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§16.108 To approve an agreement with an officer of the corporation which permits him to personally purchase from the corporation, at its cost, up to 12.5% of any new business venture that was formulated by him in which the corporation engagesPROPOSED AGREEMENT WITH THE CHAIRMAN OF THE BOARD OF THE COMPANY Barry Yampol, President and Chairman of the Board of the Company, is presently employed by the Company pursuant to the terms of an employment agreement dated July 1, 1970 (the "Employment Agreement") which has been renewed for one year periods by both the Company and Mr. Yampol since the expiration of its initial term of four years. Mr. Yampol's present direct remuneration from the Company is $95,000 per annum. In addition, for the year ended June 30, 1980 the Company accrued $26,800 towards a retirement benefit payable to Mr. Yampol pursuant to the Employment Agreement (see "Remuneration and Certain Transactions with Management" herein). The Employment Agreement also requires Mr. Yampol to "devote his entire time (except for vacations), attention and energies" to the business of the Company. From time to time (dating in time from a point prior to the organization of the Company), Mr. Yampol has made private investments for his own account in real estate, mining, minerals and in various other areas and thus believed that the Employment Agreement should be modified to allow him to continue to manage his outside investments without conflicting with the terms of the Employment Agreement. The Board of Directors of the Company (with Mr. Yampol abstaining) authorized the modification to Paragraph 5 of the Employment Agreement as set forth below: "5. Extent of Services. The Employee shall devote substantially all of his time during normal business hours (except for vacations), attention and energies to the business of the Employer, and shall not, during the term of this Agreement, be engaged in any other business activity requiring Employee to devote substantial time during normal business hours whether or not such business activity is pursued for gain, profit, or other pecuniary advantage; the foregoing shall not be construed as preventing the Employee from investing his assets and managing his investments in such form or manner as will not require any significant services during normal business hours on the part of the Employee in the operation of the affairs of the companies for which such investments are made." The Board of Directors has also sought to create additional incentives for Mr. Yampol to continue to seek to expand the Company's business through new business ventures. After due consideration by the Board (with Mr. Yampol abstaining) and Mr. Yampol, the Board of Directors and Mr. Yampol have agreed to the matters set forth below, subject to an affirmative vote of a majority of Shareholders of the Company voting at the meeting of Shareholders or any adjournments thereof. As an encouragement and incentive to Mr. Yampol to continue to seek to expand the Company's activities through new business ventures and enterprises, the Company has agreed to grant to Mr. Yampol an option to purchase up to 12.5076 of the equity in any new business ventures in which the Company engages, which were formulated by Mr. Yampol. The purchase price to Mr. Yampol would be proportionate to the cost to the Company of its interest in such new entity formed for such business venture. Determination of whether or not any business venture would be deemed "new" to the Company and formulated by Mr. Yampol, as well as the terms and conditions of his purchase of any interest formed for such business venture, would be subject to a determination by the Board of Directors of the Company, in their sole discretion, other than Mr. Yampol.On August 7, 1981, Switchco, Inc. ("Switchco"), a 99% owned subsidiary of the Company, filed a Registration Statement with the Securities and Exchange Commission respecting the proposed sale of 2,500,000 shares of Common Stock of Switchco, at $10 per share. A copy of the Preliminary Prospectus of Switchco, dated August 24, 1981, has been included with this Proxy Statement. The Board of Directors of the Company has determined that Switchco is a business venture formulated by Mr. Yampol and has offered to Mr. Yampol, subject to Shareholder approval, the right to purchase 985,250 shares of Common Stock of Switchco which it presently owns at the Company's cost per share (see Switchco Preliminary Prospectus - "Certain Transactions" at page 25), which was $.01 per share. Assuming the successful completion of the offering of Switchco shares of Common Stock such interest would represent approximately 9.4% of the total outstanding shares of Common Stock of Switchco. SHAREHOLDERS OF THE COMPANY ARE URGED TO READ THE SWITCHCO PRELIMINARY PROSPECTUS BEFORE VOTING ON THIS PROPOSAL. An affirmative vote of the majority of Shareholders of the Company voting at the meeting of Shareholders, or any adjournments thereof, shall be required in order to: (i) enter into such an agreement as described above with Mr. Yampol on new business ventures formulated by him; and (ii) approve the action of the Board of Directors of the Company offering the sale of 985,250 shares of Common Stock of Switchco to Mr. Yampol at the Company's cost per share. Mr. Yampol, who owns approximately 26.7% of the outstanding Common Stock of the Company, has indicated that he will cast a vote of his shares in accordance with the votes cast by the majority of Shareholders voting on this proposal.