Exhibit 10.1
EMPLOYMENT AGREEMENT
WITH
XXX XXXXXXXXXX, XX.
EMPLOYMENT AGREEMENT entered into as of the 3rd day of March 2005 between XXX
XXXXXXXXXX, XX., (the "EMPLOYEE") and NEW VISUAL CORPORATION, a Utah corporation
with offices at 0000 Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 (the
"COMPANY").
W I T N E S S E T H
WHEREAS, Employee was engaged as the Company's Executive Vice President
under the Employment Agreement dated as of March 22, 2002 between Employee and
the Company (the "Previous Employment Agreement");
WHEREAS, the term of the Previous Employment Agreement has expired as
provided therein and the Company and the Employee desire to continue the
employment of Employee as the Company's Executive Vice President upon the terms
and conditions contained herein.
NOW THEREFORE, in consideration of the premises and mutual agreements
hereinafter contained, the parties hereto agree as follows:
1. ENGAGEMENT & DUTIES
With effect from the effective date (as defined in Section 2), the
Company employs Employee and Employee accepts employment with the Company as
Executive Vice President. Additionally, the Company shall take such action
necessary to appoint the Employee as president of Company's wholly owned
subsidiary NV Entertainment, Inc. ("NVE"). Such appointment shall automatically
terminate upon expiration or termination of this Agreement and Employee shall
not be entitled to any benefits or remuneration for such position with NVE.
The Employee shall perform faithfully and diligently the duties
customarily performed by persons in the position for which Employee is engaged.
Employee shall devote Employee's full business time and efforts to rendition of
such services and to the performance of such duties customarily associated with
Employee's position.
1.2 The Employee shall report directly to the Chief Executive Officer
of the Company.
1.3 The Employee's services under this Agreement will be performed at
San Diego, California. The Parties acknowledge and agree, however, that the
nature of the Employee's duties hereunder will also require substantial domestic
travel.
2. TERM
2.1 Employee's employment under this Agreement shall commence on March
23, 2005 (the "Effective Date") and shall end on the earlier of: (i) the death
or disability (as defined herein ) of the Employee, (ii) termination by either
party without cause upon written notice; (iii) termination of Employee with
cause or (iv) three (3) years from the date of this Agreement.
2.2 For the purpose of this paragraph 2, "disability" shall mean any
physical or mental illness or injury as a result of which Employee remains
absent from work for a period of six (6) successive months, or an aggregate of
six (6) months in any twelve (12) month period. Disability shall occur at the
end of any such period.
2.3 For purposes of this Agreement, Employer shall have "Cause" to
terminate the Executive's employment hereunder only upon:
(i) The failure or neglect by the Executive to
substantially perform his assigned duties to
the Employer or any subsidiary (other than any such refusal resulting from the
Executive's disability or incapacity due to physical or mental illness);
(ii) The engaging by the Executive in criminal
conduct or conduct constituting moral turpitude or which otherwise brings
notoriety to Company or has an adverse effect on the name or public image of the
Company;
(iii) The willful insubordination of the Executive;
(iv) The embezzlement, theft or misappropriation by
the Executive of any property of Employer or its affiliates;
(v) Fraud, acts of dishonesty or misrepresentation,
or other acts (including any breach of the Executive's covenants contained in
this Agreement) that cause harm to Employer or substantial damage to its
reputation or that of its subsidiaries (other than as a consequence of good
faith decisions made by the Executive in the normal performance of the
Executive's duties hereunder);
(vi) A conviction for or plea of nolo contendere to a
felony which carries a minimum prison sentence upon conviction of one (1) year
or longer;
(vii) Executive commits a material breach of this
Agreement or any written policies of Employer;
(viii) breach of Executive's fiduciary obligations to
the Employer or any of its subsidiaries; and/or
(ix) any chemical dependence which materially affects
the performance of Executive's duties and responsibilities to the Employer or
any of its subsidiaries;
PROVIDED, that in the case of the misconduct set forth in clauses (i)
and (ix) above, such misconduct shall continue for a period of thirty (30) days
following written notice thereof by Employer to Employee.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall be delivered to him a
copy of a duly adopted resolution of the Employer's Board of Directors finding
that the Employer has "Cause" to terminate Executive as contemplated in this
Section 4(a).
2.4 During the period following notice of termination until the
effective date of termination by either party for whatever reason, the Employee
shall cooperate with the Company and use his best efforts to assist the
integration into the Company the person or persons who will assume the
Employee's responsibilities.
3. REMUNERATION. The Employee shall not be paid any salary.
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4. BOARD OF DIRECTORS. Company agrees that so long as this Agreement is in
effect, Employee will be nominated to the board as part of management's slate of
directors and if so elected will be appointed as chairman of the Board. Upon the
termination of this agreement for cause, the Employee shall be deemed to have
resigned from the Company's board of directors.
5. COMMISSION OF FINANCING.
5.1 If sale of securities or long-term debt (but not a bridge loan)
financing is consummated, through a funding source introduced by Employee or as
a result of Employee's personal efforts, in each case as reasonably determined
by the Board of Directors during this Agreement or within twelve (12) months
after termination of this Agreement (the "Transaction") then Employee shall be
entitled to a fee from the proceeds realized in any Transaction set forth below:
- 6% from aggregate annual proceeds of up to $2 million.
- 5% from aggregate annual proceeds above $2 million and up to
$5 million.
- 4% from aggregate annual proceeds above $5 million.
`aggregate annual proceeds' shall refer to amounts received by Company in any
fiscal year from Transactions.
(the "Fee").
By way of example, should the Company receive six million dollars in a
twelve month period, and should it be in the form of a single five million
dollar transaction and several follow-on transactions that in the aggregate are
one million dollars, Employee will receive
- $120,000, which is 6% of the first two million, plus
- $150,000, which is 5% of the next three million, plus
- $ 40,000, which is 4% of the last one million.
5.2 Such fees shall be payable in the same form (i.e. cash, stock,
options, debt, debt assumption, etc.) as the Company shall receive as proceeds
raised from the Transaction.
5.3 Employee shall be paid a pro rata share of the Fee on any portion
of proceeds raised and paid to the Company through a deferred or multiple-step
transaction or in any form of periodic installment payment at such time as the
Company receives such payment. The Fee shall be paid to the Employee within 30
days of receipt of proceeds by Company and Company shall provide an explanatory
statement to the Employee with payment.
5.4 It is understood that Employee shall have no authority to enter
into any commitments on Company's behalf or to negotiate the terms of any
financing.,
6. BONUS
During the term of this Agreement the Employee shall be paid an amount
equal to 2% of the total annual amount paid to Company by Top Secret Productions
in respect of the film "Step into Liquid". The said amount shall be paid within
45 days of the end of each calendar year and the Company shall provide an
explanatory statement to the Employee with payment.
7. FRINGE BENEFITS
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7.1 VACATION & SICK LEAVE. Employee shall be entitled to take an
aggregate of 20 business days of vacation, during the term hereof, prorated for
any portion of a year to date of termination. The timing and duration of any
vacation shall be as agreed upon by the parties. Company acknowledges that
Employee has earned 80 days that he has not taken and is entitled to.
7.2 OTHER FRINGE BENEFITS. Employee shall be eligible to participate,
on terms no less favorable than those afforded to other executives of the
Company, in any employee benefit plan, health insurance program, life insurance
plan, disability insurance plan, retirement plan, 401(k) and other compensation
plans that may hereafter be adopted by the Company for its executives and
management employees from time to time. Such participation shall be subject to
the terms of the applicable plan, generally applicable policies of the Company,
applicable law and the discretion of the Board of Directors. Nothing contained
in this Agreement shall be construed to create any obligation on the part of the
Company to establish any such plan or to maintain the effectiveness of any such
plan which may be in effect from time to time. Subject to review at the end of
each year of employment, commencing on the first anniversary of this Agreement,
or at any time at the Board's discretion, Employee may, at the discretion of the
Board be awarded a bonus based on performance and Employee shall have the option
if such bonus is awarded of receiving the same in cash or shares of common stock
of the Company equal to the amount of the bonus based on the closing price of
the shares on day bonus is awarded.
7.4 EXPENSES. Employee is authorized to incur reasonable and proper
expenses for promoting the business of the Company as specified in the Company's
travel and expense policy. The Company will reimburse Employee promptly for all
such expenses upon presentation by Employee, of receipts or other appropriate
evidence of expenses.
7.5 OFFICE. The Company shall lease an office for Employee's use in
performing his duties under this Agreement.
7.6 CAR ALLOWANCE. The Employee is eligible for a $500.00 per month car
allowance. Employee is not eligible for reimbursement for mileage or other
auto-related expenses.
8. EMPLOYEE REPRESENTATIONS
The Employee represents and warrants to the Company that the execution
and delivery of this Agreement and the fulfillment of the terms hereof (i) will
not constitute a breach of any agreement or other instrument to which Employee
is party, (ii) does not require the consent of any person, and (iii) shall not
utilize during the term of his employment any proprietary information of any
third party, including prior employers of the Employee.
9. CONFIDENTIALITY, NON-COMPETE; POACHING; DEVELOPMENT RIGHTS
The Company values the protection of its confidential information and
proprietary materials essential to the survival of the Company. Therefore, as a
mandatory condition of Employee's employment, Employee agrees to comply with the
following provisions.
a. CONFIDENTIALITY
(i) The term "Information" as used in this section means any and all
confidential and proprietary information including but not limited to any and
all specifications, formulae, prototypes, software design plans, computer
programs, and any and all records, data, methods, techniques, processes and
projections, plans, marketing information, materials, financial statements,
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memoranda, analyses, notes, and other data and information (in whatever form),
as well as improvements and know-how related thereto, relating to the Company or
its products. Information shall not include information that (a) was already
known to or independently developed by the Employee prior to its disclosure as
demonstrated by reasonable and tangible evidence satisfactory to the Company;
(b) shall have appeared in any printed publication or patent or shall have
become part of the public knowledge except as a result of breach of this
Agreement by the Employee or similar agreements by other Company employees (c)
shall have been received by the Employee from another person or entity having no
obligation of confidentiality to the Company or (d) is approved in writing by
the Company for release by the Employee.
(ii) Subject to the provisions of Section (iii) below, the Employee
agrees to hold in trust and confidence all Information disclosed to Employee and
further agrees not to exploit or disclose the Information to any other person or
entity or use the Information directly or indirectly for any purpose other than
for Employee's work with the Company, unless otherwise consented to in writing
by the Company.
(iii) The Employee agrees to disclose the Information only to persons
necessary in connection with Employee's work with the Company or who have
undertaken the same confidentiality obligations set forth herein in favor of the
Company. The Employee agrees to assume full responsibility for the
confidentiality of the Information disclosed to Employee and to prevent its
unauthorized disclosure, and shall take appropriate measures to ensure that such
persons acting on his behalf are bound by a like covenant of secrecy.
(iv) The Employee acknowledges and agrees that the Information
furnished hereunder is and shall remain proprietary to the Company. Unless
otherwise required by statute or government rule or regulation, all copies of
the Information, shall be returned to the Company immediately upon request
without retaining copies thereof.
b. NON-COMPETE; POACHING; DEVELOPMENT RIGHTS
(i) Unless otherwise expressly consented to in writing by the Company,
during the term of the Employee's employment hereunder, and for a period of
twelve (12) months following the date on which Employee's termination of
employment with the Company becomes effective, Employee will not, directly or
indirectly, for his own account or as an employee, officer, director,
consultant, joint venture, shareholder, investor, or otherwise (except as an
investor in a corporation whose stock is publicly traded and in which the
Employee holds less than 5% of the outstanding shares) interest him/herself or
engage, directly or indirectly, in the design, development, production, sale or
distribution of any product or component that directly or indirectly competes
with a product or component (i) being designed, produced, sold or distributed by
the Company or any of its affiliates (ii) or to which the Company or any of its
affiliates shall then have proprietary rights.
(ii) HIRING OF COMPANY EMPLOYEES. During the term of the Employee's
employment hereunder, and for a period of twelve (12) months following the date
on which Employee's termination of employment with the Company becomes
effective, the Employee shall not, except in the course of the performance of
his duties hereunder or with the prior approval of the Board, in any way
directly or indirectly, with respect to any person who to the Employee's
knowledge was employed by the Company or its affiliates ("Company Employee") at
any time during the period commencing 12 months prior to the date of the hiring
of such Company Employee, hire or cause to be hired any Company Employee, or
contract the services of any closely held private corporation or other entity in
which such Company Employee is an officer or director or holds a 25% or greater
equity ownership interest.
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(iii) Employee's undertakings herein under this Section 6(b) shall be
binding upon Employee's successors, heirs or assigns, and shall continue until
the later of (i) the expiration of one year from the date of execution of this
Agreement or (ii) the expiration of one year from the date the Employee last
represented him/herself as an employee, agent or representative of the Company
or any of its affiliates, subsidiaries or successors.
(iv) Employee acknowledges that the restricted period of time specified
under this Section 9(b) are reasonable, in view of the nature of the business in
which the Company is engaged and Employee's knowledge of the Company's business
and products. If such a period of time or geographical location should be
determined to be unreasonable in any judicial proceeding, then the period of
time and area of restriction shall be reduced so that this Agreement may be
enforced in such an area and during such a period of time as shall be determined
to be reasonable by such judicial proceeding.
(v) DEVELOPMENT RIGHTS. The Employee agrees and declares that all
proprietary information including but not limited to trade secrets, know-how,
patents and other rights in connection therewith developed by or with the
contribution of Employee's efforts during his employment with the Company shall
be the sole property of the Company. Employee shall keep and maintain adequate
and current records (in the form of notes, sketches, drawings and in any other
form that may be required by the Company) of all such proprietary information
developed by Employee. Employee shall at Company's request do all things and
execute all documents as Company may reasonably require to vest in Company the
rights and protection herein referred to. It is hereby acknowledged and agreed
that the Salary payable under this Agreement also constitutes sufficient
consideration for the Employee's obligation hereunder
10. RIGHT OF FIRST REFUSAL
10.1 NOTICE OF OUTSIDE OFFER. If at any time the Company (i) receives a
BONA FIDE written offer (the "Outside Offer") from an arm's length person (the
"Outside Purchaser") to purchase any of the Company's membership interest in Top
Secret Productions LLC, a Delaware limited liability company (the "Assets")
which the Company wishes to accept, or (ii) if at any time the Company
determines to sell the Assets for a determined price (the "Offer Price") then
the Company must give an irrevocable notice in writing (the "Sale Notice") to
the Employee (i) within 5 Business Days of receipt of the Outside Offer or (ii)
of the Offer Price. The Sale Notice must set out the terms, conditions, price
and any other information relating to the Outside Offer or Offer Price that
would be reasonably relevant to the Employee.
10.2 EMPLOYEE'S RIGHT TO PURCHASE. The Employee has the right, to be
exercised by a notice in writing (the "Employee Notice") given to the Company
within 5 business days of receipt of the Sale Notice to purchase all of the
Assets on the terms and conditions set out in the Outside Offer or the Offer
Price.
10.3 CLOSING DATE. The transaction of purchase and sale contemplated by
section 10.2 must be completed within 30 business days of receipt of the Sale
Notice ("Employee Closing Date").
10.4 SALE TO OUTSIDE PURCHASER. If the Employee does not give an
Employee Notice within the time limited or if the Assets remain unsold after the
Employee Closing Date, the Company will be entitled to complete the transaction
contemplated by (i) the Outside Offer with the Outside Purchaser in accordance
with the terms and conditions set out in the Outside Offer or (ii) on terms at
least as favourable to Company as contained in the Offer Price. Notwithstanding
the above Employee's rights in this Section 10 are subject to the rights of
other members of Top Secret Productions LLC, including the rights of first
refusal, all as described in the Operating Agreement of Top Secret Productions
LLC dated May 2, 2000, as amended from time to time.
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11. Miscellaneous
11.1 BENEFIT & ASSIGNMENT This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns. The rights and
obligations of the Employee under this Agreement may not be assigned by the
Employee.
11.2 ENTIRE AGREEMENT This Agreement constitutes the entire
understanding and agreement between the parties, and supersedes any and all
prior discussions and agreements and correspondence, and may not be amended or
modified in any respect except by a subsequent writing executed by both parties.
11.3 NOTICES All notices or other communications hereunder shall be in
writing and shall be sent to either party by hand or by Registered or Certified
mail, postage prepaid, return receipt requested, or sent by telegram or
facsimile to the address set forth in the Preamble to this Agreement or to such
other address as the recipient may designate by notice in accordance with the
provisions of this section.
11.4 APPLICABLE LAW. This Agreement shall be interpreted, governed,
construed and enforced according to the laws of the State of California.
11.5 COUNSEL. Each Party to this Agreement has had the opportunity to
obtain independent legal advice in connection with this Agreement
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly signed as
of the date stated above.
NEW VISUAL CORPORATION
____________________ ______________________
XXX XXXXXXXXXX, XX.
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