Document:

EXHIBIT
10.2

 

Amendment No. 1 to Employment,

Confidentiality and Noncompetition Agreement

 

This Amendment No. 1 to Employment,
Confidentiality and Noncompetition Agreement (the “Amendment”) is made and
entered into as of December 23, 2008 between MediaDefender, Inc. a
Delaware corporation (the “Company”), and Octavio Herrera (“Executive”).

 

RECITALS

 

A.            Pursuant to
that certain Employment, Confidentiality and Noncompetition Agreement dated as
of July 28, 2005 (the “Employment Agreement”), Executive agreed to be
employed by the Company under the terms and conditions set forth therein.

 

B.            The
Parties wish to amend the term of the Employment Agreement to an at-will
arrangement.

 

NOW THEREFORE, the parties agree to amend the Employment Agreement as
follows:

 

1.             Amendment
to Employment Agreement.

 

1.1           Paragraph
5 of the Employment Agreement is hereby amended in its entirety by substituting
the following:

 

5.             Term.  Commencing January 1, 2009, either
Executive or the Company may terminate this Agreement upon five days written
notice.  Upon the effective date of
termination, with respect to the period commencing January 1, 2009 through
such effective date, Executive shall be entitled to receive only the
compensation set forth in Sections 2.1 (as to only the first sentence), 2.3,
2.4 and 2.5 of the Employment Agreement for such period.  Notwithstanding anything to the contrary in
the Employment Agreement or in the Stock Option Agreement between Executive and
ARTISTdirect, Inc., Executive shall have a period of sixty days from the
effective date of termination to exercise all vested stock options issued to
Executive.

 

1.2           Paragraph
6 of the Employment Agreement is hereby deleted in its entirety.

 

2.             Effect
of Amendment.

 

Except as expressly amended hereunder, the Employment Agreement shall
remain in full force and effect.

 

 

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

 

	
   

  	
  “COMPANY 

  
	
   

  	
   

  
	
   

  	
  MediaDefender, Inc. 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DIMITRI VILLARD

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “EXECUTIVE” 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ OCTAVIO HERRERA

  
	
   

  	
  Octavio Herrera

  

 

2Exhibit
10.1

 

EMPLOYMENT
AGREEMENT

 

This EMPLOYMENT AGREEMENT (“Agreement”) is effective
this 9th day of January, 2009, between American Defense Systems, Inc. (“the
Company”) and Fergal Foley (“Executive”) (sometimes referred to herein
individually as “Party” or collectively as “Parties”).

 

WHEREAS, the Company, having employed Executive on an
ongoing basis, now wishes to formalize the relationship and employ Executive on
the terms and conditions contained in this Agreement; and Executive wishes to
accept such employment.

 

NOW THEREFORE, in consideration of the promises and
the mutual agreements herein contained, the Parties hereto, intending to be
legally bound, hereby agree as follows:

 

1.                                      DEFINITIONS.  Those
words and terms that have special meanings for purposes of this Agreement are
specially defined through the use of parenthetical quotations and upper-lower
case lettering.

 

2.                                      EMPLOYMENT.

 

2.1                          Position and Term. 
The Company hereby employs Executive as Chief Operating Officer,
reporting directly to the Chief Executive Officer, and Executive hereby accepts
said employment and agrees to render such services to the Company on the terms
and conditions set forth in this Agreement. 
Unless terminated in accordance with Section 5 below, the term of
this Agreement will be for a term of five (5) years commencing on the
Effective Date of this Agreement (the “Initial Term”); provided, however, that,
while this Agreement is in effect, beginning one (1) year following the
Effective Date and continuing on each one-year anniversary date of the
Agreement (the “Annual Renewal Date”), this Agreement will be automatically
extended for an additional one (1) year (“Renewal Term”), unless one of
the Parties gives the other Party written notice of non-renewal (in accordance
with Section 6.2 below) at least thirty (30) days before the impending
Annual Renewal Date (in which event this Agreement shall terminate at the end
of the then current Term.)  Reference
herein to “Term” shall refer both to the Initial Term and any successive
Renewal Term, as the context requires.

 

2.2                          Duties.  During the
Term, Executive shall devote his full working time, attention and best efforts
to further the interests of the Company and shall perform such services for the
Company as are consistent with his position.

 

3.                                      COMPENSATION
AND BENEFITS.

 

3.1                          Base Salary.  For
services rendered by Executive under this Agreement, the Company shall pay
Executive a minimum base salary of $274,890 per year (“Base Salary”), The
Company’s Board of Directors shall review Executive’s Base Salary on an annual
basis and may, in its sole discretion, increase the Base Salary from time to
time in such amounts as may determined by the Board.  Said Base Salary shall be payable in
accordance with the Company’s regular payroll practices for executive
employees.

 

 

3.2                          Bonus(es).  Executive
shall be entitled to the bonus or bonuses set forth in Schedule A hereto, which
is incorporated by reference hereto.

 

3.3                          Withholding.  All
payments required to be made by the Company to Executive under this Agreement
shall be subject to the withholding of such amounts, if any, relating to tax
and other payroll deductions as must be withheld pursuant to any applicable law
or regulation.

 

3.4                          Stock Options. 
Executive shall be eligible to participate in the Company’s Stock Option
Plan, as it may be amended from time to time. 
All grants under such plan shall be made in accordance with and subject
to the terms thereof.

 

3.5                          Benefits. Except as otherwise provided in this Agreement,
Executive shall be entitled to participate in and receive the benefits of any
benefit plans, benefits and privileges given to similar level employees of the
Company, to the extent commensurate with his then duties and responsibilities (“Benefit
Plans”) when and if such Benefit Plans are established by the Company. The
Company shall not make any changes in such Benefit Plans that would adversely
affect Executive’s rights or benefits thereunder unless such change occurs
pursuant to a program applicable to all similar level employees of the Company
and does not result in a proportionately greater adverse change in the rights
of or benefits to Executive as compared with any other similar level employee
of the Company.  With limiting the above,
Executive shall be entitled to the benefits set forth in Schedule A herteto.

 

4.                                      SUPPORT
AND EXPENSES

 

4.1                          Support.
The Company shall provide Executive with
secretarial, administrative and support staff, and furnished offices and
conference facilities, in the Hicksville NY area, and in such other location,
if any, in which Executive hereafter agrees to perform services on behalf of
the Company, all of which shall be consistent with Executive’s duties and
sufficient for the efficient performance of those duties.

 

4.3                          Expenses.  The Company
shall reimburse Executive or otherwise provide for or pay for all reasonable
expenses incurred by Executive in furtherance of, or in connection with, the
Company’s business, including, but not by way of limitation, traveling
expenses, communication expenses, and all reasonable entertainment expenses
(whether incurred at Executive’s residence, while traveling or otherwise),
subject to such reasonable documentation and other limitations as may be
established by the Company.

 

5.                                      TERMINATION.

 

5.1                          Termination Due to Death. 
This Agreement shall terminate automatically upon Executive’s Death, in
which event the Company shall promptly pay his spouse or estate, as applicable,
all compensation, expenses and other amounts owed to him as of the date of his
death and thereafter shall have no further obligation to pay him compensation
(unless required by applicable law).

 

5.2                          Termination Due to Disability.  The Company shall have the right to terminate
Executive’s employment due to his Disability, in which event the Company shall
promptly pay him all compensation, expenses and other amounts owed to him as of
the Date of Termination 

 

2

 

(as defined in Section 5.10
below) and thereafter shall have no further obligation to pay him compensation
(unless required by applicable law).  “Disability”
for purposes of this Section shall mean Executive is unable to perform the
essential functions of the position with or without accommodation due to a
disability (as such term is defined in the Americans with Disabilities Act) for
at least six months in the aggregate during any twelve month period.  This definition shall be interpreted and
applied consistent with the Americans with Disabilities Act and other
applicable laws.

 

5.3                          Termination by Executive without Good Reason.  Executive shall have the right to terminate
his employment at any time without Good Reason (as that term is defined in Section 5.6
below, and subject to the conditions specified in Section 5.10 below), in
which event the Company shall promptly pay him all compensation, expenses and
other amounts owed to him as of the Date of Termination (as defined in Section 5.10
below) and thereafter shall have no further obligation to pay him compensation
(unless required by applicable law).

 

5.4                          Termination by the Company Without Cause.  The Company shall have the right to terminate
Executive’s employment without Cause with sixty (60) days written notice
(subject to and in accordance with Sections 5.10 and 6.2 below), in which event
the Company: (a) shall, on the Date of Termination, pay Executive all
compensation, expenses and other amounts owed to him as of the Date of
Termination (as defined in Section 5.10 below); and (b) shall
continue to pay Executive’s Base Salary (in effect as of the Date of
Termination) for the remainder of the Term or for two years after the Date of
Termination, whichever is greater; provided however, that upon a termination
pursuant to this Section 5.4 within six (6) months before the
effective date of a Change in Control (as defined herein), or within eighteen
months following the effective date of such a Change in Control, the Company
shall continue to pay Executive’s Base Salary for the remainder of the Term or
for three (3) years after the Date of Termination, whichever is
greater.  “Change in Control” as used in
this Agreement means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events: (i) any “person”
(as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) (an “Exchange Act Person”)
becomes the “beneficial owner” (as defined in Rule 1 3d-3 of the Exchange
Act), directly or indirectly, of securities of the Company representing more
than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities other than by virtue of a merger, consolidation or
similar transaction. Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely because the level of ownership held by any
Exchange Act Person (the “Subject Person”) exceeds the designated percentage
threshold of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the number of
shares outstanding, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the Subject Person
becomes the owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to
occur; (ii) there is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company if, immediately
after the consummation of such merger, consolidation or similar transaction,
the stockholders of the Company immediately prior thereto do not own, directly
or indirectly, either (A) outstanding voting securities representing more
than fifty 

 

3

 

percent (50%) of
the combined outstanding voting power of the surviving entity in such merger,
consolidation or similar transaction or (B) more than fifty percent (50%)
of the combined outstanding voting power of the parent of the surviving entity
in such merger, consolidation or similar transaction; (iii) there is
consummated a sale, lease, license or other disposition of all or substantially
all of the consolidated assets of the Company and its subsidiaries, other than
a sale, lease, license or other disposition of all or substantially all of the
consolidated assets of the Company and its subsidiaries to an entity, more than
fifty percent (50%) of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially the same proportion
as their ownership of the Company immediately prior to such sale, lease,
license or other disposition; or (iv) during any period of 12 consecutive
months, individuals who at the beginning of such period constitute the Board of
Directors of the Company cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by stockholders, of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period.

 

5.5                          Termination by the Company for Cause.  The Company shall have the right to terminate
Executive’s employment for Cause subject to the conditions set forth herein. If
the Company terminates Executive’s employment for Cause, the Company shall
promptly pay Executive all compensation, expenses and other amounts owed to him
as of the Date of Termination (as defined in Section 5.10 below) and
thereafter shall have no further obligation to pay him compensation. As used in
this Agreement, “Cause” shall mean any of the following: (a) Executive’s
conviction of a felony crime; (b) Executive’s commission of fraud against,
or embezzlement or material misappropriation from, the Company; or (c) Executive’s
material breach of this Agreement. With respect to matters relating to
subsections 5.5(b) and (c) herein, the Board shall give Executive
prompt notice (in accordance with Section 6.2 below), and shall afford
Executive thirty days after his receipt of such written notice to cure such
grounds. Cause shall be determined in good faith by the affirmative vote of a
majority of the whole Board (excluding Executive if he is a member of the
Board) after Executive has been provided the opportunity to make a presentation
to the Board (which presentation may be with counsel).

 

5.6                          Termination by Executive for Good Reason.  Executive shall have the right to terminate
his employment for Good Reason, in which event he shall be entitled to receive
the same payments and benefits specified in Section 5.4 of this Agreement.
“Good Reason” shall mean the occurrence of any of the following without
Executive’s prior express written consent: (a) the Company, or a successor
as contemplated in Section 6.1 below, breaches any material term of this
Agreement; (b) the Company, or a successor as contemplated in Section 6.1
below, makes or causes a material adverse change in his functions, duties or
responsibilities; (c) the Company, or a successor as contemplated in Section 6.1
below, reduces his Base Salary (as the same may be increased from time to
time); (d) the Company, or a successor as contemplated in Section 6.1
below, causes or allows a material reduction in his entitlement to benefits
under Section 3 above (except to the extent permitted by Section 3.5
thereof); (e) the Company or a successor as contemplated in Section 6.1
below, requires him to work in an office more than twenty-five 25 miles from
the location of his current principal executive office (except for required
travel on the Company’s business to an extent substantially consistent with
Executive’s business travel obligations); (f) the Company, or a successor
as contemplated in Section 6.1 terminates Executive’s employment without
cause or Executive terminates his employment for good reason; and (g) the
Company, or a successor as contemplated in Section 6.1 below, fails to 

 

4

 

obtain the
assumption of, and agreement to perform, this Agreement by a successor as
contemplated in Section 6.1 below. 
In order to terminate his employment under this section, Executive
shall) give the Company written notice of termination under this Section (subject
to and in accordance with Sections 5.10 and 6.2 below) within ninety (90) days
of the most recent event(s) constituting grounds for termination under this
Section; and (ii) give the Company thirty (30) days written notice
(subject to and in accordance with Sections 5.10 and 6.2 below) of such
termination, during which thirty (30) day period the Company shall be afforded
the opportunity to cure the deficiencies giving rise to such termination.

 

5.7                          Benefits Upon Termination. 
Except as otherwise provided in this Agreement, in the event of
termination of Executive’s employment under Sections 5.1 through 5.6 above, Executive’s
entitlement to benefits under any Benefit Plan (as defined in Section 3.5
above) shall be determined in accordance with applicable law and the provisions
of such Benefit Plan.

 

5.8                          Termination by Mutual Consent.  Notwithstanding any of the foregoing
provisions of this Section 5, if, at any time during the Term, the Parties
by mutual consent decide to terminate this Agreement, they may and shall do so
by separate agreement setting forth the terms and conditions of such
termination.

 

5.9                          Withholding.  All
payments required to be made by the Company to Executive under Section 5
of this Agreement shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as must be withheld pursuant to
any applicable law or regulation.

 

5.10                   Notice of Termination. 
Any purported termination of Executive’s employment by the Company for
any reason, or by Executive for any reason, shall be communicated by a written “Notice
of Termination” to the other Party. A “Notice of Termination” shall mean a
dated notice that: (a) indicates the specific termination provision in
this Agreement relied on; (b) sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated; (c) specifies a Date of
Termination; and (d) is given in the manner specified in Section 6.2.
“Date of Termination” shall mean the later of: (i) the date specified in
the Notice of Termination required by this Section; and (ii) the date
Notice of Termination is deemed to have been duly given in accordance with Section 6.2
of this Agreement.

 

6.                                      GENERAL
PROVISIONS.

 

6.1                          Assignment.  The
Company shall assign this Agreement and its rights and obligations hereunder in
whole, but not in part, to any corporation or other entity with or into which
the Company may hereafter merge or consolidate or to which the Company may
transfer all or substantially all of its assets, if in any such case said
corporation or other entity shall by operation of law or expressly in writing
assume all obligations of the Company hereunder as fully as if it had been
originally made a party hereto; the Company may not otherwise assign this
Agreement or its rights and obligations hereunder. Executive may not assign or
transfer this Agreement or any rights or obligations hereunder.

 

5

 

6.2                          Notice.  All Notices
of Termination and other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when delivered or mailed
by certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below:

 

	
   

  	
  To the Company:

  	
   

  	
  American Defense Systems, Inc.

  
	
   

  	
   

  	
   

  	
  230 Duffy Ave.

  
	
   

  	
   

  	
   

  	
  Hicksville, NY 11801

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  To Executive:

  	
   

  	
  Fergal Foley

  
	
   

  	
   

  	
   

  	
  119 Dakota Drive

  
	
   

  	
   

  	
   

  	
  Hopewell Junction New York 12533

  

 

Either Party may change the address to which Notices
of Termination and other communications provided for in this Agreement shall be
sent to that Party, by giving the other Party notice in the manner provided in
this Section.

 

6.3                          Indemnification.  The
Company shall indemnify Executive and hold him harmless for any and all
liabilities arising from the performance of his duties under this Agreement and
services for the Company, subject to and in accordance with applicable law and
any applicable indemnification provisions in the Company’s Articles of
Incorporation and/or Bylaws.

 

6.4                          Tax Treatment of Payments and/or Benefits.

 

(a)                                  Each
payment made pursuant to the terms of this Agreement is intended as a separate
payment within the meaning of Code Section 409A and Department of Treasury
regulations and other interpretive guidance issued thereunder. To the extent
applicable and notwithstanding any other provisions in this Agreement, this
Agreement, including but not limited to a Change of Control as set forth in Section 5.4,
and payments or benefits hereunder shall be administered, operated and
interpreted in accordance with Code Section 409A and Department of
Treasury regulations and other interpretive guidance issued thereunder,
including without limitation any such regulation or other guidance that may be
issued after the Effective Date of this Agreement; provided, however, in the
event that the Company determines that any payments or benefits hereunder may
be taxable to Executive under Code Section 409A and related Department of
Treasury guidance prior to the payment and/or delivery of such amount, the
Company may (i) adopt such amendments to the Agreement that the Company
reasonably and in good faith determines necessary or appropriate to preserve
the intended tax treatment of the benefits provided under this Agreement and/or
(ii) take such other actions, including delaying the payment or delivery
hereunder, as the Company determines necessary or appropriate to comply with or
exempt the payments or benefits from the requirements of Code Section 409A.

 

(b)                                 If Executive is subject to a federal excise tax on
all or any part of any payment made pursuant to this Agreement under Code Section 4999
(or any successor thereto), the Company shall pay Executive an additional
amount sufficient, considering the state and federal income and other taxes
that Executive will be required to pay with respect to such additional amount,
considering the state and federal income and other taxes that Executive will be
required to pay with respect to such amount, to provide Executive on an
after-tax basis an 

 

6

 

amount equal to the amounts to be
paid to Executive under this Agreement without regard to such excise tax.

 

6.5                          Amendment and Waiver. 
No amendment or modification of this Agreement shall be valid or binding
upon the Parties unless made in writing and signed by each of the Parties for
that express purpose.

 

6.6                          Non-Waiver of Breach. 
No failure by either Party to declare a default due to any breach of any
obligation under this Agreement by the other, nor failure by either Party to
act with regard thereto, shall be considered to be a waiver of any such
obligation, or of any future breach.

 

6.7                          Severability.  In the
event that any provision or portion of this Agreement, shall be determined to
be invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and
effect.

 

6.8                          Governing Law.  The
validity and effect of this Agreement and the rights and obligations of the
Parties hereto shall be construed and determined accordance with the law of the
State of New York without regard to its conflicts of laws or principles.

 

6.9                          Dispute Resolution. 
Any controversy, dispute or claim arising out of or relating to this
Agreement or breach thereof shall first be resolved through good faith
negotiation between the Parties. If the Parties are unsuccessful at resolving
the dispute through such negotiation, the Parties agree to attempt in good
faith to resolve the dispute by mediation in New York City, New York (or such
other location agreed upon between the Parties), administered by JAMS. Either
Party may commence such mediation by providing the other Party (in accordance
with Section 6.2 above) and JAMS a written request for mediation, setting
forth the subject of the dispute and the relief requested. The Parties covenant
that they will cooperate in good faith with JAMS and one another in selecting a
mediator from JAMS panel of neutrals and in scheduling and participating in the
mediation proceedings. If the Parties are unsuccessful at resolving the dispute
through such mediation, the Parties agree to final and binding arbitration in
New York City, New York (or such other location agreed upon between the
Parties), administered by JAMS pursuant to its Employment Arbitration Rules &
Procedures (except insofar as they conflict with the express provisions of this
Section) and subject to JAMS Policy on Employment Arbitration Minimum Standards
of Procedural Fairness. Either Party initiating such arbitration must do so by
filing a written demand for arbitration (and giving the other Party notice in
accordance with Section 6.2 above) at any time following the initial
mediation session or 45 days after the date of filing the written request for
mediation, whichever occurs first. The mediation may continue after the commencement
of arbitration if the Parties so agree. Unless otherwise agreed by the Parties,
the mediator shall be disqualified from serving as arbitrator. The arbitrator
may, in the award, allocate all or part of the costs, fees and expenses of the
arbitration, including the arbitrator’s fees and the prevailing Party’s
attorneys’ fees. Judgment on the arbitration award may be entered in any court
having jurisdiction. The provisions of this Section may be enforced by any
court of competent jurisdiction, and the Party seeking enforcement shall be
entitled to an award of all costs, fees and expenses, including attorneys’
fees, to be paid by the Party against whom enforcement is ordered.

 

7

 

6.10                   Entire Agreement. 
Unless otherwise specified, this Agreement contains all of the terms
agreed upon by the Company and Executive with respect to the subject matter
hereof and supersedes all prior agreements, arrangements and communications
between the Parties dealing with such subject matter, whether oral or written.

 

6.11                   Binding Effect.  This
Agreement shall be binding upon and shall inure to the benefit of the
transferees, successors and assigns of the Company, including any corporation
or entity with which the Company may merge or consolidate.

 

6.12                               Headings.   Numbers
and titles to Sections hereof are for information purposes only and, where
inconsistent with the text, are to be disregarded.

 

6.13                   Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which when taken together, shall be and constitute one and
the same instrument.

 

6.14                   Executive’s Warranties. 
Executive expressly warrants that he has carefully read and fully
understands all the provisions of this Agreement and is hereby advised by the
Company to consult an attorney of his own choosing in deciding whether to sign
this Agreement.

 

IN WITNESS WHEREOF, the
Parties hereto have caused this Agreement to be duly executed as of the date
and year first written above.

 

	
  The Company:

  	
  AMERICAN DEFENSE SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Anthony J. Piscitelli

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Executive:

  	
   

  
	
   

  	
  Fergal Foley

  

 

8

 

Schedule A

Fergal Foley
Employment Agreement

 

3.2                               Annual
Bonuses.  Executive
shall be entitled to earn and be paid an annual bonus each fiscal year of 2.5%
of the increase in the Company’s EBITDA over the preceding year (“Annual Bonus”).  (For example, in 2009 Executive would be
entitled to 2.5% of the amount by which EBITDA for the fiscal year ended in
2009 is greater than the FYE in 2008). 
The Annual Bonus, if earned, shall be paid in cash after the date the
Company’s auditors issue their audit report on the Company’s financial
statements for the fiscal year with respect to which such Annual Bonus relates,
and in any event, not later than seventy-four (74) days after the last day of
such fiscal year, and in a manner in accordance with the Company’s regular
payroll practices for executive employees. 
The term “EBITDA” means earnings before interest income, interest
expenses, taxes, depreciation and amortization of the Company’s consolidated
businesses each as determined in accordance with U.S. generally accepted
accounting principles.  If otherwise
eligible, Executive need not be employed by the Company at the time the Annual
Bonus is calculated and/or paid out in order to receive the Annual Bonus, as
applicable, if his employment terminates for any reason before the end of the
applicable fiscal year.

 

3.5.                            Benefits

 

3.5.1                     Vacation.  Executive shall be entitled to four weeks of
paid vacation each calendar year.  In the
event that the Company terminates Executive’s employment without Cause or
Executive terminates his employment for Good Reason, the Company shall pay
Executive for all unused vacation for the remainder of the Company’s then
current fiscal year.

 

3.5.2                     D&O
Liability Insurance.  The
Company shall provide Executive with directors’ and officers’ liability
insurance coverage in an amount that the Company, reasonably and in good faith,
determines to be appropriate and affordable. After the expiration of Executive’s
employment and/or the termination of this Agreement, the Company shall provide
Executive with directors’ and officers’ liability insurance coverage in an
amount and for a period of time that the Company, reasonably and in good faith,
determines to be appropriate and affordable.

 

3.5.3                     Life
Insurance.  The Company shall
provide Executive with life insurance in accordance with the terms of any
applicable life insurance plan established by the Company.

 

3.5.4                     Long-Term
Disability Insurance.  The
Company shall provide Executive with long-term disability insurance in
accordance with the terms of any applicable long-term disability plan
established by the Company.

 

9

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