RETIREMENT AGREEMENT
BETWEEN
EUGENE M. LANG
AND
REFAC TECHNOLOGY DEVELOPMENT CORPORATION
DATED AS OF DECEMBER 13, 1996
THIS RETIREMENT AGREEMENT (the "Agreement"),
made as of the 13th day of December, 1996 (the "Effective
Date"), by and between Eugene M. Lang (the "Executive")
and REFAC Technology Development Corporation (the
"Company").
WHEREAS, Executive has been employed by the
Company as its Chairman and Chief Executive Officer;
WHEREAS, the Company and Executive have entered
into a Stock Repurchase Agreement, dated as of December
13, 1996 (the "Repurchase Agreement"), whereby the
Company has agreed to purchase from Executive, on the
Closing Date (as defined in the Repurchase Agreement),
832,912 shares of common stock of the Company;
WHEREAS, Executive and the Company have agreed
that (i) Executive shall resign as Chief Executive
Officer of the Company, effective as of the Closing Date;
and (ii) Executive's employment as Chairman of the
Company shall terminate as of June 30, 1997 (the
"Termination Date"); and
WHEREAS, the parties have negotiated and
reached an agreement with respect to all rights, duties
and obligations arising between them, including, but in
no way limited to, any rights, duties and obligations
that have arisen or might arise out of or are in any way
related to Executive s employment with the Company.
NOW, THEREFORE, in consideration of the
premises and agreements hereinafter set forth, intending
to be legally bound, the parties hereby agree as follows:
1. Resignation. Executive shall resign as
Chief Executive Officer of the Company effective as of
the Closing Date and shall resign as Chairman effective
as of the Termination Date. As of the Termination Date,
the Company shall take all necessary actions to appoint
Executive "Founder and Honorary Chairman" of the Company,
and Executive shall be listed as Founder and Honorary
Chairman in the Annual Report to the Stockholders of the
Company for the life of Executive unless Executive
requests that the Company discontinue such listing. In
addition, the Company shall include Executive as a
nominee to the Board of Directors of the Company (the
"Board") and solicit proxies on his behalf during the
Consulting Period (as defined in Paragraph 2 hereof).
2. Consulting. For a period of three years
commencing as of the Termination Date (the "Consulting
Period"), Executive shall provide consulting services to
the Company from time to time at mutually agreeable times
at the request of the Company. Executive shall not be
required to provide in excess of 750 hours per year of
consulting services. Executive shall devote reasonable
time and his reasonable best efforts, skill and attention
to the performance of such consulting services, including
travel reasonably required in the performance of such
consulting services. The Company shall reimburse
Executive for all reasonable travel and related expenses
incurred in connection with such consulting services.
Executive, in his capacity as a consultant, shall report
directly to the Board of Directors and the chief
executive officer of the Company and shall at reasonable
mutually agreeable times during the Consulting Period
make himself available by telephone.
3. Payments. The Company shall continue to
pay Executive (i) his annual salary of $135,000 less any
amounts withheld, to be paid in regular pay periods
commencing approximately two weeks following the Closing
Date and continuing until the end of the Consulting
Period; provided however in the event that Executive dies
prior to the end of the Consulting Period, Executive
shall receive the remainder of his annual salary for the
year in which Executive dies or $100,000, whichever is
greater and (ii) thereafter, $100,000 per year, to be
paid in regular pay periods commencing approximately two
weeks following the end of the Consulting Period and
continuing through the end of the pay period in which
Executive dies; provided however if at the time Executive
dies he has received less than an aggregate of $500,000
following the end of the Consulting Period, the Company
shall pay Executive $100,000 at the time of his death.
For the year 1996 the Company shall pay Executive a bonus
of $20,000.
Except as specifically set forth in this
Agreement, Executive is not due any compensation,
including compensation for unpaid salary, unpaid bonus,
or accrued or unused vacation time or vacation pay from
the Company or any of its affiliates.
4. Benefits. Except as specifically set
forth in this Section 4, as of the Termination Date,
Executive shall not be eligible to participate in any of
the benefit plans of the Company or any of its
affiliates; provided however that if Executive is a
Director but not an executive officer of the Company,
Executive shall be entitled to receive any benefits,
other than stock options, that a Director, who is not an
executive officer of the Company, would be entitled to
receive.
(a) Commencing on the Effective Date and
continuing for the duration of the respective lives of
Executive and his spouse, the Company shall provide or
make available to Executive and his spouse medical and
health benefits, on the same terms and conditions as
provided to the Company's senior officers from time to
time or a separate health insurance policy as mutually
agreed to by Executive and the Company; provided,
however, that the Company's obligation to provide such
benefits shall be mitigated to the extent that Executive
is eligible to obtain benefits under Medicare or any
similar U.S. government programs. The Company shall
assist Executive in making any medical claims on his
behalf and the Company shall pursue any negative response
from the insurance company with respect to Executive's
medical claims.
(b) For the five year period commencing on the
Termination Date, the Company shall provide to Executive
an office, office furnishings and all operating
facilities and equipment which are no less favorable to
Executive, as those presently enjoyed by Executive,
including a secretary selected by Executive, whose salary
and employee benefits shall be paid by the Company;
provided, however, Executive shall have the right to
maintain his current office with full access to such
office until December 31, 1997 and shall have the right
to select the location of his new office. Until the end
of the Consulting Period, the Company shall also provide
to Executive an assistant, whose salary and employee
benefits shall be paid by the Company.
The aggregate annual operating costs,
including, but not limited to, Executive's secretary,
assistant and office rental, shall not exceed $150,000
per year. The cost to set up Executive's new office,
including, but not limited to, office furnishings,
facilities, machinery, equipment and leasehold
improvements shall not exceed $65,000.
(c) This Agreement shall have no effect on the
exercisability of Executive's outstanding stock options
granted under the Company's 1990 Stock Option and
Incentive Plan, and such options shall remain outstanding
for their original term.
5. Business Relationships. (a) Any and all
business conducted by Executive on behalf of the Company
and any new business relationships brought to the Company
by Executive during the period from the Closing Date to
the end of the Consulting Period belong to the Company.
(b) In the event that Executive brings a
specific new business relationship to the Company
following the end of the Consulting Period, the Company
and Executive shall negotiate a separate compensation
agreement with respect to such relationship.
6. Confidentiality. (a) Executive
acknowledges that, through his status as an executive of
the Company, he has had possession of important,
confidential information and knowledge as to the business
of the Company and its affiliates, including, but not
limited to, knowledge of marketing and operating
strategies, financial results and projections, future
plans, the provisions of important contracts entered into
by the Company or its affiliates and possible
acquisitions. Such knowledge and information constitute
a vital part of the business of the Company and its
subsidiaries and are by their nature trade secrets and/or
confidential information (collectively, "Confidential
Information"). Following the end of the Consulting
Period, Executive shall not divulge, communicate, furnish
or make accessible (whether orally or in writing or in
books, articles or any other medium) to any individual,
firm, partnership or corporation any knowledge or
information with respect to Confidential Information
directly or indirectly material to any aspect of the
business of the Company or its affiliates, unless (i)
such information is now available to the general public
or later becomes available to the general public by
lawful acts of third parties, or (ii) Executive receives
the information from a third party not obligated to
maintain it in confidence or develops the information
independently without reference to the disclosed
information. No later than when Executive no longer has
his office on the Company premises, Executive shall
return to the Company all reports, files, memoranda,
records, software, credit cards, computer access codes or
disks, and other physical or personal property that he
received or prepared or helped prepare in connection with
his employment with the Company and Executive shall not
retain any copies, duplicates, reproductions or excerpts
thereof, except with the knowledge and approval of the
Chief Executive Officer.
(b) The Company acknowledges that it has had
possession of important, confidential information and
knowledge regarding Executive. Following the end of the
Consulting Period, the Company shall not divulge,
communicate, furnish or make accessible (whether orally
or in writing or in books, articles or any other medium)
to any individual, firm, partnership or corporation any
material knowledge or information with respect to
Executive, unless (i) such information is now available
to the general public or later becomes available to the
general public by lawful acts of third parties, or (ii)
the Company receives the information from a third party
not obligated to maintain it in confidence or develops
the information independently without reference to the
disclosed information.
7. Covenant Not to Compete. Executive
acknowledges that (i) the business in which the Company
is engaged is intensely competitive, that the Company
needs to protect its good will, and that Executive's
employment by the Company has required Executive to have
access to and knowledge of Confidential Information which
is of vital importance to the success of the Company's
business; (ii) the direct or indirect disclosure of any
such Confidential Information to existing or potential
competitors of the Company could place the Company at a
competitive disadvantage and could do material damage,
financial and otherwise to the Company's business; and
(iii) Executive's services to the Company have been
special and unique. Therefore, in consideration of the
terms and conditions of this Agreement, including the
compensation to be paid hereunder, for a period of six
years commencing on the Effective Date, Executive shall
not render any services, directly or indirectly, as an
employee, officer, consultant or in any other capacity,
to any individual, firm, corporation or partnership
engaged in activities competitive with any activities in
which the Company or its affiliates are currently engaged
(such activities being herein called the "Company
Business"). During said period, Executive shall not,
without the prior written consent of the Company, hold an
equity interest in any firm, partnership or corporation
which competes with the Company Business, except that
beneficial ownership by Executive (together with any one
or more members of Executive's immediate family and
together with any entity under Executive's direct or
indirect control) of less than 5% of the voting stock of
any corporation which may be engaged in any of the same
lines of business as the Company Business which stock is
listed on a national securities exchange or publicly
traded in the over-the-counter market shall not
constitute a breach of the covenants in this Paragraph 7.
Executive acknowledges that the non-competition
provisions contained in this Agreement are reasonable and
necessary, in view of the nature of the Company and his
knowledge thereof, in order to protect the legitimate
interests of the Company. The parties hereto agree that
the provisions of this Paragraph 7 shall be enforceable
to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any portion of
this Paragraph 7 is adjudicated unenforceable in any
jurisdiction, such adjudication shall apply only in the
particular jurisdiction in which such adjudication is
made.
8. Breach of Covenants. If the Board
reasonably believes that Executive has violated any of
the covenants set forth in Paragraphs 6, 7 and 10 of this
Agreement, the Company shall provide Executive with
written notice setting forth the violations and shall
provide Executive with ten (10) days to respond in
writing to the Board. If the Board determines that the
violations did not occur or that the violations have been
remedied to the degree that the Company or any of its
directors, officers or other executives have not suffered
competitive disadvantage or other material damage,
financial or otherwise, the Agreement shall continue in
full force and effect. If the Board in its reasonable
judgment determines that the violations occurred and have
not been adequately remedied, and Executive and the Board
cannot resolve the dispute, the dispute shall be finally
determined in accordance with the arbitration provisions
set forth in Paragraph 9 below.
9. Arbitration. (a) Subject to Section 8
herein, any dispute, controversy, or claim arising out of
or relating to this Agreement or the breach, termination
or validity thereof ("Dispute"), shall be finally settled
by arbitration administered by the American Arbitration
Association under its Commercial Arbitration Rules then
in effect (the "Rules"), except as modified herein. The
Arbitration shall be held in New York, New York.
(b) There shall be three arbitrators of whom
each party shall select one and the two arbitrators shall
jointly select the third arbitrator, within 20 days of
the selection of the second arbitrator.
(c) The arbitral tribunal shall decide the
Dispute in accordance with the laws of the State of New
York. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. SECTIONS 1-16 and judgment
upon the award rendered by the arbitrators may be entered
by any court having jurisdiction thereof.
(d) The award of the arbitral tribunal shall
be final and binding and shall be the sole and exclusive
remedy between the parties regarding any claims,
counterclaims, issues, or accountings presented to the
tribunal.
(e) Each party shall bear its own costs and
fees, including attorneys' fees and expenses, and an
equal share of the arbitrators' fees and administrative
fees of the arbitration; provided however if the arbitral
tribunal determines in its sole discretion that Executive
is the prevailing party, Executive shall be entitled to
an award of all fees and expenses of the arbitration,
including, but not limited to, reasonable attorneys'
fees, arbitrators' fees and administrative fees of the
arbitration. The parties expressly agree that the
arbitral tribunal shall have no power to award punitive
damages or any other damages not measured by the
prevailing parties actual damages.
(f) This Agreement and the rights and
obligations of the parties shall remain in full force and
effect pending the award in any arbitration proceeding
hereunder.
(g) Either party may, without inconsistency
with this agreement to arbitrate, seek from any court of
competent jurisdiction any injunctive relief contemplated
by Section 17 herein pending the arbitral tribunal's
final determination of the Dispute.
(h) All notices by one party to another in
connection with the arbitration shall be in accordance
with the provisions of Section 18 hereof.
(i) The arbitral tribunal shall permit
prehearing discovery that is relevant to the subject
matter of the Dispute taking into account the parties
desire that the arbitration be conducted expeditiously
and cost effectively.
(j) This agreement to arbitrate shall be
binding upon the heirs, successors, and assigns and any
trustee, receiver, or executor of Executive or the
Company.
10. No Disparagement. (a) Executive shall not
disparage or criticize, in a material or harmful manner,
orally or in writing, the Company or any of its
affiliates, their Boards of Directors or any director
serving therein or any former or current officer or
employee of the Company or its affiliates; provided,
however, that Executive may divulge, discuss or provide
the information described above to the extent that he is
required by law to do so, and, in such event, Executive
shall notify the Company immediately upon any request or
demand for such information so that the Company may seek
a protective order or other appropriate remedy prior to
such disclosure.
(b) The Company or any of its affiliates, their
Boards of Directors or any director serving therein or
any former or current officer or employee of the Company
or its affiliates (the "Company Group") shall not
disparage or criticize, in a material or harmful manner,
orally or in writing, Executive; provided, however, that
the Company Group may divulge, discuss or provide the
information described above to the extent that they are
required by law to do so, and, in such event, the Company
Group shall notify Executive immediately upon any request
or demand for such information so that Executive may seek
a protective order or other appropriate remedy prior to
such disclosure.
11. Release of Company. (a) Executive, on
behalf of himself, his heirs, executors, administrators,
and assigns, does hereby knowingly and voluntarily
release, acquit and forever discharge the Company and any
affiliates, and their legal representatives, agents,
successors and assigns (collectively, the "Releasees")
from and against any and all charges, complaints, claims,
cross-claims, third-party claims, counterclaims,
contribution claims, liabilities, obligations, promises,
agreements, controversies, damages, actions, causes of
action, suits, rights, demands, costs, losses, debts and
expenses of any nature whatsoever (collectively, the
"Actions"), known or unknown, suspected or unsuspected,
foreseen or unforeseen, matured or unmatured, which, at
any time up to and including the date hereof, exists,
have existed, or may arise from any matter, any claims
arising out of or in any way related to Executive s
employment with the Company or its affiliates and the
conclusion thereof, which Executive or any of his heirs,
executors, administrators and assigns ever had, now has
or at any time hereafter may have, own or hold against
the Releasees. Without limiting the foregoing, by
executing this Agreement, Executive is waiving all
Actions against the Releasees arising under federal,
state and local labor and anti-discrimination laws,
including without limitation the Age Discrimination in
Employment Act, as amended, and Title VII of the Civil
Rights Act, as amended, and under any purported common
law restrictions on the right of a Company to terminate
the employment of an employee. Executive acknowledges
that, in exchange for this release, the Company is
providing Executive with consideration which exceeds what
Executive would have received had Executive not given
this release.
(b) Executive shall not in any way commence or
join in any claim, charge or action against the Releasees
arising out of or relating in any way to matters
described in Section 11(a) occurring prior to the date of
this Agreement, except as may be necessary to enforce
this Agreement or to enforce his rights under any benefit
plan of the Company. Executive shall not aid or assist
others in pursuing any claim, charge or action against
the Releasees, except as may be compelled by proper legal
process or ordered by a competent court of law. If
Executive commences or joins any suit or action or
asserts any claim in violation of the provisions of this
Paragraph 11, in addition to all other damages or
remedies available to the Releasees, Executive shall pay
all legal fees incurred by the Releasees in defending or
otherwise responding to such suit, action or claim.
Executive understands that this Agreement is
intended to include all claims, if any, which he may have
and which he does not now know or suspect to exist in his
favor against the Releasees with respect to his
employment with the Company or its affiliates and the
conclusion thereof and that this Agreement extinguishes
those claims.
12. Release of Executive. (a) The Company and
any affiliates, and their legal representatives, agents,
successors and assigns do hereby knowingly and
voluntarily release, acquit and forever discharge
Executive, on behalf of himself, his heirs, executors,
administrators, and assigns from and against any and all
Actions, known or unknown, suspected or unsuspected,
foreseen or unforeseen, matured or unmatured, which, at
any time up to and including the date hereof, exists,
have existed, or may arise from any matter, any claims
arising out of or in any way related to Executive s
employment with the Company or its affiliates and the
conclusion thereof or any claim arising out of or in any
way related to Executive's actions or inactions as an
officer of the Company or any of its affiliates or a
member of the Company's Board or the board of directors
of any of its affiliates, which the Company or its
affiliates or their legal representatives, agents,
successors or assigns ever had, now have or at any time
hereafter may have, own or hold against Executive.
(b) The Company and any affiliates, and their
legal representatives, agents, successors and assigns
shall not in any way commence or join in any claim,
charge or action against Executive arising out of or
relating in any way to matters occurring prior to the
date of this Agreement, except as may be necessary to
enforce this Agreement. The Company and any affiliates,
and their legal representatives, agents, successors and
assigns shall not aid or assist others in pursuing any
claim, charge or action against Executive, except as may
be compelled by proper legal process or ordered by a
competent court of law. If the Company and any
affiliates, and their legal representatives, agents,
successors and assigns commence or join any suit or
action or assert any claim in violation of the provisions
of this Paragraph 12, in addition to all other damages or
remedies available to Executive, the Company and any
affiliates, and their legal representatives, agents,
successors and assigns shall pay all legal fees incurred
by Executive, in defending or otherwise responding to
such suit, action or claim.
The Company and any affiliates, and their legal
representatives, agents, successors and assigns
understand that this Agreement is intended to include all
claims, if any, which they may have and which they do not
now know or suspect to exist in their favor against
Executive and that this Agreement extinguishes those
claims.
13. Indemnification. The Company shall
indemnify, defend and hold harmless Executive to the
fullest extent permitted under Delaware law, including,
without limitation, his reasonable legal fees and
expenses as and when incurred. In the event that
Executive is a party or is called as a witness in a
proceeding involving the Company and must retain separate
counsel for himself, the Company shall reimburse
Executive for his reasonable legal fees and expenses as
and when incurred. This indemnification shall be
effective with respect to actions or inactions of
Executive occurring on, before or after the Effective
Date.
14. Consult Attorney; Right to Revoke Release.
Executive acknowledges that the Company has advised him
to consult with an attorney of his choosing prior to
signing this Agreement and Executive acknowledges that he
has consulted with an attorney. Executive has twenty-one
(21) days during which to consider the provisions of this
Agreement. Executive further acknowledges that he has
been advised by the Company that he has the right to
revoke this Agreement for a period of seven (7) days
after signing it and that this Agreement shall not become
effective or enforceable until such seven (7) day
revocation period has expired without revocation.
Executive acknowledges that, if he wishes to revoke this
Agreement, he must do so in writing, and that such
revocation must be signed by him and received by the
Company no later than 5:00 p.m. Eastern Standard Time on
the seventh (7th) day after he has signed the Agreement.
Executive acknowledges that, in the event that he revokes
this Agreement, he shall have no right to receive any
payments hereunder and any payments already received
hereunder shall be immediately returned to the Company.
Executive represents that he has read this Agreement and
understands its terms and that he enters into this
Agreement freely, voluntarily, and without coercion.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS
OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
16. Severability. In the event that any one
or more of the provisions contained herein, or the
application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any
reason, the parties shall negotiate in good faith with a
view to the substitution therefor of a suitable and
equitable solution in order to carry out, so far as may
be valid and enforceable, the intent and purpose of such
invalid provision, provided, however, that the validity,
legality and enforceability of any such provision in
every other respect and of the remaining provisions
contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and
privileges of the parties hereto shall be enforceable to
the fullest extent permitted by law.
17. Injunctive Relief. (a) Executive
acknowledges and agrees that the Company could suffer
irreparable injury in the event of a breach or violation
of the provisions set forth in Paragraphs 6, 7 and 10
herein and Executive agrees that, in the event of an
actual or threatened breach or violation of such
provisions, the Company may be awarded interim injunctive
relief in a court of appropriate jurisdiction to prohibit
or remedy any such violation or breach or threatened
violation or breach, without the necessity of posting any
bond or security, pending the arbitral tribunal's final
determination of the Dispute.
(b) The Company acknowledges and agrees that
Executive could suffer irreparable injury in the event of
a breach or violation of the provisions set forth in
Paragraph 10 herein and the Company agrees that, in the
event of an actual or threatened breach or violation of
such provisions, Executive may be awarded interim
injunctive relief in a court of appropriate jurisdiction
to prohibit or remedy any such violation or breach or
threatened violation or breach, without the necessity of
posting any bond or security, pending the arbitral
tribunal's final determination of the Dispute.
18. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if
delivered personally, telecopied (with confirmation of
receipt), delivered by nationally-recognized overnight
express service or sent by registered or certified mail
(postage prepaid, return receipt requested) to the
parties at the following addresses:
If to Executive to:
Eugene M. Lang
REFAC Technology Development Corp.
122 East 42nd Street
New York, New York 10168
Telephone: (212) 687-4741
Telecopy: (212) 949-8716
Copy to:
Kronish, Lieb, Weiner & Hellman LLP
1114 Avenue of the Americas
New York, New York 10036
Telephone: (212) 479-6000
Telecopy: (212) 479-6275
Attention: Renee Schwartz, Esq.
If to the Company to:
REFAC Technology Development Corp.
122 East 42nd Street
New York, N.Y. 10168
Telephone: (212) 687-4741
Telecopy: (212) 949-8716
Attention: Chief Executive Officer
Copy to:
Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
Telecopy: (212) 735-2000
Attention: Mark N. Kaplan, Esq.
or to such other address as the person to whom notice is
to be given may have previously furnished to the other in
writing in the manner set forth above, provided that
notice of a change of address shall be deemed given only
upon receipt.
19. Entire Agreement. This Agreement and the
Repurchase Agreement set forth the entire agreement
between the parties hereto and may not be amended,
supplemented or discharged without the written consent of
the parties. This Agreement supersedes all prior written
agreements and oral understandings concerning the subject
matter hereof.
20. Counterparts. This Agreement may be
executed in any number of counterparts, each of which
shall be an original, but all of which together shall
constitute one instrument.
21. Successors and Assigns. This Agreement is
a personal contract and the rights and interests of
Executive hereunder may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him,
except as otherwise expressly permitted by the provisions
of this Agreement. This Agreement may be assigned by the
Company without the consent of Executive. This Agreement
shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, heirs and
permitted assigns.
22. Descriptive Headings; Interpretation. The
headings contained in this Agreement are for the
reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
References in this Agreement to Sections, Exhibits or
Schedules mean a Section, Exhibit or Schedule of this
Agreement unless otherwise indicated. References to this
Agreement shall be deemed to include the Exhibits hereto,
unless the context otherwise requires. The term "person"
shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, a governmental
entity or an unincorporated organization.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the day and date first above
written.
REFAC TECHNOLOGY
DEVELOPMENT CORPORATION
By: ____________________
Name:
Title:
__________________________
Eugene M. Lang