacknowledged, theparties hereto,intendingto be legallybound hereby, agree as follows:
1. OfficesandDuties.TheCompanyherebyemploysExecutiveduringtheTerm(as hereinafterdefined)toserveastheCompany'sPresident andChief Executive Officer and to perform such executiveandsupervisorydutieson behalfof the Companyas the Company's Boardof Directors may from time totime reasonably direct. Executivehereby accepts such employment and agrees that throughout theTermhe shallfaithfully,diligentlyand tothe bestof hisability, infurtheranceof the business oftl1e Company, perfomtl1eduties assignedto himor incidental to tl1e officesassumed by him pursuant to tl1is Section. Executive shalldevote substantiallyapproximately one-half of his businesstime and attentionto the businessandaffairs of the Company, but Executiveshall not be required to devoteany minimum amount of time or report or perform his dutieshereunderon a fixed or periodic basis,and Executive mayengageor participate in such otheractivities incidental toany otl1er employment,occupation or business venture orenterpriseas do notmaterially interfere with or compromisehis ability to perform his dutieshereunder. TheCompany understands that Executiveis also providing executivelevel services forWorlds Inc., a Delaware corporation and formerparent oftl1eCompany,and the Companyacknowledges thatthe provisionofsuch services is permitted hereunder andshall not bedeemeda breachof this Agreement.Executive shall atall times be subject to tl1edirection and controloftl1e Company's Boardof Directors,andobserveandcomply witl1 such rules, regulations, policiesand practices as tl1e Company'sBoard of Directors may from time to time establish.
2. Term.TheemploymentofExecutivehereundershallcommenceonthedatehereofand endonAugust30,2017,provided, thatExecutive shall have tl1e right inhis sole discretion to extendtl1eterm for an additional12 months ending on August 30, 2018, by notifying tl1e Company in writing ofsuch no later than JuneI,2018,subject in allrespects to earlier termination upon tl1e termsand conditions provided elsewhereherein.The term duringwhich Executiveis employed herem1der shall be referredtoherein asthe "Term". Asused herein, "Termination Date"meanstl1e last dayof theTerm.
| (1) |
| 3. | Compensation. |
(a) Ascompensationforhisserviceshereunder,theCompanyshallpaytoExecutive duringtheTe1m:
(i) a basesalaryattherateof$175,000perannum(the"BaseSalary"),such Base Salarytobepaidinsubstantiallyequalinstallmentsnolessoftenthan twicemonthly;
(ii) theBaseSalaryshallbeincreasedby10%ontheanniversaryeachyearof theTem1overtheprioryear's Base Salary;
| (iii) | acarallowanceintheamountof$500permonth,payablemonthly; |
(iv) abonus(the"2.5%Bonus")inrespectofeachBonusPeriod(as hereinafterdefined),payablewithinninety(90)daysaftertheend of such Bonus Pe1iod, inan an10unt equalto twoand one-halfpercent (2.5%) of Pre-Tax Income (as hereinafter defined)for theapplicable Bonus Period, provided,however, that the maximun1 amountofthe 2.5%Bonus earned forany BonusPeriod shall notexceed 50% of Executive'sthenBaseSalary, andfurther provided, that the 2.5%Bonusshall onlybe payableif the Company reports Net Income (as hereinafterdefined)for suchBonusPeriod;
(v) abonus(the"AdditionalBonus")in respectofeachBonusPeriod,payable withinninety(90)daysaftertheendofsuchBonusPeriod, asfollows: (A) $75,000, ifPre-Tax Income for the Bonus Period isbetween 150% and200% of the priorfiscalyear's Pre-Tax Income; or (B) $100,000, if Pre-Tax Income forthe Bonus Period isbetween 201%and250% of the priorfiscal year'sPre-TaxIncome; or (C) $200,000,if Pre-TaxIncome for theBonusPeriod is 251% or greaterthan the prior fiscalyear's Pre-TaxIncome, provided, however, that the Additional Bonus payable toExecutive withrespecttoany BonusPeriod shall notexceed five (5%) percentof Pre-Tax Income for such Bonus Period, andfurther provided, that the Additional Bonus shall only bepayable if the Companyreports Net Income for such Bonus Period andthe Company's Earnings Per Share (as hereinafter defined) are higher forsuch Bonus Period than in the yearpriorto such Bonus Period; and
(vi) suchadditionalincentiveorbonuscompensationastheCompany'sBoard ofDirectorsmayfromtimetotimedetermine.
| (b) | Forthepurposesofparagraph3(a): |
and
(i) “BonusPeriod" isafiscalyearoftheCompanyendingdmingtheTerm;
(ii) The"Pre-TaxIncome," "Net Income,"and"EarningsPerShare"inany BonusPeriod istheCompany's incomebeforeprovision forincometaxes asreported inits auditedfinancial statements for suchBonus Period.
The dete1111inationofthe Pre-TaxIncomeandthe2.5%BonusandAdditionalBonusfor any BonusPeriodshallbedeterminedbytheCompany'sthen Chief Financial Officer(or other senior most accounting official ifno one holds a position withthattitle) in accordance with the Company's audited financial statementsas prepared by the Company'sindependent auditor, which shallbeconclusive andbinding uponthe Company and Executive.
(c) TheCompanyshallprovidemajormedical,hospitalizationanddentalinsurance for thebenefitofExecutiveandhisfamilyconsistentwithbenefits made availableto other of the Company's seniorexecutives and ifnosuch benefits are thenavailableor paidto other executives, thanin the amount of, rn1d providing coveragefor, no lesserbenefitsthrn1 Executive has priorto the datehereof, andtheCompanyshall payall premiumsrn1dany othercosts or expenses incurredtomaintain such policies ineffectduring theTenn.
(d) InadditiontohisBaseSalaryandothercompensationprovidedherein,Executive shall beentitledtoparticipate,totheextentheiseligibleunder the terms rn1d conditionsthereof, in anystock, stock optionor other equityparticipationplanandanyprofit-sharing, pension, retirement,insurance, medical serviceor otheremployee benefit plrn1 generally availabletothe executiveofficersof theCompany, andtoreceive anyotherbenefits or perquisites generally available to theexecutive officersof theCompany pursurn1t to rn1y employment policy or practice, which maybeineffectfromtimetotimeduringtheTerm.The abovenotwithstanding, the Company shalluse its commercially reasonable efforts to obtainfor thebenefitof Executive a life insurancepolicy with adeath benefitof atleast $2 million payabletoabeneficiary of Executive's choice, provided, however,that theComprn1y shallnotbeobligatedto spendmore than $10,000 annually on the premiumsfor suchpolicy. Exceptasotherwiseexpressly provided herein,theCompany shall beundernoobligationhereunder toinstitute or to continueany such employeebenefitplan or employmentpolicy orpractice.
(e) Noprovision hereofisintended,orshallbedeemed,toimpairorlimit Executive'seligibilitytoreceive,orrn1yrighthemaynoworatanytimehereafterhaveto receive,holdor dispose of anycommon stock, parvalue$.001pershare,oftheCompany (the "Common Stock") or other securities ofthe Company orto receive, hold or exercise any options, warrants or other rights to acquire rn1y Common Stock or other securities of the Company.
(f) DuringtheTenn,Executiveshallnotbeentitledtoadditionalcompensationfor serving inanyofficeoftheCompany(oranysubsidiarythereof)towhichheis electedor appointed.
| (2) |
4. StockOptions.
(a) ByitsapprovalofthisAgreement,theCompany'sBoardofDirectorshas approvedtheissuancetoExecutiveofanoptiontoacquire4,500,000shares of theCompany's Common Stock, underand pursuantto the provisions of theWorlds Online Inc. 2012Stock Option Plan,as adoptedby theCompany's Boardof Directors andas approvedby the Company's Shareholders(the "Plan")and onthe terms set forth intheStock OptionAgreement annexed tothisAgreement as ExhibitA (the"Option Agreement"), whichprovidesinter aliathatsuch optionshall vest asset forth below, and beexercisableat the exercise p1ice of $0.010 per share(which is the closing market price of theCompany's Common Stock on the lasttrading date priortothedatehereof)atany time during thefive(5)year period following the date hereof (subject toearliertermination as provided under thePlan):
| (i) | theoptiontoacquire1,500,000sharesshallvestimmediately; |
| (ii) | theoptiontoacquire1,500,000sharesshallvestonAugust30,2013;and |
| (iii) | theoptiontoacquire1,500,000sharesshallvestonAugust30,2014. |
(b) Theoptionbeinggrantedherebyissubjectinallrespectstothetem1sand provisionsofthePlanandtheOptionAgreement,including,withoutlimitation, thetermination provisionscontained in thePlan,andinthe eventof anyconflictbetween thetermsof this Agreement andthe Plan orthe OptionAgreement,the PlanortheOption Agreement shall control. The optiongranted hereby is alsosubject totheapproval ofthePlanby the Company's shareholders.Itisthe intention ofthe parties hereto that, totheextentpossible, the options grantedhereinshallbe"incentivestock options"as such term isdefinedintheInternalRevenue Codeof1986andanyofthetermsoftheoptions shall bemodified, asminimally as necessary, to maintain theirstatus as incentivestock options.
(c) Executiveshallreceivesuchotheroption,restrictivestockawardsorother security-basedcompensation astheBoardofDirectorsshallapprove.
5. ExpenseAllowance.TheCompanyshallpaydirectly,oradvancefundstoExecutiveor reimburseExecutivefor,allexpensesreasonablyincurredbyhiminconnectionwiththe performance of hisduties as an employeeor consultanthereunder, upon thesubmission to the Company of itemized expensereports, receipts or vouchers in accordancewitl1 its tl1en customary policies and practices.
6. Location: Office.Exceptforroutinetravelandtemporaryaccommodationreasonably requiredto performhis serviceshereunder,Executiveshallnotberequiredtoperformhis serviceshereunderat any location other than theprincipal executive office of the Company, which office shall be located throughout the Term at its locationont11e date hereof,or, if relocated, at a location within a distanceof 30miles fromits location on the date hereof,or at such other officeor site to which Executive may,in hissole discretion, consent; nor shall hebe required to relocatehisprincipal residenceto, or otherwise to reside at, any locationspecified by theCompany. The Company shall provide Executive with suitable office space, furnishings and equipment, secretarial and clerical services and such other facilities and officesupport as Executive may reasonably request.
7. Vacation.Executiveshall beentitledtofour(4)weekspaidvacationduringeachyearof hisfulltimeemploymenthereunder,suchvacationtobetakenatsuchtime or timesas shall be agreed upon byExecutive and theCompany. Vacation timeshallbe cumulativefromyear to year, except that Executiveshall not be entitledto take morethan six weeksvacation during any consecutive 12-month period duringthe Term. Accrued butunusedvacation time shallbepaid in cashonthe TerminationDate,exceptthatin the event of a Termination pursuant toSection 12, the amount of accruedvacation time to bepaid on the Termination Date shall belimitedto six weeksandin the event ofa Terminationpursuant toSection 13, the amount of vacation time to be paidon the Termination Date shallbe limited to fourweeks.
8. Key-ManInsurance.The Company shallhavetherightfromtimetotimetopurchase, increase,modifyorterminateinsurancepolicieson thelife of Executive for the benefit ofthe Company in such an10unts as theCompany maydetermineinitssolediscretion. Inconnection therewith, Executive shall, at such time or times and at such placeor placesas theCompany may reasonably direct, submithimselftosuch physical exan1inations and execute and deliver such documentsas theCompany may deem necessary or appropriate.
| (3) |
| 9. | TradeSecrets. |
(a) ExecutiveshallholdinafiduciarycapacityforthebenefitoftheCompanyall confidentialorproprietaryinformation relating to orconcerned with the Company orits Affiliates (as definedbelow) or its products or services, prospective products or services, operations,business andaffairs("Confidential Information"),and he shall not, atany time hereafter, useor disclose anyConfidential Information to anyperson other than to theCompany orits designees or exceptas may otherwise berequired in connection with the business m1d affairs of the Company, m1d infurtherance of theforegoing Executive agrees that:
(i) Executivewillreceive,maintainm1dholdConfidentialInformationin strict confidencem1dwillusethesamelevelofcare insafeguardingit that he uses with hisown confidentialmaterial of a similarnature;
(ii) Executivewilltal(eallsuchstepsasmaybereasonablynecessaryto prevent thedisclosureofConfidentialInformation;and
(iii) ExecutivewillnotutilizeConfidentialInformation forhispersonalbenefit withoutfirsthavingobtainedtheCompany'sconsenttosuch utilization.
"Affiliate" ofa Person meansanother Person directly or indirectly controlling, controlledby, or under common controlwitl1, such Person; for this purpose, "control" of a Personmeans the power(whetl1er or not exercised) todirect tl1e policies, operations or activities of such Person by virtue of t11e ownership of, or right to vote or direct the manner of voting of, securities of such Person, or pursuant to agreement or law or otherwise. The term "Person" includes without limitation anatural person, corporation, joint stockcompany, limited liability company, partnership,jointventure, association, trust, governmental authority, or any group of the foregoing acting in concert.
(b) Thecommitmentssetfortl1inparagraph9(a)shallnotextendtoanyportionof ConfidentialInformation:
(i) thatisgenerallyavailabletothepublic;
(ii) thatwasnotacquired,directlyor indirectly and/orinanymam1er,fromthe CompanyandwhichExecutivelawfullyhadinhispossessionpriortothedateofthis
Agreement; or
(iii) that,hereafter,tlrroughnoactoromissiononthepartoft11eExecutive, becomesinformationgenerally availabletothepublic.
(c) Atanytimeuponwrittenrequestbyt11eCompany(i)theConfidential Information, includinganycopies,shallbereturnedtotheCompany, and(ii)alldocuments, drawings, specifications, computer software,and anyother material whatsoever in t11e possession oft11eExecutive that relates tosuch Confidential Information, including allcopies and/orany other form of reproduction and/or description thereof made by Executive shall, at the Company's option, be returned to the Company or destroyed.
(d) IntheeventthatExecutivebecomeslegallycompelled(bydeposition interrogatory,requestof documents,subpoena, civilinvestigativedemandorsimilarprocess)to discloseanyof t11e Confidential Information, t11e Executive shall providethe Comp:my with prompt prior written notice of such requirement so that it(or its designees)may seek aprotective order or otl1er appropriate remedy and/or waive compliance with the terms of this Agreement. In the event that such protective order or other remedy is not obtained,or t11e Company waives compliance with t11e provisions hereof, the Executive agrees to furnishonly such portion of the Confidential Information which islegally required to be furnished.
| (4) |
10.Intellectual Propertv.Any idea,invention,design,process,system,procedure, improvement, developmentordiscoveryconceived,developed, createdormadebyExecutive, alone or with ot11ers, during t11e Term and applicable to the business of the Company, whetheror not patentable or registrable, shall become the sole and exclusive property of t11eCompany. Executive shall disclose the san1e promptly and completely to t11e Company and shall, during the Tenn or t11ereafter, (i)execute alldocuments requested by the Company for vesting in the Company theentireright, titleandinterest inand tothesame, (ii) execute all documents requested bythe Company for filingand procuring such applications for patents, trademarks, service marks orcopyrights as theCompany, in its sole discretion, may desire toprosecute, and (iii) give the Companyallassistance it may reasonablyrequire,including the givingof testimony in anyProceeding(asdefined below), in other toobtain, maintain and protecttheCompany's right therein and thereto.
A "Proceeding"isanysuit,action,arbitration,audit,investigationorotherproceedingbeforeor byanycourt,magistrate,arbitrationpanelorother tribunal, orany governmental agency, authorityor instrumentality of competent jurisdiction.
11. NoCompetition.
(a) During theRestrictedPeriod(asdefinedbelow),Executiveshallnot,directlyor
(i) own,control,manage,operate,participateorinvestin,orotherwisebe connectedwith,inanymanner,anybusinessactivity,ventureorenterprisewhichisengagedin anybusinessin theUnited Statesin whichtheCompany(or any subsidiary thereof) iscurrently engagedoris engagedat the time ofte1mination ofExecutive's employment hereunder, or
(ii) forhimselforonbehalfofanyotherperson,employorengageanyperson whoat thetimeshallhavebeenwithinthepreceding12-month period an employeeof the Company (or suchsubsidiary) or contactany supplier, customer or employeeof theCompany (or such subsidiary) for thepurpose of soliciting ordivertingany supplier, customeror employee from the Company (orsuch subsidiary).
(b) Theprovisionsofparagraphll(a)notwithstanding,Executivemay(i)investhis fundsinsecuritiesofanissuerifthesecuritiesofsuchissuerare listedfor trading ona registered securitiesexchange oractivelytradedinan over-the-counter market andExecutive's holdings thereinrepresent less than 5% ofthe total numberofshares or principal amount of thesecurities of such issuer outstanding and(ii)workas an executiveandbe a director of WorldsOnline Inc.
(c) ExecutiveacknowledgesthattheprovisionsofthisSection,andthepe1iodof time,geographicareaandscopeandtypeof restrictionson his activities set forth herein, are reasonable andnecessary forthe protection of the Company.
(d) "RestrictedPe1iod"shall mean theperiodcommencingonthedatehereofand endingAugust30,2018;provided,however,thatifExecutivehasexercisedhisoption to extend the Term toAugust 30, 2018 in accordancewith Section 2 hereof, the RestrictedPeriod shall end August30, 2019.
| (5) |
(e) TheCompanyacknowledges thattheservices Executiveprovidesto WorldsInc. are notcompetitive withtheCompany andnotsubject totherestrictions containedin this Section11.
12. TerminationUponDisabilitv.In theeventthattheBoardofDirectorsdeterminesthatthe Executiveisunabletoperformhisdutieshereunder byreasonofany disabilityor incapacity (due toany physical or mentalinjury, illnessor defect) for anaggregateof 180 daysin any consecutive 12-monthperiod,theCompanyshall have the right to te1111inate Executive's employment hereunder within30 days after the 180th day ofhisdisability or incapacity by giving Executivenotice to such effect at least I 0 days prior to the date of termination set forth in such notice, and onsuch date such employment shall terminate. The Board of Directors' determination shall bemade after due inquiry, on the basis of convincing evidence presented in at least two medical opinions rendered byreputable physicians with experience in diagnosing and treating the condition described in the opinion.
| 13. | Terminationfor Cause. |
(a) InadditiontoanyotherrightsorremediesprovidedbylaworinthisAgreement, theCompanymayterminateExecutive's employment underthis Agreement if:
(i) Executiveisconvictedof,orentersapleaofguiltyor110/0contendere(whichplea isnotwithdrawnpriorto its approval by thecourt) to,afelony offense or the commission of a fraudagainst,or embezzlementormisappropriation of funds orother assets of, the Company (or any subsidiarythereof) andeither Executivefails to perfect an appealof such conviction priorto the expirationofthemaximum period of time within which, under applicable lawor rulesof court, such appeal maybe perfected or, if Executive does perfect suchan appeal, hisconvictionof such as offenseissustained onappeal; or
(ii) theCompany'sBoardofDirectorsdetermines,afterdueinquiry,basedon convincingevidence,thatExecutivehas:
| (A) | violated,orcausedtheCompany(oranysubsidiarythereof)oranyofficer, employeeorotheragentthereof,oranyotherpersontoviolate,any materiallaw,regulation or ordinance orany material rule,regulation, policy or practice established by theCompany'sBoard of Directors; |
| (B) | willfully,orbecauseofgrossorpersistentnegligence,(x)failedproperly toperformhisdutieshereunderor(y) actedina manner detrimental to, or adverse to the interestsof, theCompany; or |
| (C) | violated,orfailedtoperformorsatisfyanymaterialcovenant,conditionor obligationrequired tobeperformedorsatisfiedby Executive hereunder; and that,inthecaseof any violationor failure referred to in clause (A),(B) or(C)of this paragraph(ii) ofSection13(a), such violation or failure has caused, or is reasonably likely to cause, theCompanyto sufferor incur a substantial casualty, loss, penalty,expense or other liability or cost. |
| (6) |
(b) TheCompanymayeffectsuchterminationforcausebygivingExecutivenotice tosucheffect,settingforthinreasonable detail thefactualbasis for such termination, atleast thirty(30)days prior tothedateof terminationset forth therein;provided, however,that Executive mayavoid suchtermination if Executive, prior tothedateof termination setforth in such notice, explainstothereasonablesatisfaction oftheCompany'sBoardof Directors why the factsrelied upon by the Company in terminating Executive's employment do not constitute a For CauseEvent (as defined below) or thatExecutive has ceased anysuch claimedviolation and/or cured any such failure to perform within such 30 day period.
(c) InmakinganydeterminationpursuanttoSection13(a)astotheoccurrenceofany actoreventdescribedin clauses (A) to(C)of paragraph (ii) thereof(each, a "ForCause Event"), each of thefollowing shall constituteconvincing evidenceof such occurrence:
(i) ifExecutiveismadeapartyto,or targetof,anyProceedingarisingunder orrelatingtoanyForCauseEvent,Executive'sfailuretodefend against such Proceeding orto answerany complaintfiled againsthim therein, or todeny anyclaim, charge,averment, or allegationthereof asserting or basedupontheoccurrence of a For CauseEvent;
(ii) anyjudgment,award,order,decreeorotheradjudicationor rulinginany suchProceedingfindingorbasedupontheoccurrenceofaForCauseEvent; or
(iii) anysettlementorcompromiseof,orconsentdecreeissuedin,anysuch Proceedingin whichExecutiveexpresslyadmitstheoccuranceofaFor Cause Event;
providedthatnoneoftheforegoingshallbedispositiveorcreateanirrebuttablepresumptionof theoccurrenceofsuchForCauseEvent; andprovidedfi1rtherthat theCompany's Board of Directorsmay relyon anyother factororevent asconvincing evidence of theoccurrence ofa ForCauseEvent.
(d) IndeterminingandassessingthedetrimentaleffectofanyForCauseEventonthe CompanyandwhethersuchForCauseEventwarrantstermination of Executive'semployment hereunder, the Company's Board of Directors shall takethefollowing factors,to the extent applicable and material, intoaccount:
(i) whethertheCompany'sBoardofDirectorsdirectedorauthorized Executive totake,ortoomittotake,any actioninvolvedin such For Cause Event, or approved, consented to oracquiesced in histaking oromittingto take such action;
| (7) |
(ii) anyawardofdamages, penaltyorother sanction,remedyor reliefgranted orimposed inanyProceeding baseduponor relating to suchForCause Event, andwhether such sanction,remedy or reliefissufficienttorecompense the Company or any other injuredperson, orto preventor todeter the recurrenceofsuch For Cause Event;
(iii) whetheranylessersanctionwouldbeappropriateandeffective;and
(iv) anyadverseeffectthatthelossofExecutive'sserviceswouldhave,orbe reasonablylikelytohave,upontheCompany.
14. TerminationbyExecutiveforGoodReason.Inadditiontoanyotherrightsorremedies providedbylaworinthisAgreement, Executivemayterminate hisemploymenthereunder:
(i) if(A)theCompanyviolates,orfails toperformorsatisfyanymaterial covenant, conditionorobligationrequiredtobeperforn1edorsatisfiedbyit hereunderor(B) asa resultofanyactionor failure to act by the Company, thereisa material change inthenature or scopeofthe duties, obligations, rights or powers of Executive's employment,by givingthe Company noticeto such effect, settingforthin reasonable detail thefactual basis forsuch termination, atleastthirty (30) daysprior to the dateof termination setforth therein;provided howeverthat theCompany may avoid suchtermination if it,prior tothe date of termination set forthin such notice, cures orexplains tothereasonablesatisfactionofExecutive the factual basis fortermination setforththerein; or
(ii) ifaChangeofControl(ashereinafterdefined)occurswhileExecutiveisa full-timeemployeeof theCompany,bygivingtheCompanynoticetosucheffectwithin ninety (90) daysafter the occunenceofsuchChangeofControl, setting forth the eventor circumstance constituting suchChangeof Control,such termination tobe effective upon the date of termination, not more thanthirty (30) days after the date ofsuch notice, set forth therein or,if no such date isset forth therein,i1mnediately upon delivery of such notice to theCompany.
15. VoluntaryTermination.Inadditiontoanyotherrightsorremediesprovidedbylaworin thisAgreement,fromandafterthedatehereof,Executive may terminate his employment hereunderby givingthe Companywrittennotice tosuch effect at leastninety (90) days prior lo thedate of termination setforth therein.
| 16. | Compensationand BenefitsuponTermination. |
(a) UponterminationofExecutive'semploymenthereunder, heshallbeentitledto receive,inanycase,anyBaseSalarypursuantto Section3(a)(i)accruedbut unpaidto the TerminationDate.Anyamount payable to Executive under thissubparagraphshall bepaid promptly,m1d in any event withinthirty (30) days aftertheTermination Date.
| (8) |
(b) If Executive'semployment isterminated asa resultofa "For CauseEvent" pursuanttoSection 13,exceptfor the paymentof any amount required tobe madebySection 16(a), from and afterthe TerminationDate, the Company shallhaveno further obligationto Executive hereunder,including without limitation anyobligationpursuant to Section 17.
(c) IftheExecutive'semploymentisterminated(i)byhimpursuanttoSection14(i); or(ii)bytheCompanyotherthanas a result of a "For Cause Event" pursuanttoSection 13; he shallbe entitled to receive an amount equal to thefull value of any Base Salary still remaining until the endof the Term plus an amount equal to three timestheBaseSalary at the time of termination, unless such payment would trigger the excise tax under Section 4999 of the Codein whichcase theaggregatepayments hereundershall be reduced to the maximum amount which would not trigger such tax.Notwithstanding the foregoing,if the Executive's employment is terminatedby theCompany after a Change ofControl has occurredfor any reason other than as a result of a "ForCause Event" pursuant to Section 13, he shall be entitledtoreceive, upon the terms and subject to the conditionsset forth in Section 17, the Parachute Amount (as hereinafter defined in Section 17). Any amount payableto Executive under this subparagraph shall bepaid promptly, and in anyevent within thirty (30) days after the Tem1inationDate.
(d) IftheExecutive'semploymentterminatesasaresultofaChangeofControl pursuanttoSection14(ii),heshall beentitled to receive, uponthe termsand subject to the conditions setfortl1 in Section17, the Parachute Amount.Anyamount payableto Executive under this subparagraphshall be paid promptly,and in anyevent within thirty (30) days after the TerminationDate.
(e) IftheExecutive'semploymentisterminatedbyhimpursuanttoSection14(i)orl4(ii)ofthis Agreement,orby the Company other than asa result of a "For Cause Event" pursuant to Section 13, the Company shall for the two (2) year periodfollowing the Termination Datemaintain and payfor Executive andhis family, or reimburse Executive, for the cost of medical, dental, and hospitalization benefits comparable to such benefits maintained by the Company during thetwelve (12) months prior to the Termination Date. Ifthe Executive voluntarily terminates his employment pursuant to Section 15 of thisAgreement such benefits shall be maintained forone(I)year followingsuch termination.
(f)Executive shallhavenoobligationherew1dertoseekortoacceptanyother employmentaftertheTerminationDateorotherwisetomitigatethepaymentsrequiredtobe made bythis Section. No compensation or otl1eramountreceived or receivableby Executiveon accom1t ofany employment or engagementafter the Termination Dateshall beoffsetagainstor deductedfromany payment required tobemadebythis Section16 orSection 17.
(g) IntheeventtheCompanyterminatesExecutiveotherthanasaresultofa"For CauseEvent"pursuanttoSection13, or iftl1e Executive'semployment is tem1inated by him pursuant to Section l4(i) or l4(ii) of this Agreement, Executive shall receiveas his sole and exclusive remedyanddamages thepayments he would otherwisebeentitledto receive underthe applicable provisions of this Section16 (and, if applicable,the other benefits provided under clause(h) of this Section 16).
(h) IntheeventofExecutive'sdeathorif theCompanyterminatesExecutivefor disability pursuanttoSection12,theCompany shall pay, in the caseof Executive's death, Executive's estate anamountequal to his thencurrent Base Salaryand in theeventof termination for disability,an amountequal to twotimes histhen current BaseSalary. Any an10unt payable to Executive (or his estate) under thissubparagraph shall be paid promptly, and in any event withinthirty (30) days after thedateExecutive diesor is terminated for disability, as the case may be.
| (9) |
| 17. | Changeof Control. |
(a) ForthepurposesofthisSection17:
(i) The"Act"istheSecuritiesExchangeActof1934,asamended.
(ii) A"person" includesa"group"withinthemeaningofSection13(d)(3) of
(iii) "Control"is usedhereinasdefinedinRule12b-2 undertheAct.
(iv) "Beneficiallyowns"and "acquisition" areusedhereinasdefinedin Rules13d-3and13d-5,respectively,undertheAct.
(v) "Non-AffiliatedPerson"means anyperson,otherthanExecutive,an employeestockownershiptrustoftheCompany(oranytrusteethereofforthebenefit ofsuch trust),orany person controlledbyExecutive, the Companyorsuch a trust.
(vi) "VotingSecurities"includes CommonStockandanyothersecuritiesof theCompanythatordinarilyentitletheholdersthereofto vote, together with the holders of CommonStockor as a separate class,withrespectto matters submitted toa voteof the holders of CommonStock,but securities of the Company as to which theconsentof theholdersthereof is requiredbyapplicable Jaw or the terms of such securitiesonly with respect toce1iainspecified transactions orother matters, or theholders of whichare entitled to vote onlyupon the occurrence of certainspecified events(such as default in the payment of a mandatory dividend on preferredstockora scheduled installmentof principal or interest ofanydebtsecurity),shall not be VotingSecurities.
(vii) "Right"meansanyoption,warrantorotherrighttoacquireanyVoting Security(otherthansucharightofconversionorexchange includedin aVoting Security).
| (viii) | The"Code" istheInternalRevenueCodeof1986,asamended. |
(ix) "Baseamount,""presentvalue"and"parachutepayment"areusedherein asdefinedinSection 280GoftheCode.
| (b) | A"ChangeofControl"occurswhen: |
(i) aNon-AffiliatedPersonacquirescontroloftheCompany;
(ii) uponanacquisitionof VotingSecuritiesor RightsbyaNon-Affiliated Person from personsotherthantheExecutive(orpersonscontrolledbytheExecutive) or any change in the number orvoting powerofoutstanding Voting Securities, such Non-Affiliated Person beneficially ownsVoting SecuritiesorRights entitling such person to casta number of votes (determined inaccordance with Sectionl7(g)) equal to orgreater than 25% ofthe sum of (A) thenumberofvotes thatmaybe cast by all other holders of outstandingVoting Securities and (B) the numberofvotes that maybecast by such Non-Affiliated Person (determined in accordance with Section l7(g)); or
(iii) uponanychangeinthemembershipoftheCompany'sBoardofDirectors, amajorityofthedirectorsare persons whoare not nominated or appointed by the Company's BoardofDirectorsas constituted prior to suchchange.
(c) The"ParachuteAmount" towhichExecutiveshallbeentitledpursuantto Sections16(c)and(d)shallequal2.99multipliedbytheExecutive'sbaseamount.
(d) ItisintendedthatthepresentvalueofanypaymentsorbenefitstoExecutive, whether hereunderorotherwise,thatareincludibleinthecomputationoftheParachute Amount shall not exceed 2.99timesthe Executive's baseamount. Accordingly, ifExecutive receives any payment orbenefitfrom theCompany priorto payment of the Parachute Amountwhich, when addedtotheParachuteAmount, wouldsubjectany of the paymentsor benefitstoExecutiveto the excisetax imposedby Section4999 of theCode,theParachute Amountshallbereduced by theleastamount necessaryto avoidsuch tax. TheCompanyshall have noobligation hereunder to makeany payment orprovideanybenefitto Executive afterthe payment ofthe Parachute Amountwhich wouldsubject anyof suchpaymentsor benefits to theexcisetax imposedby Section 4999of the Code.
(e) Anyotherprovisionhereofnotwithstanding,Executive may(butonlytothe extentnotprohibitedbytheUnitedStatessecuritieslaws,asthenamended),priortohisreceipt of theParachuteAmountpursuant to Section l7(d),waive thepaymentthereof, or, afterhis receiptof the Parachute Amount thereunder, treat someor allofsuch ammountasa loan from the Companywhich Executive shallrepayto the Company within 180 daysafter thereceipt thereof, together withinterest thereon at the rate provided inSection7872of theCode,ineithercase,by givingthe Company notice tosuch effect.
| (10) |
(f) Any determinationofthe Executive'sbaseamount, theParachuteAmount, any liabilityforexcise taxunderSection 4999of theCode or other matter required tobe made pursuant tothisSection 17, shall bemade bytheCompany's regularly -engaged independent certified publicaccountants, whosedetermination shall be conclusive and bindingupon the Company and Executive;providedthatsuch accountants shall give to Executive, on or beforethe date on which paymentof theParachute Amountor any later paymentorbenefit wouldbemade, a noticesettingforthin reasonable detail suchdeterminationand the basis therefor, and stating expresslythat Executive isentitled to relythereon.
(g) The numberofvotesthatmaybecastbyholdersofVotingSecuritiesorRights upontheissuanceorgrantthereofshall be deemedto bethelargestnumber ofvotes that maybe cast by theholders ofsuch securitiesor theholders ofanyotherVotingSecurities intowhich such Voting Securities orRights areconvertible orforwhichthey areexchangeable or exercisable, determined asthough such VotingSecuritiesor Rights were immediately convertible, exchangeableorexercisable andwithout regardto any anti-dilution or other adjustmentsprovided for therein.
18. OtherTerminationProvisions.
(a) Throughoutthe7-yearperiodfollowingtheTerminationDate,theCompanyshall indemnifyExecutive, andholdhimharmlessfrom,anyloss,damages, liability, obligation or expense thathemay sufferor incurinconnectionwith anyclaimmadeor Proceeding c01mnenced duringsuch period relating to hisservice as a director, officer, employee or agent of the Company(or any subsidiary thereat) to thesan1e extent and in same manner as theCompany shall be obligated so toindemnify Executive immediately priortotheTermination Date;providedthat, if duringsuch7-yearperiod the Company adoptsor assumes any indemnification policy or practice with respect toits directors, officers, employees oragentsthatis more favorablethanthat ineffect on the Termination Date,Executive shall be entitled to suchmore favorable indemnification.
(b) Throughoutthe7-yearperiodfollowingtheTerminationDate,theCompanyshall maintainforthebenefitofExecutivedirectors'and officers' liabilityinsurance (ona "claims made" basis)providingcoverageat leastas favorabletoExecutive (including withrespectto limits of liability, exclusions, anddeductibleandretentionamounts)asthat in effecton the Tem1ination Date.
19. LimitationofAuthoritv. Exceptasexpresslyprovidedherein,noprovisionhereofshall bedeemedtoauthorizeorempowereitherpartyheretotoacton behalfof,obligate or bindthe other partyhereto.
20. Notices.Anynoticeordemandrequiredorpermittedtobegivenormadehereunderto oruponeitherpartyheretoshall be deemed tohave beendulygiven or madefor all purposesif (a) in writingand sent by (i) messenger or an overnight courier serviceagainst receipt,or (ii) certified orregistered mail, postagepaid, return receipt requested, or (b) sent by telegram, telecopy, telex or similarelectronic means,providedthat a written copy thereof is sent on the same day bypostage-paid first-class mail,to such party at thefollowing address:
| (11) |
to theCompanyat:
its thencurrentaddressofitsprincipalofficeasstatedon the coverpageofitsmostrecentpublicfiling under the Actandif suchaddressis then Executive's residence, to the address of the Company's Chief Financial Officer.
with acopyto:
FederKaszovitzLLP
845 ThirdAvenue,11thFloor
New York,NewYork10022-6601 Attn:IrvingRothstein, Esq.
Fax: (212)888-7776
to Executiveat:
11RoyalRoad Brookline,MA02445
Fax:(617)975-3888
or suchotheraddressaseitherpartyheretomayatanytin1e,orfromtimetotime,directby noticegiventotheotherpartyinaccordancewith this Section. The date of giving ormakingof any suchnotice or demand shall be, in thecase ofclause(a)(i),thedateofthe receipt; inthe case of clause(a)(ii),fivebusiness daysaftersuch notice or demandissent; and, inthecase of clause(b),the business day next following thedatesuch notice or demand issent.
21. Amendment.Exceptasotherwiseprovidedherein,noamendmentofthisAgreement shallbevalidoreffective,unlessinwritingandsigned by oronbehalfof the partieshereto.
22. Waiver.Nocourseofdealingoromissionordelayonthepartofeitherpartyheretoin assertingorexercisinganyrighthereundershall constitute oroperate asa waiver ofany such right.No waiver ofanyprovision hereof shallbeeffective,unless in writingandsigned by or on behalf of theparty tobechargedtherewith. Nowaivershall be deemed a continuing waiveror waiver in respect ofany other orsubsequentbreachordefault, unless expressly sostated in writing.
23. Governing Law.ThisAgreement shallbegovernedby,andinterpretedandenforcedin accordancewith,thelawsoftheCommonwealthof Massachusetts withoutregard to principles ofchoice of laworconflict oflaws.
24. Jurisdiction.Eachofthepartiesheretoherebyirrevocablyconsentsandsubmitstothe jurisdictionofthecourtsoftheCommonwealth ofMassachusetts and theUnited States District Court for the Districtof Massachusettsin co1111ection with any suit, actionor proceeding arising outofor relatingto this Agreement or the transactions contemplated hereby,waivesany objection tovenueinthe Countyof Norfolk, Commonwealth ofMassachusetts, or suchDistrict, and agrees that serviceof any summons,complaint,notice orother process relating to such proceeding may be effected in the mannerprovided by clause (a) (ii) of Section 20.
25. Remedies.Intheeventofanyactualorprospectivebreachordefaultbyeitherparty hereto,theotherpartyshall be entitledtoequitable relief, includingremediesinthe nature of rescission, injunction and specific performance. All remedieshereunder arecumulative and not exclusive,andnothingherein shallbe deemedto prohibitor limit eitherparty frompursuingany other remedyorreliefavailableatlaworin equityforsuch actual orprospective breach or default, includingthe recovery of damages.
26. Severability.Theprovisionshereofareseverableandintheeventthatanyprovisionof thisAgreementshallbedetem1inedtobeinvalidor w1enforceable in anyrespectby a courtof competent jurisdiction, theremaining provisions hereof shallnot be affected, but shall,subject to thediscretionofsuchcourt, remain in full forceand effect,andany invalid orunenforceable provision shallbe deemed, without furtheractionon thepartof the partieshereto,amendedand limitedto the extent necessary to renderthe samevalidandenforceable.
27. Counterparts. ThisAgreementmaybeexecutedinCOU11terparts,eachofwhich shallbe deemedanoriginalandwhichtogether shall constitute one and the same agreement.
28. Assignment.ThisAgreement,andeach right,interestandobligationhere1mder,maynot beassignedbyeitherpartyheretowithoutthepriorwrittenconsentof theotherpartyhereto, ai1d ai1y purported assignmentwithoutsuch consent shall be voidandwithout effect,exceptthatthis Agreement shallbeassigned to, andassumedby,anyperson with orintowhichtheCompany mergesor consolidates, or whichacquiresall orsubstantially all ofitsassets, or which otherwise succeeds to andcontinues the Company'sbusiness substantially asanentirety.Except as otherwiseexpressly provided herein or required by law,Executive shall not have anypower of anticipation,assignmentor alienationof any payments requiredtobe made tohimhereunder, and noother person mayacquireai1y right or interestin ai1y thereofby reason of any purported sale, assignment orotherdispositionthereof,whether voluntary or involuntary, ai1yclaim ina bai1kruptcy or otherinsolvency proceeding against Executive,or ai1y other ruling, judgment, order, write or decree.
29. BindingEffect.ThisAgreementshallbebindinguponai1dinuretothebenefitofthe partiesheretoandtheir respective successors andpermittedassigns. ThisAgreement is not intended, andshall notbedeemed,to create or conferai1yright or interestfor the benefit of any person not a party hereto.
30. TitlesandCaptions.ThetitlesandcaptionsoftheArticlesandSectionsofthis Agreementareforconvenienceofreferenceonlyai1ddonot inai1y way defineor interpretthe intentof the parties or modify or otherwiseaffect any of the provisions hereof.
| (12) |
31. GrammaticalConventions.Wheneverthecontextsorequires, eachpronounor verbused hereinshall beconstruedin thesingular orthe plural sense andeachcapitalized termdefined herein and each pronoun used hereinshall beconstrued in the masculine, feminineor neuter sense.
32. References.Thete1111s"herein,""hereto,""hereof,""hereby,"and"hereunder,"andother te1111sofsimilarimport,refertothisAgreementas awhole, andnot to any Article, Sectionor otherpart hereof.
33. NoPresumptions.Eachpartyheretoacknowledgesthatithashadanopportunityto consultwithcounselandhasparticipatedinthepreparationofthisAgreement. No party hereto is entitled toany presumption with respectto theinterpretation of any provision hereof or the resolution of anyalleged ambiguityhereinbasedon any claim thatthe other party hereto drafted orcontrolledthedrafting of this Agreement.
34. EntireAgreement.ThisAgreementembodiestheentireagreementofthepartieshereto withrespecttothesubjectmatterhereofand supersedes any prior agreement,commitment or arrangement relating tl1ereto, written ororal,if any, which shall terminate immediately uponthe commencement of the Tenn, except that each party tl1ereto shall (a)remainrequired toperform any act andtosatisfy any obligation or condition that such partyis required to perform or satisfy thereunder withrespect to any eventoccurring or circumstance existing prior tothe commencement of tl1e Term hereof (includingwitl10ut limitation the payment or deliveryto Executive ofanycompensation, reimbursable expenseor employee benefit or perquisite to which hemay be entitled, but whichhasnotyet been paidtohim,onaccount of hisemployment under any such prior arrangement)that has not been so perfo1111edor satisfied, and (b) retain his or its tight under any such prior assignmenttoassert or toallege any claim or cause of action relatingto or basedupon, or otl1erwise toenforce, any provisiontl1ereof with respectto any event occurring or circumstanceexistingduring the term tl1ereof.
[Remainder of pageblank.Signaturesappearonfollowingpage.]
| (13) |
IN WITNESSWHEREOF,theundersignedhavedulyexecutedthisAgreementasofthe dayandyearfirstabovewritten.
THE COMPANY:
Name: Robert Fireman
Title: Director(onbehalfof theBoard)
EXECUTIVE:
Thomas Kidrin
