Exhibit 10.1

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, (this “Agreement”), is made and
entered into as of June 9, 2005, by and between Alan Goldstein (the “Executive”)
and American Bank Note Holographics, Inc., a Delaware corporation (the
“Company”).

 

R E C I T A L

 

WHEREAS, the Executive and the Company have entered into that certain Employment
Agreement dated as of May 11, 1999 (the “Original Employment Agreement”); and

 

WHEREAS, each of the Executive and the Company wishes to amend and restate the
provisions of the Original Employment Agreement as hereinafter set forth.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual promises set forth in this
Agreement and intending to be legally bound, Executive and the Company agree as
follows:

 

SECTION 1.                                EMPLOYMENT.  THE COMPANY HEREBY
EMPLOYS EXECUTIVE AND EXECUTIVE HEREBY ACCEPTS SUCH EMPLOYMENT AND AGREES TO
RENDER SERVICES TO THE COMPANY, UPON THE TERMS AND CONDITIONS SET FORTH IN THIS
AGREEMENT.

 

SECTION 2.                                POSITION AND DUTIES.  EXECUTIVE SHALL
ASSUME THE RESPONSIBILITIES AND PERFORM THE DUTIES OF VICE PRESIDENT, FINANCE OF
THE COMPANY. THE EXECUTIVE SHALL ALSO SERVE IN SUCH SIMILAR CAPACITIES AS MAY BE
ASSIGNED TO HIM IN GOOD FAITH FROM TIME TO TIME BY THE PRESIDENT OR CHIEF
FINANCIAL OFFICER OF THE COMPANY. EXECUTIVE AGREES TO DEVOTE SUBSTANTIALLY ALL
OF HIS BUSINESS TIME, ATTENTION, SKILL AND BEST EFFORTS TO THE DILIGENT
PERFORMANCE OF HIS DUTIES HEREUNDER AT THE COMPANY’S HEADQUARTERS LOCATED AT 2
APPLEGATE DRIVE, ROBBINSVILLE, NEW JERSEY 08691 OR HIS HOME OFFICE AND SHALL BE
LOYAL TO THE COMPANY AND ITS AFFILIATES AND SUBSIDIARIES, AND USE HIS BEST
EFFORTS TO FURTHER THEIR INTERESTS.  EXECUTIVE SHALL WORK IN THE COMPANY’S
ROBBINSVILLE OFFICE A MINIMUM OF THREE DAYS PER WEEK, EXCEPT DUE TO APPROVED
VACATION OR ILLNESS.  THE EXECUTIVE SHALL PERFORM SUCH TASKS AND
RESPONSIBILITIES ASSIGNED TO HIM BY THE CHIEF EXECUTIVE OFFICER AND THE CHIEF
FINANCIAL OFFICER OF THE COMPANY, INCLUDING WITHOUT LIMITATION, ASSISTING WITH
AND/OR OVERSEEING THE FINANCIAL MANAGEMENT AND FINANCIAL REPORTING OF THE
COMPANY. IN THE PERFORMANCE OF HIS DUTIES, EXECUTIVE AGREES TO ABIDE BY AND
COMPLY WITH ALL POLICIES, PRACTICES, HANDBOOKS, PROCEDURES AND GUIDELINES WHICH
ARE NOW IN EFFECT OR WHICH THE COMPANY MAY ADOPT, MODIFY, SUPPLEMENT OR CHANGE
FROM TIME TO TIME.

 

SECTION 3.                                TERM OF EMPLOYMENT.  THE TERM OF
EMPLOYMENT HEREUNDER SHALL COMMENCE ON THE DATE HEREOF AND SHALL CONTINUE
THEREAFTER UNTIL THE EARLIER OF (I) MARCH 31, 2006 OR (II) TERMINATION PURSUANT
TO SECTION 10 HEREOF (THE “EMPLOYMENT TERM”). THE DATE OF THE LAST DAY OF THE
EMPLOYMENT TERM SHALL BE HEREINAFTER REFERRED TO AS THE “TERMINATION DATE”. 
EXECUTIVE’S EMPLOYMENT BY THE COMPANY SHALL TERMINATE ON THE TERMINATION DATE.

 

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SECTION 4.                                EXCLUSIVITY.  During the term of
Executive’s employment with the Company, Executive shall not without the prior
written consent of the Board of Directors (i) perform any managerial, sales,
marketing or technical services directly or indirectly for any person or entity
competing directly or indirectly with the Company or any of its subsidiaries in
the holography business; (ii) perform any such services for any entity owned,
directly or indirectly, by anyone competing, either directly or indirectly, with
the Company or any of its subsidiaries in the holography business; (iii) on his
own behalf or that of any other person or entity, compete, either directly or
indirectly, with the Company or any of its subsidiaries, to sell any products or
services marketed or offered by the Company or any of its subsidiaries;
(iv) engage or become interested, directly or indirectly, as owner, employer,
partner, consultant, through stock ownership (except ownership of less than one
percent of the number of shares outstanding of any securities which are listed
for trading on any securities exchange, provided that the specific nature and
amount of the investment, if over $50,000 shall be immediately disclosed to the
Company in writing), investment of capital, lending of money or property, or
otherwise either alone or in association with others, in the operation of any
type of business or enterprise which conflicts or interferes with the
performance of Executive’s services hereunder or (v) engage in any activities
which could reasonably be deemed to be a conflict of interest with his duties
hereunder or his obligations to the Company.

 

SECTION 5.                                COMPENSATION AND BENEFITS.

 

(A)                                  SALARY AND BONUS.  AS COMPENSATION FOR THE
PERFORMANCE OF THE EXECUTIVE’S SERVICES HEREUNDER, DURING THE EMPLOYMENT TERM
AND THE SEVERANCE PERIOD (AS DEFINED BELOW), THE COMPANY WILL PAY TO THE
EXECUTIVE AN ANNUAL BASE SALARY OF $240,000.  IN THE EVENT THAT THE EMPLOYMENT
TERM IS EXTENDED BY THE COMPANY, IN ITS SOLE DISCRETION, EXECUTIVE’S SALARY WILL
BE RAISED BY A MINIMUM OF 3% ANNUALLY, AS DETERMINED BY THE BOARD OF DIRECTORS. 
FOR PURPOSES HEREOF, “SEVERANCE PERIOD” SHALL MEAN THE NINE-MONTH PERIOD
COMMENCING THE DAY FOLLOWING THE TERMINATION DATE OR IN THE EVENT OF AN EXTENDED
EMPLOYMENT TERM THE DAY FOLLOWING THE TERMINATION OF SUCH EXTENDED EMPLOYMENT
TERM, AS THE CASE MAY BE.  DURING THE SEVERANCE PERIOD, UPON EXECUTIVE’S
EXECUTION AND DELIVERY TO THE COMPANY ON THE TERMINATION DATE OR IN THE EVENT OF
AN EXTENDED EMPLOYMENT TERM THE DATE OF EXECUTIVE’S LAST DAY OF EMPLOYMENT WITH
THE COMPANY OF A GENERAL RELEASE SUBSTANTIALLY EQUIVALENT TO THE RELEASE SET
FORTH IN SECTION 11 HEREOF, EXECUTIVE SHALL RECEIVE BENEFITS AS DESCRIBED BELOW,
AND SHALL BE PAID IN ACCORDANCE WITH THE CUSTOMARY PAYROLL PRACTICES OF THE
COMPANY FOR ITS SENIOR MANAGEMENT PERSONNEL (COLLECTIVELY, THE “SEVERANCE
BENEFITS”).  NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL THERE BE A
SEVERANCE PERIOD NOR SHALL EXECUTIVE BE ENTITLED TO ANY SALARY, SEVERANCE
BENEFITS OR OTHER BENEFITS TO THE EXTENT EXECUTIVE WAS TERMINATED FOR CAUSE (AS
DEFINED IN SECTION 10(A)) OR RESIGNED OTHER THAN FOR GOOD REASON (AS DEFINED IN
SECTION 10(E)(II)) DURING THE EMPLOYMENT TERM OR ANY EXTENDED EMPLOYMENT TERM.

 

(B)                                 BENEFITS.  DURING THE EMPLOYMENT TERM AND
SEVERANCE PERIOD, THE EXECUTIVE SHALL BE ELIGIBLE TO PARTICIPATE, ON THE SAME
BASIS AND SUBJECT TO THE SAME QUALIFICATIONS AS OTHER SENIOR MANAGEMENT
PERSONNEL OF THE COMPANY, IN ANY PENSION, PROFIT SHARING, SAVINGS, BONUS, LIFE
INSURANCE, HOSPITALIZATION, DENTAL, DRUG PRESCRIPTION, DISABILITY, ACCIDENTAL
DEATH AND DISMEMBERMENT AND OTHER BENEFIT PLANS AND POLICIES AS MAY FROM TIME TO
TIME BE IN EFFECT WITH RESPECT TO SENIOR MANAGEMENT PERSONNEL OF THE COMPANY
(COLLECTIVELY, THE “BENEFITS”). THE EXECUTIVE SHALL ALSO BE ENTITLED TO VACATION
DAYS, HOLIDAYS AND SICK DAYS IN ACCORDANCE WITH THE

 

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POLICIES OF THE COMPANY AS MAY BE IN EFFECT FROM TIME TO TIME; PROVIDED,
HOWEVER, THAT UPON TERMINATION OF EXECUTIVE’S EMPLOYMENT FOR ANY REASON
(INCLUDING RESIGNATION BY THE EXECUTIVE), THE COMPANY SHALL PAY EXECUTIVE FOR
ACCRUED VACATION TIME FROM THE INCEPTION OF HIS EMPLOYMENT THROUGH THE LAST DATE
OF EMPLOYMENT AS SET FORTH ON EXHIBIT A, ON A PRO RATED BASIS CALCULATED ON THE
BASIS OF THE EXECUTIVE’S SALARY IN EFFECT ON THE TERMINATION DATE. THE EXECUTIVE
SHALL ALSO BE ENTITLED TO HAVE HIS EXISTING LEASED CAR (THE “LEASED CAR”)
EXTENDED THROUGH THE TERMINATION DATE IN ACCORDANCE WITH THE TERMS SET FORTH ON
EXHIBIT B. IN THE EVENT THAT THE EXECUTIVE CONTINUES TO BE EMPLOYED BY THE
COMPANY THROUGH MARCH 31, 2006 AND EXECUTIVE CHOOSES TO APPLY FOR UNEMPLOYMENT
BENEFITS, THE COMPANY WILL NOT CONTEST THE EXECUTIVE’S APPLICATION. FURTHER, IN
THE EVENT THAT THE EXECUTIVE IS TERMINATED WITHOUT CAUSE OR RESIGNS FOR GOOD
REASON PRIOR TO MARCH 31, 2006, THE COMPANY WILL NOT CONTEST THE EXECUTIVE’S
APPLICATION FOR SUCH BENEFITS.

 

(C)                                  STOCK OPTIONS.  THE EXECUTIVE SHALL BE
ELIGIBLE TO RECEIVE GRANTS OF OPTIONS TO PURCHASE EQUITY IN THE COMPANY DURING
THE EMPLOYMENT TERM AS DETERMINED, FROM TIME TO TIME, IN THE SOLE DISCRETION OF
THE BOARD OR THE COMPENSATION COMMITTEE.  ALL OF EXECUTIVE’S OPTIONS SHALL VEST
IMMEDIATELY UPON THE EXPIRATION OF THE EMPLOYMENT TERM AND REMAIN EXERCISABLE
FOR A PERIOD OF TWO YEARS.

 

(D)                                 EXPENSES.  THE COMPANY WILL PAY OR PROMPTLY
REIMBURSE THE EXECUTIVE FOR ALL REASONABLE OUT-OF-POCKET BUSINESS, ENTERTAINMENT
AND TRAVEL EXPENSES INCURRED BY THE EXECUTIVE IN THE PERFORMANCE OF HIS DUTIES
HEREUNDER UPON PRESENTATION OF APPROPRIATE SUPPORTING DOCUMENTATION AND
OTHERWISE IN ACCORDANCE WITH THE EXPENSE REIMBURSEMENT POLICIES OF THE COMPANY
IN EFFECT FROM TIME TO TIME.  SUCH EXPENSES SHALL INCLUDE THE COST OF (I) GAS
AND TOLLS INCURRED BY THE EXECUTIVE IN CONNECTION WITH THE EXECUTIVE’S TRAVEL TO
AND FROM HIS RESIDENCE AND THE COMPANY’S HEADQUARTERS LOCATED AT 2 APPLEGATE
DRIVE, ROBBINSVILLE, NEW JERSEY 08691 AND (II) ACCOMMODATIONS IN THE
ROBBINSVILLE, NEW JERSEY VICINITY. THE COMPANY SHALL ALSO PROMPTLY REIMBURSE THE
EXECUTIVE FOR OUT-OF-POCKET EXPENSES INCURRED FOR MOVING AND STORAGE COSTS
ASSOCIATED WITH HIS PREVIOUSLY PLANNED RELOCATION AND HOME SALE PREPARATION.
SUCH COSTS SHALL BE LIMITED TO $1,400.

 

(E)                                  TAXES AND WITHHOLDINGS. ALL APPROPRIATE
DEDUCTIONS, INCLUDING FEDERAL, STATE AND LOCAL TAXES AND SOCIAL SECURITY, SHALL
BE DEDUCTED FROM ANY AMOUNT PAID BY THE COMPANY TO THE EXECUTIVE HEREUNDER IN
CONFORMITY WITH APPLICABLE LAWS.

 

SECTION 6.                                CONFIDENTIALITY.  THE EXECUTIVE
ACKNOWLEDGES AND AGREES THAT (A) IN CONNECTION WITH HIS EMPLOYMENT BY THE
COMPANY, THE EXECUTIVE WILL BE INVOLVED IN THE COMPANY’S AND ITS SUBSIDIARIES’
(IF ANY) OPERATIONS; (B) IN ORDER TO PERMIT HIM TO CARRY OUT HIS
RESPONSIBILITIES, THE COMPANY MAY DISCLOSE, TO THE EXECUTIVE, IN STRICT
CONFIDENCE, OR THE EXECUTIVE MAY DEVELOP, CONFIDENTIAL PROPRIETARY INFORMATION
AND TRADE SECRETS OF THE COMPANY AND ITS AFFILIATES, INCLUDING WITHOUT
LIMITATION (I) UNPUBLISHED INFORMATION WITH RESPECT TO THE COMPANY CONCERNING
MARKETING OR SALES PLANS, OPERATIONAL TECHNIQUES, STRATEGIC PLANS AND THE
IDENTITY OF SUPPLIERS AND SUPPLY CONTACTS; (II) UNPUBLISHED FINANCIAL
INFORMATION WITH RESPECT TO THE COMPANY, INCLUDING INFORMATION CONCERNING
REVENUES, PROFITS AND PROFIT MARGINS; (III) INTERNAL CONFIDENTIAL MANUALS AND
MEMOS; AND (IV) ”MATERIAL INSIDE INFORMATION” AS SUCH PHRASE IS USED FOR
PURPOSES OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (COLLECTIVELY,
“CONFIDENTIAL INFORMATION”); AND (C) THE COMPANY AND ITS AFFILIATES DERIVE
SIGNIFICANT ECONOMIC

 

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value and competitive advantage by reason of the fact that such Confidential
Information, in whole or in part, is not generally known or readily
ascertainable by the Company’s or its affiliates’ actual or potential
competitors and, as such, constitutes the Company’s and its affiliates’ valuable
trade secrets.

 

In addition to any obligations set forth herein, and in recognition of the
foregoing acknowledgments, for himself and on behalf of his affiliates, the
Executive agrees that he will not, directly or indirectly, use, disseminate or
disclose, any Confidential Information (other than for the legitimate business
purposes of the Company), and that he will not knowingly permit any of his
affiliates to, directly or indirectly, use, disseminate or disclose, any
Confidential Information. At the end of the Employment Term, the Executive
agrees to deliver immediately to the Company the originals and all copies of
Confidential Information in his possession or control, whether in written form,
on computers or discs or otherwise.

 

The restrictions set forth in this Section 6 shall not apply to those particular
portions of Confidential Information, if any, that (a) have been published by
any of the Company or any of its affiliates in a patent, article or other
similar tangible publication or (b) become available to the Executive from a
source other than the Company, provided that the source of such Confidential
Information was not known by the Executive, after reasonable inquiry, to be
bound by a confidentiality agreement with or other obligation of confidentiality
to the Company or any of its affiliates.

 

The foregoing restrictions on the disclosure of Confidential Information set
forth in this Section 6 shall not apply to those particular portions of
Confidential Information, if any, that are required to be disclosed in
connection with any legal process; provided that, at least ten (10) days in
advance of any required disclosure, or such lesser time as may be required by
circumstances, the Executive shall furnish the Company with a copy of the
judicial or administrative order requiring that such information be disclosed
together with a written description of the information proposed to be disclosed
(which description shall be in sufficient detail to enable the Executive and its
affiliates to determine the nature and scope of the information proposed to be
disclosed), and the Executive covenants and agrees to cooperate with the Company
and its affiliates to deliver the minimum amount of information necessary to
comply with such order.

 

This Section 6 shall survive any termination of this Agreement.

 

SECTION 7.                                COVENANT NOT TO COMPETE.

 

(A)                                  SCOPE.  IN ORDER TO FULLY PROTECT THE
COMPANY’S CONFIDENTIAL INFORMATION, DURING THE EMPLOYMENT TERM AND FOR A PERIOD
OF ONE YEAR THEREAFTER (THE “NON-COMPETITION PERIOD”), THE EXECUTIVE SHALL NOT,
EXCEPT AS AUTHORIZED IN WRITING BY THE BOARD, DIRECTLY OR INDIRECTLY, RENDER
SERVICES TO, ASSIST, PARTICIPATE IN THE AFFAIRS OF, OR OTHERWISE PROVIDE
ASSISTANCE TO ANY PERSON OR ENTERPRISE (OTHER THAN THE COMPANY AND ITS
SUBSIDIARIES, IF ANY), WHICH PERSON OR ENTERPRISE IS ENGAGED IN, OR IS PLANNING
TO ENGAGE IN, AND SHALL NOT PERSONALLY ENGAGE IN ANY BUSINESS IN ANY
JURISDICTION WHERE THE COMPANY HAS TRANSACTED BUSINESS AT ANY TIME PRIOR TO THE
TERMINATION DATE THAT IS COMPETITIVE WITH THE BUSINESS OF THE COMPANY OR ANY OF
ITS SUBSIDIARIES, IF ANY, WITH RESPECT TO ANY PRODUCTS OR

 

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services of the Company or any of its subsidiaries, if any, in any capacity
which would utilize the Executive’s services with respect to any products or
services of the Company or any of its subsidiaries, if any, that were within the
Executive’s management responsibility at any time within the twelve (12) month
period immediately prior to the Termination Date.

 

(B)                                 REMEDIES.  THE PARTIES RECOGNIZE,
ACKNOWLEDGE AND AGREE THAT (I) ANY BREACH OR THREATENED BREACH OF THE PROVISIONS
OF THIS SECTION 7 SHALL CAUSE IRREPARABLE HARM AND INJURY TO THE COMPANY AND
THAT MONEY DAMAGES WILL NOT PROVIDE AN ADEQUATE REMEDY FOR SUCH BREACH OR
THREATENED BREACH AND (II) THE DURATION, SCOPE AND GEOGRAPHICAL APPLICATION OF
THIS AGREEMENT ARE FAIR AND REASONABLE UNDER THE CIRCUMSTANCES, AND ARE
REASONABLY REQUIRED TO PROTECT THE LEGITIMATE BUSINESS INTERESTS OF THE COMPANY.
ACCORDINGLY, EXECUTIVE AGREES THAT THE COMPANY SHALL BE ENTITLED TO HAVE THE
PROVISIONS OF THIS AGREEMENT SPECIFICALLY ENFORCED BY ANY COURT HAVING
JURISDICTION, AND THAT SUCH A COURT MAY ISSUE A TEMPORARY RESTRAINING ORDER,
PRELIMINARY INJUNCTION OR OTHER APPROPRIATE EQUITABLE RELIEF, WITHOUT HAVING TO
PROVE THE INADEQUACY OF AVAILABLE REMEDIES AT LAW. IN ADDITION, THE COMPANY
SHALL BE ENTITLED TO AVAIL ITSELF OF ALL SUCH OTHER ACTIONS AND REMEDIES
AVAILABLE TO IT OR ANY OF ITS AFFILIATES UNDER LAW OR IN EQUITY AND SHALL BE
ENTITLED TO SUCH DAMAGES AS IT SUSTAINS BY REASON OF SUCH BREACH OR THREATENED
BREACH. IT IS THE EXPRESS DESIRE AND INTENT OF THE PARTIES THAT THE PROVISIONS
OF THIS AGREEMENT BE ENFORCED TO THE FULL EXTENT POSSIBLE.

 

(C)                                  SEVERABILITY.  IF ANY PROVISION OF
SECTION 7(A) IS HELD TO BE UNENFORCEABLE BECAUSE OF THE DURATION OF SUCH
PROVISION, THE AREA COVERED THEREBY OR THE SCOPE OF THE ACTIVITY RESTRAINED, THE
PARTIES HEREBY EXPRESSLY AGREE THAT THE COURT MAKING SUCH DETERMINATION SHALL
HAVE THE POWER TO REDUCE THE DURATION AND/OR AREAS OF SUCH PROVISION AND/OR THE
SCOPE OF THE ACTIVITY TO BE RESTRAINED CONTAINED IN SUCH PROVISION AND, IN ITS
REDUCED FORM, SUCH PROVISION SHALL THEN BE ENFORCEABLE. THE PARTIES HERETO
INTEND AND AGREE THAT THE COVENANTS CONTAINED IN SECTION 7(A) SHALL BE CONSTRUED
AS A SERIES OF SEPARATE COVENANTS, ONE FOR EACH MUNICIPALITY, COMMUNITY OR
COUNTY INCLUDED WITHIN THE AREA DESIGNATED BY SECTION 7(A). EXCEPT FOR
GEOGRAPHIC COVERAGE, THE TERMS AND CONDITIONS OF EACH SEPARATE COVENANT SHALL BE
DEEMED IDENTICAL TO THE COVENANT CONTAINED IN SECTION 7(A). FURTHERMORE, IF ANY
COURT SHALL REFUSE TO ENFORCE ANY OF THE SEPARATE COVENANTS DEEMED INCLUDED IN
SECTION 7(A), THEN SUCH UNENFORCEABLE COVENANT SHALL BE DEEMED ELIMINATED FROM
THE PROVISIONS HEREOF TO THE EXTENT NECESSARY TO PERMIT THE REMAINING SEPARATE
COVENANTS TO BE ENFORCED IN ACCORDANCE WITH THEIR TERMS.

 

SECTION 8.                                RESPONSIBILITY UPON TERMINATION. UPON
THE TERMINATION OF HIS EMPLOYMENT FOR ANY REASON AND IRRESPECTIVE OF WHETHER OR
NOT SUCH TERMINATION IS VOLUNTARY ON HIS PART:

 

(A)                                  THE EXECUTIVE SHALL ADVISE THE COMPANY OF
THE IDENTITY OF HIS NEW EMPLOYER WITHIN THEN (10) DAYS AFTER ACCEPTING NEW
EMPLOYMENT AND FURTHER AGREES TO KEEP THE COMPANY SO ADVISED OF ANY CHANGE IN
EMPLOYMENT DURING THE NON-COMPETITION PERIOD;

 

(B)                                 THE COMPANY IN ITS SOLE DISCRETION MAY
NOTIFY ANY NEW EMPLOYER, WHO THE COMPANY HAS GOOD FAITH BASIS TO BELIEVE IS A
COMPETITOR PURSUANT TO SECTION 7 OF THIS AGREEMENT, OF THE EXECUTIVE THAT HE HAS
AN OBLIGATION NOT TO COMPETE WITH THE COMPANY DURING THE NON-COMPETITION PERIOD;
AND

 

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(C)                                  THE EXECUTIVE SHALL DELIVER TO THE COMPANY
ANY AND ALL RECORDS, FORMS, CONTRACTS, MEMORANDA, WORK PAPERS, CUSTOMER DATA AND
ANY OTHER DOCUMENTS (WHETHER IN WRITTEN FORM, ON COMPUTERS OR DISCS OR
OTHERWISE) WHICH HAVE COME INTO HIS POSSESSION BY REASON OF HIS EMPLOYMENT WITH
THE COMPANY, IRRESPECTIVE OF WHETHER OR NOT ANY OF SAID DOCUMENTS WERE PREPARED
FOR HIM, AND HE SHALL NOT RETAIN MEMORANDA IN RESPECT OF OR COPIES OF ANY OF
SAID DOCUMENTS.

 

SECTION 9.                                NONSOLICITATION.  THE EXECUTIVE AGREES
THAT DURING THE TERM OF HIS EMPLOYMENT WITH THE COMPANY AND FOR A PERIOD OF
TWELVE (12) MONTHS THEREAFTER, HE WILL NOT, AND WILL NOT ASSIST ANY OF HIS
AFFILIATES TO, DIRECTLY OR INDIRECTLY, RECRUIT OR OTHERWISE SOLICIT OR INDUCE
ANY EXECUTIVE, CUSTOMER, SUBSCRIBER OR SUPPLIER OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES ABOUT WHOM OR WHICH HE GAINED CONFIDENTIAL INFORMATION WHILE AT THE
COMPANY TO TERMINATE ITS EMPLOYMENT OR ARRANGEMENT WITH THE COMPANY OR ANY OF
ITS SUBSIDIARIES, OTHERWISE CHANGE ITS RELATIONSHIP WITH THE COMPANY OR ANY OF
ITS SUBSIDIARIES, OR ESTABLISH ANY RELATIONSHIP WITH THE EXECUTIVE OR ANY OF HIS
AFFILIATES FOR ANY BUSINESS PURPOSE DEEMED MATERIALLY COMPETITIVE WITH THE
BUSINESS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, IF ANY.

 

SECTION 10.                          TERMINATION.

 

(A)                                  TERMINATION FOR CAUSE. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE BOARD MAY TERMINATE THE
EXECUTIVE’S EMPLOYMENT WITH THE COMPANY FOR CAUSE; PROVIDED THAT THE EXECUTIVE
SHALL BE GIVEN NOTICE OF THE COMPANY’S INTENT TO TERMINATE HIS EMPLOYMENT FOR
CAUSE, THE NATURE OF THE CAUSE, AND, IF CURABLE, A REASONABLE OPPORTUNITY TO
REMEDY THE CAUSE. FOR THE PURPOSES OF THIS SECTION 10(A), THE TERM “REASONABLE”
SHALL MEAN THAT AMOUNT OF TIME DEEMED REASONABLE BY THE BOARD ACTING IN GOOD
FAITH AND IN LIGHT OF THE NATURE OF THE CAUSE. FOR PURPOSES OF THIS AGREEMENT,
THE TERM “CAUSE” SHALL MEAN, THE OCCURRENCE OF ANY ONE OR MORE OF THE FOLLOWING
(I) THE COMMISSION OF ANY ACT OF WILLFUL AND MATERIAL EMBEZZLEMENT OR FRAUD ON
THE PART OF EXECUTIVE AGAINST THE COMPANY, (II) ANY ACT OR OMISSION WHICH
CONSTITUTES A WILLFUL AND MATERIAL BREACH BY EXECUTIVE OF THIS AGREEMENT,
INCLUDING A REFUSAL OR FAILURE BY EXECUTIVE TO PERFORM HIS REGULAR DUTIES AND
OBLIGATIONS HEREUNDER, (III) EXECUTIVE HAS BEEN CONVICTED OF A CRIME, WHICH
CONVICTION HAS, OR IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON THE
COMPANY, OR ITS BUSINESS OR WILL PREVENT THE EXECUTIVE FROM PERFORMING HIS
DUTIES FOR A SUSTAINED PERIOD OF TIME, (IV) EXECUTIVE BECOMES DISABLED (AS
HEREINAFTER DEFINED), OR (V) THE DEATH OF EXECUTIVE; PROVIDED, HOWEVER, THAT
“CAUSE” SHALL NOT INCLUDE ANY ACT OR OMISSION BY THE EXECUTIVE UNDERTAKEN IN THE
GOOD FAITH EXERCISE OF THE EXECUTIVE’S BUSINESS JUDGMENT AS VICE PRESIDENT,
FINANCE OR IN GOOD FAITH RELIANCE ON THE ADVICE OF COUNSEL. FOR PURPOSES OF THIS
AGREEMENT, “DISABLED” SHALL MEAN EXECUTIVE’S INABILITY, DUE TO ILLNESS, ACCIDENT
OR ANY OTHER PHYSICAL OR MENTAL CONDITION, TO FULLY PERFORM THE ESSENTIAL
FUNCTIONS OF HIS POSITION OR THIS AGREEMENT FOR MORE THAN 26 WEEKS CONSECUTIVELY
OR FOR INTERMITTENT PERIODS AGGREGATING 39 WEEKS DURING ANY 78-WEEK PERIOD
DURING THE EMPLOYMENT TERM, EXCEPT AS OTHERWISE REQUIRED BY LAW.

 

If, during the Employment Term the Company terminates the Executive’s employment
pursuant to clauses (i), (ii) or (iii) of this paragraph (a), then, from and
after the date the Executive’s termination is effective (the “Termination
Date”), the Executive shall (a) have no right to receive any further Salary
following the Termination Date, (b) be entitled to receive any Bonus, payable on
a pro rata basis, which may have accrued or which otherwise would have

 

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been granted by the Board had the Executive not been terminated for the year in
which the Executive was terminated (c) cease to be covered under or be permitted
to participate in any Benefits (except payments due to the Executive or the
Executive’s beneficiaries or representatives under any applicable life or
disability insurance plans or policies) and (d) shall have no further right to
purchase shares of the Company’s common stock $.01 par value per share (the
“Common Stock”) pursuant to any stock option plan or other equity incentive plan
of the Company (collectively, the “Plans”); provided, however, that all
restrictions as disclosed in the Plans on the shares of Common Stock underlying
any options granted under the Plans (the “Restricted Stock”) purchased by the
Executive shall, subject to applicable securities laws, rules and regulations,
lapse on the Termination Date.

 

If during the Employment Term the Company terminates the Executive employment
pursuant to clause (iv) or (v) of this paragraph (a), (a) the Company shall
continue to pay the Executive (or his beneficiaries, as applicable) Salary and
with respect to clause (iv) Benefits, then in effect, for a period of one year
following the termination date in accordance with the customary payroll
practices of the Company for its senior management personnel, (b) the Executive
shall be entitled to receive any Bonus, payable on a pro rata basis, which may
have accrued or which otherwise would have been granted by the Board had the
Executive not been terminated for the year in which the Executive was
terminated, and (c) the Executive shall be entitled to all rights with respect
to any options granted or Common Stock purchased under the 1998 Plan and the
2000 Plan for a period of two years following the Termination Date including the
immediate vesting of any unvested options on the Termination Date and all
restrictions on Restricted Stock purchased by the Executive shall, subject to
applicable securities laws, rules and regulations, lapse on the Termination
Date.

 

(B)                                 TERMINATION WITHOUT CAUSE AND RESIGNATION
FOR GOOD REASON.  THE COMPANY SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT
AND THE EMPLOYMENT OF EXECUTIVE WITH THE COMPANY FOR ANY REASON OR NO REASON AND
WITHOUT CAUSE UPON WRITTEN NOTICE TO EXECUTIVE OF SUCH TERMINATION, AND THE
EXECUTIVE SHALL HAVE THE RIGHT TO RESIGN FOR GOOD REASON (AS HEREINAFTER
DEFINED); PROVIDED THAT, EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH (C) BELOW,
THE SEVERANCE PERIOD SHALL COMMENCE ON THE DAY IMMEDIATELY FOLLOWING THE DATE OF
SUCH TERMINATION OR RESIGNATION, AS THE CASE MAY BE, AND THE EXECUTIVE SHALL BE
ENTITLED TO RECEIVE THE SEVERANCE BENEFITS.  ALL OF THE EXECUTIVE’S NON-VESTED
OPTIONS TO PURCHASE SHARES OF COMMON STOCK GRANTED UNDER THE 1998 PLAN AND THE
2000 PLAN SHALL VEST ON THE TERMINATION DATE.  THE EXECUTIVE SHALL BE ENTITLED
TO EXERCISE ANY OR ALL VESTED OPTIONS THAT WERE GRANTED UNDER THE PLANS FOR A
PERIOD OF TWO YEARS FOLLOWING THE TERMINATION DATE.

 

(C)                                  TERMINATION UPON CHANGE OF CONTROL OR
RESIGNATION FOR GOOD REASON FOLLOWING A CHANGE OF CONTROL.  IN THE EVENT
EXECUTIVE’S EMPLOYMENT IS TERMINATED BY THE COMPANY SUBSEQUENT TO A CHANGE OF
CONTROL (AS HEREINAFTER DEFINED) OR THE EXECUTIVE RESIGNS FROM THE COMPANY FOR
GOOD REASON (AS HEREINAFTER DEFINED) THE SEVERANCE PERIOD SHALL COMMENCE ON THE
DAY IMMEDIATELY FOLLOWING THE DATE OF SUCH TERMINATION OR RESIGNATION, AS THE
CASE MAY BE, AND THE EXECUTIVE SHALL BE ENTITLED TO RECEIVE THE SEVERANCE
BENEFITS. IF THE EXECUTIVE RECEIVES THE SEVERANCE BENEFITS PURSUANT TO THIS
PARAGRAPH (C), IN NO EVENT SHALL THE EXECUTIVE RECEIVE ANY SEVERANCE BENEFITS
PURSUANT PARAGRAPH (B) OF THIS SECTION 10. TO THE EXTENT THAT SUCH AMOUNTS ARE
IN EXCESS OF THE AMOUNT ALLOWABLE AS A DEDUCTION UNDER SECTION 280(G) OF THE
CODE, OR ARE SUBJECT TO EXCISE TAX PURSUANT TO SECTION 4999 OF THE CODE THE

 

7

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COMPANY WILL GROSS-UP ANY ADDITIONAL AMOUNTS DUE AND (III) ALL NON-VESTED
OPTIONS TO PURCHASE SHARES OF COMMON STOCK GRANTED UNDER THE 1998 PLAN AND THE
2000 PLAN SHALL VEST ON THE TERMINATION DATE AND THE EXECUTIVE SHALL BE ENTITLED
TO EXERCISE ANY OR ALL OF THE VESTED OPTIONS THAT WERE GRANTED UNDER THE 1998
PLAN OR 2000 PLAN FOR A PERIOD OF TWO YEARS FOLLOWING THE TERMINATION DATE AND
ALL RESTRICTIONS ON RESTRICTED STOCK PURCHASED BY THE EXECUTIVE SHALL, SUBJECT
TO APPLICABLE SECURITIES LAWS, RULES AND REGULATIONS, LAPSE ON THE TERMINATION
DATE.

 

(D)                                 RESIGNATION.  EXECUTIVE SHALL HAVE THE RIGHT
TO TERMINATE THIS AGREEMENT AND HIS EMPLOYMENT WITH THE COMPANY UPON FOURTEEN
(14) CALENDAR DAYS PRIOR WRITTEN NOTICE TO THE COMPANY. EXCEPT IF THE
EXECUTIVE’S RESIGNATION IS FOR GOOD REASON IN ACCORDANCE WITH PARAGRAPHS (B) AND
(C) ABOVE, FROM AND AFTER THE EFFECTIVE DATE OF SUCH RESIGNATION, EXECUTIVE
SHALL (I) HAVE NO RIGHT TO RECEIVE ANY FURTHER SALARY, BONUS OR SEVERANCE
BENEFITS HEREUNDER; (II) CEASE TO BE COVERED UNDER OR BY PERMITTED TO
PARTICIPATE IN ANY BENEFITS (EXCEPT PAYMENTS DUE THE EXECUTIVE OR THE
EXECUTIVE’S BENEFICIARIES OR REPRESENTATIVES UNDER ANY APPLICABLE PENSION,
PROFIT SHARING, LIFE OR DISABILITY INSURANCE PLANS OR POLICIES); AND
(III) FORFEIT ANY AND ALL NON-VESTED OPTIONS GRANTED OR NON-VESTED COMMON STOCK
PURCHASED UNDER THE PLANS.  NOTWITHSTANDING THE FOREGOING, IF EXECUTIVE
TERMINATES HIS EMPLOYMENT WITH THE COMPANY PURSUANT TO THIS SECTION 10(D) PRIOR
TO SEPTEMBER 27, 2005, EXECUTIVE SHALL PURCHASE THE LEASED CAR IN ACCORDANCE
WITH THE TERMS SET FORTH ON EXHIBIT B.

 

(E)                                  DEFINITIONS.  FOR PURPOSES OF THIS
SECTION 10 THE TERMS LISTED BELOW SHALL MEAN THE FOLLOWING:

 

(I)                                     “CHANGE IN CONTROL” SHALL MEAN:

 

(a)                                  the direct or indirect acquisition, whether
by sale, merger, consolidation, or purchase of assets or stock, by any person,
corporation, or other entity or group thereof of the beneficial ownership (as
that term is used in Section 13(d)(1) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder) of shares in the
Company which, when added to any other shares the beneficial ownership of which
is held by the acquirer, shall result in the acquirer’s having more that 33% of
the votes that are entitled to be cast at meetings of stockholders as to matters
on which all outstanding shares are entitled to be voted as a single class;
provided, however, that such acquisition shall not constitute a Change of
Control for purposes of this Agreement if prior to such acquisition a resolution
declaring that the acquisition shall not constitute a Change of Control is
adopted by the Board with the support of a majority of the Board members who
either were members of the Board for at least two years prior to the date of the
vote on such resolution or were nominated for election to the Board by at least
two-thirds of the Directors then still in office who were members of the Board
at least two years prior to the date of the vote on such resolution; and
provided further, that neither the Company, nor any person who as of the date
hereof was a Director or officer of the Company, nor any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, nor
any corporation owned, directly or indirectly, by the shareholders of the
Company in the substantially the same proportions as their ownership of shares
of the Company shall be deemed to be an “acquirer” for purposes of this Section.

 

(b)                                 the election during any two-year period to a
majority of the seats on the Board of Directors of the Company of individuals
who were not members of the

 

8

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Board at the beginning of such period unless such additional or replacement
directors were approved by at least 80% of the continuing directors.

 

(c)                                  shareholder approval of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets.

 

(II)                                  “GOOD REASON” SHALL MEAN THE OCCURRENCE OF
(A) A BREACH OF THIS AGREEMENT BY THE COMPANY, (B) THE ASSIGNMENT TO THE
EXECUTIVE OF DUTIES INCONSISTENT WITH HIS POSITION AS DESCRIBED IN SECTION 2
HEREIN, OR ANY SIGNIFICANT ADVERSE ALTERATION IN THE STATUS OR CONDITIONS OF THE
EXECUTIVE’S EMPLOYMENT OR IN THE NATURE OF THE EXECUTIVE’S RESPONSIBILITIES AS
DESCRIBED IN SECTION HEREIN, (C) THE FAILURE OF THE COMPANY TO MAINTAIN
DIRECTORS’ AND OFFICERS’ INSURANCE AT AN AGGREGATE AMOUNT AT LEAST EQUAL TO THE
LEVEL PROVIDED AS OF THE DATE HEREOF OR (D) THE FAILURE OF THE COMPANY TO
CONTINUE TO PROVIDE EXECUTIVE WITH BENEFITS SUBSTANTIALLY SIMILAR TO THOSE
DESCRIBED IN THIS AGREEMENT OR TO CONTINUE IN EFFECT ANY BENEFIT OR STOCK OPTION
PLAN WHICH IS MATERIAL TO THE EXECUTIVE’S COMPENSATION, INCLUDING BUT NOT
LIMITED TO THE 1998 PLAN; PROVIDED, HOWEVER, EXECUTIVE SHALL NOT BE DEEMED TO
HAVE GOOD REASON TO TERMINATE HIS EMPLOYMENT IF THE REASON FOR SUCH TERMINATION
IS REMEDIED PRIOR TO THE DATE OF TERMINATION SPECIFIED IN THE NOTICE OF
TERMINATION PURSUANT TO SECTION 10(D) HEREIN.

 

9

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SECTION 11. RELEASE.  EXECUTIVE FOR HIMSELF AND FOR THE EXECUTORS AND
ADMINISTRATORS OF HIS ESTATE, HIS HEIRS, SUCCESSORS AND ASSIGNS, HEREBY RELEASES
AND FOREVER DISCHARGES THE COMPANY AND ITS OFFICERS, DIRECTORS, EMPLOYEES AND
STOCKHOLDERS AND THE RESPECTIVE EXECUTORS, ADMINISTRATORS, HEIRS, SUCCESSORS AND
ASSIGNS OF THE FOREGOING, FROM ANY AND ALL CLAIMS, ACTIONS, CAUSES OF ACTION,
SUITS, SUMS OF MONEY, DEBTS, DUES, ACCOUNTS, RECKONINGS, BONDS, BILLS,
COVENANTS, CONTRACTS, CONTROVERSIES, AGREEMENTS, PROMISES, DEMANDS OR DAMAGES OF
ANY NATURE WHATSOEVER OR BY REASON OF ANY MATTER, CAUSE OR THING REGARDLESS OF
WHETHER KNOWN OR UNKNOWN AT PRESENT, WHICH AGAINST THE COMPANY OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES OR STOCKHOLDERS EXECUTIVE EVER HAD, NOW HAS OR
HEREAFTER CAN, SHALL OR MAY HAVE FOR, UPON, OR BY REASON OF, ANY MATTER, CAUSE
OR THING WHATSOEVER FROM THE BEGINNING OF THE WORLD TO THE DATE HEREOF
INCLUDING, BUT NOT LIMITED TO, ANY MATTER RELATING TO OR ARISING OUT OF THE
EMPLOYMENT OF EXECUTIVE OR TERMINATION THEREOF UNDER ANY CONTRACT, TORT,
FEDERAL, STATE OR LOCAL FAIR EMPLOYMENT PRACTICES OR CIVIL RIGHTS LAW INCLUDING,
BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED, THE
AMERICANS WITH DISABILITIES ACT, THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THE
OLDER WORKERS BENEFITS PROTECTION ACT, THE FEDERAL FAMILY AND MEDICAL LEAVE ACT,
OR ANY CLAIM FOR PHYSICAL OR EMOTIONAL DISTRESS OR INJURIES, OR ANY OTHER DUTY
OR OBLIGATION OF ANY KIND OR DESCRIPTION, INCLUDING ANY IMPLIED COVENANT OF GOOD
FAITH AND FAIR DEALING, IMPLIED CONTRACT OF PERMANENT EMPLOYMENT OR THE TORTIOUS
OR WILLFUL DISCHARGE OF EMPLOYMENT.  THE PARTIES ALSO AGREE THAT THIS AGREEMENT
DOES NOT EITHER AFFECT THE RIGHTS AND RESPONSIBILITIES OF THE EQUAL EMPLOYMENT
OPPORTUNITY COMMISSION TO ENFORCE THE AGE DISCRIMINATION IN EMPLOYMENT ACT, OR
JUSTIFY INTERFERING WITH THE PROTECTED RIGHT OF AN EMPLOYEE TO FILE A CHARGE OR
PARTICIPATE IN AN INVESTIGATION OR PROCEEDING CONDUCTED BY THE EQUAL EMPLOYMENT
OPPORTUNITY COMMISSION UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT.  IN THE
EVENT THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION COMMENCES A PROCEEDING AGAINST
THE COMPANY IN WHICH EXECUTIVE IS A NAMED PARTY, EXECUTIVE AGREES TO WAIVE AND
FOREGO ANY MONETARY CLAIMS WHICH MAY BE ALLEGED BY THE EQUAL EMPLOYMENT
OPPORTUNITY COMMISSION TO BE OWED TO EXECUTIVE.  THE PARTIES AGREE THAT NOTHING
IN THE PROVISIONS OF THIS SECTION 11 IS INTENDED TO LIMIT THEIR RIGHTS UNDER AND
CONCERNING ENFORCEMENT OF THIS AGREEMENT.

 

SECTION 12. REVOCATION.  THE COMPANY HAS ADVISED EXECUTIVE TO CONSULT WITH AN
ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT.  BY EXECUTING THIS AGREEMENT,
EXECUTIVE ACKNOWLEDGES THAT (A) HE HAS BEEN PROVIDED AN OPPORTUNITY TO CONSULT
WITH AN ATTORNEY OR OTHER ADVISOR OF HIS CHOICE REGARDING THE TERMS OF THIS
AGREEMENT, (B) THIS IS A FINAL OFFER AND EXECUTIVE HAS BEEN GIVEN TWENTY-ONE
(21) DAYS IN WHICH TO CONSIDER WHETHER HE WISHES TO ENTER INTO THIS AGREEMENT,
(C) EXECUTIVE HAS ELECTED TO ENTER THIS AGREEMENT KNOWINGLY AND VOLUNTARILY AND
(D) IF HE DOES SO WITHIN FEWER THAN 21 DAYS FROM RECEIPT OF THE FINAL DOCUMENT
HE HAS KNOWINGLY AND VOLUNTARILY WAIVED THE REMAINING TIME.  THE COMPANY
RESERVES THE RIGHT TO CHANGE OR REVOKE THIS AGREEMENT PRIOR TO EXECUTIVE’S
EXECUTION HEREOF.  THIS AGREEMENT SHALL BE FULLY EFFECTIVE AND BINDING UPON ALL
PARTIES HERETO IMMEDIATELY UPON EXECUTION OF THIS AGREEMENT EXCEPT AS TO RIGHTS
OR CLAIMS ARISING UNDER THE ADEA, IN WHICH CASE EXECUTIVE HAS SEVEN (7) DAYS
FOLLOWING EXECUTION OF THIS AGREEMENT TO CHANGE HIS MIND (THE “REVOCATION
PERIOD”).  EXECUTIVE FURTHER COVENANTS NOT TO CONTEST THE VALIDITY OF THE
RELEASE SET FORTH IN SECTION 11 HEREOF SUBSEQUENT TO THE REVOCATION PERIOD AND
AGREES THAT IF HE NONETHELESS SHOULD PURSUE LITIGATION AGAINST THE COMPANY
INVOLVING ANY MATTER COVERED AND RELEASED HEREBY, EXECUTIVE AGREES THAT HE FIRST
SHALL RESTORE TO THE COMPANY THE FULL VALUE OF ALL CONSIDERATION HE HAS RECEIVED
OR TO WHICH HE IS ENTITLED HEREUNDER AND SHALL BE LIABLE FOR THE COMPANY’S COSTS
AND ATTORNEYS’ FEES INCIDENTAL TO DEFENDING SUCH LEGAL ACTION.

 

10

--------------------------------------------------------------------------------

 

SECTION 13. AUTHORITY.  EXECUTIVE REPRESENTS AND WARRANTS THAT HE HAS THE
ABILITY TO ENTER INTO THIS AGREEMENT AND PERFORM ALL OBLIGATIONS HEREUNDER, AND
THAT THERE ARE NO RESTRICTIONS ON EXECUTIVE OR ANY OBLIGATIONS OWED BY HIM TO
THIRD PARTIES WHICH ARE REASONABLY LIKELY, IN ANY WAY, TO DETRACT FROM OR
ADVERSELY AFFECT HIS PERFORMANCE HEREUNDER.

 

SECTION 14. MISCELLANEOUS.

 

(A)                                  SEPARATE AGREEMENTS.  THE COVENANTS OF
EXECUTIVE CONTAINED IN THIS AGREEMENT SHALL SURVIVE ANY TERMINATION OF THIS
AGREEMENT AND SHALL BE CONSTRUED AS SEPARATE AGREEMENTS INDEPENDENT OF ANY OTHER
AGREEMENT, CLAIM, OR CAUSE OF ACTION OF EXECUTIVE AGAINST THE COMPANY, WHETHER
PREDICATED ON THIS AGREEMENT OR OTHERWISE. THE COVENANTS CONTAINED IN THIS
AGREEMENT ARE NECESSARY TO PROTECT THE LEGITIMATE BUSINESS INTERESTS OF THE
COMPANY.

 

(B)                                 ENTIRE AGREEMENT.  THE PARTIES HERETO
ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT SUPERSEDES ALL PREVIOUS CONTRACTS AND
AGREEMENTS BETWEEN THE COMPANY AND EXECUTIVE RELATING TO THE SUBJECT MATTER
HEREOF AND THAT ANY SUCH PREVIOUS CONTRACTS OR AGREEMENTS, INCLUDING WITHOUT
LIMITATION, THE ORIGINAL EMPLOYMENT AGREEMENT, SHALL BECOME NULL AND VOID UPON
EXECUTION OF THIS AGREEMENT. THIS AGREEMENT CONSTITUTES THE COMPLETE AGREEMENT
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND NO PARTY
HAS MADE OR IS RELYING ON ANY PROMISES BY ANY OTHER PARTY OF THEIR RESPECTIVE
REPRESENTATIVES NOT CONTAINED IN THIS AGREEMENT.

 

(C)                                  SEVERABILITY.  IF ANY PROVISION OF THIS
AGREEMENT IS HELD TO BE ILLEGAL, INVALIDOR UNENFORCEABLE UNDER PRESENT OR FUTURE
LAWS, SUCH PROVISION SHALL BE FULLY SEVERABLE, THIS AGREEMENT SHALL BE CONSTRUED
AND ENFORCED AS IF SUCH ILLEGAL, INVALID OR UNENFORCEABLE PROVISION HAD NEVER
COMPRISED A PART OF THIS AGREEMENT, AND THE REMAINING PROVISIONS OF THIS
AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT AND SHALL NOT BE AFFECTED BY THE
ILLEGAL, INVALID OR UNENFORCEABLE PROVISION OR BY ITS SEVERANCE FROM THIS
AGREEMENT. IF ANY PROVISION OF THIS AGREEMENT IS HELD TO BE UNENFORCEABLE
BECAUSE OF THE DURATION OF SUCH PROVISION, THE AREA COVERED THEREBY OR THE SCOPE
OF THE ACTIVITY RESTRAINED, THE PARTIES HEREBY EXPRESSLY AGREE THAT THE COURT
MAKING SUCH DETERMINATION SHALL HAVE THE POWER TO REDUCE THE DURATION AND/OR
AREAS OF SUCH PROVISION AND/OR THE SCOPE OF THE ACTIVITY TO BE RESTRAINED
CONTAINED IN SUCH PROVISION AND, IN ITS REDUCED FORM, SUCH PROVISION SHALL THEN
BE ENFORCEABLE.

 

(D)                                 SUCCESSOR AND ASSIGNS.

 

(I)                                     THIS AGREEMENT IS PERSONAL IN NATURE AND
NEITHER THIS AGREEMENT NOR ANY RIGHTS OR OBLIGATIONS ARISING HEREUNDER MAY BE
ASSIGNED, TRANSFERRED OR PLEDGED BY EXECUTIVE. THIS AGREEMENT SHALL INURE TO THE
BENEFIT OF AND BE ENFORCEABLE BY EXECUTIVE’S PERSONAL OR LEGAL REPRESENTATIVES,
EXECUTORS, ADMINISTRATORS, SUCCESSORS, HEIRS, DISTRIBUTEES, DEVISEES AND
LEGATEES.

 

(II)                                  THIS AGREEMENT SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF THE COMPANY AND THEIR SUCCESSORS. THE RIGHTS AND
OBLIGATIONS OF THE COMPANY PURSUANT TO THIS AGREEMENT ARE FREELY ASSIGNABLE AND
TRANSFERABLE BY COMPANY WITHOUT THE CONSENT OF EXECUTIVE

 

11

--------------------------------------------------------------------------------

 

WITHOUT HIS BEING RELIVED OF ANY OBLIGATIONS HEREUNDER, INCLUDING, WITHOUT
LIMITATION, AN ASSIGNMENT OR TRANSFER IN CONNECTION WITH A MERGER OR
CONSOLIDATION OF THE COMPANY, OR A SALE OR TRANSFER OF ALL OR SUBSTANTIALLY ALL
OF THE ASSETS OF THE COMPANY; PROVIDED, THE PROVISIONS OF THIS AGREEMENT SHALL
BE BINDING ON AND SHALL INURE TO THE BENEFIT OF THE SURVIVING BUSINESS ENTITY OR
THE BUSINESS ENTITY TO WHICH SUCH ASSETS SHALL BE TRANSFERRED AND SUCH SUCCESSOR
SHALL EXPRESSLY ASSUME AND AGREE TO PERFORM THIS AGREEMENT IN THE SAME MANNER
AND TO THE SAME EXTENT THAT THE COMPANY WOULD BE REQUIRED TO PERFORM IT IF NO
SUCH TRANSACTION HAD TAKEN PLACE.

 

(E)                                  GOVERNING LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.

 

(F)                                    AMENDMENT.  NO AMENDMENT, WAIVER,
MODIFICATION OR CHANGE OF AN PROVISION OF THIS AGREEMENT SHALL BE VALID UNLESS
IN WRITING AND SIGNED BY BOTH PARTIES; PROVIDED, THAT ANY SUCH AMENDMENT,
WAIVER, MODIFICATION OR CHANGE MUST BE CONSENTED TO ON BEHALF OF THE COMPANY BY
THE BOARD. THE WAIVER OF ANY BREACH OF ANY DUTY, TERM OR CONDITION OF THIS
AGREEMENT SHALL NOT BE DEEMED TO CONSTITUTE A WAIVER OF ANY PRECEDING OR
SUCCEEDING BREACH OF THE SAME OR ANY OTHER DUTY, TERM OR CONDITION OF THIS
AGREEMENT.

 

(G)                                 NOTICES.  ALL NOTICES AND COMMUNICATIONS
UNDER THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE PERSONALLY DELIVERED OR
SENT BY PREPAID CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY RECOGNIZED
COURIER SERVICE, AND ADDRESSED AS FOLLOWS:

 

(I)                             IF TO THE COMPANY TO:

 

American Bank Note Holographics, Inc.

2 Applegate Drive

Robbinsville, NJ 08691

Attention:  President

Telephone:  (609) 632-0800

Facsimile:   (609) 632-0850

 

 

With a copy to:

 

Fulbright & Jaworski LLP

666 Fifth Avenue

New York, NY 10103

Attention:  Paul Jacobs, Esq.

Telephone:  (212) 318-3348

Facsimile:   (212) 752-5958

 

12

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(II)                          IF TO THE EXECUTIVE TO:

 

Alan Goldstein

1219 Baldwin Road

Yorktown Heights, NY 10598

Telephone:  (914) 245-1907

Facsimile:   (914) 962-4938

 

With a copy to:

 

Sapir & Frumkin LLP

399 Knollwood Road, Suite 310

White Plains, NY 10603

Attention: William Frumkin, Esq.

Telephone: (914) 326-0366

Facsimile: (914) 682-9128

 

or to such other address as may be specified by notice of the parties.

 

(H)                                 ARBITRATION.  EXCEPT AS PROVIDED FOR IN
SECTION 7(B), THE COMPANY AND EXECUTIVE AGREE THAT ANY CLAIM OR CONTROVERSY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY BREACH THEREOF (“ARBITRABLE
DISPUTE”) SHALL BE SETTLED BY ARBITRATION IF SUCH CLAIM OR CONTROVERSY IS NOT
OTHERWISE SETTLED; PROVIDED, HOWEVER, THAT NOTHING SET FORTH HEREIN SHALL IN ANY
WAY LIMIT THE COMPANY’S ABILITY TO SEEK AND OBTAIN INJUNCTIVE RELIEF IN AID OF
ARBITRATION FROM ANY COURT OF COMPETENT JURISDICTION. THIS ARBITRATION AGREEMENT
APPLIES TO, AMONG OTHERS, DISPUTES ABOUT THE VALIDITY, INTERPRETATION, OR EFFECT
OF THIS AGREEMENT. THE ARBITRATION SHALL TAKE PLACE IN NEW YORK, NEW YORK, OR
SUCH OTHER LOCATION AS TO WHICH THE PARTIES MAY MUTUALLY AGREE. EXCEPT AS
EXPRESSLY SET FORTH HEREIN, ALL ARBITRATION PROCEEDINGS UNDER THIS
SECTION 12(H) SHALL BE UNDERTAKEN IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION (THE “AAA”) THEN IN FORCE ONLY
BEFORE INDIVIDUALS WHO ARE (I) LAWYERS ENGAGED FULL-TIME IN THE PRACTICE OF LAW
AND (II) ON THE AAA REGISTER OF ARBITRATORS. THERE SHALL BE ONE ARBITRATOR WHO
SHALL BE CHOSEN IN ACCORDANCE WITH THE RULES OF THE AAA. THE ARBITRATOR MAY NOT
MODIFY OR CHANGE THIS AGREEMENT IN ANY WAY AND SHALL NOT BE EMPOWERED TO AWARD
PUNITIVE DAMAGES AGAINST ANY PARTY TO SUCH ARBITRATION. EACH PARTY SHALL PAY THE
FEES OF SUCH PARTY’S ATTORNEYS, THE EXPENSES OF SUCH PARTY’S WITNESSES, AND ANY
OTHER EXPENSES THAT SUCH PARTY INCURS IN CONNECTION WITH THE ARBITRATION, BUT
ALL OTHER COSTS OF THE ARBITRATION, INCLUDING THE FEES OF THE ARBITRATOR, THE
COST OF ANY RECORD OR TRANSCRIPT OF THE ARBITRATION, ADMINISTRATIVE FEES, AND
OTHER FEES AND COSTS SHALL BE PAID IN FULL BY THE COMPANY. EXCEPT AS PROVIDED
FOR IN SECTION 7(B), ARBITRATION IN THIS MANNER SHALL BE THE EXCLUSIVE REMEDY
FOR ANY ARBITRABLE DISPUTE SHOULD EXECUTIVE OR THE COMPANY ATTEMPT TO RESOLVE AN
ARBITRABLE DISPUTE.

 

(I)                                     INDEMNIFICATION AGREEMENT.  A MATERIAL
BREACH OF THAT CERTAIN INDEMNIFICATION AGREEMENT, ENTERED INTO AS OF THE DATE
HEREOF, BETWEEN THE COMPANY AND THE EXECUTIVE, SHALL CONSTITUTE A MATERIAL
BREACH OF THIS AGREEMENT.

 

13

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(J)                                     COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN COUNTERPARTS, EACH OF WHICH WILL BE DEEMED AN ORIGINAL BUT ALL OF
WHICH WILL TOGETHER CONSTITUTE ONE AND THE SAME AGREEMENT.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

 

AMERICAN BANK NOTE HOLOGRAPHICS, INC.

 

 

 

 

 

By:

/s/ Kenneth Traub

 

 

Name: Kenneth Traub

 

Title: President and Chief Executive Officer

 

 

 

 

 

ALAN GOLDSTEIN

 

 

 

 

 

 

/s/ Alan Goldstein

 

14

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Exhibit A

 

Unused Vacation Summary

1999-2004

 

 

 

Days Taken For

 

 

 

 

 

 

 

Year

 

Vacation

 

Personal

 

Sick

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1999

 

8

 

1

 

1

 

 

 

 

 

 

 

2000

 

13

 

2

 

1

 

 

 

 

 

 

 

2001

 

11

 

2

 

1

 

 

 

 

 

 

 

2002

 

16

 

2

 

1

 

 

 

 

 

 

 

2003

 

18

 

2

 

1

 

 

 

 

 

 

 

2004

 

16

 

2

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year

 

1999

 

2000

 

2001

 

2002

 

2003

 

2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vacation Earned

 

15

 

20

 

20

 

20

 

20

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vacation Taken

 

8

 

13

 

11

 

16

 

18

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unused Vacation

 

7

 

7

 

9

 

4

 

2

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Unused Vacation

 

 

 

 

 

 

 

 

 

 

 

33

 

 

15

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Exhibit B

 

Leased Car

 

1.     The current lease term of the Leased Car ends on September 27, 2005. If
the Executive’s Termination Date is prior to September 27, 2005, the Company
will continue the Leased Car benefit until the expiration of the current lease
term. At the end of the lease term the Company will purchase the Leased Car for
the residual lease value ($22,257 plus sales tax for a total of $24,093) and the
Executive will purchase the Leased Car from the Company for the residual value
less any excess mileage charge which the Company would have had to pay to the
leasing company when returning the Leased Car. The Executive will pay all title
fees, registration and sales tax upon purchase of the Leased Car.  The excess
mileage charge is $0.20 per mile over 36,000 miles.

 

2.     If the Termination Date is after September 27, 2005, the Company will
extend the lease term to the extent permissible by the leasing company of the
Leased Car.

 

3.     In the event the lease for the Leased Car cannot be extended, the Company
will purchase the Leased Car at the end of the current lease term on
September 27, 2005 for the residual value and depreciate the Leased Car based on
the monthly lease payment (approximately $485/month) it is currently paying. On
the Termination Date the Executive will purchase the Leased Car from the Company
for the net book value of the Leased Car less the excess mileage cost at that
time. The excess mileage base (36,000 miles) will increase by 1,000 miles per
month through the Termination Date. The Executive will pay all title fees,
registration and sales tax upon purchase of the Leased Car.

 

16

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