Attached files
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| 8-K - 8-K - Boomerang Systems, Inc. | v198543_8k.htm |
AMENDED
AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
This
Amended and Restated Executive Employment Agreement (“Agreement”) executed on
October 1, 2010, and effective as of August 21, 2010, by and
between Boomerang Systems, Inc. (the "Company"), a Delaware corporation, with
its principal place of business at 355 Madison Avenue, Morristown, New Jersey
and Mark Patterson (“Executive”) an individual having a mailing address at 40
Minnisink Road, Short Hills, New Jersey 07078-1920.
WHEREAS,
the parties entered into an Executive Employment Agreement made and effective as
of August 21, 2010 (the “Original Employment Agreement”); and
WHEREAS,
on or about September 10, 2010, the parties agreed to amend and restate the
terms of the Original Employment Agreement; and
WHEREAS,
this Agreement reflects the terms agreed to on September 10, 2010;
NOW,
THEREFORE, the parties hereto agree that the Original Employment Agreement is
hereby amended and restated as follows:
1.
Employment.
Company
hereby agrees to employ Executive as its Chief Executive Officer and Executive hereby
accepts such employment in accordance with the terms of this Agreement and the
terms of employment applicable to regular employees of Company. In the event of
any conflict or ambiguity between the terms of this Agreement and terms of
employment applicable to regular employees, the terms of this Agreement shall
control.
2.
Duties of
Executive.
The
duties of Executive shall include the performance of all of the duties typical
of the office held by Executive as described in the bylaws of the Company and
such other duties and projects as may be assigned by the Board of Directors of
the Company that are compatible with Executive’s position and duties, including,
but not limited to, the development and implementation of the Company’s business
plan, the development of global strategic relationships, and the hiring, firing,
and compensation of the Company’s executive officers. Executive shall
report directly to the Board of Directors of the Company. Executive
shall devote the majority of his productive time, ability and attention to the
business of the Company and shall perform all duties in a professional, ethical
and businesslike manner. Company acknowledges that Executive
currently performs advisory services for entities other than Company and may in
the future accept new engagements to perform advisory services for entities
other than Company, including but not limited to appointment to one or more
board(s) of directors so long as such
engagements: i) do not interfere with Executive’s performance under this
Agreement; and ii) are not with entities that are direct or indirect competitors
of Company in connection with automated parking systems.
3.
Compensation.
Executive
will be paid compensation during the Agreement as follows:
A.
Salary. A base salary of $200,000 per year, payable in installments
according to the Company’s regular payroll schedule. The base salary shall
be adjusted upward at the discretion of the board of directors; provided,
however, that Executive’s base salary shall be adjusted upward at the beginning
of the second two-year Term (if any) in an amount to be determined by the
Company’s Board of Directors in the reasonable, good faith exercise of its
discretion, with input from Executive, taking into account (among other things)
the performance of the Company and Executive.
B. Grant
of Warrants.
As
additional compensation, Company agrees to grant to Executive five-year warrants
(the “Warrants”) to purchase 21,600,000 Shares (the “Warrant Shares”) of the
Company’s common stock subject to the vesting schedule identified below, with
such vesting to occur in such number of shares and on such dates as set forth
below, provided the Executive remains employed by Company on any such vesting
date (except as expressly provided herein). The Warrants shall have
an exercise price of twenty five cents ($0.25) per share (the “Exercise Price”),
subject to adjustment for stock splits, combinations, recapitalizations and
other events as set forth in the Warrant agreement (the “Warrant
Agreement”). The Warrant Agreement shall contain terms no less
favorable than the terms of the warrants issued in connection with the Company’s
July 2010 private placement, and shall be in the form annexed hereto as Exhibit
A.
Vesting
Schedule
|
At
execution of this Agreement:
|
5,400,000
Warrants
|
|
February
1, 2011:
|
4,200,000
Warrants
|
|
August
1, 2011:
|
4,200,000
Warrants
|
|
February
1, 2012:
|
4,200,000
Warrants
|
|
August
1, 2012:
|
3,600,000
Warrants
|
|
|
|
|
TOTAL:
|
21,600,000
Warrants
|
The
Warrant Agreement shall provide that, at the Executive’s option, in lieu of
paying the Exercise Price in cash, the Warrants may be exercised on a cashless
basis by converting the Warrants (or a portion thereof) into the number of
Warrant Shares (rounded to the next highest integer) which equals (i) the number
of Warrant Shares specified by the Executive in his notice of exchange (the
“Total Share Number”) less (ii) the number of Warrant Shares equal to the
quotient obtained by dividing (a) the product of the Total Share Number and the
existing Exercise Price per Warrant Share by (b) the Market Price (as defined in
the Warrant Agreement) of the Company’s common stock on the exchange
date. Executive will be responsible to pay any Federal and State
Income taxes incurred by Executive in connection with the grant, vesting and
exercise of the Warrants when due.
C. Right
of First Refusal. For so long as the Executive is the Chief Executive
Officer, Chairman or Vice Chairman of the Company, he shall have a right of
first refusal (the "Right of First Refusal") to purchase his Pro Rata Portion
(as hereinafter defined) of any equity securities, securities convertible into
or exchangeable for equity securities or any units which include equity
securities or securities convertible into or exchangeable for equity securities
of the Company offered or sold by the Company or issued by the Company for
financial, investment banking services or as a placement fee (a "Company
Offering"), based on his percentage ownership interest in the capital stock of
the Company (calculated in accordance with Rule 13d-3d(1) promulgated under the
Securities Exchange Act of 1934, as amended). If the Company intends
to undertake a Company Offering at any time that the Executive is the Chief
Executive Officer, Chairman or Vice Chairman of the Company, the Company shall
notify Executive no less than five days in advance of the pricing of such
Company Offering (or, if the price is known, five days prior to the commencement
thereof) in writing of such intention and of the proposed terms of the Company
Offering. The Executive shall be given the opportunity to purchase
any or all of the Pro Rata Portion of the securities to be sold in such Company
Offering at the same price and on the same terms as it is being offered to other
prospective investors. If, within five (5) days of the receipt of
such notice of intention and statement of terms, the Executive does not give
irrevocable notice of his intention to purchase all or part of the Pro Rata
Portion of the securities to be sold in such Company Offering upon the terms
proposed, the Company shall be free to effect such offering on such proposed
terms; provided, however, that the Executive can still participate up to his Pro
Rata Portion, at the same price and on the same terms as any third-party
purchaser, up until 5 days before the later of the pricing or closing of such
Company Offering. If the Executive gives such irrevocable notice of
his intention to participate in a Company Offering, he shall be obligated to
complete such purchase on the same terms as any third-party purchaser and to
close his purchase before or at the same time that the Company Offering
closes. Before the Company shall accept any modified proposal from a
prospective purchaser or modify the terms of such Company Offering, the
Executive’s preferential right shall be reinstated and the same procedure with
respect to such modified proposal as provided above shall be
adopted. The failure by the Executive to exercise his Right of First
Refusal in any particular instance shall not affect in any way such right with
respect to any other Company Offering. For purposes of this Section
3.C., “Pro Rata Portion” for the Executive shall be equal to the Executive’s
beneficial ownership percentage of Company’s Common Stock calculated in
accordance with Rule 13d-3(d)(1) under the Exchange Act and immediately prior to
the completion of the Company Offering.
D. Bonus. For
every fiscal year after 2010, Executive shall be eligible for an annual cash
incentive bonus (“Annual Bonus”). The amount of the Annual Bonus (if
any) shall be determined by the Company’s Board of Directors in the reasonable,
good faith exercise of its discretion, with input from Executive, taking into
account (among other things) the performance of the Company and
Executive. The Annual Bonus (if any) in respect of each fiscal year
shall be paid to Executive on or before September 1 of the then current fiscal
year.
F. Executive’s
total compensation in all forms received in any given fiscal year (except for
fiscal year 2010) shall not be less than the total annual compensation in all
forms received of any single employee of the Company for the given
year.
4.
Benefits.
A. Medical
Insurance. Company agrees to provide Executive with a medical,
hospital and dental plan in the amount equal to 85% of total premium for himself
personally and 65% for his spouse and children, as approved by Company, during
this Agreement. Executive shall be responsible for payment of any federal
or state income tax imposed upon these benefits. Executive’s benefits
under such plans shall be on terms no less favorable than those made available
to any of the Company’s executive officers.
B.
Stock Option
Plans. Executive shall be entitled to participate in any Stock
Option Plan, incentive compensation plan, 401(k) Plan, and any similar plans
adopted by Company on terms no less favorable than those made available to any
of the Company’s executive officers.
C.
Expense
Reimbursement. Executive shall be entitled to reimbursement for all
reasonable expenses, including travel and entertainment, incurred by Executive
in the performance of Executive’s duties. Executive will maintain records
and written receipt and Expense Reports as required by the Company policy
generally applicable to executive officers and reasonably requested by the board
of directors to substantiate such expenses. The Company agrees that
reimbursable expenses shall include fuel costs for Executive to fly his single
engine airplane for Company business on trips provided that such reimbursable
amount is equal to or less than the cost of a first class ticket on a commercial
air carrier for the same route.
5. Representations,
Warranties, and Covenants of the Company.
Company
represents, warrants, and covenants as follows:
A. As
of the date this Agreement is executed, the Company shall have secured and
thereafter shall maintain in force a Directors and Officers liability insurance
policy with a face amount of $10,000,000, covering Executive for all claims made
against Executive during, and against Executive in respect of, the period he is
a director, officer, or employee of the Company. This Section 5(A)
shall survive termination of Executive’s employment for any
reason.
B. As
of the Company’s execution of this Agreement, Executive shall have been
appointed Chief Executive Officer, and the Company shall use its reasonable
efforts to cause Executive to continue to hold the office of Chief Executive
Officer so long as Executive remains an employee of
Company. Consistent with its duties and obligations under Delaware
Law, so long as Executive remains an employee of Company, the Board of Directors
shall recommend to the stockholders to elect him to the Board of Directors;
provided, however, the Executive shall, within 10 days of the execution of this
Agreement, deliver to the Company an irrevocable letter of resignation from the
Board of Directors (i) which states that it is automatically effective, if the
Executive’s employment is terminated under this Agreement, upon the request of a
majority of the members of the Board of Directors (excluding the Executive), and
(ii) by which the Executive covenants to execute any other resignation letters
in connection with any such resignation as reasonably requested by the
Company.
C. After
the date hereof, promptly at such times required by the Securities Exchange Act
of 1934 (1934 Act), the Company shall assist the Executive with timely filing
any applicable SEC Rule 13D and 13G filings under the 1934 Act relating to
Executive’s ownership or disposition of Company securities. The
Company will make its counsel available to Executive to discuss whether a
transaction effected by or in favor of Executive requires a filing or amendment
and to assist in the preparation of any such filing or amendment.
6.
Term and
Termination.
A.
The Initial Term of this Agreement shall commence as of August 21, 2010 and it
shall continue in effect until September 30, 2012. Thereafter, the
Agreement shall be renewed automatically for additional Terms of two-year
periods (running from October 1 until September 30 two years later) unless the
Company or the Executive shall give its/his written notice of intention not to
renew the Agreement at least twenty-one (21) days before the end of the then
current Term.
B. This
Agreement may be terminated by Executive at Executive’s discretion, or by the
Company at its discretion, by providing at least ten (10) days prior written
notice to the other. In the event of termination by Executive
pursuant to this subsection, Company may immediately relieve Executive of all
duties, provided that Company shall pay Executive at the then applicable base
salary rate to the termination date included in Executive’s original termination
notice. Except as expressly provided herein, in the event of
termination by Executive pursuant to this subsection, Executive will forfeit any
rights to receive restricted shares or an incentive bonus under this Agreement
not vested as of the date of termination.
C.
In the event that Executive is in willful breach of any material obligation owed
Company in this Agreement, willfully and habitually neglects the material duties
to be performed under this Agreement (except in the case of disability), engages
in any conduct in connection with his employment with the Company which is
deliberately dishonest, materially damages the reputation or standing of the
Company, or is convicted of any deliberate criminal act involving moral
turpitude (each individually, “Cause”), then Company may terminate this
Agreement; provided, however, that the Company shall (i) give Executive
written notice of the ground for Cause and a detailed description of the facts
underlying such ground, and (ii) (b) where the ground for Cause is curable, ten
(10) days in which to cure the purported ground for Cause, or (c) where the
ground for Cause is not curable, one (1) day’s written notice. In event of
termination of the Agreement pursuant to this subsection, Executive shall be
paid only at the then applicable base salary rate up to and including the date
of termination. Executive shall not be paid any Annual Bonus or other
compensation, prorated or otherwise. In event of termination of the Agreement
pursuant to this subsection, Executive will forfeit any rights to receive
Warrants or incentive bonus under this Agreement not vested as of the date of
termination.
D. In
the event that the Company terminates Executive without Cause, or the Executive
resigns his employment for Good Reason, Executive shall be entitled to the
following: (i) the Company shall pay the Executive his then applicable
annual base salary up to and including the date of termination; (ii) as soon as
practicable after the date of termination, the Company shall pay Executive a
lump sum cash payment equivalent to the sum that Executive would have been paid
as the then applicable annual salary from the date of termination through the
end of the then-current Term had Executive’s employment not been terminated;
(iii) as soon as practicable after the date of termination, the Company shall
pay Executive a lump sum cash payment equivalent to any awarded but unpaid
annual incentive bonus for the then previous year, (iv) as soon as practicable
after the date of termination, the Company shall, in lieu of an Annual Bonus for
the then current fiscal year, pay executive a lump sum cash payment equivalent
to a pro rata amount of the greater of (a) the total Annual Bonus awarded to
Executive in respect of the then previous year, and (b) the total amount of
Executive’s then current annual salary; (v) as soon as practicable after the
date of termination, to the extent not already vested, all Warrants provided for
in this Agreement shall vest; and (vi) all restricted shares held by Executive,
and all shares obtained by Executive via exercise of warrants, shall immediately
be eligible, without any further condition or qualification, to be
registered. For the purposes of this Agreement, “Good Reason” shall
mean: (a) without his consent, Executive no longer reports solely to the Board
of Directors, (b) without his consent, there has been a material adverse
diminution in Executive’s powers or duties, (c) without his consent,
Executive no longer holds the position of Chief Executive Officer,
(d) without his consent, Executive no longer holds a seat on the Company’s
Board of Directors, (e) the Company materially breaches this Agreement,
(f) the Company fails to pay or make any payment, award, or grant provided
for in this Agreement, (g) the Company gives notice of its intention not to
renew this Agreement for another Term, or (h) without his consent, the Company
relocates Executive’s place of work away from the Company’s principal place of
business in New Jersey; provided, however, that Executive shall give the Company
written notice of the ground for Good Reason and a detailed description of the
facts underlying such ground, and (where the ground for Good Reason is curable)
ten (10) days in which to cure the purported ground for Good
Reason. Notwithstanding any existing or future agreement to the
contrary, the definition of Good Reason set forth above shall be deemed to be
incorporated into any prior or future agreement, award or grant to which the
Company and the Executive are parties and any resignation by the Executive for
Good Reason as defined herein shall be deemed a termination by the Company
without Cause.
E. In
the event Executive’s employment is terminated due to Executive’s death or
disability, Executive shall be entitled to the following: (i) the Company shall
pay the Executive his then applicable annual base salary up to and including the
date of termination; (ii) as soon as practicable after the date of termination,
the Company shall pay Executive a lump sum cash payment equivalent to any
awarded but unpaid annual incentive bonus for the then previous year, (iii) as
soon as practicable after the date of termination, the Company shall, in lieu of
an Annual Bonus for the then current fiscal year, pay executive a lump sum cash
payment equivalent to a pro rata amount of the greater of (a) the total Annual
Bonus awarded to Executive in respect of the then previous year, and (b) the
total amount of Executive’s then current annual salary; (v) as soon as
practicable after the date of termination, the Warrants (if any) that are
unvested as of the date of termination shall vest as to a number of shares equal
to the greater of (x) the number of unvested shares as of the date of
termination multiplied by a fraction, the numerator of which is equal the number
of days between the most recent vesting date of the Warrants that precedes the
date of termination and the date of termination and the denominator of which is
equal to the number of days between the most recent vesting date of the Warrants
that precedes the date of termination and August 12, 2012 and (y) the number of
shares scheduled to vest on the next vesting date of the Warrants; and (vi) all
restricted shares held by Executive, and all shares obtained by Executive via
exercise of Warrants, shall immediately be eligible, without any further
condition or qualification, to be registered. For the purposes of
this subsection, “disability” shall mean that for 180 consecutive says in any
calendar year Executive is not able, due to physical or mental infirmity or
ailment, the principal duties of his job.
F.
In the event Company is acquired, or is the non-surviving party in a merger, or
sells all or substantially all of its assets, (i) this Agreement shall not be
terminated and Company agrees to use its best efforts to ensure that the
transferee or surviving company is bound by the provisions of this Agreement,
(ii) all Warrant awards provided for by this Agreement or otherwise awarded to
Executive not yet vested shall vest immediately without any further condition or
qualification, and (iii)
all restricted shares held by Executive, and all shares obtained by Executive
via exercise of warrants, shall immediately be eligible, without any further
condition or qualification, to be registered.
7.
Indemnification/Advancement. To
the greatest extent permitted by Delaware General Corporation Law § 145,
and subject to the provisions thereof, if Executive is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that Executive is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, Executive shall be entitled to
indemnification against, and advancement of, expenses (including attorneys’ fees
as and when incurred), judgments, fines and amounts paid in settlement actually
and reasonably incurred by Executive in connection with such action, suit or
proceeding. The indemnification and advancement provided by, or
granted pursuant to, this Section shall not be deemed exclusive of any other
rights to which Executive may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
Executive’s person’s official capacity and as to action in another capacity
while holding such office. In addition to the rights set forth in
this Section, Executive shall be entitled to indemnification and/or advancement
rights no less favorable than such rights granted to other senior executives of
the Company. This Section shall survive termination of Executive’s
employment for any reason.
8. Notices.
Any
notice required by this Agreement or given in connection with it, shall be in
writing and shall be given to the appropriate party by personal delivery or by
certified mail, postage prepaid, or recognized overnight delivery
services;
If to
Company:
Chris
Mulvihill
President
Boomerang
Systems, Inc.
355
Madison Avenue
Morristown,
NJ 07960
-
with a
copy to –
Blank
Rome LLP
405
Lexington Avenue
New York,
NY 10174
Attention:
Robert J. Mittman
(212)
885-5001(fax)
rmittman@blankrome.com
If to
Executive:
Mark
Patterson
40
Minnisink Road
Short
Hills, NJ 07078-1920
– with a
copy to –
Friedman
Kaplan
Seiler
& Adelman LLP
1633
Broadway
New York,
NY 10019
Attention: Lance
J. Gotko
(212)
373-7915 Fax
lgotko@fklaw.com
9.
Final
Agreement.
This
Agreement terminates and supersedes all prior understandings or agreements on
the subject matter hereof, including the Original Employment Agreement.
This Agreement may be modified only by a further writing that is duly executed
by both parties.
10.
Governing
Law.
This
Agreement shall be construed and enforced in accordance with the laws of the
State of New Jersey without regard to its conflict of laws principles; provided,
however, that Executive’s rights concerning advancement and/or indemnification
shall be governed by the laws of the State of Delaware without regard to its
conflicts of laws principles.
11.
Headings.
Headings
used in this Agreement are provided for convenience only and shall not be used
to construe meaning or intent.
12.
No
Assignment.
Neither
this Agreement nor any or interest in this Agreement may be assigned by
Executive without the prior express written approval of Company, which may be
withheld by Company at Company’s absolute discretion.
13.
Severability.
If any
term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
14.
Arbitration.
The
parties agree that they will use their best efforts to amicably resolve any
dispute arising out of or relating to this Agreement. Any controversy,
claim or dispute that cannot be so resolved shall be settled by final binding
arbitration in accordance with the rules of the American Arbitration
Association and judgment upon the award rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof. Any
such arbitration shall be conducted in New York, New York, or such other place
as may be mutually agreed upon by the parties.
Within
fifteen (15) days after the commencement of the arbitration, each party shall
select one person to act arbitrator, and the two arbitrators so selected shall
select a third arbitrator within ten (10) days of their appointment.
Each party shall bear its own costs and expenses and an equal share of the
arbitrator’s expenses and administrative fees of arbitration.
Notwithstanding
the provisions of this Section, any disputes or rights between Executive and
Company concerning or arising from advancement and/or indemnification may, at
the option of Executive, be litigated in the courts of the State of Delaware,
for which purpose Company and Executive consent to the jurisdiction and forum of
such courts.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
|
/s/ Mark Patterson
|
/s/ Chris Mulvihill
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||
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Mark
Patterson
|
Chris
Mulvihill
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Executive
|
President
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Boomerang
Systems, Inc.
|