AMENDEDAND 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.

 

 

 

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)

***@***

 

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

***@***

 

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.