EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") effective as of January 1, 2005 (the
"Effective Date") between XXXXXX INTERACTIVE INC., a Delaware corporation
("Company"), and XXXXX X. XXXXXXXX, XX. ("Executive").
1. CAPACITY AND DUTIES
1.1 Employment; Acceptance of Employment. Company hereby employs
Executive and Executive hereby accepts employment by Company for the period and
upon the terms and conditions hereinafter set forth.
1.2 Capacity and Duties.
(a) Executive shall serve as the Executive Vice
President, Chief Financial Officer and Treasurer of the Company. Executive shall
perform duties and shall have authority as may from time to time be specified by
the Chief Executive Officer and the Board of Directors of Company (the "Board").
Executive's title and duties may be changed from time to time by the Chief
Executive Officer and the Board; provided, however, that (i) Executive's
position, authority, duties, and responsibilities shall be no less senior and
executive in nature than those of Chief Financial Officer and shall be
consistent with those of a chief financial officer of a public company of the
size and type similar to the Company, (ii) the duties assigned to the Executive
shall be in all respects consistent with all applicable laws and regulations,
and (iii) Executive's title shall include at least "Chief Financial Officer".
Executive will report to the Chief Executive Officer of the Company. Executive's
principal business location shall be located within the City of New York,
Westchester County, New York, or Fairfield County, Connecticut, but he
acknowledges and agrees that travel to Company's and its affiliates' various
offices, and to other locations in furtherance of Company's business, will be
required in connection with the performance of Executive's duties hereunder.
(b) Executive shall devote full time efforts to the
performance of Executive's duties hereunder, in a manner that will faithfully
and diligently further the business and interests of Company; provided, however,
that nothing in this Section 1.2(b) shall prevent or limit the Executive from
serving on boards of directors (or similar governing bodies) of non-profit
corporations and other non-profit entities.
(c) Executive acknowledges that Company's reputation is
important in the continued success of its business, and agrees that he will not
discuss or comment in such a manner as may adversely impact the reputation or
public perception, or otherwise disparage, Company or its officers, employees,
or directors in any manner; provided, however, that Executive may make such
disclosures as may be required by law. Company acknowledges that Executive's
reputation is important to his continued success. Company agrees that it will
not, and that it will use all reasonable efforts to cause its officers,
employees, and directors not to, defame, disparage, or otherwise discuss or
comment about Executive in such a manner as may adversely impact his reputation
or public perception; provided, however, that Company may make such disclosures
as may be required by law.
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2. TERM OF EMPLOYMENT
2.1 Term. The term of Executive's employment hereunder, for all
purposes of this Agreement, shall commence on the Effective Date (the
"Commencement Date") and continue through and including the earliest to occur of
(i) June 30, 2006, if and as further extended to subsequent June 30ths as
provided in this Section 2.1, (ii) the date on which Executive dies, and (iii)
the date on which either the Company or Executive terminates Executive's
employment for any reason (the "Termination Date"). Except as hereinafter
provided, on June 30, 2006 this Agreement shall be automatically extended for an
additional one-year term, and if so extended shall be automatically extended for
successive additional one-year terms, unless either the Executive or Company
shall have given the other written notice of nonrenewal of this Agreement at
least three (3) months prior to June 30, 2006, or if applicable any one-year
extension term then in effect. If written notice of nonrenewal is given as
provided above, Executive's employment under this Agreement shall terminate on
June 30, 2006, or if the term of this Agreement has automatically renewed, on
the June 30 immediately following the date of the non-renewal notice.
3. COMPENSATION
3.1 Base Compensation. As compensation for Executive's services,
Company shall pay to Executive base compensation in the form of salary ("Base
Compensation") in the amount of $315,000 per annum. The salary shall be payable
in periodic installments in accordance with Company's regular payroll practices
for its executive personnel at the time of payment, but in no event less
frequently than monthly. The Compensation Committee of the Board shall review
Base Compensation periodically for the purpose of determining, in its sole
discretion, whether Base Compensation should be adjusted; provided, however,
that Executive's Base Compensation shall not be less than $315,000.
3.2 Signing and Performance Bonus.
(a) As additional compensation for the services rendered
by Executive to Company, Executive shall be paid a signing bonus of $67,500
payable on June 30, 2005 provided only that a Termination Date has not yet
occurred caused by a termination by the Company for Cause or a termination by
the Executive without Good Reason.
(b) For fiscal years ending after June 30, 2005, as
additional compensation for the services rendered by Executive to Company
Executive shall be paid a performance bonus ("Performance Bonus") payable in
full at the same time as payment of other executive bonuses by the Company
(generally targeted for payment within ninety (90) days after the end of the
relevant fiscal year of the Company). The Performance Bonus award criteria and
amounts shall be those established on an annual basis by the Compensation
Committee of the Board of Directors of the Company based upon performance
guidelines established for executive officers of the Company; provided, however,
that the target bonus for Executive for the fiscal year ending June 30, 2006
shall be $135,000 provided that performance guidelines are met. No bonus will be
due in the event that award criteria established by the Compensation Committee
are not met.
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3.3 Employee Benefits. Executive shall be entitled to participate
in such of Company's employee benefit plans and benefit programs, including
medical, hospitalization, dental, disability, accidental death and dismemberment
and travel accident plans and programs, as may from time to time be provided by
Company for its senior executives generally. In addition, Executive shall be
eligible to participate in all pension, retirement, savings and other employee
benefit plans and programs maintained from time to time by Company for the
benefit of its senior executives generally. Company shall have no obligation,
however, to maintain any particular program or level of benefits referred to in
this Section 3.3.
3.4 Vacation. Executive shall be entitled to the normal and
customary amount of paid vacation provided to senior executive officers of the
Company, but in no event less than 20 days during each 12 month period. Any
vacation days that are not taken in a given 12 month period shall accrue and
carry over from year to year up to a maximum aggregate of 5 days. The Executive
may be granted leaves of absence with or without pay for such valid and
legitimate reasons as the Board in its sole and absolute discretion may
determine, and is entitled to the same sick leave and holidays provided to other
executive officers of Company.
3.5 Expense Reimbursement. Company shall reimburse Executive for
all reasonable and documented expenses incurred by him in connection with the
performance of Executive's duties hereunder, including without limitation travel
cost and expense including to Company offices other than his principal office,
in accordance with its regular reimbursement policies as in effect from time to
time. In addition, the Company shall reimburse the Executive for his reasonable
costs up to a maximum of $10,000 incurred in the negotiation of this Employment
Agreement and the related agreements related to stock options granted to
Executive on the Effective Date.
3.6 Stock Options.
(a) On the Effective Date, the Company shall grant
Executive options to purchase 300,000 shares of the Company's stock with an
exercise price equal to the fair market value of the stock as of the close of
trading on the Effective Date.
(b) 65,000 of the options described in Section 3.6(a)
shall be granted under and pursuant to the terms of the Company's Long Term
Incentive Plan pursuant to the form of Incentive Stock Option Agreement annexed
hereto as Exhibit A.
(c) 235,000 of the options described in Section 3.6(a)
shall be granted under and pursuant to the Non-Qualified Stock Option Agreement
annexed hereto as Exhibit B. The Company agrees to file, as soon as practicable
after the Effective Date, to the extent it is then eligible to do so, a Form S-8
registration statement covering the shares of Company common stock underlying
the options. The Company is eligible to file Form S-8 registration statements on
the date of this Agreement.
3.7 Withholding. All payments under this Agreement shall be
subject to any required withholding of Federal, state and local taxes pursuant
to any applicable law or regulation.
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4. TERMINATION OF EMPLOYMENT
4.1 Accrued Obligations. For purposes of this Agreement, "Accrued
Base Obligations" shall mean amounts for Base Compensation, expense
reimbursement, and employee benefits which have accrued, vested, and are unpaid
as of the Termination Date, and (ii) "Accrued Bonus Obligations" shall mean (i)
any unpaid Performance Bonus earned for any fiscal year ending on or after July
1, 2005 and before the Termination Date, (ii) for the year in which the
Termination Date occurs if the Termination Date is subsequent to June 30, 2005,
a prorated Performance Bonus for the partial-year period ending before the
Termination Date if the Termination Date occurs in the last six months of the
applicable fiscal year calculated by annualizing the short period before
termination, and no prorated Performance Bonus if the Termination Date occurs in
the first six months of the applicable fiscal year, and (iii) for the year in
which the Termination Date occurs, if and only if the Termination Date is on or
prior to June 30, 2005, $67,500 if such amount is otherwise payable pursuant to
Section 3.2(b). Accrued Base Obligations shall be paid within thirty (30) days
after the Termination Date, and Accrued Bonus Obligations shall be paid on the
date on which they would have been paid under this Agreement absent the
occurrence of the Termination Date.
4.2 Termination Procedures. Except as otherwise provided in this
Agreement, any termination of Executive's employment by the Company or by
Executive (other than termination pursuant to death) shall be communicated by
written Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and, if
applicable, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
No Notice of Termination of Executive for Cause shall be given
by the Company unless and until (i) adoption by the Board of Directors of Xxxxxx
of a resolution, finding that in the good faith opinion of the Board of
Directors Executive is guilty of the conduct described in the definition of
Cause, after at least five (5) business days notice is provided to Executive,
such notice to include in reasonable specificity the alleged conduct justifying
such termination for Cause, and (ii) an opportunity is given to Executive,
together with counsel, to be heard by the Board of Directors of Xxxxxx at a
meeting (which may be held by telephonic conference call). This Section 4.2
shall not prevent Executive from challenging, pursuant to Section 6.1, the
Board's determination that Cause exists, or that Executive has failed to cure
any act (or failure to act), to the extent permitted by this Agreement, that
purportedly formed the basis for the Board's determination.
4.3 Death of Executive. If Executive dies prior to a Termination
Date that otherwise occurs, Company shall not thereafter be obligated to make
any further payments hereunder other than amounts for Accrued Base Obligations
and Accrued Bonus Obligations.
4.4 Disability of Executive. If Executive is permanently disabled
(as defined in Company's long-term disability insurance policy then in effect),
then the Board shall have the right to terminate Executive's employment upon 30
days' prior written notice to Executive at any time during the continuation of
such disability ("Disability"). In the event Executive's employment is
terminated for Disability in accordance with this Section 4.4, Company shall not
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be obligated to make any further payments hereunder except for Accrued Base
Obligations and Accrued Bonus Obligations.
4.5 Termination for Cause.
(a) Executive's employment hereunder shall terminate
immediately upon a Notice of Termination from the Company that Executive is
being terminated for Cause (as defined herein), in which event Company shall not
thereafter be obligated to make any further payments hereunder other than
Accrued Base Obligations and Accrued Bonus Obligations.
(b) "Cause" shall be limited to the following:
(i) willful failure to substantially perform
Executive's duties as described in Section 1.2 after demand for substantial
performance is delivered by Company in writing that specifically identifies the
manner in which Company believes Executive has not substantially performed
Executive's duties and Executive's failure to cure such non-performance within
ten (10) days after receipt of the Company's written demand; provided, however,
that a failure to perform such duties during the remedy period set forth in
subsection (i) of the definition of Good Reason set forth in Section 4.7 hereof,
following the issuance of a Notice of Termination (as herein defined) by
Executive for Good Reason, shall not be Cause unless an arbitrator acting
pursuant to Section 6.1 hereof finds Executive to have acted in bad faith in
issuing such Notice of Termination;
(ii) willful conduct that is materially and
demonstrably injurious to Company or any of its subsidiaries, but not including
good faith conduct taken without intention to injure the Company or its
subsidiaries that, at the time engaged in, could not reasonably be expected to
be more likely than not to be materially injurious to the Company; or
(iii) conviction or plea of guilty or nolo
contendere to a felony or to any other crime which involves moral turpitude or,
if not including moral turpitude, provided the act giving rise to such
conviction or plea is materially and demonstrably injurious to the Company or
any of its subsidiaries;
(iv) material violation of Section 5 of this
Agreement, or material violation of Company polices set forth in Company manuals
or written statements of policy provided in the case of violation of policy that
such violation is either materially and demonstrably injurious to Company or, if
curable, continues for more then three (3) days after written notice thereof is
given to Executive by the Company; and
(v) material breach of any material provision of
this Agreement by Executive, which breach continues for more than ten days after
written notice thereof is given by the Company to Executive.
4.6 Termination without Cause or by Executive for Good Reason.
(a) The Company reserves the right to terminate
Executive's employment at any time. If, however, a Termination Date occurs (not
including termination in the ordinary course on any applicable June 30 if the
term of this Agreement is not automatically renewed,
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which circumstance is covered by Section 4.6(b)) for any reason other than Cause
under Section 4.5, termination by Executive under Section 4.7, death, or
Disability, then Company shall have no further obligations under this Agreement
except that Company shall pay to Executive:
(i) the Accrued Base Obligations through the
Termination Date, payable promptly after the Termination Date,
(ii) any unpaid Performance Bonus earned for any
fiscal year ended before the Termination Date payable the later of (A) the date
on which such Performance Bonus would be paid absent termination and (B) a date
no later than 30 days after the Termination Date,
(iii) the Performance Bonus, if any is earned, for
the fiscal year in which the Termination Date occurs, allocable to and prorated
for the period prior to termination, calculated by annualizing any short period
before termination, calculated and payable when Performance Bonuses for the
applicable year are paid to all other Company senior executives,
(iv) Base Compensation through and including the
date one year after the Termination Date, payable at the same times as paid
under Section 3.1; and
(v) benefits as required by Section 3.3 of this
Agreement during the same period that Base Compensation is due under Section
4.6(a)(iv); provided, however, if Executive, Executive's spouse or Executive's
dependents are ineligible to participate in the Company benefit programs under
Section 3.3, the Company shall arrange to provide Executive, Executive's spouse
and Executive's dependents with the economic equivalent of such benefits which
they otherwise would have been entitled to receive, and further provided that
such benefits become secondary to primary coverage upon the date or dates
Executive receives coverage and benefits which are substantially similar, taken
as a whole, without waiting period or pre-existing condition limitations, under
the plans and programs of a subsequent employer.
(b) If this Agreement is terminated in the ordinary
course on any applicable June 30 because of a non-renewal notice given by the
Company under Section 2.1, then Company shall have no further obligations under
this Agreement except that Company shall pay to Executive the payments to which
the Executive would be entitled under Section 4.6(a)(i), (ii), (iii), (iv), and
(v). If this Agreement is terminated in the ordinary course on any applicable
June 30 because of a non-renewal notice given by the Executive under Section
2.1, then Company shall have no further obligations under this Agreement except
that Company shall pay to Executive the payments to which the Executive would be
entitled under Section 4.6(a)(i), (ii), and (iii).
4.7 Termination by Executive without Good Reason. In the event
Executive's employment is voluntarily terminated by Executive without Good
Reason (and Executive may terminate this Agreement without Good Reason upon
fifteen (15) days prior notice), Company shall not be obligated to make any
further payments to Executive hereunder other than Accrued Base Obligations and
Accrued Bonus Obligations through the Termination Date.
"Good Reason" shall mean the following:
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(i) material breach of Company's obligations
hereunder, including any assignment of duties not included within the
Executive's duties described in Section 1.2 unless previously agreed to in
writing by Executive, provided that Executive shall have given reasonably
specific written notice thereof to Company, and Company shall have failed to
remedy the circumstances within fifteen (15) days thereafter;
(ii) any decrease in Executive's salary as it may
have increased during the term of this Agreement, except for decreases that are
in conjunction with decreases in executive salaries by the Company generally and
that do not result in a decrease in Executive's annual salary below $315,000 per
annum;
(iii) the failure of Executive to be appointed to
the positions set forth in Section 1.2(a);
(iv) the relocation of the Executive to an office
not permitted by the last sentence of Section 1.2(a); or
(v) the failure of any successor in interest of
the Company to be bound by the terms of this Agreement in accordance with
Section 6.4 hereof.
Executive must provide a Notice of Termination to the Company
that he is intending to terminate his employment for Good Reason within one
hundred and eighty (180) days after Executive has actual knowledge of the
occurrence of the latest event he believes constitutes Good Reason, which
termination notice shall specify a termination date within thirty (30) days
after the date of such notice except for termination under subsection (i) in
which case the termination date shall be as provided in such subsection.
Executive's right to terminate Executive's employment hereunder for Good Reason
shall not be affected by Executive's subsequent Disability provided that the
notice of intention to terminate is given prior to the onset of such Disability.
Subject to compliance by Executive with the notice provisions of this Section
4.7, Executive's continued employment prior to terminating employment for Good
Reason shall not constitute consent to, or a waiver of rights with respect to,
any act or failure to act constituting Good Reason. In the event Executive
delivers to the Company a Notice of Termination for Good Reason, upon request of
the Board Executive agrees to appear before a meeting of the Board called and
held for such purpose (after reasonable notice) and specify to the Board the
particulars as to why Executive believes adequate grounds for termination for
Good Reason exist. No action by the Board, other than the remedy of the
circumstances within the time periods specified in this Section 4.7, shall be
binding on Executive.
4.8 Mitigation. Executive shall not be required to mitigate
amounts payable under this Section 4 by seeking other employment or otherwise,
and there shall be no offset against amounts due Executive under this Agreement
on account of subsequent employment except as specifically provided herein.
4.9 Change of Control.
(a) If Executive is terminated without Cause, a
Termination Date occurs on a June 30 due to non-renewal by the Company of the
term of this Agreement under Section 2.1, or Executive terminates his employment
for Good Reason during the fifteen-month period
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following a Change of Control (as defined below), then in addition to payments
and benefits to which Executive is entitled under Section 4.6, Executive also
shall receive reimbursement for reasonable (in the discretion of the Company)
and actual expenses incurred by Executive for six months of out-placement
services.
(b) If a Change of Control shall have occurred:
(i) after such Change of Control Executive's
entitlement to Bonus under Section 3.2(b) may be modified by the new controlling
Person in a reasonable manner (not to be less favorable to the Executive than
the manner in which bonus calculations are modified for other executive
officers) so that such Bonus is calculated with reference to a performance-based
bonus plan provided by the new controlling Person; and
(ii) after such Change of Control Executive's
entitlement to payments and benefits under Sections 3.3 and 3.4 may be modified
by the new controlling Person to entitlement to those benefits generally
provided to executives of the new controlling Person.
(c) A "Change of Control" shall be deemed to have
occurred if:
(i) the following individuals cease for any
reason to constitute a majority of the number of directors then serving as
directors of the Company: individuals who, on the date hereof, constitute the
Board of Directors of the Company and any new director (other than a director
whose initial assumption of office is in connection with the settlement of an
actual or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board of Directors of the Company or nomination
for election by the Company's stockholders was approved or recommended by a vote
of at least a majority of the directors then still in office who either were
directors on the date hereof or whose appointment, election or nomination for
election was previously so approved or recommended;
(ii) the stockholders of the Company approve a
complete liquidation or dissolution of the Company, except in connection with a
recapitalization or other transaction which does not otherwise constitute a
Change of Control for purposes of subsection (iii) or (iv) below;
(iii) any consolidation or merger of the Company
occurs; or
(iv) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of assets accounting
for fifty percent (50%) or more of total assets, fifty percent (50%) or more of
the total revenues, or stock accounting for fifty percent (50%) or more of
voting power, of the Company occurs;
other than, in case of either subsection (iii) or (iv), a transaction in which
immediately following such transaction, (x) more than fifty percent (50%) of the
combined voting power of the then outstanding voting securities of the surviving
entity in the case of a merger or consolidation or acquiring entity in the case
of a transfer (in each case, the "Surviving Entity") entitled to vote generally
in the election of directors (or other determination of governing body) is then
beneficially owned (within the meaning of Rule 13d-3 under the Securities
Exchange Act of
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1934) by all or substantially all of the individuals and entities who were the
owners of Company common stock immediately prior to such transaction in
substantially the same proportion, as among themselves, as their ownership of
such common stock immediately prior to such transaction, or (y) a majority of
the directors (or other governing body) of the Surviving Entity consists of
members of the Board of Directors of the Company in office during the twelve
months preceding the applicable transaction.
(d) If all or any portion of the payments or other
benefits paid or payable to Executive under this Agreement and under any other
plan, program or agreement of the Company or its affiliates, in each case,
however, in connection with or after a Change of Control, are determined to
constitute an excess parachute payment within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended, and as it may be amended on or after
the date of this Agreement (the "Code"), and results in the imposition on
Executive of an excise tax under Section 4999 of the Code, then, in addition to
any other benefits to which Executive is entitled under this Agreement, Xxxxxx
shall pay to Executive an amount equal to the sum of (i) the excise taxes
payable by Executive by reason of receiving excess payments; and (ii) a gross-up
amount necessary to offset any and all applicable federal, state, and local
excise, income, or other taxes incurred by Executive by reason of Xxxxxx'x
payment of the excise tax described in (i) above.
5. NON-COMPETITION AND CONFIDENTIALITY
5.1 Non-Competition.
(a) During the period that Executive is employed by the
Company, and for a period of one year after the Termination Date (the
"Non-Competition Period"), Executive shall not, directly or indirectly, own,
manage, operate, join, control, participate in, invest in or otherwise be
connected or associated with, in any manner, including, without limitation, as
an officer, director, employee, distributor, independent contractor, independent
representative, partner, consultant, advisor, agent, proprietor, trustee or
investor, any Competing Business (defined below); provided, however, that
ownership of 4.9% or less of the stock or other securities of a corporation, the
stock of which is listed on a national securities exchange or is quoted on the
NASDAQ Stock Market's National Market, shall not constitute a breach of this
Section 5, so long as the Executive does not in fact have the power to control,
or direct the management of, or is not otherwise engaged in activities with,
such corporation.
(b) For purposes of this Section 5.1, the term "Competing
Business" shall mean any business or venture which is substantially similar to
the whole or any significant part of the business conducted by Company, and
which is in material competition with the Company, and the term "Affiliate" of
any person or entity shall mean any other person or entity directly or
indirectly controlling, controlled by or under common control with such
particular person or entity, where "control" means the possession, directly or
indirectly, of the power to direct the management and policies of a person or
entity whether through the ownership of voting securities, contract, or
otherwise.
5.2 No Solicitation. During the Noncompetion Period, the Executive
shall not, directly or indirectly, including on behalf of, for the benefit of,
or in conjunction with, any other person or entity, (i) solicit, assist, advise,
influence, induce or otherwise encourage in any way,
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any employee of Company to terminate such employee's relationship with Company
for any reason, or assist any person or entity in doing so, or employ, engage or
otherwise contract with any employee or former employee of Company in a
Competing Business or any other business unless such former employee shall not
have been employed by Company for a period of at least one year and no
solicitation prohibited hereby shall have occurred prior to the end of such
one-year period, (ii) interfere in any manner with the relationship between any
employee and Company, or (iii) contact, service or solicit any existing clients,
customers or accounts of Company on behalf of a Competing Business, either as an
individual on Executive's own account, as an investor, or as an officer,
director, partner, joint venturer, consultant, employee, agent or salesman of
any other person or entity.
5.3 Confidential Information.
(a) "Confidential Information" shall mean all proprietary
or confidential records and information, including, but not limited to,
development, marketing, purchasing, organizational, strategic, financial,
managerial, administrative, production, distribution and sales information,
distribution methods, data, specifications, technologies, methods, and processes
(including the Transferred Property as hereinafter defined) presently owned or
at any time hereafter developed by Company, or its agents, consultants, or
otherwise on its behalf, or used presently or at any time hereafter in the
course of the business of Company, that are not otherwise part of the public
domain.
(b) Executive hereby sells, transfers and assigns to
Company, or to any person or entity designated by Company, all of Executive's
entire right, title and interest in and to all inventions, ideas, methods,
developments, disclosures and improvements (the "Inventions"), whether patented
or unpatented, and copyrightable material, and all trademarks, trade names, all
goodwill associated therewith and all federal and state registrations or
applications thereof, made, adopted or conceived by solely or jointly, in whole
or in part prior to the Termination Date which (i) relate to methods, apparatus,
designs, products, processes or devices sold, leased, used or under construction
or development by Company or (ii) otherwise relate to or pertain to the
business, products, services, functions or operations of the Company
(collectively, the "Transferred Property"). Executive shall make adequate
written records of all Inventions, which records shall be Company's property and
shall communicate promptly and disclose to Company, in such forms Company
requests, all information, details and data pertaining to the aforementioned
Inventions. Whether during the term of this Agreement or thereafter, Executive
shall execute and deliver to Company such formal transfers and assignments and
such other papers and documents as may be required of Executive to permit
Company, or any person or entity designated by Company, to file and prosecute
patent applications (including, but not limited to, records, memoranda or
instruments deemed necessary by Company for the prosecution of the patent
application or the acquisition of letters patent in the United states, foreign
counties or otherwise) and, as to copyrightable material, to obtain copyrights
thereon, and as to trademarks, to record the transfer of ownership of any
federal or state registrations or applications.
(c) All Confidential Information is considered secret and
will be disclosed to the Executive in confidence, and Executive acknowledges
that, as a consequence of Executive's employment and position with Company,
Executive may have access to and become acquainted
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with Confidential Information. Except in the performance of Executive's duties
as an employee of Company, Executive shall not, during the term and at all times
thereafter, directly or indirectly for any reason whatsoever, disclose or use
any such Confidential Information. All records, files, drawings, documents,
equipment and other tangible items (whether in electronic form or otherwise),
wherever located, relating in any way to or containing Confidential Information,
which Executive has prepared, used or encountered or shall in the future
prepare, use or encounter, shall be and remain Company's sole and exclusive
property and shall be included in the Confidential Information. Upon termination
of this Agreement, or whenever requested by Company, Executive shall promptly
deliver to Company any and all of the Confidential Information and copies
thereof, not previously delivered to Company, that may be in the possession or
under the control of the Executive. The foregoing restrictions shall not apply
to the use, divulgence, disclosure or grant of access to Confidential
Information to the extent, but only to the extent, (i) expressly permitted or
required pursuant to any other written agreement between Executive and Company,
(ii) such Confidential Information has been publicly disclosed (not due to a
breach by the Executive of Executive's obligations hereunder, or by breach of
any other person, of a fiduciary or confidential obligation to Company) or (iii)
the Executive is required to disclose Confidential Information by or to any
court of competent jurisdiction or any governmental or quasi-governmental
agency, authority or instrumentality of competent jurisdiction, provided,
however, that the Executive shall, prior to any such disclosure, immediately
notify Company of such requirements and provided further, however, that the
Company shall have the right, at its expense, to object to such disclosures and
to seek confidential treatment of any Confidential Information to be so
disclosed on such terms as it shall determine.
5.4 Consideration for Section 5 Covenants. In consideration of the
covenants contained in this Section 5, the Company is willing to incur the
payment and related obligations under this Agreement, including in particular
and without limitation those obligations under Section 4.6(a)(iv). Executive
acknowledges and agrees that the Company's entry into this Agreement and its
incurrence of the related payment and other obligations hereunder are fair and
adequate consideration for the Executive's obligations under this Section 5, and
that the Company has advised Executive that it would not bind itself in advance
to the obligations hereunder but for Executive's agreement to this Section 5. In
this regard, the Executive understands that the provisions of this Section 5 may
limit Executive's ability to earn a livelihood in a business similar or related
to the business of Company, but nevertheless agrees and acknowledges that (i)
the provisions of Section 5 are reasonable and necessary for the protection of
Company, and do not impose a greater restraint than necessary to protect the
goodwill or other business interest of Company, (ii) such provisions contain
reasonable limitations as to the time and the scope of activity to be
restrained, and (iii) the Company's advance agreement to make payments under the
various circumstances set forth in this Agreement provide Executive with
benefits adequate to fully compensate Executive for any lost opportunity due to
the operation of Section 5. In consideration of the foregoing and in light of
Executive's education, skills and abilities, Executive agrees that all defenses
by Executive to the strict enforcement of such provisions are hereby waived by
Executive.
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5.5 Acknowledgement; Remedies; Survival of this Agreement.
(a) Executive acknowledges that violation of any of the
covenants and provisions set forth in Section 5 of this Agreement would cause
Company irreparable damage and agrees that Company's remedies at law for a
breach or threatened breach of any of the provisions of this Section 5 would be
inadequate and, in recognition of this fact, in the event of a breach or
threatened breach by Executive of any of the provisions of this Agreement, it is
agreed that, in addition to the remedies at law or in equity, Company shall be
entitled, without the posting of a bond, to equitable relief in the form of
specific performance, a temporary restraining order, temporary or permanent
injunction, or any other equitable remedy which may then be available for the
purposes of restraining Executive from any actual or threatened breach of such
covenants. Without limiting the generality of the foregoing, if Executive
breaches or threatens to breach this Section 5 hereof, such breach or threatened
breach will entitle Company (i) to terminate its obligations to make further
payments otherwise required under this Agreement, and (ii) to enjoin Executive
from disclosing any Confidential Information to any Competing Business, to
enjoin any Competing Business from retaining Executive or using any such
Confidential Information, and to enjoin Executive from rendering personal
services to or in connection with any Competing Business. The rights and
remedies of the parties hereto are cumulative and shall not be exclusive, and
each such party shall be entitled to pursue all legal and equitable rights and
remedies and to secure performance of the obligations and duties of the other
under this Agreement, and the enforcement of one or more of such rights and
remedies by a party shall in no way preclude such party from pursuing, at the
same time or subsequently, any and all other rights and remedies available to
it.
(b) The provisions of this Section 5 shall survive the
termination of Executive's employment with Company.
6. MISCELLANEOUS
6.1 Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
New York, New York, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The parties consent to the
authority of the arbitrator, if the arbitrator so determines, to award fees and
expenses (including legal fees) to the prevailing party in the arbitration.
Notwithstanding the foregoing, Company shall be entitled to enforce the
provisions of Section 5 hereof through proceedings brought in a court of
competent jurisdiction as contemplated by Section 6.7 hereof.
6.2 Severability; Reasonableness of Agreement. If any term,
provision or covenant of this Agreement or part thereof, or the application
thereof to any person, place or circumstance shall be held to be invalid,
unenforceable or void by an arbitrator or court of competent jurisdiction, the
remainder of this Agreement and such term, provision or covenant shall remain in
full force and effect, and any such invalid, unenforceable or void term,
provision or covenant shall be deemed, without further action on the part of the
parties hereto, modified, amended and limited, and the arbitrator or court shall
have the power to modify, amend and limit any such term, provision or covenant,
to the extent necessary to render the same and the remainder of the Agreement
valid, enforceable and lawful.
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6.3 Key Employee Insurance. Company in its sole discretion shall
have the right at its expense to purchase insurance on the life of Executive, in
such amounts as it shall from time to time determine, of which Company shall be
the beneficiary. Executive shall submit to such physical examinations as may
reasonably be required and shall otherwise cooperate with Company in obtaining
such insurance.
6.4 Assignment; Benefit. This Agreement shall not be assignable by
Executive, other than Executive's rights to payments or benefits hereunder,
which may be transferred only by will or the laws of descent and distribution.
Upon Executive's death, this Agreement and all rights of Executive hereunder
shall inure to the benefit of and be enforceable by Executive's beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any
such person succeeds to Executive's interests under this Agreement. No rights or
obligations of Company under this Agreement may be assigned or transferred
except to any successor to the Company's business and/or assets (by merger,
purchase of stock or assets, or otherwise) which, to the extent not otherwise
automatically provided by operation of law, expressly assumes and agrees to
perform this Agreement in the same manner and to the same extent that Company
would be required to perform if no such succession had taken place.
6.5 Notices. All notices hereunder shall be in writing and shall
be deemed sufficiently given (i) if hand-delivered, on the date of delivery,
(ii) if sent by documented overnight delivery service, on the first business day
after deposit with such service for overnight delivery, and (iii) if sent by
registered or certified mail, postage prepaid, return receipt requested, on the
third business day after deposit in the U.S. mail, in each case addressed as set
forth below or at such other address for either party as may be specified in a
notice given as provided herein by such party to the other. Any and all service
of process and any other notice in any such action, suit or proceeding shall be
effective against any party if given as provided in this Agreement; provided
that nothing herein shall be deemed to affect the right of any party to serve
process in any other manner permitted by law.
(i) If to Company:
Xxxxxx Interactive Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
With Copies To:
Xxxx Xxx Xxxxxxx, Esq.
Xxxxxx Beach LLP
00 Xxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
(ii) If to Executive:
Xxxxx X. Xxxxxxxx, Xx.
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
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With Copies To:
Xxxxx Xxxxx, Esq.
Xxxx Xxxxx & Xxxxxxx LLP
Xxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000-0000
6.6 Entire Agreement; Modification. This Agreement constitutes the
entire agreement between the parties hereto with respect to the matters
contemplated herein and supersedes all prior agreements and understandings with
respect thereto. No amendment, modification, or waiver of this Agreement shall
be effective unless in writing. Neither the failure nor any delay on the part of
any party to exercise any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power, or privilege with respect to such
occurrence or with respect to any other occurrence.
6.7 Governing Law. This Agreement is made pursuant to, and shall
be construed and enforced in accordance with, the laws of the State of Delaware
and the federal laws of the United States of America, to the extent applicable,
without giving effect to otherwise applicable principles of conflicts of law.
Subject to Section 6.1 of this Agreement, the parties hereto expressly consent
to the jurisdiction of any state or federal court located in the State of New
York, and to venue therein, and consent to the service of process in any such
action or proceeding by certified or registered mailing of the summons and
complaint therein directed to Executive or Company, as the case may be, at its
address as provided in Section 6. hereof.
6.8 Prevailing Party. Should either party breach the terms of this
Agreement, the prevailing party who seeks to enforce the terms and conditions of
this Agreement shall be entitled to recover its attorneys fee and disbursements.
6.9 Headings; Counterparts; Interpretation. The headings of
paragraphs in this Agreement are for convenience only and shall not affect its
interpretation.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which, when taken together,
shall be deemed to constitute the same Agreement.
The Company and the Executive each acknowledge that it has been
represented by legal counsel in the negotiation and drafting of this Agreement,
that this Agreement has been drafted by mutual effort, and that no ambiguity in
this Agreement shall be construed against either party as draftsperson.
6.10 Further Assurances. Each of the parties hereto shall execute
such further instruments and take such other actions as the other party shall
reasonably request in order to effectuate the purposes of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the date first above written.
[Signature Page Follows]
15
XXXXXX INTERACTIVE INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
/s/ Xxxxx X. Xxxxxxxx, Xx.
----------------------------------
XXXXX X. XXXXXXXX, XX.
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