Atomic Studios, Inc.
“Sky” Xxxxxxx Xxxxxx
THIS EMPLOYMENT AGREEMENT
(this "Agreement"), effective as of the Effective Date (as defined below), is entered into by and between Atomic Studios,
Inc., a Wyoming corporation (the "Company"), and (the “Executive”).
WHEREAS, the Company
desires to employ the Executive and to enter into an agreement embodying the terms of such employment; and
WHEREAS, the Executive
desires to accept employment with the Company, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, IT IS
HEREBY AGREED AS FOLLOWS:
Period. Subject to the provisions for earlier termination hereinafter provided, the Executive's employment hereunder shall
be for a term (the "Employment Period") commencing on the Effective Date and ending on the fifth anniversary of the Effective
Date (the "Initial Termination Date"); provided, however, that this Agreement shall be automatically extended for one
additional year on the Initial Termination Date and on each subsequent anniversary of the Initial Termination Date, unless either
the Executive or the Company elects not to so extend the term of the Agreement by notifying the other party, in writing, of such
election not less than sixty (60) days prior to the last day of the term as then in effect. For purposes of this Agreement, "Effective
Date" shall mean the date written below.
2. Terms of
(a) Position and Duties.
the Employment Period, the Executive shall serve as Chairman of the Company and shall perform such employment duties as are usual
and customary for such positions. At the Company's request, the Executive shall serve the Company and/or its subsidiaries and affiliates
in other offices and capacities in addition to the foregoing. In the event that the Executive, during the Employment Period, serves
in any one or more of such additional capacities, the Executive's compensation shall not be increased beyond that specified in
Section 2(b) of this Agreement. In addition, in the event the Executive's service in one or more of such additional capacities
is terminated, the Executive's compensation, as specified in Section 2(b) of this Agreement, shall not be diminished or reduced
in any manner as a result of such termination for so long as the Executive otherwise remains employed under the terms of this Agreement.
the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote appropriate attention and time during normal business hours to the business and affairs of the Company. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or
committees, (B) fulfill limited teaching, speaking and writing engagements or (C) manage his personal investments, so long as such
activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company
in accordance with this Agreement and (D) undertake other business responsibilities. It is expressly understood and agreed that
to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct
of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's responsibilities to Company; provided that no such activity
that violates any written non-competition agreement between the parties shall be permitted.
(i) Base Salary.
During the Employment Period, the Executive shall receive a base salary (the "Base Salary") as determined by the Board
of Directors from time to time with due regard for the state of development of the Company, as the same may be increased thereafter
pursuant to the Company's normal practices for its executives. The Base Salary shall be paid at such intervals as the Company pays
executive salaries generally. During the Employment Period, the Base Salary shall be reviewed at least annually for possible increase
in the Company's discretion. Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. The Base Salary shall not be reduced after any such increase and the term "Base Salary" as utilized
in this Agreement shall refer to Base Salary as so increased.
(ii) Annual Bonus. In
addition to the Base Salary, the Executive shall be eligible to earn, for each fiscal year of the Company ending during the Employment
Period, an annual cash performance bonus (“Annual Bonus) under the Company's bonus plan or plans applicable to senior executives.
The amount of the Annual Bonus and the target performance goals applicable to the Annual Bonus shall be determined in accordance
with the terms and conditions of such bonus plan as in effect from time to time.
Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all other incentive
plans, practices, policies and programs, and all savings and retirement plans, practices, policies and programs, in each case that
are applicable generally to senior executives of the Company.
Benefit Plans. During the Employment Period, the Executive and the Executive's eligible family members shall be eligible for participation
in the welfare benefit plans, practices, policies and programs (including, if applicable, medical, dental, disability, employee
life, group life and accidental death insurance plans and programs) maintained by the Company for its senior executives.
During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses
incurred by the Executive in accordance with the policies, practices and procedures of the Company provided to senior executives
of the Company.
Benefits. During the Employment Period, the Executive shall be entitled to such fringe benefits and perquisites as are provided
by the Company to its senior executives from time to time, in accordance with the policies, practices and procedures of the Company,
and shall receive such additional fringe benefits and perquisites as the Company may, in its discretion, from time-to-time provide.
During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs
and practices of the Company applicable to its senior executives.
Payments. The amount of compensation payable to Executive pursuant to Sections 2(b)(i) and (ii) above shall be "grossed up"
as necessary (on an after-tax basis) to compensate for any additional social security withholding taxes due as a result of Executive's
shared employment by any subsidiary and/or affiliate of the Company, the Company, if applicable.
3. Termination of Employment.
(a) Death or
Disability. The Executive's employment shall terminate automatically upon the Executive's death or Disability during the Employment
Period. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 90 consecutive days or on a total of 180 days in any 12-month period, in either case
as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected
by the Company or its insurers and acceptable to the Executive or the Executive's legal representative.
(b) Cause. The Company
may terminate the Executive's employment during the Employment Period for Cause or without Cause. For purposes of this Agreement,
"Cause" shall mean the occurrence of any one or more of the following events unless the Executive fully corrects the
circumstances constituting Cause within a reasonable period of time after receipt of the Notice of Termination (as defined below):
(i) the Executive's
willful and continued failure to substantially perform his duties with the Company (other than any such failure resulting from
the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after his issuance of a
Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to the Executive by the
Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed
(ii) the Executive's
willful commission of an act of fraud or dishonesty resulting in economic or financial injury to the Company;
(iii) the Executive's
conviction of, or entry by the Executive of a guilty plea to the commission of a felony or a crime involving moral turpitude;
(iv) a willful
breach by the Executive of his fiduciary duty to the Company which results in economic or other injury to the Company; or
(v) the Executive's
willful and material breach of the Executive's covenants set forth in Section 9 hereof.
For purposes of this provision, no act
or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done,
by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of
the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based
upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for
Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative
vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel for the
Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of any
of the conduct described in Section 3(b), and specifying the particulars thereof in detail; provided, that if the Executive is
a member of the Board, the Executive shall not vote on such resolution nor shall the Executive be counted in determining the "entire
membership" of the Board.
(c) Good Reason.
The Executive's employment may be terminated by the Executive for Good Reason or by the Executive without Good Reason. For purposes
of this Agreement, "Good Reason" shall mean the occurrence of any one or more of the following events without the Executive's
prior written consent, unless the Company fully corrects the circumstances constituting Good Reason (provided such circumstances
are capable of correction) prior to the Date of Termination (as defined below):
(i) the assignment
to the Executive of any duties materially inconsistent in any respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 2 of this Agreement, or any
other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(ii) the Company's
reduction of the Executive's annual base salary or bonus opportunity, each as in effect on the date hereof or as the same may be
increased from time to time;
(iii) the relocation
of the Company's offices at which the Executive is principally employed (the "Principal Location") to a location more
than thirty (30) miles from such location, or the Company's requiring the Executive to be based at a location more than thirty
(30) miles from the Principal Location, except for required travel on the Company's business to an extent substantially consistent
with the Executive's present business travel obligations;
(iv) the Company's
failure to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in
Section 10 hereof; or
(v) the Company's
failure to cure a material breach of its obligations under the Agreement after written notice is delivered to the Board by the
Executive which specifically identifies the manner in which the Executive believes that the Company has breached its obligations
under the Agreement and the Company is given a reasonable opportunity to cure any such breach.
(d) Notice of
Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other parties hereto given in accordance with Section 12(c) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
(e) Date of
Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein (which
date shall not be more than 30 days after the giving of such notice), as the case may be, (ii) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies
the Executive of such termination, (iii) if the Executive's employment is terminated by the Executive without Good Reason, the
Date of Termination shall be the tenth day after the date on which the Executive notifies the Company of such termination, unless
otherwise agreed by the Company and the Executive, and (iv) if the Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death or Disability of the Executive, as the case may be.
4. Obligations of the Company upon
Cause or For Good Reason. If, during the Employment Period, the Company shall terminate the Executive's employment without
Cause or the Executive shall terminate his employment for Good Reason:
(i) The Executive
shall be paid, in a single lump sum payment within 60 days after the Date of Termination, the aggregate amount of (A) the Executive's
earned but unpaid Base Salary and accrued vacation pay through the Date of Termination, and any Annual bonus required to be paid
to the Executive pursuant to Section 2(b)(ii) above for any fiscal year of the Company that ends on or before the Date of Termination
to the extent not previously paid (the "Accrued Obligations"), and (B) two (the "Severance Multiple") times
the sum of (x) the annual Base Salary in effect on the Termination Date plus (y) the average Annual Bonus received by the Executive
for the three complete fiscal years (or such lesser number of years as the Executive has been employed by the Company) of the Company
immediately prior to the Termination Date (the "Severance Amount");
(ii) At the
time when annual bonuses are paid to the Company's other senior executives for the fiscal year of the Company in which the Date
of Termination occurs, the Executive shall be paid an Annual Bonus in an amount equal to the product of (x) the amount of the Annual
Bonus to which the Executive would have been entitled if the Executive's employment had not been terminated, and (y) a fraction,
the numerator of which is the number of days in such fiscal year through the Date of Termination and the denominator of which is
the total number of days in such fiscal year (a "Pro-Rated Annual Bonus");
(iii) For a
period of years equal to the Severance Multiple, the Company shall continue to provide the Executive and the Executive's eligible
family members with group health insurance coverage at least equal to that which would have been provided to them if the Executive's
employment had not been terminated; provided, however, that if the Executive becomes re-employed with another employer and is eligible
to receive group health insurance coverage under another employer's plans, the Company's obligations under this Section 4(a)(iii)
shall be reduced to the extent comparable coverage is actually provided to the Executive and the Executive's eligible family members,
and any such coverage shall be reported by the Executive to the Company.
(iv) The Company
shall, at its sole expense and on an as-incurred basis, provide the Executive with outplacement services the scope and provider
of which shall be reasonable and consistent with industry practice for similarly situated executives; and
(v) To the
extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any vested benefits and other
amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy
or practice or contract or agreement of the Company and its affiliates (such other amounts and benefits shall be hereinafter referred
to as the "Other Benefits").
Notwithstanding the foregoing, it shall
be a condition to the Executive's right to receive the amounts provided for in Sections 4(a)(i)(B) and 4(a)(ii), (iii) and (iv)
above that the Executive execute, deliver to the Company and not revoke a release of claims in substantially the form attached
hereto as Exhibit A.
(b) For Cause
or Without Good Reason. If the Executive's employment shall be terminated by the Company for Cause or by the Executive without
Good Reason during the Employment Period, the Company shall have no further obligations to the Executive under this Agreement other
than pursuant to Sections 7 and 8 hereof, and the obligation to pay to the Executive the Accrued Obligations in cash within 30
days after the Date of Termination and to provide the Other Benefits.
(c) Death or
Disability. If the Executive's employment is terminated by reason of the Executive's death or Disability during the Employment
(i) The Accrued
Obligations shall be paid to the Executive's estate or beneficiaries or to the Executive, as applicable, in cash within 30 days
of the Date of Termination;
(ii) 100% of
the Executive's annual Base Salary, as in effect on the Date of Termination, shall be paid to the Executive's estate or beneficiaries
or to the Executive, as applicable, in cash within 30 days following the Date of Termination;
(iii) The Pro-Rated
Annual Bonus shall be paid to the Executive's estate or beneficiaries or to the Executive, as applicable, at the time when annual
bonuses are paid to the Company's other senior executives for the fiscal year of the Company in which the Date of Termination occurs;
(iv) For a
period of twelve months following the Date of Termination, the Executive and the Executive's eligible family members shall continue
to be provided with group health insurance coverage at least equal to that which would have been provided to them if the Executive's
employment had not been terminated; provided, however, that if the Executive becomes re-employed with another employer and is eligible
to receive group health insurance coverage under another employer's plans, the Company's obligations under this Section 4(d)(iv)
shall be reduced to the extent comparable coverage is actually provided to the Executive and the Executive's eligible family members,
and any such coverage shall be reported by the Executive to the Company; and
(v) The Other
Benefits shall be paid or provided to the Executive on a timely basis.
5. Termination Upon a Change in
Control. If a Change in Control (as defined herein) occurs during the Employment Period and the Executive's employment is terminated
(a) by the Company without Cause or by the Executive for Good Reason, in each case within two (2) years after the effective date
of the Change in Control or (b) by the Executive for any reason on or within 30 days after the one year anniversary of the effective
date of the Change in Control, then the Executive shall be entitled to the payments and benefits provided in Section 4(a), subject
to the terms and conditions thereof, except that for purposes of this Section 5, the Severance Multiple shall equal three (3).
In addition, in the event of such a termination of the Executive's employment, all outstanding stock options, restricted stock
and other equity awards granted to the Executive under any of the Company's equity incentive plans (or awards substituted therefore
covering the securities of a successor company) shall become immediately vested and exercisable in full. For purposes of this Agreement,
"Change in Control" shall mean the occurrence of any of the following events:
(i) the acquisition,
directly or indirectly, by any "person" or "group" (as those terms are defined in Sections 3(a)(9), 13(d),
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and the rules thereunder) of "beneficial ownership"
(as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors
("voting securities") of the Company that represent 35% or more of the combined voting power of the Company's then outstanding
voting securities, other than
(A) an acquisition
of securities by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or
maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by the Company, or
(B) an acquisition
of securities by the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of the stock of the Company, or
(C) an acquisition
of securities pursuant to a transaction described in clause (iii) below that would not be a Change in Control under clause (iii),
(D) any direct
or indirect acquisition of securities by the Executive or his family, or any entity controlled thereby;
Notwithstanding the foregoing, the following event
shall not constitute an "acquisition" by any person or group for purposes of this clause (i): an acquisition of the Company's
securities by the Company which causes the Company's voting securities beneficially owned by a person or group to represent 35%
or more of the combined voting power of the Company's then outstanding voting securities; provided, however, that if a person or
group shall become the beneficial owner of 35% or more of the combined voting power of the Company's then outstanding voting securities
by reason of share acquisitions by the Company as described above and shall, after such share acquisitions by the Company, become
the beneficial owner of any additional voting securities of the Company, then such acquisition shall constitute a Change in Control;
who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least
a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election
by the Company's shareholders, or nomination for election by the Board, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office occurs as a result of an election contest with respect
to the election or removal of directors or other solicitation of proxies or consents by or on behalf of a person other than the
(iii) the consummation
by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries)
of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially
all of the Company's assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction
(A) which results
in the Company's voting securities outstanding immediately before the transaction continuing to represent (either by remaining
outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls,
directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company's assets or otherwise
succeeds to the business of the Company (the Company or such person, the "Successor Entity")) directly or indirectly,
at least 50% of the combined voting power of the Successor Entity's outstanding voting securities immediately after the transaction,
(B) after which
no person or group beneficially owns voting securities representing 35% or more of the combined voting power of the Successor Entity;
provided, however, that no person or group shall be treated for purposes of this clause (B) as beneficially owning 35% or more
of combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation
of the transaction; or
by the Company's shareholders of a liquidation or dissolution of the Company.
For purposes of clause (i) above,
the calculation of voting power shall be made as if the date of the acquisition were a record date for a vote of the Company's
shareholders, and for purposes of clause (iii) above, the calculation of voting power shall be made as if the date of the consummation
of the transaction were a record date for a vote of the Company's shareholders.
6. Non-exclusivity of Rights.
Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company and for which the Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any contract or agreement with the Company. Amounts which are vested benefits or which
the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with
the Company at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program
or contract or agreement except as explicitly modified by this Agreement.
7. Full Settlement. The Company's
obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this Agreement and except as expressly provided, such amounts
shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred (within 30 days
following the Company's receipt of an invoice from the Executive), to the full extent permitted by law, all reasonable legal fees
and expenses which the Executive or his beneficiaries may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive or his beneficiaries about
the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal
rate provided for in Section 7872(f)(2)(A) of the Code. The preceding sentence shall not apply with respect to any such contest
if the court having jurisdiction over such contest determines that the Executive's claim in such contest is frivolous or maintained
in bad faith.
8. Certain Additional Payments
by the Company.
(a) Anything in this
Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would
be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the "Excise Tax Gross-Up
Payment") in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Excise Tax Gross-Up Payment, the Executive retains an amount of the Excise Tax Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 8(a), if it shall be
determined that the Executive is entitled to the Excise Tax Gross-Up Payment, but that the Parachute Value of all Payments does
not exceed 110% of the Safe Harbor Amount, then no Excise Tax Gross-Up Payment shall be made to the Executive and the amounts payable
under this Agreement shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount.
The reduction of the amounts payable hereunder, if applicable, shall be made by first reducing the payments under Section 4(a)(i),
unless an alternative method of reduction is elected by the Executive, and in any event shall be made in such a manner as to maximize
the Value of all Payments actually made to the Executive. For purposes of reducing the Payments to the Safe Harbor Amount, only
amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amount payable under this
Agreement would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable
under the Agreement shall be reduced pursuant to this Section 8(a). The Company's obligation to make Excise Tax Gross-Up Payments
under this Section 8 shall not be conditioned upon the Executive's termination of employment.
(b) Subject to the provisions
of Section 8(c), all determinations required to be made under this Section 8, including whether and when an Excise Tax Gross-Up
Payment is required, the amount of such Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at such determination,
shall be made by such nationally recognized accounting firm as may be selected by the Company and reasonably acceptable to the
Executive (the "Accounting Firm"); provided, that the Accounting Firm's determination shall be made based upon "substantial
authority" within the meaning of Section 6662 of the Code. The Accounting Firm shall provide detailed supporting calculations
both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a
Payment or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any Excise Tax Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive, unless the Company obtains an opinion of outside legal counsel, based upon at least
"substantial authority" within the meaning of Section 6662 of the Code, reaching a different determination, in which
event such legal opinion shall be binding upon the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Excise
Tax Gross-Up Payments that will not have been made by the Company should have been made (the "Underpayment"), consistent
with the calculations required to be made hereunder. In the event the Company exhausts its remedies pursuant to Section 8(c) and
the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall
notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the
Company of the Excise Tax Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business
days after the Executive is informed in writing of such claim. The Executive shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which the Executive gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that the Company desires to contest such claim, the Executive shall:
(i) give the
Company any information reasonably requested by the Company relating to such claim,
(ii) take such
action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,
with the Company in good faith in order effectively to contest such claim, and
the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall
bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest,
and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest
and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 8(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole
discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and xxx
for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that, if the Company directs the Executive to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such advance
or with respect to any imputed income in connection with such advance; and provided, further, that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited
to issues with respect to which the Excise Tax Gross-Up Payment would be payable hereunder, and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt
by the Executive of an Excise Tax Gross-Up Payment or an amount advanced by the Company pursuant to Section 8(c), the Executive
becomes entitled to receive any refund with respect to the Excise Tax to which such Excise Tax Gross-Up Payment relates or with
respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 8(c), if applicable)
promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c), a determination
is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive
in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Excise Tax Gross-Up Payment required to be paid.
any other provision of this Section 8, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service
or any other applicable taxing authority, for the benefit of the Executive, all or any portion of any Excise Tax Gross-Up Payment,
and the Executive hereby consents to such withholding.
(f) Any other liability
for unpaid or unwithheld Excise Taxes shall be borne exclusively by the Company, in accordance with Section 3403 of the Code. The
foregoing sentence shall not in any manner relieve the Company of any of its obligations under this Employment Agreement.
(g) Definitions. The
following terms shall have the following meanings for poses of this Section 8:
Tax" shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect
to such excise tax.
Value" of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the
Code of the portion of such Payment that constitutes a "parachute payment" under Section 280G(b)(2), as determined by
the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.
(iii) A "Payment"
shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to
or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.
(iv) The "Safe
Harbor Amount" shall mean 2.99 times the Executive's "base amount," within the meaning of Section 280G(b)(3) of
of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section
280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.
9. Confidential Information and
(a) In no event shall
an asserted violation of the provisions of this Section 9 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement. However, in recognition of the facts that irreparable injury will result to the
Company in the event of a breach by the Executive of his obligations under Sections 9(a) and (b) of this Agreement, that monetary
damages for such breach would not be readily calculable, and that the Company would not have an adequate remedy at law therefor,
the Executive acknowledges, consents and agrees that in the event of such breach, or the threat thereof, the Company shall be entitled,
in addition to any other legal remedies and damages available, to specific performance thereof and to temporary and permanent injunctive
relief (without the necessity of posting a bond) to restrain the violation or threatened violation of such obligations by the Executive.
(b) The Employee shall,
at all times during and subsequent to the Term, keep secret and retain in strictest confidence all confidential matters of the
Company, and the "know-how", trade secrets, technical processes, inventions, equipment specifications, equipment designs,
plans, drawings, research projects, confidential client lists, details of client, subcontractor or consultant contracts, pricing
policies, operational methods, marketing plans and strategies, project development, acquisition and bidding techniques and plans,
business acquisition plans, and new personnel acquisition plans of the Company and its subsidiaries and divisions (whether now
known or hereafter learned by the Employee), except to the extent that (i) such information is generally available to the public
without restriction, (ii) the Employee obtains confidentiality agreements with respect to such confidential information, (iii)
the Employee is requested by the Board of Directors of the Company or a Committee thereof, or by the Chairman of the Company, to
disclose such confidential information, (iv) such information is provided to a customer of the Company pursuant to a request received
from such customer in the ordinary course of business, or (v) the Employee is under compulsion of either a court order or a governmental
agency's or authority's inquiry, order or request to so disclose such information.
of the Company.
as otherwise provided herein, all lists, records and other non-personal documents or papers (and all copies thereof) relating to
the Company and/or any of its subsidiaries or divisions, including such items stored in computer memories, on microfiche or by
any other means, made or compiled by or on behalf of the Employee, or made available to the Employee, are and shall be the property
of the Company, and shall be delivered to the Company on the date of termination of the Employee's employment with the Company,
or sooner upon request of the Company at any time or from time to time.
(ii) All inventions,
including any procedures, formulas, methods, processes, uses, apparatuses, patterns, designs, plans, drawings, devices or configurations
of any kind, any and all improvements to them which are developed, discovered, made or produced, and all trade secrets and information
used by the Company and/or its subsidiaries and divisions (including, without limitation, any such matters created or developed
by the Employee during the term of this Agreement), shall be the exclusive property of the Company or the subject subsidiary, and
shall be delivered to the Company or the subject subsidiary (without the Employee retaining any copies, components or records thereof)
on the date of termination of the Employee's employment with the Company; provided, however, that nothing herein contained shall
be deemed to grant to the Company any property rights in any inventions or other intellectual property which may at any time be
developed by the Employee which is wholly unrelated to any business then engaged in or under development by the Company.
(d) The Employee shall
not, at any time (whether during the term of this Agreement or at any time thereafter), directly or indirectly, for or on behalf
of any business enterprise other than the Company and/or its subsidiaries and affiliates, solicit any employee of the Company or
any of its subsidiaries to leave his or her employment with the Company or such subsidiary, or encourage any such employee to leave
such employment, without the prior written approval of the Company in each instance.
For so long as the Employee shall be receiving any compensation or remuneration under this Agreement, and for a further period
of one (1) year thereafter, the Employee shall not, directly or indirectly, whether individually or as an employee, stockholder
(other than the passive ownership of up to 5% of the capital stock of a publicly traded corporation), partner, joint venturer,
agent or other representative of any other person, firm or corporation, engage or have any interest in any business (other than
the Company or any of its subsidiaries or affiliates) which, in any country in which the Company or any of its subsidiaries or
divisions does or solicits business during the Term, is engaged in or derives any revenues from performing any functionally equivalent
services or marketing any functionally equivalent products as those services provided and products marketed by the Company or any
of its subsidiaries or divisions during the Term.
of Covenants. The Employee acknowledges and agrees that the provisions of this Section 9 of this Agreement are (a) made in
consideration of the premises and undertakings of the Company set forth herein, (b) made for good, valuable and adequate consideration
received and to be received by the Employee, and (c) reasonable and necessary, in terms of the time, geographic scope and nature
of the restrictions, for the protection of the Company and the business and good will thereof. It is intended that the provisions
of this Section 9 be fully severable, and in the event that any of the foregoing restrictions, or any portion of the foregoing
restrictions, shall be deemed contrary to law, invalid or unenforceable in any respect by any court or tribunal of competent jurisdiction,
then such restrictions shall be deemed to be amended, modified and reduced in scope and effect, as to duration and/or geographic
area, only to that extent necessary to render same valid and enforceable (and in such reduced form, such provisions shall then
be enforceable), and any other of the foregoing restrictions shall be unaffected and shall remain in full force and effect.
Remedies. The parties hereby acknowledge that, in the event of any breach or threatened breach by the Employee of the provisions
of this Section 9, the Company will suffer irreparable harm and will not have an adequate remedy at law. Accordingly, in the event
of any such breach or threatened breach, the Company may seek and obtain appropriate equitable relief to restrain or enjoin such
breach or threatened breach and/or to compel compliance herewith.
(h) Trade Secrets.
The Parties hereby agree and stipulate that any confidential information of the Parties shall be deemed a "trade secret"
as that term is defined under the Economic Espionage Act of 1996 (the "Act"), and further agree and stipulate that the
Parties by this Agreement have taken all reasonable steps under the Act to keep such information secret.
(a) This Agreement is
personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's
(b) This Agreement shall
inure to the benefit of and be binding upon the Company and its successors and assigns.
(c) The Company will
require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to assume and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.
11. Payment of Financial Obligations.
The payment or provision to the Executive by the Company of any remuneration, benefits or other financial obligations pursuant
to this Agreement shall be allocated to the Company and, if applicable, any subsidiary and/or affiliate thereof from time to time.
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Wyoming, without reference
to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force
or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
Except as set forth in Section 9(c) above, any disagreement, dispute, controversy or claim arising out of or relating to this Agreement
or the interpretation of this Agreement or any arrangements relating to this Agreement or contemplated in this Agreement or the
breach, termination or invalidity thereof shall be settled by final and binding arbitration administered by the America Arbitration
Association in Tampa, Wyoming in accordance with the then existing American Arbitration Association Rules and Procedures for Employment
Disputes. In the event of such an arbitration proceeding, the Executive and the Company shall select a mutually acceptable neutral
arbitrator from among the American Arbitration Association panel of arbitrators. In the event the Executive and the Company cannot
agree on an arbitrator, the Administrator of American Arbitration Association will appoint an arbitrator. Neither the Executive
nor the Company nor the arbitrator shall disclose the existence, content, or results of any arbitration hereunder without the prior
written consent of all parties. Except as provided herein, the Federal Arbitration Act shall govern the interpretation, enforcement
and all proceedings. The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of the state of Wyoming,
or federal law, or both, as applicable, and the arbitrator is without jurisdiction to apply any different substantive law. The
arbitrator shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and shall
apply the standards governing such motions under the Federal Rules of Civil Procedure. The arbitrator shall render an award and
a written, reasoned opinion in support thereof. Judgment upon the award may be entered in any court having jurisdiction thereof.
All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
at the Executive's most recent address on the records of the Company,
If to the Company:
at the Company’s principal offices, attention of the Company’s Secretary and President.
or to such other address as either party
shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective hen actually
received by the addressee.
Act of 2002. Notwithstanding anything herein to the contrary, if the Company determines, in its good faith judgment, that any
transfer or deemed transfer of funds hereunder is likely to be construed as a personal loan prohibited by Section 13(k) of the
Exchange Act and the rules and regulations promulgated thereunder, then such transfer or deemed transfer shall not be made to the
extent necessary or appropriate so as not to violate the Exchange Act and the rules and regulations promulgated thereunder.
The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation. In addition, notwithstanding any other provision of this
Agreement, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable
taxing authority, for the benefit of the Executive, all or any portion of any Excise Tax Gross-Up Payment, and the Executive hereby
consents to such withholding.
(g) No Waiver.
The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3(c) of this Agreement, shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement.
(h) Entire Agreement.
As of the Effective Date, this Agreement, together with any non-competition agreement between the parties, constitutes the final,
complete and exclusive agreement between the Executive and the Company with respect to the subject matter hereof and replaces and
supersedes any and all other agreements, offers or promises, whether oral or written, made to you by any related entity, or representative
of the Company or the transactions related thereto. The Executive agrees that any such agreement, offer or promise between the
Executive and Employer (or any representative thereof) is hereby terminated and will be of no further force or effect, and the
Executive acknowledges and agrees that upon his execution of this Agreement, he will have no right or interest in or with respect
to any such agreement, offer or promise. In the event that the Effective Date does not occur, this Agreement (including, without
limitation, the immediately preceding sentence) shall have no force or effect.
This Agreement may be executed simultaneously in two counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto
set the Executive's hand and, pursuant to the authorization from the Board, the Company has caused these presents to be executed
in its name on its behalf, all as of the day and year written below.
Atomic Studios, Inc.
A Wyoming Corporation
“Sky” Xxxxxxx Xxxxxx
Dated: July ____, 2019