Employment Agreement
This Employment Agreement ("Agreement") is made as of March 25, 1996,
("Effective Date") between SP Enterprises, Inc. (also doing business as
"Interactive Magic", and hereafter in this Agreement the "Corporation"), a
Maryland corporation, and Xxxxxxx X. Xxxxxx ("Employee").
WHEREAS, the Corporation desires to employ Employee, and Employee desires
to be employed by the Corporation, upon the terms and conditions herein set
forth;
NOW, THEREFORE, in consideration of the foregoing premises, and the mutual
promises and covenants herein contained, the Corporation and Employee agree as
follows:
1. Term of Agreement. This Agreement shall commence as of the Effective
Date for an initial term of two (2) years, provided that upon each annual
anniversary of the Effective Date commencing March 25, 1998 the term shall be
extended automatically by an additional one (1) year unless either the
Corporation or Employee, prior to such anniversary date shall give notice of
intent not to extend the term for an additional year. The initial term, as
extended automatically pursuant to the foregoing sentence, is hereafter the
"Term of Agreement".
2. Period of Employment. The Corporation shall employ the Employee, and the
Employee shall serve in the employ of the Corporation, during the Term of
Agreement (the "Period of Employment"), in the position and with the duties and
responsibilities set forth in Exhibit A, subject to the other terms and
conditions of this Agreement.
3. Compensation. During the Period of Employment, the Corporation shall pay
to the Employee as compensation a base salary and incentive compensation as set
forth on Exhibit A.
4. Benefits. During the Period of Employment, the Corporation shall pay the
Employee the following benefits:
(a) Medical and Dental benefits. Employee shall be entitled to
reimbursement of reasonable health insurance premiums for family coverage
and shall be eligible to participate in the Corporation medical and dental
plans in accordance with the company's policies as may be in effect from
time to time.
(b) Disability Insurance. The Corporation shall provide Employee with
disability insurance in accordance with the Corporation's policies as may
be in effect from time to time.
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(c) Modification of Company Benefit Plans. Nothing herein shall be
construed as an obligation to make available benefit plans to its employees
generally, or to provide for specific terms and conditions relating to such
benefit plans.
(d) Vacation. Employee shall be entitled to all regular Corporation
employee holidays in addition to such vacation as provided in Exhibit A.
5. Termination Before Expiration of Period of Employee. The termination of
the employment of the Employee during the Period of Employment may occur, under
this Agreement, in any one of the following ways:
(a) By the Corporation. The Corporation may terminate the employment
of the Employee at any time.
(b) By the Employee. The Employee may terminate his employment at any
time during the Period of Employment for any reason, including retirement
pursuant to the provisions of the Corporation's retirement plan, if any.
(c) Death or Disability. Upon the death or disability of the employee,
and in either such event, the provisions of Section 8 will apply.
6. Notice of Termination. Any termination of the employment of the
Employee, whether by the Corporation or by the Employee shall be communicated to
the other party by notice in writing (the "Notice of Termination"), and shall
state the termination provision in this agreement relied upon and (other than
for nonrenewal of the Term provided in Section 1) shall set forth in reasonable
detail the facts/circumstances claimed to provide a basis for termination under
the provisions so indicated. The "Date of Termination" shall mean the date on
which the employment terminates.
7. Consequences of Termination. The Termination of the employment of the
Employee during the Period of Employment will cause the following results:
7.1. If the termination is for any reason other than either by the
Corporation for Cause (as defined herein) or by Employee voluntarily
(including resignation or pursuant to notice of nonrenewal by Employee
under Section 1):
(a) The Corporation will pay the Employee within five (5) days
after the Date of Termination: (i) any unpaid base compensation for
services performed prior to the Date of Termination; (ii) the amount
of any accrued annual vacation pay to which he may be entitled under
the Corporation's vacation plan and other accrued but unpaid benefits;
and (iii) an amount as liquidated damages, and in a lump sum, equal to
the total of (A) Employee's annual base salary then in effect
(regardless of whether such salary has been paid or deferred); (B)
Employee's incentive compensation under Section 4 (b), if any, due
from prior years but unpaid as of the Date of Termination; and
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(C) such incentive compensation under Section 4 (b), if any, as would
have been earned (as defined in Section 7.1 (b)) by Employee for the
period from January 1 of the year of the Date of Termination through
the Date of Termination, in all cases subject to applicable federal
and state withholding. (The total amount due under subsection (iii) is
hereafter the "Termination Damages.")
(b) For purposes of calculating the incentive compensation
component in foregoing clause (a) (iii) (C), Employee shall be deemed
to have earned such incentive compensation if the Corporation's
performance, either pro-rated as of the Date of Termination from the
annual performance criteria as previously determined by the Board of
Directors under Section 3 ("Performance Criteria") or as of the end of
the applicable year, substantially satisfies the Performance Criteria.
The amount of incentive compensation to which the Employee shall be
entitled under clause (a) (iii) (C) is the portion of the total
incentive compensation for the year in which the Date of Termination
occurs, pro rated from January 1 through the Date of Termination. In
the event the amount of incentive compensation due under clause (a)
(iii) (C) cannot reasonably be determined within five days of the Date
of Termination, the amount due under clause (a) (iii) (C) shall be
paid as soon as can practicably be determined, but in no event later
than incentive compensation paid to the Corporation's other employees
for such year.
(c) The term "Cause" shall mean: (i) breach of this Agreement
that (except as to breach sections 11 and 12, which shall not be
curable other than with the Corporation's consent which may be
withheld in its sole discretion) remains uncured 30 days following
written notice by the Corporation to Employee of such breach; (ii)
material or flagrant violations of Employer's policies and procedures;
(iii) other conduct that is substantially and materially detrimental
to the best interests of the Corporation; (iv) conviction of, or
pleading guilty or Confessing to, fraud, misappropriation,
embezzlement or any felony; or (v) willful failure, without reasonable
excuse or proper authorization, to devote full business time to the
affairs of the Corporation.
(d) Notwithstanding anything to the contrary, in the event of
notice by the Corporation pursuant to Section 1 that it will not
extend the Period of Employment for an additional one-year term upon
any anniversary of the Effective Date, amounts due the Employee under
Section (a) shall be reduced by amounts paid by the Corporation to
Employee as base and incentive compensation for the period commencing
January 3 of the final year of the Term of the Agreement through the
Date of Termination.
7.2 If the termination is voluntarily by the Employee or is by the
Corporation for Cause:
(a) The Corporation will pay the Employee within five (5) days
after the Date of Termination: (i) any unpaid compensation for
services performed prior to the Date of Termination; (ii) the amount
of any accrued annual vacation pay to
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which he may be entitled under the Corporation's vacation plan; and
(iii) incentive compensation for the year in which the Date of
Termination occurs as described in Section 7.1 (a) (iii) (C).
(b) For purposes of this section, "voluntary termination" by
Employee shall not include termination by Employee as a result of (i)
a material change in the Employee's duties, responsibilities or
authority, without his express written consent, or any change,
including the sale or other disposition of a substantial part of the
business of the Corporation and its subsidiaries, which would cause
the Employee's position with the Corporation to become of less
dignity, responsibility, importance or scope from the position and
attributes thereof described in Section 2; (ii) relocation or transfer
of the Employee's office to a location more than fifty miles from the
Employee's principal residence or the Corporation's principal offices
in North Carolina as of the date of this Agreement, without his
express written consent; (iii) failure to obtain the assumption of the
obligation to perform this Agreement by any successor, or (iv) breach
of this Agreement by the Corporation.
8. Death and Disability. In the event of the Employee's death or
disability, the following provisions will apply:
(a) Death. The Employee's employment shall be terminated upon his
death, and the beneficiaries of the Employee will be entitled to receive
the amounts set forth in section 7.2 (a) and the benefits set forth in any
plans of the Corporation then in effect and applicable under the
circumstances.
(b) Disability. If, during the Period of Employment, the Employee
becomes physically or mentally disabled so as to be unable to carry out the
normal and usual duties of his employment for six (6) continuous months,
his employment hereunder may be terminated at the election of the
Corporation. During such period of the Employee's disability prior to
termination, the Employee shall continue to earn all compensation and other
benefits as if he were not disabled, and following termination he shall
continue to participate in all benefit plans of the Corporation applicable
to employees terminated for disability or retirement, as the case may be.
9. Other Benefits. Nothing in this Agreement shall prevent the Employee
from receiving any benefits to which he may be entitled under any plan or
program of the Corporation, except any severance pay benefits for which he might
otherwise be eligible under any plan, program or policy of the Corporation.
Amounts paid to the Employee pursuant to Section 7 shall be considered as
compensation or earnings for purposes of the Corporation's pension plan or other
benefit plans, programs or policies.
10. Income Tax Withholding. The Corporation may withhold from and benefits
payable under this Agreement any federal, state, city or other taxes as may be
required pursuant to any law, regulation or ruling.
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11. Noncompetition.
(a) Employee shall not, without the prior written approval of the Board of
Directors of the Corporation, during the term hereof and a period of one (1)
year after termination of his employment with the Corporation, be interested,
directly or indirectly, as partner, officer, director, stockholder, advisor,
employee or in any other capacity in any other Competitive Business (as defined
herein) within 250 miles of any location at which the Corporation maintains its
principal administrative headquarters; provided, however, that nothing herein
contained shall be deemed to prevent or limit the right of Employee to invest in
the capital stock or securities of any corporation whose stock or securities are
regularly traded on any public exchange. The term "Competitive Business" shall
mean the design, manufacture, or sale of games used on personal computers.
(b) The Term of this provision shall be extended by breach of subsection
(a) such that the term shall run for one year from the date such breach is
cured.
(c) The term of this provision shall be reduced automatically upon failure
of the Corporation to timely pay the full amount of all Termination Damages
provided in Section 7. The amount of reduction in the term shall bear the same
proportion to the one-year term as the amount of Termination Damages due but not
paid bears to the total Termination Damages. Reduction of the term shall not
release the Corporation from its full obligation for Termination Damages without
the express written consent of the Employee.
12. Confidentiality; Ownership and Assignment of Rights.
(a) Other than in the furtherance of his duties to the Corporation the
Employee shall not at any time, either directly or indirectly, divulge,
disclose, or communicate to any person, firm or corporation in any manner
whatsoever any information concerning any matters affecting or relating to the
business of the Corporation, including without limitation the names of its
customers or clients, the prices at which it sells, has sold, provides or has
provided, its products and services, or any other information concerning the
Corporation, its manner of operation, its plans, processes, or other data
without regard to whether all of the forgoing matters would be deemed
confidential, material or important, the parties hereto stipulating that, as
between them, the same are important, material, and confidential and gravely
affect the effective and successful conduct of the business of the Corporation,
and the Corporation's good will and that any breach of the terms of this
paragraph shall be a material breach of this Agreement. This confidentiality
provision shall survive the termination of Employee's employment, regardless of
cause. The existence of any claims or cause of action against the Corporation by
Employee, whether predicated on this Agreement or otherwise, shall not be
constitute a defense to enforcement of this provision.
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(b) Employee agrees that upon termination for any reason and unless
specifically authorized otherwise in writing by the Corporation's Board of
Directors, he shall return to the Corporation, without making or retaining any
copies thereof, all documents pertaining to the Corporation's business in any
way obtained while Employee was an Employee of the Corporation.
(c) Employee shall not, whether during the Period of Employment or
thereafter, have or claim any right, title or interest in any trade name,
patent, trademark, copyright or other similar rights, domestic or foreign
(collectively, "Intangible Assets") belonging to or used by the Corporation, and
shall not assert any right, title or interest in any material prepared for or
used in connection with the Corporation, whether produced in whole or in part by
the Employee. Employee shall cooperate fully with the Corporation during his
employment and thereafter in securing for the benefit of the Corporation to
Intangible Assets.
(d) Employee shall communicate to the Corporation promptly and fully all
inventions made or conceived by Employee relating to the business of the
Corporation, whether on the time of the Corporation or Employee's own time, and
such inventions shall remain the sole and exclusive property of the Corporation.
The term "inventions" as used in this section shall include without limitation
all concepts, ideas, notes, reports, and other material regardless of whether
patentable or copyrightable. All inventions made of conceived by Employee within
one year after termination of Employee's employment shall be presumed to relate
to the business of the Corporation unless Employee can demonstrate the complete
non-applicability of such invention to the Corporation's business as conducted
or planned at the date of such termination.
13. Remedy or Breach. The parties recognize that the services to be
rendered by Employee hereunder are special, unique, of an extraordinary
character, require Employee's special skills knowledge and talents and that his
employment with the company of necessity provide Employee with the specialized
knowledge, and that the Corporation will be irreparably harmed in the event
Employee were to use his special skill, knowledge and talents and his knowledge
of the Corporation's trade secrets in competition with the competitor of the
Corporation, or otherwise in breach or threatened breach of the Agreement. In
such event the Corporation, without limitation as to other remedies that may be
available to it, shall be entitled to institute and prosecute proceedings in law
or in equity to enforce the specific performance hereof by Employee or to enjoin
Employee from breaching the provisions hereof. Employee waives any and all
defenses he may have on the ground of jurisdiction or competence of the court to
grant such an injunction, specific performance or other equitable relief.
14. Severability. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision or this Agreement, which shall remain in full force and effect.
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15. Amendment. This Agreement may not be modified or amended except by an
instrument in writing signed by all parties hereto.
16. Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto in respect of the matters set forth
herein, and all prior negotiations, writings and understandings, written or
oral, relating to the subject matter of the Agreement are merged herein and are
superseded and canceled by this Agreement.
17. Binding Agreement and Successors. The Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that this Agreement and the
rights of the parties hereunder may not be assigned, and the obligations of the
parties hereunder may not be delegated, in whole or in part, without the prior
written consent of the other party hereto.
18. Notices. Any notice, request, instruction or other document or
communication required or permitted to be given under this Agreement shall be in
writing and shall be deemed to be given upon (i) delivery in person, (ii) three
(3) days after being deposited in he mail, first class postage prepaid, for
mailing by certified or registered mail, (iii) one day after being deposited
with an overnight courier, charges prepaid for next day delivery, or (iv) when
transmitted by facsimile, upon receipt of a facsimile confirmation by the
intended recipient, with a copy simultaneously sent as provided in clauses (ii)
or (iii), in every case addressed as follows (or at such other address or
addresses as be specified from time to time pursuant to a notice sent in
accordance with this section):
If to the Corporation, delivered or mailed to:
SP Enterprises, Inc. (dba Interactive Magic)
000 Xxxxxxxxxxx Xxxxx
Xxxxx #000
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: President
If to Employee, delivered or mailed to the Employee at his last-known
address on the Corporation's records.
19. Section Headings. The Section headings contained in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning or interpretation of this Agreement or any of its terms and conditions.
20. Construction. Each and every term and condition of this Agreement and
any and all agreements and instruments subject to the terms hereof, the parties
hereto understand and agree that the same have or has been mutually negotiated,
prepared
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and drafted, and that if at any time the parties hereto desire or are required
to interpret or construe any such term or condition or any agreement or
instrument subject hereto, no consideration shall be given to the issue of which
party hereto actually prepared, drafted or requested any term or condition of
this Agreement or any agreement or instrument subject hereto.
21. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
22. Previous Agreements. Employee represents and warrants that he has
undertaken a review of all applicable agreements and understandings with his
former and current employers and that he is not subject to any duties or
obligations that conflict with or are inconsistent with the full and complete
performance of his duties and obligations under this Agreement.
23. Governing Laws. This Agreement shall be subject to, and governed by,
the laws of the state of Maryland, excluding its choice of law provisions.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the date first above written.
Witness or Attest: SP Enterprises, Inc.
/s/ Xxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxx
---------------------- --------------------------
Xxxxxx X. Xxxxxxx
President
Witness:
/s/ Xxxx Xxxxxxxx /s/ Xxxxxxx X. Xxxxxx
---------------------- --------------------------
Xxxxxxx X. Xxxxxx
CFO
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Xxxxxxx X. Xxxxxx
Employment Agreement
Exhibit A
1. Description of Position:
a. Title: Chief Financial Officer (CFO)
b. Duties: Those duties normally accorded to CFO's including but not
limited to business planning, cash flow management, corporate records
maintenance, investor relations, accounting and financial transactions, and any
other duties that may be assigned to the position from time to time from the
company's management or Board of Directors.
2. Compensation:
a. Annual base compensation of One Hundred Twenty Thousand Dollars
($120,000) with increases in such amounts as may be determined from time to time
by the Board of Directors.
b. Annual incentive compensation in an amount to be determined from year to
year by the Corporation's Board of Directors.
3. Vacation:
a. Three (3) weeks per year.
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