Exhibit 10.3
THIRD AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT, (this "Agreement")
dated as of April 24 1998, by and among Sound Source Interactive, Inc., a
Delaware corporation ("SSI/DE"), and Sound Source Interactive, Inc., a
California corporation ("SSI/CA") (SSI/DE and SSI/CA collectively, "Employer"),
and Xxxxxxx X. Xxxxxxx ("Executive").
W I T N E S S E T H:
WHEREAS, Executive has served as Chief Executive Officer of Employer since
1988;
WHEREAS, Employer and Executive entered into an Amended and Restated
Employment Agreement dated as of September 15, 1995, and a Second Amended and
restated Employment Agreement dated as of April 30, 1996 (collectively, the
"Prior Agreement");
WHEREAS, Employer and Executive mutually desire to amend and restate the
Prior Agreement in its entirety as set forth herein;
WHEREAS, Executive continues to possess an intimate knowledge of the
business and affairs of Employer, its policies, methods, personnel,
opportunities and problems;
WHEREAS, Employer desires to assure itself of Executive's continued
employment by Employer and to compensate him for such efforts; and
WHEREAS, Executive is desirous of committing himself to serve Employer on
the terms herein provided;
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Executive is hereby employed as the Chairman of the Board
and Chief Executive Officer ("CEO") of Employer. Executive, subject to the
direction and control of the Board of Directors of Employer (the "Board"), shall
have supervision and control over, and responsibility for, the operations and
affairs of Employer, and shall have such other powers and duties as may be from
time to time assigned to him by the Board; provided, that in no event shall
Executive be required to perform duties not in keeping with his position as an
executive officer of Employer. Executive hereby accepts such employment, all
subject to the terms and conditions herein contained. Executive hereby agrees
that during the period of his employment hereunder he shall devote substantially
all of his business time, attention and skills to the business and affairs of
Employer and its subsidiaries.
2. PLACE OF PERFORMANCE. In connection with his employment by Employer,
Executive shall be based at Employer's principal executive offices.
3. COMPENSATION.
(a) BASE SALARY. Employer shall pay to Executive, and Executive shall
accept, for all services which may be rendered by him pursuant to this
Agreement, a base salary ("Base Salary") as hereinafter set forth. The initial
Base Salary of Executive hereunder shall be $240,000 per annum. At the end of
the first full year of this Agreement, the Base Salary shall be increased by an
amount equal to the Base Salary then in effect multiplied by a fraction, the
numerator of which shall be the difference between (a) the Consumer Price Index
(as hereinafter defined) as of the first anniversary of the Effective Date (as
hereinafter defined) and (b) the Consumer Price Index as of the Effective Date,
and the denominator of which shall be the Consumer Price Index as of the
Effective Date; provided, that the "fraction" set forth in this sentence shall
never be zero or less. At the end of each succeeding full year of this
Agreement, the Base Salary shall be increased in a like manner.
Any increase in Base Salary or other compensation granted by Employer, the
Board or any committee thereof shall in no way limit or reduce any other
obligation of Employer hereunder and, once established at an increased specified
rate, Executive's Base Salary hereunder shall not thereafter be reduced, other
than as necessitated by Employer's adverse financial condition. Executive's
salary shall be payable in accordance with Employer's payroll practices as from
time to time in effect.
For purposes of this Agreement, the "Consumer Price Index" as of any
particular date means the Consumer Price Index for Urban Consumers for All
Items, as reported in the Monthly Labor Review (published by the Bureau of Labor
Statistics of the United States Department of Labor) in respect of the month
immediately preceding such particular date. In the event that the Consumer
Price index is not available, a successor or substitute index shall be used for
the computations herein set forth. In the event that the Consumer Price Index
or such successor or substitute index is not published, a reliable governmental
or other nonpartisan publication evaluating the information theretofore used in
determining the Consumer Price index shall be used for the computations herein
set forth.
(b) ADDITIONAL CASH COMPENSATION. Employer shall pay Executive
compensation in addition to Executive's Base Salary upon Employer's attainment
of one or more revenue or profitability levels. This additional compensation
shall be computed on an annual basis at the close of the Employer's fiscal year
and paid to Executive within ten days of completion of the annual audit. Any
disagreements regarding the calculation of the bonuses payable under this
Section 3(b) shall be determined by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in Los
Angeles, California. Such arbitration shall be conducted by a single arbitrator
who shall be a certified public accountant associated with a "Big Six"
accounting firm and not affiliated with either party. Such arbitrator shall be
selected by Employer and shall be reasonably acceptable to Executive.
(i) REVENUE ATTAINMENT. Employer shall pay Executive a cash bonus
if Employer realizes certain gross revenues. The cash bonus shall be based upon
the following schedule:
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Cumulative
Revenue Attainment Cash Bonus
------------------ ----------
$ 7,500,000 $ 25,000
$10,000,000 $ 75,000
$15,000,000 $125,000
The foregoing schedule shall apply in respect of the fiscal year ending June 30,
1998. The revenue attainment levels set forth in the schedule shall be
increased annually by 60 percent per annum for each subsequent fiscal year
during the term of this Agreement.
(ii) EMPLOYER GROSS PROFIT. Employer shall pay Executive a cash
bonus if Employer achieves successful gross profit levels. For purposes hereof,
"gross profit" means total revenues less cost of sales as determined by
Employer's independent public accountants in accordance with GAAP consistently
applied. The cash bonus shall be calculated based upon the following performance
schedule:
Cumulative
Gross Profit Cash Bonus
------------ ----------
$2,000,000 $ 50,000
$2,250,000 $ 75,000
$2,500,000 $100,000
The foregoing schedule shall apply respect of the fiscal year ending June 30,
1998. The gross profit levels set forth in the schedule shall be increased
annually by 60 percent per annum for each subsequent year during the term of
this Agreement.
(iii) PRE-TAX PROFITABILITY. Employer shall pay Executive a cash
bonus upon Employer's achieving certain levels of pre-tax profitability. For
purposes hereof, "pre-tax profitability" shall mean earnings before interest,
amortization, depreciation and income taxes divided by gross revenues as
determined by Employer's independent public accountants in accordance with GAAP
consistently applied. For each fiscal year during the term of this Agreement,
the cash payment shall be based on the following pre-tax profitability schedule:
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Pre-Tax Cumulative
Profitability Cash Bonus
------------- ----------
10% $ 50,000
15% $100,000
(iv) SEPARATE BONUS CATEGORIES. Each of the three bonus categories
set forth above shall be independent of each other and Executive may obtain cash
bonuses from one or more of the categories in the same fiscal year.
(c) AUTOMOBILE. In order to facilitate travel by Executive in the
performance of his duties hereunder, Employer shall furnish Executive, at no
expense to him, with an automobile owned or leased by Employer; provided, that
the total cost to the Company for lease/purchase payments shall not exceed
$1,000 per month. The manufacturer and type of such automobile shall be chosen
by Employer. Employer shall reimburse Employee for all expenses of maintaining,
insuring and operating such automobile upon the presentation of appropriate
vouchers and/or receipts (to the extent that Employer does not pay such expenses
directly). At the discretion of Executive, Employer shall, in lieu of
furnishing Executive with an automobile owned or leased by Employer and paying
all maintenance, insurance and operation expenses in connection therewith,
reimburse Executive for all expenses he incurs in maintaining, insuring and
operating one automobile owned or leased by Executive upon the presentation of
appropriate vouchers and/or receipts (to the extent that Employer does not pay
such expenses directly); provided, that the aggregate amount of such expenses
subject to reimbursement shall not exceed $1,000 per month.
(d) LIFE INSURANCE. During the term of his employment hereunder, the
Company shall purchase and keep in effect life insurance in the amount of
$5,000,000 on the life of the Executive; provided, that the total cost to the
Company for such insurance shall not exceed $7,500 per annum. Such life
insurance will name as beneficiaries those individuals designated by the
Executive.
(e) EXPENSES. During the term of his employment hereunder, Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by him in performing services hereunder, provided that Executive
properly accounts therefor in accordance with Employer's policy relating
thereto. Without limiting the generality of the foregoing, the parties agree
that any travel Executive undertakes in connection with the performance of his
duties hereunder shall be in business class or better, and Employer shall
reimburse Executive for such expenses.
(f) BENEFIT PLANS. Executive shall be entitled to participate in or
receive benefits under any employee benefit plan or arrangement currently
available, or made available by Employer in the future, to its executives and
key management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plan or arrangement. Employer
shall not make any changes in any employee benefit plans or arrangements in
effect on the date hereof or during the term of this Agreement in which
Executive participates (including, without limitation, any
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pension and retirement plan, supplemental pension and retirement plan, savings
and profit sharing plan, stock ownership plan, stock purchase plan, stock option
plan, life insurance plan, medical insurance plan, disability plan, dental plan,
health-and-accident plan or arrangement) which would adversely affect
Executive's rights or benefits thereunder, unless such change occurs pursuant to
a program applicable to all executives of Employer and does not result in a
proportionately greater reduction in the rights of or benefits to Executive as
compared with any other executive of Employer. Any payments or benefits payable
to Executive hereunder in respect of any calendar year during which Executive is
employed by Employer for less than the entire such year shall, unless otherwise
provided in the applicable plan or arrangement, be prorated in accordance with
the number of calendar days in such calendar year during which he is so
employed.
(g) VACATIONS, HOLIDAYS AND SICK LEAVE. Executive shall be entitled to
the number of paid holidays, personal days off, vacation days and sick leave
days in each calendar year as are determined by Employer from time to time for
its senior executive officers, but not less than four weeks in any calendar year
(prorated, in any calendar year during which Executive is employed under this
Agreement for leans than the entire such year, in accordance with the number of
calendar days in such calendar year during which he is so employed). Vacation
may be taken in Executive's discretion, so long as it is not inconsistent with
the reasonable business needs of Employer. Executive shall be entitled to accrue
from year to year all vacation days not taken by him.
(h) PERQUISITES. Executive shall be entitled to continue to receive the
perquisites and fringe benefits appertaining to the office of the Chief
Executive Officer of Employer in accordance with present practice and
appropriate to the industry.
(i) KEY MAN LIFE INSURANCE. Executive shall cooperate with Employer to
secure, for Employer, a key man life insurance policy on the life of Executive
in the amount of $2,000,000 to $5,000,000, to be paid to Employer upon
Executive's death.
(j) BASE SALARY NOT EFFECTED BY OTHER BENEFITS. None of the benefits to
which Executive is entitled under any of the provisions of Sections 3(b) - 3(g)
hereof shall in any manner reduce or be deemed to be in lieu of the Base Salary
payable to Executive pursuant to Section 3(a) hereof.
(k) STOCK OPTIONS. SSI/DE shall grant to Executive options to purchase
50,000 shares of the common stock of SSI/DE pursuant to the 1995 Stock Option
Plan of SSI/DE. Such options shall be fully vested on the date of grant, which
shall be not later than April 30, 1998. The exercise price of 25,000 of such
options shall be $2.50 per share, and the exercise price of 25,000 of such
options shall be $5.00 per share.
4. TERM OF EMPLOYMENT. The employment by Employer of Executive pursuant
hereto shall commence as of the date hereof (the "Effective Date") and, subject
to the provisions of Section 5 hereof, shall terminate on December 31, 2000 (the
"Termination Date"). This Agreement shall automatically be extended for one
additional year beyond the Termination Date (the "Extended Termination Date")
unless at least 30 calendar days prior to the Termination Date, Executive or
Employer shall have given notice that he or it does not wish to extend this
Agreement.
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5. PREMATURE TERMINATION. Anything in this Agreement contained to the
contrary notwithstanding:
(a) DEATH. Executive's employment hereunder shall terminate
forthwith upon the death of Executive.
(b) DISABILITY. Executive's employment hereunder shall terminate, at
the option of Employer, in the event that the Board makes a good faith
determination that Executive suffers from Disability (as hereinafter defined) so
as to be unable to substantially perform his duties hereunder for an aggregate
of 180 calendar days during any period of 12 consecutive months. As used in
this Agreement, the term "Disability" shall mean the material inability, in the
opinion of three-fourths of the entire membership of the Board set forth in a
resolution giving the particulars thereof, of Executive to render his agreed-
upon services to Employer due to physical and/or mental infirmity, which opinion
is concurred in by a physician or psychiatrist selected by Executive or his duly
appointed representative or guardian and reasonably acceptable to Employer.
(c) TERMINATION FOR CAUSE. Employer may terminate Executive's
employment hereunder for Cause. For purposes of this Agreement, Employer shall
have "Cause" to terminate Executive's employment hereunder upon (i) the willful
and continued failure by Executive to substantially perform his duties hereunder
(other than any such failure resulting from Executive's incapacity due to
physical or mental illness) after demand for substantial performance is
delivered by Employer specifically identifying the manner in which Employer
believes Executive has not substantially performed his duties, or (ii) the
willful engaging by Executive in misconduct which is materially injurious to
Employer, monetarily or otherwise, or (iii) the willful violation by Executive
of the provisions of Section 8 hereof provided that such violation results in
material injury to Employer. No act, or failure to act, on Executive's part
shall be considered "willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission was in the
best interest of Employer. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to Executive a copy of a resolution, duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice to Executive and an opportunity for him, together with his
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, Executive conducted, or failed to conduct, himself in a manner set
forth above in clause (i), (ii), or (iii) of this Section 5(c), and specifying
the particulars thereof in detail. Any dispute as to whether Cause to dismiss
Executive exists, shall be resolved by arbitration conducted in Los Angeles,
California in accordance with the rules of the American Arbitration Association
and by a single arbitrator reasonably acceptable to Executive and Employer.
(d) TERMINATION BY EXECUTIVE. Executive may terminate his employment
hereunder (i) for Good Reason (as hereinafter defined) or (ii) if his physical
or mental health becomes impaired to an extent that makes the continued
performance of his duties hereunder hazardous to his physical or mental health
or his life, provided that Executive shall have furnished Employer with a
written statement from a doctor or psychiatrist to such effect, and provided
further, that, at Employer's request and expense, Executive shall submit to an
examination by a physician or psychiatrist selected by Employer and such
physician or psychiatrist shall have concurred
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in the conclusion of Executive's physician or psychiatrist. Until Executive
terminates his employment pursuant to clause (ii) of this Section 5(d), he shall
continue to receive his full Base Salary, payable at the time such payments are
due.
(e) "GOOD REASON" DEFINED. For purposes of this Agreement, "Good
Reason" shall mean (i) any removal of Executive as, or any failure to re- elect
Executive as, Chairman of the Board of Employer except in connection with
termination of Executive's employment for Cause (as hereinafter defined) or
Disability, provided, however, that any removal of Executive as, or any failure
to re-elect Executive as, Chairman of the Board of Employer (except in
connection with termination of Executive's employment for Cause or Disability)
shall not diminish or reduce the obligations of Employer to Executive under this
Agreement, or (ii) a reduction of ten percent or more in Executive's then
current Base Salary, other than a reduction necessitated by Employer's adverse
financial condition, or any failure by Employer to comply with any of the
provisions of Sections 1, 2, 3 or 4 hereof, or (iii) the failure of Employer to
obtain the assumption of the agreement to perform this Agreement by any
successor to Employer, as provided for in Section 8 hereof.
(f) NOTICE OF TERMINATION. Any termination of Executive's employment
by Employer or by Executive (other than termination pursuant to Section 5(a)
hereof) 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 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.
(g) DATE OF TERMINATION. For purposes of this Agreement, "Date of
Termination" shall mean (i) if Executive's employment is terminated by his
death, the date of his death, (ii) if Executive's employment is terminated
pursuant to Section 5(b) hereof, 30 calendar days after Notice of Termination is
given (provided that Executive shall not have returned to the performance of his
duties on a full- time basis during such 30-day period), (iii) if Executive's
employment is terminated pursuant to Section 5(c) hereof, the date specified in
the Notice of Termination, and (iv) if Executive's employment is terminated for
any other reason, the date on which a Notice of Termination is given.
6. PAYMENTS AND BENEFITS UPON EARLY TERMINATION.
(a) EARLY TERMINATION FOR DEATH, DISABILITY OR CAUSE. Upon the
termination of this Agreement prior to the Termination Date (or, if this
Agreement shall have been extended to the Extended Termination Date, as provided
in Section 4 hereof, prior to the Extended Termination Date) (X) by Employer as
a result of death, Disability or termination of Executive for Cause or (Y) by
Executive for any of the reasons set forth in clause (ii) of Section 5(d)
hereof, Employer shall pay Executive:
(i) his Base Salary through the Date of Termination at the
rate in effect at the time of Notice of Termination is given or, in the case of
the death of Executive, the Date of Termination, payable at the time such
payments are due; and
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(ii) all other amounts to which Executive is entitled,
including, without limitation, expense reimbursement amounts or amounts due
under any benefit plan of Employer accrued to the Date of Termination, at the
time such payments are due.
(b) EARLY TERMINATION OTHER THAN FOR DEATH, DISABILITY OR CAUSE. Upon
the termination of this Agreement prior to the Termination Date (or, if this
Agreement shall have been extended to the Extended Termination Date, as provided
in Section 4 hereof, prior to the Extended Termination Date) (X) by Employer
other than for death, Disability or Cause or (Y) by Executive for Good Reason or
as a result of a breach of this Agreement by Employer, Employer shall pay to
Executive:
(i) his Base Salary through the Termination Date at the rate
in effect at the time Notice of Termination is given, payable at the time such
payments are due (or, if this Agreement shall have been extended to the Extended
Termination Date, as provided in Section 4 hereof, his Base Salary through the
Extended Termination Date at the rate in effect at the time Notice of
Termination is given, payable at the time such payments are due); and
(ii) all other amounts to which Executive is entitled,
including, without limitation, expense reimbursement amounts or amounts due
under any benefit plan of Employer accrued to the Date of Termination, at the
time such payments are due.
In addition, for the 36-month period after termination for any of the
reasons specified in this Section 6(b), Employer shall arrange to provide
Executive with life and health insurance benefits substantially similar to those
which Executive was receiving immediately prior to the Notice of Termination.
(c) PAYMENT OF DAMAGES. Upon the early termination of this
Agreement, Employer shall pay all other damages to which Executive may be
entitled as a result of Employer's termination of his employment under this
Agreement, including damages for any and all loss of benefits to Executive under
Employer's employee benefit plans which he would have received if Employer had
not breached this Agreement and had his employment continued for the full term
provided in Section 4 hereof, and including all legal fees and expenses incurred
by him in contesting or disputing any such termination of in seeking to obtain
or enforce any right or benefit provided by this Agreement.
(d) MITIGATION NOT REQUIRED. Executive shall not be required to
mitigate the amount of any payment provided for in this Section 6 by seeking
other employment or otherwise. However, the amount of any payment provided for
in this Section 6 shall be reduced by any compensation earned by Executive as
the result of employment by another employer engaged in the business of
interactive educational computer software after the Date of Termination, or
otherwise.
7. REGISTRATION RIGHTS.
(a) At the request of Executive made at any time subsequent to the
Date of Termination, SSI/DE, on not more than two occasions, will, as promptly
as practicable (and in any event no later than 120 days following the
Executive's request): (i) prepare and file under the Securities Act of 1933, as
amended ("Securities Act"), using its year-end financial statements
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for the preceding year, a registration statement relating to all of the common
stock of SSI/DE held by or issuable to Executive pursuant to any option or other
agreement between SSI/DE and Executive (collectively, the "Registrable
Securities"); and (ii) prepare and file with the appropriate Blue Sky
authorities the necessary documents to register or qualify such Registrable
Securities. Notwithstanding the foregoing, Executive shall not be entitled to
exercise his rights under this Section 7(a) for a period of one year following
the initial public offering of common stock of the employer without the consent
of the lead underwriters in the initial public offering.
(b) As a condition for the inclusion of any Registrable Securities in
any registration statement pursuant to this paragraph 7, at the request of
SSI/DE, Executive shall enter into an underwriting agreement with SSI/DE and the
underwriter(s) with respect to the registration of the Registrable Securities,
in such form as may be reasonably agreed upon by Employer and such
underwriter(s), as long as such agreement is consistent with those then in use
by major underwriters and with the provisions hereof.
(c) SSI/DE shall pay all registration expenses relating to any
registration of Registrable Securities pursuant to this paragraph 7. Executive
shall pay all brokerage fees, underwriting fees and discounts, transfer taxes,
if any, and the fees and expenses of Executive's legal counsel in connection
with the registration and sale of the Registrable Securities.
8. NONDISCLOSURE; NONCOMPETE.
(a) CONFIDENTIAL INFORMATION. Executive shall not, to the detriment
of Employer, knowingly use for his own benefit or disclose or reveal to any
unauthorized person, any trade secret or other confidential information received
by Executive in the course of his employment or engagement in any capacity by
employer which relates to Employer or to any of the businesses operated by it,
including, but not limited to, any customer lists, customer needs, price and
performance information, specifications, hardware, software, devices, supply
sources and characteristics, business opportunities, marketing, promotional,
pricing and financing techniques, or other information relating to the business
of Employer, and Executive confirms that such information constitutes the
exclusive property of Employer. However, said restriction on confidential
information shall not apply to information which is: (i) generally available in
the industry in which Employer operates, (ii) disclosed in published literature
or (iii) obtained by Executive from a third party without binder or secrecy.
Executive agrees that, except as otherwise expressly agreed to by Employer, he
will return to Employer, promptly upon the request of the Board or any executive
officer designated by the Board, any physical embodiment of such confidential
information.
(b) NONCOMPETITION. During the term of his employment by Employer,
Executive shall not engage, directly or indirectly (which includes, but is not
limited to, owning, managing, operating, controlling, being employed by, giving
financial assistance to, participating in or being connected in any material way
with any business or person so engaged), anywhere in the continental United
States, in the business of interactive educational computer software based on
licensed products from major motion pictures and televisions; provided, however,
that Executive's ownership as a passive investor of less than five percent of
the issued and outstanding stock of any publicly held corporation or partnership
so engaged shall not by
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itself be deemed to constitute such engagement by Executive; and provided
further that, subject to obtaining (as and when required) prior written consent,
which consent will not be unreasonably withheld, nothing herein shall be
construed to prevent Executive from engaging, directly or indirectly, in any
capacity in any business in the computer software or movie industries not
specified above. During such period, Executive shall not act to induce any of
Employer's or its subsidiaries, customers or employees to take action which
might be disadvantageous to Employer.
(c) REMEDIES. Executive recognizes that the possible restrictions on
his activities which may occur as a result of his performance of his obligations
under this Section 8 are required for the reasonable protection of Employer and
its investments, and Executive expressly acknowledges that damages alone will be
an inadequate remedy for any breach or violation of this Section 8, and that
Employer, in addition to all other remedies at law or in equity, shall be
entitled, as a matter of right, to injunctive relief, including specific
performance, with respect to any such breach or violation, in any court of
competent jurisdiction. If any of the provisions of this Section 8 are held to
be in any respect an unreasonable restriction upon Executive, then they shall be
deemed to extend only over the maximum period of time, geographic area, and/or
range of activities as to which they may be enforceable.
(d) NONEXCLUSIVITY. The undertakings of Executive contained in
Sections 8(a), 8(b) and 8(c) hereof shall be in addition to, and not in lieu of,
any obligations which he may have with respect to the subject matter hereof,
whether by contract, as a matter of law or otherwise.
9. SUCCESSORS; BENEFITS.
(a) SUCCESSORS. Employer shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer, by agreement in
form and substance satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Employer
would be required to perform it if no such succession had taken place. Failure
of Employer to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Executive to
compensation from Employer in the same amount and on the same terms as he would
be entitled to hereunder if he terminated his employment for Good Reason, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used
in this Agreement, "Employer" shall mean Employer as hereinbefore defined and
any successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 9 or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of law.
(b) BENEFITS. This Agreement and all rights of Executive hereunder
shall inure to the benefit of and be enforceable by Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die while any amounts
would still be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's devisee, legatee, or other designee or,
if there be no such designee, to Executive's estate.
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10. MISCELLANEOUS PROVISIONS.
(a) EXECUTION IN COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
(b) NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given or
made as of the date delivered, if delivered personally, or three calendar days
after having been mailed, if mailed by registered or certified mail, postage
prepaid, return receipt requested, as follows:
If to Employer, to: Sound Source Interactive, Inc.
00000 Xxxxxx Xxxx, Xxxxx X
Xxxxxxxxx, XX 00000-0000
If to Executive, to: Xxxxxxx X. Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
or to such other address as either party hereto shall have designated by like
notice to the other party hereto (except that a notice of change of address
shall only be effective upon receipt).
(c) AMENDMENT. This Agreement may only be amended by a written
instrument executed by each of the parties hereto.
(d) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties hereto, oral
and written, with respect to the subject matter hereof, except that the
entitlement of Executive under paragraph 7 of the Prior Agreement to receive a
bonus from Employer computed as a percentage of Employer's net sales revenue
shall continue in effect until November 30, 1995.
(e) APPLICABLE LAW. This Agreement shall be governed by the laws of
the State of California applicable to contracts made and to be wholly performed
therein.
(f) HEADINGS. The headings contained herein are for the sole purpose
of convenience of reference and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
(g) WAIVER, ETC. The failure of either of the parties hereto to at
any time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Agreement or any provision hereof or the right of either of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any breach of any of the provisions of this Agreement shall be
effective unless set forth in a written instrument executed by the party against
whom or which enforcement of such waiver is sought; and no waiver of any such
breach shall be construed or deemed to be a waiver of any other or subsequent
breach.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.
EMPLOYER:
SOUND SOURCE INTERACTIVE, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxxxxx, President &
Chief Operating Officer
SOUND SOURCE INTERACTIVE, INC.,
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxxxxx, President &
Chief Operating Officer
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
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