EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of November 30, 2000,
between Fantasy Sports, Inc., a Delaware corporation (the "Company"), and
Xxxxxxx Xxxxxx (the "Executive").
W I T N E S S E T H:
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WHEREAS, the Company desires to employ the Executive, and the
Executive desires to accept such employment, on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises,
representations and warranties set forth herein, and for other good and valuable
consideration, it is hereby agreed as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts such employment, upon the terms and
conditions set forth herein.
2. TERM. Subject to the provisions of Section 10 hereof, the
period of the Executive's employment under this Agreement shall be for three (3)
years from November 30, 2000 (the "Effective Date") through November 30, 2003
(the "Term").
3. POSITION AND DUTIES.
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(a) During the Executive's employment hereunder, the
Executive shall serve as the President of the Company and shall perform and
discharge the duties, consistent with such office, that may reasonably be
assigned to him from time to time by the Chairman of the Board or Board of
Directors of the Company, including, without limitation, business travel. The
Executive shall devote his best talents, efforts and abilities to the
performance of his duties hereunder.
(i) During his employment hereunder, the Executive
shall perform his duties hereunder on a full-time basis and the Executive shall
have no other significant employment. Under no cricumstances, however, may the
Executive enter into any employment arrangement that interferes with Executive's
duties, obligations and responsibilities to the Company.
4. COMPENSATION.
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(a) Base Salary. For the Executive's services hereunder,
the Company shall pay the Executive salary at the annual rate of $100,000 (the
"Base Salary"), payable in accordance with the customary payroll practices of
the Company. The Executive's Base Salary may be increased from time to time at
the discretion of the Company.
(b) Bonus. For the fiscal year 2001 of the Company (the
"Fiscal Year"), the Executive shall be paid a bonus, if any, as a participant in
the Company's Profit Sharing Plan ("Bonus Plan") described below if the "Actual
Company EBITDA" (as hereinafter defined) at
least equals the "Target Company EBITDA" (as hereinafter defined) for such
Fiscal Year. Such bonus shall be paid to the Executive no later than 60 days
following the preparation of the Company's final financial statements for the
Fiscal Year, provided that no such bonus will be paid unless the Executive is
employed by the Company on such day, and provided further that no such bonus
shall exceed 25% of the funds allocated to the Bonus Plan with respect to the
Fiscal Year. For purposes hereof:
(i) "Actual Company EBITDA" for the Fiscal Year shall
mean the Company's earnings before interest, taxes, depreciation and
amortization for such Fiscal Year, as determined by the Company but will include
interest earned by the Company on its cash balances during the year; and
(ii) "Target Company EBITDA" for the Fiscal Year shall
equal Actual Company EBITDA of $850,000 for the Fiscal Year.
(iii) Pursuant to the Company's 2001 Bonus Plan, if the
Company achieves the Target Company EBITDA ($850,000), the Company shall
allocate $85,000 in funds for distribution to employees pursuant to the Bonus
Plan plus:
o 10% of the Actual Company EBITDA should such
EBITDA exceed $850,000;
o 15% of the Actual Company EBITDA is greater
than or equal to $1,020,000 and less than
$1,500,000; or
o 25% of the Actual Company EBITDA if the
Actual Company EDITDA is equal to or greater
than $1,500,000.
(iv) At the discretion of the Board of Directors and
with their approval, the company may, in consultation with the Executive, set up
a similar bonus plan for future Fiscal Years.
5. BENEFITS.
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(a) Stock Options. The Company grants to Executive (i)
options to purchase 4.45 shares (5%) of the Company's outstanding common stock,
$0.01 par value ("Common Stock"), at a price of $47,191 per share (or $42,000
per 1% of the Company's Common Stock) (the "Ordinary Options") and (ii) options
to purchase 2.34 shares (or 2.5%) of the Company's Common Stock, at a price of
$44,872 per share (or $42,000 per 1% of the Company's Common Stock)(the
"Performance Options"). Such Options shall equal 7.5% of the Company's
outstanding shares on November 16, 2000.
(i) Term. The Ordinary Options will expire at 5:00 p.m.
New York Time, three years after the Effective Date. The Performance Options
will expire at 5:00 p.m. New York Time, three years after the Vesting Date,
subject to earlier termination as set forth below.
(ii) Exercise. Except as otherwise provided below, the
Ordinary Options shall vest on the Effective Date and the Performance Options
shall vest at the earlier of the Company achieving aggregate Actual Company
EBITDA of $4 million for fiscal years 2001 and 2002 or aggregate Actual Company
EBITDA of $9 million for fiscal years 2001,
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2002 and 2003 (the "Vesting Date"). The Executive may exercise any vested
Ordinary Options or Performance Option, in part or in whole, from time to time
during the Term.
(iii) Manner of Exercise. Exercise of the Options shall
be effectuated by the giving of written notice to the Company at its principal
office, specifying the number of shares being purchased and accompanied by the
payment in full of the aggregate exercise price for the shares to be purchased
in cash or by certified check.
(iv) Non-Transferable. The Options may not be
transferred otherwise than by will or the laws of descent and distribution and
may be exercised, during Executive's lifetime, while in the employment of the
Company or, in the event of the death or disability of the Executive, within one
hundred eighty (180) days of such event.
(v) Recapitalizations and Related Transactions. If,
through or as a result of any recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction (i) the
outstanding shares of Common Stock are increased, decreased or exchanged for a
different number or kind of shares or other securities of the Company, or (ii)
additional shares or new or different shares or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, an
appropriate and proportionate adjustment shall be made in (x) the maximum number
and kind of shares reserved for issuance under or otherwise referred to in any
stock option plan of the Company (a "Plan"), (y) the number and kind of shares
or other securities subject to any then-outstanding Options, and (z) the price
for each share subject to any then-outstanding Options, without changing the
aggregate purchase price as to which such Options remain exercisable.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 5 if such adjustment (A) would cause any Incentive Stock Option granted
under any Plan to fail to qualify as an Incentive Stock Option within the
meaning of Section 422 of the Code, (B) if the Company is or becomes a Reporting
Company, would cause any Plan or any option granted under such a Plan to fail to
comply with Rule 16b-3 (if applicable to a Plan or such option), or (C) would be
considered as the adoption of a new plan requiring stockholder approval.
(vi) Forfeiture of Options. Executive shall not forfeit
any Options granted to Executive pursuant to this Agreement upon the natural
expiration of this Agreement or upon the termination of Executive's employment
with the Company prior to the expiration of this Agreement; EXCEPT, if Executive
is terminated for Cause (as defined in Section 8 of this Agreement), Executive
shall forfeit all right and title to any and all Options granted to Executive
during the Term.
(b) Health Plan. Upon meeting all applicable eligibility
requirements, the Executive shall be entitled to receive such other benefits or
rights as may be provided under any employment benefit plan now or hereafter
provided by the Company, including participation in life, medical, disability
and dental insurance plans.
(c) 401(k) Plan Participation. During the Term, the
Executive shall be eligible to participate in any 401(k) plan of the Company now
existing or hereafter established, under which the Company will make
contributions to such 401(k) plan equal to 50% of Executive's contribution to
such 401(k) plan up to a maximum of 4% of Executive's base salary for each year
Executive contributes to such 401(k) plan.
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(d) Other Benefits. During his employment hereunder, the
Company shall provide the Executive with any and all other employee or fringe
benefits (in accordance with their terms and conditions) which the Company may
generally make available to its other employees.
6. REIMBURSEMENT OF EXPENSES. During his employment hereunder,
the Company shall pay or reimburse the Executive, after presentation of expense
statements and/or such other supporting information as the Company may require
and in accordance with generally applicable policies of the Company, for all
reasonable business related expenses incurred by the Executive in the
performance of his duties for the Company.
7. VACATIONS. The Executive shall be entitled to such vacation
as the Company may generally make available to its employees, but in no event
less than 4 weeks. Unused vacation may not be carried over to successive years.
8. TERMINATION. The employment hereunder of the Executive may
be terminated prior to the expiration of the Term in the manner described in
this Section 8.
(a) Termination by the Company for Cause. The Company shall
have the right to terminate the employment of the Executive for Cause (as such
term is defined herein) by written notice to the Executive specifying the
particulars of the circumstances forming the basis for such Cause, and Executive
fails to cure the Cause for terminiation within thirty (30) days.
(b) Termination upon Death. The employment of the Executive
hereunder shall terminate immediately upon his death.
(c) Voluntary Resignation by the Executive. The Executive
shall have the right to voluntarily resign his employment hereunder (as such
term is defined herein) by not less than 60 days' advance written notice to the
Company.
(d) Termination by the Company Without Cause. The Company
shall have the right to terminate the Executive's employment hereunder without
Cause by written notice to the Executive.
(e) Termination Date. The "Termination Date" is the date as
of which the Executive's employment with the Company terminates. Any notice of
termination given pursuant to the provisions of this Agreement shall specify the
Termination Date.
(f) Cause. For purposes of this Agreement, "Cause" shall
exist if, and only if, the Executive (i) fails in any material respect to
satisfactorily perform his obligations hereunder as provided herein; (ii) fails
in any material respect to satisfactorily comply with any policy and/or
procedure of the Company; (iii) has been convicted of a felony, or a misdemeanor
which involves moral turpitude, or has entered a plea of guilty or nolo
contendere with respect to any of the foregoing; (iv) has committed any act in
connection with his employment with the Company which involved fraud, gross
negligence, misappropriation of funds, dishonesty, disloyalty, breach of
fiduciary duty or other misconduct injurious to the Company or any affiliate
thereof; (v) has engaged in any conduct which in the reasonable determination of
the Company is likely to adversely affect the reputation or public image of the
Company or any affiliate
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thereof; (vi) is determined by the Company to be illegally using drugs; or (vii)
has breached any of the provisions of this Agreement or any non-competition,
non-disclosure or similar agreement by and between the Executive and the
Company.
9. OBLIGATIONS OF COMPANY ON TERMINATION. Notwithstanding
anything in this Agreement to the contrary, the Company's obligations on
termination of the Executive's employment shall be solely as described in this
Section 9.
(a) Obligations of the Company in the Case of Termination
Without Cause. In the event that prior to the expiration of the Term, the
Company terminates the Executive's employment, pursuant to Section 8(d), without
Cause, the Company shall pay the Executive an amount equal to the lesser of (i)
six months' Base Salary, or (ii) the Base Salary otherwise payable from the
Termination Date through the then otherwise remaining duration of the Term.
(b) Obligations of the Company in Case of Termination for
Death, Voluntary Resignation or Cause. Upon termination of the Executive's
employment upon death (pursuant to Section 8(b)), as a result of the voluntary
resignation of the Executive (pursuant to Section 8(c)) or for Cause (pursuant
to Section 8(a)), the Company shall have no payment or other obligations
hereunder to the Executive, except for the payment of any Base Salary,
unreimbursed expenses and benefits accrued but unpaid as of the date of such
termination.
10. MATERIALS; CONFIDENTIAL INFORMATION AND DOCUMENTS.
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(a) Materials. The Executive agrees that all ideas, plans and
materials related to the business of the Company, and/or any affiliate of the
Company (the Company and any and all such affiliates hereinafter individually
and collectively called the "Companies") which are prepared by the Executive
either (i) in connection with his employment hereunder, or (ii) using
Confidential Information, as hereinafter defined ((i) and (ii) above hereinafter
individually and collectively called the "Materials") are works-made-for-hire
and are the Companies' sole and exclusive property. In the event that any
Materials are not copyrightable subject matter or, for any reason, are deemed
not to be works-made-for-hire, the Executive hereby assigns all right, title and
interest to such Materials to the Companies, free of any reversionary rights or
restrictions Without limiting the foregoing, it is specifically understood and
agreed that the Executive retains no ownership rights whatsoever in or to the
Materials.
(b) Confidentiality and Non-Compete Covenant. Executive
acknowledges that, by his employment, he has been and will be in a confidential
relationship with the Company and will have access to confidential information
and trade secrets of the Company and its subsidiaries and affiliates.
Confidential information and trade secrets include, but are not limited to,
customer, supplier and client lists, price lists, marketing strategies and
procedures, operational techniques, business plans and systems, quality control
procedures and systems, special projects and survey and market research,
including any other records, files, drawings, discoveries,
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applications, data and information concerning the business of the Company and
its customers and clients which are not in the public domain. Executive agrees
that in consideration of the execution of this Agreement by the Company:
(i) Executive will not, during the term of this
Agreement or at any time thereafter, use, or disclose to any third party, trade
secrets or confidential information of the Company, including, but not limited
to, confidential information or trade secrets belonging or relating to the
Company, its subsidiaries, affiliates, customers and clients or proprietary
procedures of the Company, its subsidiaries, affiliates customers and clients.
Proprietary procedures shall include, but shall not be limited to, all
information which is known or intended to be known only by employees of the
Company, its subsidiaries and affiliates or others in a confidential
relationship with the Company or its subsidiaries and affiliates which relates
to business matters.
(ii) Executive will not, during the term of this
Agreement, and for a period of two (2) years after the expiration of the
Employment Term, directly or indirectly, under any circumstance other than at
the direction and for the benefit of the Company, engage in or participate in
any business activity, including, but not limited to, acting as a director,
officer, employee, agent, independent contractor, partner, consultant, licensor
or licensee, franchisor or franchisee, proprietor, syndicate member, shareholder
or creditor or with a person having any other relationship with any other
business, company, firm, occupation or business activity, that is, directly or
indirectly, competitive with any business carried on by the Company or any of
its subsidiaries or affiliates during the term of this Agreement. The ownership
by Executive of 3% or less of the issued and outstanding shares of a class of
securities which is traded on a national securities exchange or in the
over-the-counter market, shall not cause Executive to be deemed a shareholder
under this subparagraph 10(b) or constitute a breach of Paragraph 4 hereof.
(iii) Executive will not, during the term of this
Agreement and for a period of two (2) years thereafter, on his behalf or on
behalf of any other business enterprise, directly or indirectly, under any
circumstance other than at the direction and for the benefit of the Company,
solicit or induce any creditor, customer, client, supplier, officer, employee or
agent of the Company or any of its subsidiaries or affiliates to sever his or
its relationship with or leave the employ of any of such entities.
(iv) It is expressly agreed by Executive that the
nature and scope of each of the provisions set forth above in this Paragraph 10
are reasonable and necessary. If, for any reason, any aspect of the above
provisions as it applies to Executive is determined by a court of competent
jurisdiction to be unreasonable or unenforceable, the provisions shall only be
modified to the minimum extent required to make the provisions reasonable and/or
enforceable, as the case may be.
(c) This Paragraph 10 and Paragraphs 11 and 12 hereof shall
survive the expiration or termination of this Agreement for any reason.
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11. COMPANY PROPERTY.
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(i) Any patents, inventions, discoveries, applications or
processes designed, devised, planned, applied, created, discovered or invented
by Executive in the course of Executive's employment under this Agreement and
which pertain to any aspect of the Company's business shall be the sole and
absolute property of the Company, and Executive shall promptly report the same
to the Company and promptly execute any and all documents that may from time to
time reasonably be requested by the Company to assure the Company the full and
complete ownership thereof.
(ii) All records, files, lists, including computer
generated lists, drawings, documents, equipment and similar items relating to
the Company's business which Executive shall prepare or receive from the Company
shall remain the Company's sole and exclusive property. Upon termination of his
employment with the Company, Executive shall promptly return to the Company all
property of the Company in his possession. Executive further represents that he
will not copy or cause to be copied, print out or cause to be printed out any
software, documents or other materials originating with or belonging to the
Company. Executive additionally represents that, upon termination of his
employment with the Company, he will not retain in his possession any such
software, documents or other materials.
12. REMEDY. It is mutually understood and agreed that
Executive's services are special, unique, unusual, extraordinary and of an
intellectual character giving them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in an action at law.
Accordingly, in the event of any breach of this Agreement by Executive,
including, but not limited to, the breach of the non-disclosure,
non-solicitation and non-compete clauses under Paragraph 11 hereof, the Company
shall be entitled to relief by way of injunction or otherwise in addition to any
damages which the Company may be entitled to recover.
13. REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. In order to
induce the Company to enter into this Agreement, Executive hereby represents and
warrants to the Company as follows: (i) Executive has the legal capacity and
unrestricted right to execute and deliver this Agreement and to perform all of
his obligations hereunder; (ii) the execution and delivery of this Agreement by
Executive and the performance of his obligations hereunder will not violate or
be in conflict with any fiduciary or other duty, instrument, agreement,
document, arrangement or other understanding to which Executive is a party or by
which he is or may be bound or subject; and (iii) Executive is not a party to
any instrument, agreement, document, arrangement or other understanding with any
person (other than the Company) requiring or restricting the use or disclosure
of any confidential information or the provision of any employment, consulting
or other services.
14. THIRD PARTY BENEFICIARIES. The Executive acknowledges that
certain of the provisions of this Agreement are for the benefit of all of the
Companies and, therefore, each of the Companies is intended to be a third party
beneficiary of this Agreement with the power to enforce the provisions of this
Agreement and any and all of its rights hereunder to the same extent as would a
signatory hereto.
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15. SEVERABILITY. Should any provision of this Agreement be
held, by a court of competent jurisdiction, to be invalid or unenforceable, such
invalidity or unenforceability shall not render the entire Agreement invalid or
unenforceable, and this Agreement and each other provision hereof shall be
enforceable and valid to the fullest extent permitted by law.
16. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed in that State, without regard to any of its
principles of conflicts of laws or other laws which would result in the
application of another jurisdiction.
17. SUCCESSORS AND ASSIGNS.
(a) This Agreement and all rights under this Agreement are
personal to the Executive and shall not be assignable other than by will or the
laws of descent. All of the Executive's rights under this Agreement shall inure
to the benefit of his heirs, personal representatives, designees or other legal
representatives, as the case may be.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. Any person or entity
succeeding to the business of the Company by merger, purchase, consolidation or
otherwise shall assume by contract or operation of law the obligations of the
Company under this Agreement.
18. NOTICES. All notices, requests and demands given to or
made upon the respective parties hereto shall be deemed to have been given or
made three business days after the date of mailing when mailed by registered or
certified mail, postage prepaid, or on the date of delivery if delivered by
hand, or one business day after the date of delivery by Federal Express or other
reputable overnight delivery service, addressed to the parties at their
addresses set forth below or to such other addresses furnished by notice given
in accordance with this Section 18 (a) if to the Company, to Fantasy Sports,
Inc., 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000, attention: Xx.
Xxxxx Xxxxxxxxx, and (b) if to the Executive, to Xx. Xxxx X. Xxxxxx, at
0000 Xxxxxxxx Xxxx, Xxxx, XX 00000.
19. WITHHOLDING. All payments required to be made by the
Company to the Executive under this Agreement shall be subject to any
withholding taxes, social security and other payroll deductions required under
applicable law.
20. COMPLETE UNDERSTANDING. Except as expressly provided
below, this Agreement supersedes any prior contracts, understandings,
discussions and agreements relating to employment between the Executive and the
Company and constitutes the complete understanding between the parties with
respect to the subject matter hereof. No statement, representation, warranty or
covenant has been made by either party with respect to the subject matter hereof
except as expressly set forth herein.
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21. MODIFICATION; WAIVER.
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(a) This Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company and the Executive or in the case of a waiver, by the
party against whom the waiver is to be effective. Any such waiver shall be
effective only to the extent specifically set forth in such writing.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
22. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of this Agreement.
23. COUNTERPARTS. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by the other party hereto.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed in its corporate name by one of its officers duly authorized to
enter into and execute this Agreement, and the Executive has manually signed his
name hereto, all as of the day and year first above written.
FANTASY SPORTS, INC.
By: /s/ Xxxxx Xxxxxxxxx
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Witness Name: Xxxxx Xxxxxxxxx
Title: Chairman
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxx
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Witness Xxxxxxx X. Xxxxxx
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