Exhibit 10.1

 

SEPARATION AND GENERAL RELEASE AGREEMENT

 

THIS SEPARATION AND GENERAL RELEASE AGREEMENT (this “Agreement”) is entered into
between Darryl Miller, an individual with an address at 7625 Blackhall, The
Colony, Texas 75056 (“Employee”), and I.D. Systems, Inc., with a headquarters
address 123 Tice Boulevard, Suite 101, Woodcliff Lake, NJ  07677 (“Company” and,
together with its parent, divisions, affiliates, and subsidiaries and their
respective officers, directors, employees, shareholders, members, partners, plan
administrators, attorneys, and agents, as well as any predecessors, future
successors or assigns or estates of any of the foregoing, the “Released
Parties”).

 

WHEREAS, Employee was employed by Company from on or about January 7, 2010 until
his employment was terminated on November 27, 2012 (the “Separation Date”); and

 

WHEREAS, Company contended that it had grounds to terminate Employee’s
employment for Cause (as that term is defined in that certain Severance
Agreement between the parties dated as of December 14, 2010 (the “Severance
Agreement”)) and Employee disputed the Company’s contention that there was
Cause; and

 

WHEREAS, during his employment and for an extended time period thereafter (as
set forth below) Employee agreed to be bound by that certain Confidentiality,
Assignment of Contributions and Inventions, Non-Competition and Non-Solicitation
Agreement he signed on or about December 14, 2010 (the “Covenants Agreement”).

 

NOW, THEREFORE, as and material consideration for Employee’s execution of this
Agreement and for him not challenging the restrictive covenants in the Covenants
Agreement as legally unenforceable and agreeing to extend the definition of the
Restricted Period as defined in the Covenants Agreement, and in consideration of
the premises, mutual covenants and agreements described herein and for other
good and valuable consideration acknowledged by each of the parties to be
satisfactory and adequate, the parties, intending to be legally bound hereby,
agree as follows:

 

1.          Separation of Employment. Employee acknowledges and understands that
Employee’s last day of employment with Company was the Separation Date, and that
Employee has received all compensation and benefits to which Employee is
entitled as a result of Employee’s employment, except as otherwise provided in
this Agreement. Employee understands that, except as otherwise provided under
this Agreement, Employee is entitled to nothing further from the Released
Parties, including reinstatement by Company.

 

 

 

 

2.           Employee Release of Released Parties. In consideration of the
payments and benefits set forth below in Section 4, Employee hereby releases,
waives, discharges and gives up any and all Claims (as defined below) that
Employee may have against the Released Parties, arising on or prior to the date
hereof. “Claims” means any and all actions, charges, controversies, demands,
causes of action, suits, rights, and/or claims whatsoever for debts, sums of
money, wages, salary, bonuses, severance pay, commissions, draw, bonuses,
unvested stock options, vacation pay, sick pay, fees and costs, unreimbursed
expenses, legal fees, losses, penalties, damages, including damages for pain and
suffering and emotional harm, arising, directly or indirectly, out of any
promise, agreement, offer letter, contract (including but not limited to the
Severance Agreement), understanding, common law, tort, the laws, statutes,
and/or regulations of the States of New Jersey, Texas, or any other state and
the United States, including, but not limited to, federal and state wage and
hour laws, federal and state whistleblower laws, Section 1981 of the Civil
Rights Act of 1866, Title VII of the Civil Rights Act of 1964, the Civil Rights
Act of 1991, the Equal Pay Act, the Americans with Disabilities Act, the Family
and Medical Leave Act, the Employment Retirement Income Security Act, the
Vietnam Era Veterans Readjustment Assistance Act, the Fair Credit Reporting Act,
the Fair Labor Standards Act, the Age Discrimination in Employment Act (“ADEA”),
OSHA, the Sarbanes-Oxley Act of 2002, the Lily Ledbetter Act, the New Jersey Law
Against Discrimination, the New Jersey Family Leave Act, the New Jersey Civil
Rights Act, the Conscientious Employee Protection Act, and the Texas Human
Rights Act, as each may be amended from time to time, whether arising directly
or indirectly from any act or omission, whether intentional or unintentional.
This Agreement releases all Claims including those of which Employee is not
aware and those not mentioned in this Agreement up to the date of the execution
and delivery of this Agreement to Company. Employee specifically releases any
and all Claims arising out of Employee’s employment with Company and separation
therefrom. Employee expressly acknowledges and agrees that, by entering into
this Agreement, Employee is releasing and waiving any and all Claims which may
have arisen on or before the date of Employee’s execution and delivery of this
Agreement to Company, including claims under ADEA.

 

3.           Representations; Covenant Not to Sue. Employee hereby represents
and warrants to the Released Parties that: (a) Employee has not filed or caused
or permitted to be filed any proceeding or Claim (nor has Employee lodged a
complaint with any governmental or quasi-governmental authority) against the
Released Parties, nor has Employee agreed to do any of the foregoing; (b)
Employee has not assigned, transferred, sold, encumbered, pledged, hypothecated,
mortgaged, distributed, or otherwise disposed of or conveyed to any third party
any right or Claim against the Released Parties that has been released in this
Agreement; and (c) Employee has not, directly or indirectly, assisted any third
party in filing or causing or assisting to be filed any proceeding or Claim
against the Released Parties. Except as set forth in Section 11 below, Employee
covenants and agrees that he shall not encourage or solicit or voluntarily
assist or participate in any way in the filing, reporting or prosecution by
himself or any third party of a proceeding or Claim against any of the Released
Parties.

 

4.           Consideration. As good consideration for Employee’s execution,
delivery, and non-revocation of this Agreement and full compliance with the
terms hereof, Company shall provide Employee with the following:

 

(a)          payment of $200,000 (less applicable withholdings and deductions)
in twelve equal monthly installments commencing on the next regularly scheduled
paydate following the Effective Date (defined below) and payable on the last
business day of each month thereafter;

 

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(b)          reimbursement of expenses totaling $500.89 together with payment of
$11,423.00 representing all unused accrued vacation days, payable on the next
regularly scheduled paydate following the Effective Date;

 

(c)          a pro rata portion of the Restricted Shares awarded to Employee
pursuant to Restricted Stock Award Agreements between Employee and the Company
dated February 5, 2010, March 30, 2011 and March 29, 2012, respectively, as
identified on Exhibit A hereto under the column “Number of Restricted Shares To
Be Vested Upon Effective Date”, will be deemed to have vested as of the
Effective Date (the “Vested Restricted Shares”). Employee shall sell the Vested
Restricted Shares only during the thirty (30) day period (the “VRS Sale Period”)
beginning on the date of delivery of the Vested Restricted Shares to Employee,
which Vested Restricted Shares shall be delivered, within three (3) business
days following the Effective Date (and, for the avoidance of doubt, only if the
Agreement has not been revoked in accordance with Section 12(b) of this
Agreement), in electronic form via book entry transfer to the account maintained
by the Employee’s broker at Depository Trust Company as set forth on Schedule
4.6(c) attached hereto. The Employee may not sell the Vested Restricted Shares
following the VRS Sale Period, and any Vested Restricted Shares not sold upon
the expiration of the VRS Sale Period shall automatically, and without any
further action of the Company, be forfeited. Employee shall (y) notify the
Company and the Escrow Agent (as defined below), in writing, of the sale of the
Vested Restricted Shares, together with a detailed accounting thereof, on a
weekly basis (with such notice and accounting for any sales made during any week
(i.e. a period of Monday through Friday) to be delivered to the Company and the
Escrow Agent by no later than 5:00 p.m. New York time on Tuesday of the next
week) and (z) deliver to Lowenstein Sandler LLP (the “Escrow Agent”) the
proceeds from the sale of the Vested Restricted Shares (the “Escrowed Restricted
Stock Proceeds”) on a weekly basis (with the proceeds from the sale of any
Vested Restricted Shares for the prior week to be delivered to the Escrow Agent
no later than Tuesday of the next week); provided, however, the Employee may use
the proceeds from the sale of the Vested Restricted Shares to pay the exercise
price for some or all of the Vested Options (as defined in Section 4(d) below)
in accordance with Section 4(d) below, in which case, Employee shall, within the
time period following the sale of the Vested Restricted Shares provided in
clauses (y) and (z) of the immediately preceding sentence, (A) notify the
Company, in writing, as to all or the portion of such proceeds which shall be
applied on account of the option exercise (which Vested Options shall be
exercised solely in accordance with Section 4(d) below) and (B) instead deliver
such proceeds to the Company on account of, and to be applied against, the
option exercise. Except as set forth herein, all other Restricted Shares
previously awarded to Employee which have not, as of the Separation Date, vested
are forfeited.

 

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(d)          a pro rata portion of the Options granted to Employee pursuant to
Stock Option Grant Agreements between Employee and the Company dated February 5,
2010, March 30, 2011 and March 29, 2012, respectively, as identified on Exhibit
A hereto under the column “Number of Shares With Respect to Which Option may be
Exercised” (the “Vested Options”), may be exercised only during the VRS Sale
Period or the VO Sale Period (as defined below), and the shares of Common Stock
issuable upon exercise thereof (the “Underlying Vested Option Shares”) may be
sold only during the thirty (30) day period following the expiration of the VRS
Sale Period (the “VO Sale Period”). Employee may not exercise the Vested Options
after the expiration of the VO Sale Period and may only sell the Underlying
Vested Option Shares during the VO Sale Period, and any unexercised Vested
Options or Underlying Vested Option Shares outstanding upon the expiration of
the VO Sale Period shall automatically, and without any further action of the
Company, be forfeited. All other Options previously granted to Employee which
have not, as of the Separation Date, vested are hereby forfeited by Employee.
Employee shall be responsible for paying the full exercise price to the Company,
in cash, in connection with any exercise by Employee of the Vested Options. As
specified in Section 4(c) above, Employee may use the proceeds from the sale of
the Vested Restricted Shares to pay the exercise price for some or all of the
Vested Options (the proceeds from the sale of the Vested Restricted Shares that
the Employee uses to pay the exercise price of the Vested Options are referred
to herein as the “VRS Option Proceeds”). To the extent any additional funds are
needed for Employee to pay the full exercise price for the Vested Options being
exercised by Employee, Employee shall be responsible for paying such additional
amounts to the Company in order to complete the exercise of the Vested Options.
By no later than Tuesday of the week immediately following which any Underlying
Vested Option Shares were sold by the Employee, Employee shall (y) notify the
Company and the Escrow Agent, in writing, of the sale of the Underlying Vested
Option Shares for such week, together with a detailed accounting thereof and (z)
deliver to the Escrow Agent an amount equal to (the “Escrowed Option Proceeds”
and together with the “Escrowed Restricted Stock Proceeds”, the “Escrowed Funds”
) the sum of (1) the proceeds from the sale of the Underlying Vested Option
Shares during such week less the exercise price for such Underlying Vested
Option Shares sold by the Employee during such week, plus (2) an amount equal to
the VRS Option Proceeds.

 

The terms and conditions of the escrow agreement regarding the Escrowed Funds
and the escrow arrangement with the Escrow Agent are set forth on Exhibit B
attached hereto, which Exhibit B is fully incorporated herein by reference. The
Escrow Agent is an express third party beneficiary of Exhibit B. The Company
shall have the power and the right to deduct (including from the Escrowed Funds)
or withhold, or require the Employee to remit to the Company, an amount
sufficient to satisfy any federal, state, local and foreign taxes of any kind
(including, but not limited to, the Employee’s FICA and SDI obligations) which
the Company, in its sole discretion, deems necessary to be withheld or remitted
to comply with the Internal Revenue Code of 1986, as amended, or any other
applicable law, rule or regulation with respect to the Vested Restricted Shares
and Vested Options and, if the Employee fails to do so, the Company may
otherwise refuse to issue or transfer any shares of Common Stock otherwise
required to be issued pursuant to this Agreement.

 

Except to the extent provided above, the Restricted Stock Award Agreements and
Stock Option Grant Agreements referenced in paragraphs (c) and (d) above shall
remain in full force and effect.

 

Employee acknowledges that Employee is not otherwise entitled to receive the
payments and benefits set forth in this Section 4 and acknowledges that nothing
in this Agreement shall be deemed to be an admission of liability or wrongdoing
on the part of Company. Employee agrees that Employee will not seek anything
further from the Released Parties.

 

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Employee acknowledges that (i) the Company may, at any at any time prior to the
expiration of the VRS or VO Sale Period, as applicable, release information
pertaining to the Company and its business (including its earnings) that may
have a negative impact on the share price of the Company’s Common Stock
(“Company Released Information”) and, as a result, may negatively impact the
purchase price that the Employee is able to obtain from the sale of any of the
Vested Restricted Shares or Vested Underlying Option Shares and (ii) the
purchase price from any sale of the Vested Restricted Shares and/or Vested
Underlying Option Shares may be limited by the fact that such sales are required
to occur during the VRS or VO Sale Period, as applicable. Employee hereby
irrevocably waives any and all actions, causes of action, rights or claims,
whether known or unknown, contingent or matured, and whether currently existing
or hereafter arising, that Employee may have or hereafter acquire against the
Released Parties in any way, directly or indirectly, arising out of, relating to
or resulting from Employee’s sale of the Vested Restricted Shares and the
exercise of any Vested Options and the sale of any Vested Underlying Option
Shares, including, without limitation, claims (i) relating to the Company’s
disclosure of any Company Released Information and the impact of such disclosure
on the purchase price Employee is able to obtain from the sale of the Vested
Restricted Shares and Vested Underlying Option Shares during the VRS or VO Sale
Period, as applicable, (ii) relating to the limited time period during which
Employee may sell the Vested Restricted Shares and exercise and sell the Vested
Underlying Option Shares, (iii) the escrow of the Escrowed Funds in accordance
with the terms of this Agreement and Exhibit B and (iv) relating to the market
price of the Company’s Common Stock and the purchase price from the sale of the
Vested Restricted Shares and the Vested Underlying Option Shares. Employee
intends to effect, to the maximum extent permitted by law, a complete and
knowing waiver of Employee’s rights as set forth in this paragraph.

 

5.           Who is Bound. Company and Employee are bound by this Agreement.
Anyone who succeeds to Employee’s rights and responsibilities, such as the
executors of Employee’s estate, is bound, and anyone who succeeds to Company’s
rights and responsibilities, such as its successors and assigns, is also bound,
by this Agreement.

 

6.           Cooperation. Employee agrees, upon Company’s request, to reasonably
cooperate in any Company investigation, litigation, arbitration, or regulatory
proceeding regarding events that occurred during Employee’s tenure with Company.
Employee will make himself reasonably available to consult with Company
representatives, including its counsel, to provide information, and to appear to
give testimony. To the extent permitted by law, Company will reimburse Employee
for reasonable out-of-pocket expenses Employee incurs in extending such
cooperation, so long as Employee provides Company with satisfactory
documentation of the expenses.

 

7.           Non Disparagement; Confidentiality; Covenants Agreement.

 

(a)          Employee agrees not to make any defamatory or derogatory statements
concerning the Released Parties. Provided that inquiries are directed to
Company’s Human Resources Department, Company shall disclose to prospective
employers information limited to Employee’s dates of employment and last
position with the Company (or its affiliate) held by Employee. Employee confirms
and agrees that Employee shall not, directly or indirectly, disclose to any
person or entity or use for Employee’s own benefit, any confidential information
concerning the business, finances, or operations of Company or its clients (or
any such information regarding any predecessor entity previously operating
Company’s business); provided, however, that Employee’s obligations under this
Section 7 shall not apply to information generally known in Company’s industry
through no fault of Employee or the disclosure of which is required by
applicable law.

 

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(b)          Employee represents and warrants that to date he has complied with
the Covenants Agreement. Employee further agrees as good and valuable
consideration for the payments and benefits set forth in Section 4 of this
Agreement to modify the definition of “Restricted Period” contained in section 5
of the Covenants Agreement from twelve (12) months to eighteen (18) months. All
terms and conditions of the Covenants Agreement shall remain in full force and
effect as modified herein.

 

(c)          Employee represents and warrants that he currently is employed with
Amazon.com, Inc. and that such employment does not conflict with his obligations
under the Covenants Agreement.

 

8.            Remedies; Dispute Resolution.

 

(a)          If the Company determines in its sole judgment and discretion that
Employee is in breach of this Agreement or the Covenants Agreement (as modified
herein), then in addition to and not instead of the Released Parties’ other
remedies hereunder or otherwise at law or equity, Company shall have the right,
upon written notice to Employee and his counsel (c/o Scott Jacobson, Esq, Archer
& Greiner) (a “Breach Notice”), to cease making any further payments to Employee
under Sections 4(a) and (b) of this Agreement. This Agreement shall continue to
be binding on Employee and the Released Parties shall be entitled to enforce the
provisions of this Agreement.

 

(b)          If Employee disagrees with Company’s determination under Section
8(a) or for any reason has a dispute with Employer regarding this Agreement or
any other matter or thing, Employee shall be permitted to bring an arbitration
proceeding in Bergen County before a retired judge of the Superior Court of New
Jersey or other mutually agreeable arbitrator. The prevailing party in that
arbitration proceeding shall be entitled to recoup reasonable attorneys’ fees
and other costs associated with such arbitration proceeding if the arbitrator so
determines. The Company also shall have the right to file a demand for
arbitration if a dispute between the parties requires resolution.
Notwithstanding the foregoing, nothing herein shall be deemed to limit or alter
the Company’s right to seek injunctive relief before a court of competent
jurisdiction to enforce its rights under the Covenants Agreement.

 

9.           Company Property. By executing this Agreement, Employee
acknowledges that Employee has returned to Company any and all Company and
client property in Employee’s use or possession, including, but not limited to,
all Company equipment, credit cards, computers, pass codes, keys, swipe cards,
documents or other materials that Employee received, prepared, or helped to
prepare. Employee acknowledges that Employee has not retained any copies,
duplicates, reproductions, computer disks or excerpts thereof or of Company or
client documents. Employee expressly represents and warrants that he has
returned to the Company any and all audio and/or electronic recordings of any of
the Released Parties in his possession, custody or control and has not
maintained any copies of same.

 

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10.          Construction of Agreement. This Agreement, together with the
Covenants Agreement (as modified herein), is the entire agreement between the
parties as of the Effective Date. In the event that one or more of the
provisions contained in this Agreement shall for any reason be held
unenforceable in any respect under the law of any state of the United States,
such unenforceability shall not affect any other provision of this Agreement,
but this Agreement shall then be construed as if such unenforceable provision or
provisions had never been contained herein. If it is ever held that any
restriction hereunder is too broad to permit enforcement of such restriction to
its fullest extent, such restriction shall be enforced to the maximum extent
permitted by applicable law. This Agreement and any and all matters arising
directly or indirectly herefrom shall be governed under the laws of the State of
New Jersey, without reference to choice of law rules.

 

11.          Acknowledgments. Company and Employee acknowledge and agree that:

 

(a)  By entering into this Agreement, Employee does not waive any rights or
Claims that may arise after the date that Employee executes and delivers this
Agreement to Company;

 

(b) This Agreement shall not affect the rights and responsibilities of the Equal
Employment Opportunity Commission (the “EEOC”) and similar state agencies to
enforce the ADEA and other laws, and it is further acknowledged and agreed that
this Agreement shall not be used to justify interfering with Employee’s
protected right to file a charge or participate in an investigation or
proceeding conducted by the EEOC or similar state agency. Accordingly, nothing
in this Agreement shall preclude Employee from filing a charge with, or
participating in any manner in an investigation, hearing or proceeding conducted
by, the EEOC or similar state agency, but Employee hereby waives any and all
rights to recover under, or by virtue of, any such investigation, hearing or
proceeding;

 

(c)  Notwithstanding anything set forth in this Agreement to the contrary,
nothing in this Agreement shall affect or be used to interfere with Employee’s
protected right to test in an arbitration pursuant to Section 8, under the Older
Workers’ Benefit Protection Act, or like statute or regulation, the validity of
the waiver of rights under ADEA set forth in this Agreement; and

 

(d) Nothing in this Agreement shall preclude Employee from exercising Employee’s
rights, if any (i) under Section 601-608 of the Employee Retirement Income
Security Act of 1974, as amended, popularly known as COBRA, or (ii) Company’s
pension plan(s) or 401(k) plan(s), if applicable.

 

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12.          Opportunity For Review.

 

(a)          Employee is hereby advised and encouraged by Company to consult
with his/her own independent counsel before signing this Agreement. Employee
represents and warrants that Employee: (i) has had sufficient opportunity to
consider this Agreement; (ii) has read this Agreement; (iii) understands all the
terms and conditions hereof; (iv) is not incompetent or had a guardian,
conservator or trustee appointed for Employee; (v) has entered into this
Agreement of Employee’s own free will and volition; (vi) has duly executed and
delivered this Agreement; (vii) understands that Employee is responsible for
Employee’s own attorneys’ fees and costs; (viii) has had the opportunity to
review this Agreement with counsel of Employee’s choice or has chosen
voluntarily not to do so; (ix) understands the Employee has been given
twenty-one (21) days to review this Agreement before signing this Agreement and
understands that he is free to use as much or as little of the 21-day period as
he/she wishes or considers necessary before deciding to sign this Agreement; (x)
understands that if Employee does not sign and return this Agreement to Company
(Attn: Julie L. Werner, Esq., Lowenstein Sandler LLP) within 21 days of receipt
of this Agreement, Company shall have no obligation to enter into this
Agreement, Employee shall not be entitled to the payment and benefits set forth
in Section 4 of this Agreement and the Separation Date shall be unaltered; and
(xi) understands that this Agreement is valid, binding and enforceable against
the parties in accordance with its terms.

 

(b)          This Agreement shall be effective and enforceable on the eighth
(8th) day after execution and delivery to Company (Attn: Julie L. Werner, Esq.,
Lowenstein Sandler LLP) by Employee (the “Effective Date”). The parties
understand and agree that Employee may revoke this Agreement after having
executed and delivered it to Company by so advising Company (Attn: Julie L.
Werner, Esq., Lowenstein Sandler LLP) in writing no later than 11:59 p.m. on the
seventh (7th) day after Employee’s execution and delivery of this Agreement to
Company. If Employee revokes this Agreement, it shall not be effective or
enforceable, Employee shall not be entitled to the payments or benefits set
forth in Section 4 of this Agreement, and the Separation Date shall be
unaltered. Employee acknowledges and understands that Company is not obligated
to make any payment or provide any benefits under Section 4 of this Agreement
until after the Effective Date.

 

Agreed to and accepted by, on this 18 day of July, 2013.

 

Witness:   EMPLOYEE:           /s/ Kathleen DeNardi   /s/ Darryl Miller      
Name:  Darryl Miller  

 

Agreed to and accepted by, on this ____ day of ___________, 2013

 

  I.D. Systems, Inc.             By: /s/ Jeffrey M. Jagid        Name: Jeffrey
M. Jagid        Title:  Chairman and CEO  

  

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EXHIBIT A

 

RESTRICTED SHARES

 

Award Date  Number of
Restricted Shares
Awarded   Number of
Restricted Shares
To Be Vested Upon
Effective Date   Number of Restricted
Shares Forfeited as of
Separation Date  February 5, 2010   21,930    20,103    1,827  March 30, 2011 
 8,020    4,233    3,787  March 29, 2012   6,374    1,239    5,135              
    TOTALS   36,324    25,575    10,749 

 

STOCK OPTIONS

 

Grant Date  Number of Shares
Subject to Option   Number of Shares
With Respect to
Which Option may
be Exercised   Number of Shares
With Respect to
Which Option is
Forfeited as of
Separation Date  February 5, 2010   44,543    40,831    3,712  March 30, 2011 
 17,061    9,004    8,057  March 29, 2012   40,541    7,883    32,658         
         TOTALS   102,145    57,718    44,427 

 

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EXHIBIT B

 

1.           Appointment. The Company and Employee hereby appoint Lowenstein
Sandler LLP as their escrow agent for the purposes set forth herein (the “Escrow
Agent”), and the Escrow Agent hereby accepts such appointment under the terms
and conditions set forth herein. The Company and Employee hereby instruct the
Escrow Agent to act in accordance with the terms set forth in the Agreement and
this Exhibit B. All terms not expressly defined in this Exhibit B are defined in
the Agreement.

 

2.           Investment of Escrow Funds. The Escrow Agent shall deposit the
Escrowed Funds in a non-interest bearing bank account maintained at Bank of
America, which is hereby approved by the Company and Employee. Instructions to
make any other investment must be at the written direction of both Employee and
the Company and shall specify the type and identity of the investments to be
purchased and/or sold. The Escrow Agent shall have no responsibility or
liability for the investment of the Escrowed Funds or the selection of the
investment.

 

3.            Agreement of the Company and Employee Regarding Release of the
Escrowed Funds.

 

(a)          Subject to Section 3(b) below, on each of the nine (9) month
anniversary of the Separation Date, the twelve (12) month anniversary of the
Separation Date and the eighteen (18) month anniversary of the Separation Date
(each such anniversary of the Separation Date, an “Anniversary Release Date”),
the Company and Employee shall jointly instruct the Escrow Agent to distribute
one-third of the Escrowed Funds to Employee, unless the Company shall have
delivered a Breach Notice to Employee on or prior to any such Anniversary
Release Date.

 

(b)          If the Company delivers a Breach Notice to Employee, Employee shall
have a period of ten (10) days following receipt of the Breach Notice (the
“Objection Period”) to notify the Company and the Escrow Agent, in writing (the
“Objection Notice”), of his objection (if any) to such Breach Notice and the
specific grounds for such objection. If Employee does not deliver an Objection
Notice within the Objection Period, (x) Employee shall be deemed to have
accepted the Breach Notice and shall cease to have any right, title or interest
in or to the Escrowed Funds, (y) the Escrowed Funds shall be distributed, in
their entirety, to the Company and (z) the Company shall be authorized to
instruct the Escrow Agent, in writing, that the Escrowed Funds be released to
the Company as a result of Employee’s failure to timely deliver an Objection
Notice (a “Breach Notice Acceptance Instruction”) and the Escrow Agent shall be
fully authorized in relying upon such Breach Notice Acceptance Instruction.

 

(c)          If Employee timely delivers an Objection Notice, the Company and
Employee shall, for a period of thirty (30) days following the Company’s receipt
of the Objection Notice, seek to resolve the dispute between the parties and the
manner in which the Escrowed Funds shall be distributed. If the parties are able
to resolve such dispute, then the Escrowed Funds shall ultimately be distributed
in accordance with the joint written instructions to the Escrow Agent by
Employee and the Company. If the parties are unable to resolve such dispute
during such thirty (30) day period, then the dispute will be resolved in
accordance with Section 8(b) of the Agreement, and the Escrowed Funds shall be
distributed in the manner specified in accordance with the arbitration award
entered in accordance therewith.

 

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4.            Release of Escrowed Funds by the Escrow Agent. The Escrow Agent
shall distribute the Escrowed Funds as follows: (w) to the Company or Employee,
as applicable, in accordance with the joint written instructions of the Company
and Employee; (x) to the Company upon receipt of a Breach Acceptance Notice
Instruction from the Company; (y) to the Company or Employee, as applicable, in
accordance with the terms of the arbitration award entered into in accordance
with Section 8(b) of the Agreement; and (z) to the Company or Employee, as
applicable in accordance with the terms of a final non-appealable order of a
court of competent jurisdiction. Upon distribution and release of the entire
Escrowed Funds by the Escrow Agent in accordance with the terms of this Exhibit
B, the appointment of the Escrow Agent shall terminate.

 

5.            Escrow Agent Duties; Limitations on Liability; Indemnification
etc. The Company and Employee acknowledge and agree for the benefit of the
Escrow Agent as follows:

 

(a)          Ministerial Duties. The Escrow Agent: (i) is not responsible for
the performance by the Company or Employee of the Agreement or this Exhibit B or
for determining or compelling compliance therewith; (ii) is only responsible for
(A) holding the Escrowed Funds in escrow in accordance with the terms set forth
in this Exhibit B, and (B) disbursing the Escrowed Funds in accordance with
Section 4 of this Exhibit B, each of the responsibilities of the Escrow Agent in
clause (A) and (B) is ministerial in nature, and no implied duties or
obligations of any kind shall be read into the terms set forth in this Exhibit B
against or on the part of the Escrow Agent (collectively, the “Escrow Agent
Duties”); (iii) shall not be obligated to take any legal or other action
hereunder which might in its judgment involve or cause it to incur any expense
or liability unless it shall have been furnished with indemnification acceptable
to it, in its sole discretion; (iv) may rely on and shall be protected in acting
or refraining from acting upon any written notice, instruction (including,
without limitation, wire transfer instructions, whether incorporated herein or
provided in a separate written instruction), instrument, statement, certificate,
request or other document furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper person, and shall
have no responsibility for making inquiry as to, or for determining, the
genuineness, accuracy or validity thereof, or of the authority of the person
signing or presenting the same; and (v) may consult counsel satisfactory to it
(including its general counsel), and the opinion or advice of such counsel in
any instance shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or advice of such counsel. Documents and written
materials referred to in this Exhibit B include, without limitation, e-mail and
other electronic transmissions capable of being printed, whether or not they are
in fact printed; and any such e-mail or other electronic transmission may be
deemed and treated by the Escrow Agent as having been signed or presented by a
person if it bears, as sender, the person’s e-mail address.

 

(b)          Limitation on Liability. The Escrow Agent shall not be liable to
anyone for any action taken or omitted to be taken by it hereunder, except in
the case of Escrow Agent’s gross negligence or willful misconduct in breach of
the Escrow Agent Duties. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE FOR
INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGE OR LOSS (INCLUDING BUT NOT
LIMITED TO LOST PROFITS) WHATSOEVER, EVEN IF THE ESCROW AGENT HAS BEEN INFORMED
OF THE LIKELIHOOD OF SUCH LOSS OR DAMAGE AND REGARDLESS OF THE FORM OF ACTION.

 

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(c)          Indemnification. The Company and Employee hereby jointly and
severally indemnify and holds harmless the Escrow Agent from and against any and
all loss, liability, cost, damage and expense, including, without limitation,
reasonable counsel fees and expenses, which the Escrow Agent may suffer or incur
by reason of any action, claim or proceeding brought against the Escrow Agent
arising out of or relating to the performance of the Escrow Agent Duties, except
to the extent such action, claim or proceeding is exclusively the result of the
willful misconduct, bad faith or gross negligence of the Escrow Agent.

 

(d)          Conflicts. The Escrow Agent has acted as legal counsel to the
Company in connection with this Agreement and various other matters, is merely
acting as a stakeholder under this Agreement and is, therefore, hereby
authorized to continue acting as legal counsel to the Company including, without
limitation, with regard to any dispute arising out of the Agreement and this
Exhibit B, the Escrowed Funds and its release or any other matter. Employee
hereby expressly consents to permit the Escrow Agent to represent the Company in
connection with all matters relating to this Agreement, including, without
limitation, with regard to any dispute arising out of this Agreement, the
Escrowed Funds and its release or any other matter, and hereby waives any
conflict of interest or appearance of conflict or impropriety with respect to
such representation. Employee has consulted with his own counsel specifically
about this Section 4(d), and has entered into the Agreement after being
satisfied with such advice.

 

(e)          Resignation; Replacement. The Escrow Agent shall have the right at
any time to resign for any reason and be discharged of its duties as escrow
agent hereunder (including without limitation the Escrow Agent Duties) by giving
written notice of its resignation to the Company and Employee at least ten (10)
calendar days prior to the specified effective date of such resignation. All
obligations of the Escrow Agent hereunder shall cease and terminate on the
effective date of its resignation and its sole responsibility thereafter shall
be to hold the Escrow Amount, for a period of ten (10) calendar days following
the effective date of resignation, at which time,

 

(I)         if a successor escrow agent acceptable to both the Company and
Employee shall have been appointed and have accepted such appointment in a
writing to both the Company and Employee, then upon written notice thereof given
to each of the Escrow Agent, the Company and Employee, the Escrow Agent shall
deliver the Escrowed Funds to the successor escrow agent, and upon such
delivery, the Escrow Agent shall have no further liability or obligation; or

 

(II)        if a successor escrow agent shall not have been appointed, for any
reason whatsoever, the Escrow Agent shall at its option in its sole discretion,
either (A) deliver the Escrowed Funds to a court of competent jurisdiction
selected by the Escrow Agent and give written notice thereof to the Company and
the Employee, or (B) continue to hold the Escrowed Funds in escrow pending
written direction from the Company and the Employee in form and formality
satisfactory to the Escrow Agent.

 

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(f)          Interpleader. In the event that the Escrow Agent shall be uncertain
as to its duties or rights hereunder or shall receive instructions with respect
to the Escrowed Funds or any portion thereunder which, in its sole discretion,
are in conflict either with other instructions received by it or with any
provision of this Exhibit B, the Escrow Agent shall have the absolute right to
suspend all further performance of its duties under this Agreement (except for
the safekeeping of such Escrowed Funds) until such uncertainty or conflicting
instructions have been resolved to the Escrow Agent’s sole satisfaction by final
judgment of a court of competent jurisdiction or joint written instructions from
the Company and Employee. In the event that any controversy arises between the
Company and the Employee with respect to this Agreement, Exhibit B or the
Escrowed Funds, the Escrow Agent shall not be required to determine the proper
resolution of such controversy or the proper disposition of the Escrowed Funds,
and shall have the absolute right, in its sole discretion, to deposit the
Escrowed Funds with the clerk of a court selected by the Escrow Agent and file a
suit in interpleader in that court and obtain an order from that court requiring
all parties involved to litigate in that court their respective claims arising
out of or in connection with the Escrowed Funds. Upon the deposit by the Escrow
Agent of the Escrowed Funds with the clerk of such court in accordance with this
provision, the Escrow Agent shall thereupon be relieved of all further
obligations and released from all liability hereunder.

 

6.          Miscellaneous. The Company and Employee acknowledge and agree that
the Escrow Agent is an express third party beneficiary of the provisions of this
Exhibit B. The provisions of this Exhibit B may not be modified except in a
writing signed by the parties hereto and the Escrow Agent.

 

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Schedule 4.6(c)

 

The account maintained by the Employee’s broker at the Depository Trust Company
is:

 

TD Ameritrade’s DTC# is 0188.

 

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