EXHIBIT 10.01
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated as of the 3rd day of October
2006, is entered into by and between Alliance Distributors Holdings Inc., a
Delaware corporation (the "Company) and Xxxxxxx Xxxxxx (the "Executive").
WITNESSETH
1. EMPLOYMENT. The Company hereby employs the Executive as its Executive Vice
President and Chief Financial Officer for and during the term of this
Agreement (as set forth in Paragraph 4 below). The Executive hereby
accepts such employment with the Company under the terms and conditions
set forth in this Agreement.
2. DUTIES AND AUTHORITIES OF THE EXECUTIVE. The Executive shall have such
duties and authorities as shall be consistent with his position as
Executive Vice President and Chief Financial Officer of the Company, as
may be reasonably assigned to him from time to time by the Company. The
Executive shall report to the Company's Chief Executive Officer.
3. FULL BUSINESS TIME. The Executive agrees to devote his full business time
and services to the faithful performance of his duties hereunder. During
the term of his employment with the Company, the Executive shall engage in
no other business activities whatsoever during normal working hours;
provided, however, that the Executive may (i) serve on the boards of
directors of other companies and charitable organizations and may devote
reasonable time to charitable and civic organizations, and (ii) provide
transition-type services to his former employer, in all cases provided
that the performance of his duties and responsibilities on such boards and
in such service does not interfere with the performance of his duties and
responsibilities under this Agreement.
4. TERM. The term of this Agreement shall commence on October 3, 2006 and end
on September 30, 2008 (the "Term"), unless terminated earlier pursuant to
this Agreement.
5. COMPENSATION.
(a) Base Salary. The Company shall pay the Executive a base annualized
salary ("Base Salary") at the annual rate of $210,000, subject to
annual reviews by the Company for discretionary annual increases.
Base Salary shall be subject to deduction for applicable U.S.
federal, state and local withholding taxes.
(b) Stock Options. The Company shall by separate instrument (the "Grant
Letter") grant to the Executive an option (the "Option") effective
on October 3, 2006 ("Grant Date") to purchase 100,000 shares (the
"Shares") of the Company's common stock under the Company's stock
option plan. The
Option price per share shall be equal to the fair market value of a
share of the Company's common stock on the Grant Date. The Option
shall have a ten (10) year term, and will vest in 12 equal
installments on the last day of each of the 12 calendar quarters
beginning with the calendar quarter that begins on October 1, 2006,
but only so long as Executive is employed by the Company on the last
day of such calendar quarter. The terms and conditions of the Grant
Letter shall exclusively govern the award, vesting, exercise and all
other aspects of the Option.
6. EMPLOYEE BENEFITS.
(a) Throughout the Executive's employment during the Term, the Company
shall provide the Executive and all of his dependents with group
medical insurance in amounts of coverage available to senior
executives of the Company with employee payment obligations on the
same terms as such other senior executives.
(b) The Executive shall be entitled to four weeks paid vacation during
each 12-month period of his employment and personal and sick leave
in accordance with the policies of the Company, which vacation and
leave shall be taken by the Executive in accordance with the
reasonable business requirements of the Company. Unused vacation
will be carried over from one year to the next, and the Executive
shall be entitled to payment for any accrued, but unused, vacation
upon the termination of the Executive's employment with the Company.
(c) The Executive shall receive a monthly car allowance (the "Car
Allowance") in the amount of five hundred and twenty-five dollars
($525) per month.
(d) The Company shall reimburse the Executive for properly documented
expenses which are incurred by the Executive on behalf of the
Company.
(e) The Executive shall be entitled to participate in all tax-qualified
retirement plans maintained by the Company to the extent that such
participation is made available to other senior executives of the
Company.
7. TERMINATION. Notwithstanding any other provision in this Agreement, during
the Term:
(a) Death. If the Executive dies, this Agreement shall automatically
terminate as of the date of the Executive's death.
(b) Disability. If the Executive is unable to perform his duties
hereunder as a result of any physical or mental disability (i) which
continues for 60 consecutive days or (ii) for 90 days in any 365
consecutive-day period, then the Company may terminate this
Agreement upon 30 days written notice to
the Executive, provided that the Executive's Base Salary shall
continue to accrue ratably for 30 days after the date of the
Executive's termination.
(c) Termination by the Company for Cause. The Company may terminate the
Executive's employment with the Company for Cause. For purposes of
this Agreement, "Cause" shall mean (i) the Executive's conviction by
a court of competent jurisdiction in the United States of a felony
or a crime involving the Company; (ii) the Executive's conviction of
a court of competent jurisdiction in the United States of a felony
involving moral turpitude or unlawful, dishonest, or unethical
conduct that a reasonable person would consider damaging to the
reputation of the Company; (iii) the Executive's willful or
persistent refusal or failure to perform assigned duties consistent
with duties of the Executive's position or to comply with the
reasonable directions of Company officer to whom he reports, the
Chief Executive Officer or the Company's Board of Directors,
provided that Executive has been provided with written notice of
such refusal or failure to perform at least thirty (30) days before
termination pursuant to this sub-paragraph; (iv) any material breach
of any provision of this Agreement, or any other agreements between
the Executive and Company, by the Executive; or (v) the Executive's
gross negligence in the performance of his duties; but in the case
of paragraph 7(c)(iv) if within thirty (30) days after the Company
first has actual knowledge of the occurrence of such action or
event, the Company gives written notice to the Executive of its
intention to terminate his employment hereunder, and the Executive
does not reasonably cure any such action within thirty (30) days
after the date of such notice, where such conduct is curable.
If the Executive's employment is terminated by the Company for
Cause, the Company shall pay the Executive his full accrued Base
Salary and Car Allowance through the date of termination at the rate
in effect at the time of such termination, and the Company shall
have no further obligation to the Executive under this Agreement or
under any other agreements or plans. All other compensation
including, without limitation, bonuses, severance, incentive
compensation and/or stock option grants shall be forfeited if the
Executive is terminated for Cause.
(d) Termination by the Company without Cause. The Company may terminate
the Executive's employment under this Agreement without Cause at any
time, provided that, in such case, the Company shall, as severance,
continue to pay to the Executive an amount equal to his Base Salary
in normal payroll installments, subject to withholding, until the
earlier to occur of (i) six months from the date of termination; and
(ii) September 30, 2008. In addition, the Company shall pay the
Executive's cost of COBRA for the period during which severance is
payable as aforesaid.
(e) Resignation by the Executive with Good Reason. The Executive may
resign his employment if (i) the Company breaches any of its
material obligations under
this Agreement, (ii) the Company reduces the Executive's Base Salary
below the amount provided for in this Agreement, without the
Executive's written consent, or (iii) the Company assigns duties to
the Executive which are not consistent with his office set forth in
Paragraphs 1 and 2, but in each case only if within thirty (30) days
after the Executive first has actual knowledge of the occurrence of
such action or event, the Executive gives written notice to the
Company of his intention to terminate his employment hereunder, the
Company does not revoke or reasonably cure any such action or event
within sixty (60) days after the date of such notice, and the
Executive resigns his employment within fifteen (15) days
thereafter. Following the Executive's resignation with Good Reason,
the Company shall make all payments to the Executive pursuant to
Paragraph 7(d) above.
(f) In addition to any other payments pursuant to Paragraphs 7(b), 7(d)
and (e) above, upon the Executive's resignation without Good Reason
or upon any of the terminations identified in Paragraphs 7(a), (b),
(d) or (e) above, the Executive or his estate shall be entitled to
receive his Base Salary, any earned but unpaid incentive
compensation and all of his then incurred but un-reimbursed business
expenses, in each case to the date of the Executive's resignation or
termination.
(g) In order to be entitled to the payments under Paragraphs 7(b), 7(d),
7(e) or 7(f), Executive agrees to execute a standard and customary
separation agreement and release in the form to be provided by the
Company, following his separation from the Company.
8. CONFIDENTIALITY AGREEMENT AND OWNERSHIP OF INFORMATION.
(a) Executive agrees that during the course of employment with the
Company, Executive will come into contact with and have access to
various forms of Confidential Information and Trade Secrets, which
are the property of the Company. This information relates both to
the Company, its customers and its employees. Such Confidential
Information and Trade Secrets include, but are not limited to: (i)
financial and business information, such as information with respect
to costs, commissions, fees, profits, sales, markets, mailing lists,
strategies and plans for future business, new business, product or
other development, potential acquisitions or divestitures, and new
marketing ideas; (ii) product and technical information, such as
product formulations, new and innovative product ideas, methods,
procedures, devices, machines, equipment, data processing programs,
software, software codes, computer models, and research and
development projects; (iii) marketing information, such as the
identity of the Company's customers, distributors and suppliers and
their names and addresses, the names of representatives of the
Company's customers, distributors or suppliers responsible for
entering into contracts with the Company, the amounts paid by such
customers to the Company, specific customer needs and requirements,
and leads and referrals to prospective customers; and (iv) personnel
information, such as the identity and number of
the Company's employees, skills, qualifications, salaries and
abilities. Executive acknowledges and agrees that the Confidential
Information and Trade Secrets are not generally known or available
to the general public, but have been developed, compiled or acquired
by the Company at its great effort and expense. Confidential
Information and Trade Secrets can be in any form: oral, written or
machine readable, including electronic files.
(b) During the Executive's employment with the Company and for as long
as such information shall remain Confidential Information or Trade
Secrets of the Company (except, during the course of his employment
with the Company, if in furtherance of the Company's business and in
accordance with Company policy):
(i) The Executive will not disclose to any person or entity,
without the Company's prior consent, any Confidential
Information or Trade Secrets, whether prepared by him or
others.
(ii) The Executive will not remove Confidential Information or
Trade Secrets from the premises of the Company without the
prior written consent of the Company.
(c) (i) Upon his resignation or termination of his employment with the
Company for whatever reason, with or without cause, or at any other
time the Company so requests, the Executive will promptly deliver to
the Company all originals and copies (whether in note, memo or other
document form or on video, audio or computer tapes or discs or
otherwise) of (A) Confidential Information and Trade Secrets of the
Company, or the Company's customers (including, but not limited to,
customers obtained for the Company by the Executive), that is in his
possession, custody or control, whether prepared by him or others,
and (B) all records, designs, patents, plans, manuals, memoranda,
lists and other property of the Company delivered to the Executive
by or on behalf of the Company, as the case may be, or by the
Company's customers (including, but not limited to, customers
obtained for the Company by the Executive), and all records compiled
by the Executive which pertain to the business of the Company,
whether or not confidential. All such material shall be and remain
the property of the Company and shall be subject at all times to the
Company's discretion and control.
(ii) Information shall not be deemed Confidential Information or
Trade Secrets if:
(A) such information was available to the public prior to
disclosure thereof by the Executive, or
(B) such information shall, other than by an act or omission
on the Executive's part, be or become available to the
public or
lawfully made available by a third party to the public
without restrictions as to disclosure.
(d) Confidential Information may be disclosed where required by law or
order of a court of competent jurisdiction, provided that the
Executive first gives to the Company reasonable prior notice of such
disclosure and affords the Company the reasonable opportunity for
the Company to obtain protective or similar orders, where available.
9. NON-COMPETE AND NON-INTERFERENCE PROVISIONS.
(a) Executive acknowledges and agrees that the Company is engaged in a
highly competitive business and that by virtue of Executive's
position and responsibilities with the Company and Executive's
access to the Confidential Information and Trade Secrets, engaging
in any business which is directly competitive with the Company will
cause it great and irreparable harm. Accordingly, the Executive
covenants that during the Limitation Period (as hereinafter
defined), the Executive will not directly or indirectly be employed
by (i) any person or entity which competes with the business the
Company shall be conducting at the time of the Executive's
termination ("Competitive Business" as defined below) or (ii) any
person or entity the major business of which constitutes Competitive
Business, nor will the Executive directly or indirectly own any
interest in any such person or entity or render to it any
consulting, brokerage, contracting, or other services. For purposes
of this Paragraph, "Competitive Business" means the distribution of
video game consoles and video game peripherals, accessories and
software. The foregoing shall not prohibit the Executive from owning
not in excess of 2% of the outstanding stock of any company that is
a reporting company under the Securities Act of 1934.
(b) During the Limitation Period (as herein defined), the Executive will
not, without the prior written consent of the Company, directly or
indirectly, solicit, divert or appropriate or attempt to solicit,
divert or appropriate any customers or clients of the Company who or
which (i) were customers or clients of the Company at the time of
the termination of the Executive's employment from the Company;
and/or (ii) with whom the Executive had contact during his
employment with the Company; and/or (iii) about whom the Executive
possesses Confidential, or Trade Secret information, for purposes of
the Executive's offering to such customers or clients of the Company
products or services which are directly competitive to the products
and services offered by the Company as of the date of the
Executive's termination or resignation from employment with the
Company for any reason.
(c) The "Limitation Period" shall mean: (i) with respect to Paragraph
9(a), the period during which the Executive is actually employed by
the Company and for a period of twelve (12) months thereafter; and
(ii) with respect to
Paragraph 9(b), the period during which the Executive is actually
employed by the Company and for a period of twenty-four (24) months
thereafter.
(d) Since monetary damages may be inadequate and the Company would be
irreparably harmed if the provisions of Paragraphs 8, 9 or 10 are
not specifically enforced, the Company shall be entitled, among
other remedies, to seek an injunction from a court of competent
jurisdiction (without the necessity of posting a bond or other
security) restraining any violation of the provisions of Paragraphs
8, 9 or 10 by the Executive and by any person or entity to whom the
Executive provides or proposes to provide any services or
information in violation of such provisions.
10. INVENTIONS.
(a) The Executive shall disclose promptly to the Company any and all
inventions, improvements and valuable discoveries, whether
patentable or not, which are conceived or made by the Executive
solely or jointly with another during his employment for the Company
and which are related to the business or activities of the Company
or which the Executive conceives during and as a direct result of
his employment by the Company, and the Executive hereby assigns and
agrees to assign all his interests therein to the Company or its
nominee. Whenever reasonably requested to do so by the Company, the
Executive shall execute any and all applications, assignments or
other instruments that the Company shall deem necessary to apply for
and obtain Letters Patent of the United States or any foreign
country or to otherwise protect the Company's interest therein.
(b) Executive further covenants and agrees that the Company shall be
entitled to shop rights with respect to any invention and
development conceived or made by Executive during the period of his
employment by the Company that is not related in any manner to the
business of the Company but which was conceived or made on the
Company's time or with the use of the Company's facilities or
materials.
(c) Executive further covenants and agrees that it shall be conclusively
presumed as against Executive that the following shall belong to the
Company: (i) any invention and development described in a patent
service xxxx, trademark or copyright application or disclosed in any
manner to a third person; and (ii) any computer program,
modification of any computer program, or systems technique for
processing data conceived or made by Executive during the period of
his employment by the Company which is disclosed, used or described
by Executive or any person with whom Executive has any business,
financial or confidential relationship, within one (1) year after
leaving the employ of the Company.
(d) If any provision contained in this Paragraph 10 or Paragraphs 8 or 9
above is determined to be void, illegal or unenforceable, in whole
or in part, then the
other provisions contained herein shall remain in full force and
effect as if the provision which was determined to be void, illegal,
or unenforceable had not been contained herein. The courts enforcing
this Paragraph 10 or Paragraphs 8 or 9 above shall be entitled to
modify the duration and scope of any restriction contained therein
to the extent such restriction would otherwise be unenforceable, and
such restriction as modified shall be enforced.
11. USE OF GENERAL ABILITIES. Nothing contained in this Agreement shall
restrict the Executive after the termination or resignation of his
employment under this Agreement from using his general business,
organizational and financial abilities, and the exertion of his efforts,
in the prosecution and development of any business, so long as the
specific non-compete and other provisions of this Agreement are not
thereby violated.
12. GENERAL PROVISIONS.
(a) Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed to have
been delivered (i) on the date personally delivered, or (ii) one day
after properly sent by Federal Express, DHL or other reasonable
overnight courier service, addressed to the respective parties at
the following addresses:
To the Company:
Alliance Distributors Holdings Inc.
0000 Xxxxxxxx Xxx
Xxxxx, Xxx Xxxx 00000-0000
Attention: Xxx Xxxxxx, Chief Executive Officer
To the Executive:
Xxxxxxx Xxxxxx
00-00 Xxxx Xxxxxx
Xxxx Xxxx, Xxx Xxxxxx 00000
Either party hereto may designate a different address by providing
written notice of such new address to the other party hereto as
provided above. All such copies shall be given in the manner
provided for notices in this Paragraph 12 (a).
(b) Severability. If any provision contained in this Agreement shall be
determined to be void, illegal or unenforceable, in whole or in
part, then the other provisions contained herein shall remain in
full force and effect as if the provision which was determined to be
void, illegal, or unenforceable had not been contained herein.
(c) Waiver and Modification. The waiver by any party hereto of a breach
of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach of any party. This Agreement
may not be modified, altered or amended except by written agreement
of both of the parties hereto.
(d) Integration. This Agreement constitutes the entire agreement between
the parties relating to the employment of the Executive by the
Company or its affiliates, and supersedes any and all other
agreements, oral or written, and all other negotiations and
communications between the parties relating to the subject matter
described in this Agreement.
(e) Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the Company and its successors and permitted
assigns, and upon the Executive, his heirs and his executors and
administrators. Neither the Executive nor the Company shall be
entitled to assign the Executive's duties hereunder without the
other's prior written consent.
(f) Equitable Relief. Executive agrees that the remedy at law for any
breach of Paragraphs 8, 9, and 10 of this Agreement would not be
adequate and that the Company would be entitled to injunctive or
other equitable relief for any such breach.
(g) Jurisdiction, Etc. Executive hereby consents to the jurisdiction of
the courts of the State of New York, County of New York, and the
United States District Court, District of New York with respect to
any claims or disputes arising from or in connection with this
Agreement, except that the Company shall not be precluded hereunder
from seeking injunctive or other equitable relief in any federal,
state or local court pursuant to Paragraph 12(f) above. Service of
process shall be effective when forwarded in the manner provided for
notices in Paragraph 12(a). Trial by jury is hereby waived by both
of the parties to this Agreement. The prevailing party in any
dispute shall be entitled to recover reasonable attorneys' fees and
costs from the other.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to
its conflicts of law principles.
(i) The Company shall indemnify Executive to the fullest extent
permitted by law.
(j) Survival. The obligations of the parties hereto contained in
Paragraphs 7, 8, 9, 10, and 12 shall survive the termination of this
Agreement.
[The next page is the signature page.]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
ALLIANCE DISTRIBUTORS HOLDINGS INC.
By: /s/ Xxx Xxxxxx
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Xxx Xxxxxx
Its: Chief Executive Officer
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
