EMPLOYMENT AGREEMENT
AGREEMENT made and entered into as of this 22nd day of November, 1999
between Urban Cool Network, Inc., a Delaware corporation (the "Corporation")
having an address at 0000 Xxx Xxxxxx, Xxxxxx, Xxxxx 00000 and Xxxxx Xxxxxx (the
"Executive"), residing at 00 Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000.
W I T N E S S E T H:
WHEREAS, Executive is presently employed by the Corporation; and
WHEREAS, the Company and the Executive desire to set forth the terms of
Executive's employment with the Company, pursuant to the terms and conditions
hereof.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree with each other as follows:
1. Term of Employment. The Corporation agrees to and does hereby employ
Executive, and Executive agrees to and does hereby accept employment by the
Corporation, as the Treasurer and Chief Financial Officer of the Corporation,
subject to the supervision and direction of its Chief Executive Officer and its
Board of Directors, for the one (1) year period commencing on the consummation
of the initial public offering of the Corporation's securities (the "Term").
2. Duties of Executive. Executive shall devote such time, attention and
energy to the affairs of Corporation as shall be reasonably required to perform
his duties hereunder, and, in pursuance of the policies and directions of the
Board of Directors, Executive shall use his best efforts
to promote the business and affairs of the Corporation.
3. Base Compensation. In consideration of the Executive's services
pursuant to this Agreement, Corporation shall pay to Executive, during the
period of Executive's employment under this Agreement (the "Base Compensation"),
(i) a salary at the rate of One Hundred Twenty Five Thousand Dollars ($125,000)
per year during the first year of this Agreement; and (ii) for each year
thereafter, annual compensation shall be determined by the Chief Executive
Officer and its Board of Directors, but not less than $125,000 per year. The
Base Compensation shall be payable in equal installments, in accordance with the
Corporation's customary procedures for executive employees, subject to
applicable tax and payroll deductions.
4. Incentive Compensation.
(a) Provided Executive has duly performed his obligations pursuant
to this Agreement, Executive shall be eligible to receive, as additional
compensation for the services to be rendered by Executive under this Agreement,
incentive compensation. The amount of such incentive compensation, if any, shall
be determined by the Board of Directors in its sole discretion based on the
Executive's performance and contributions to the Corporation's success.
(b) Provided Executive's employment continues during the term hereof
and he is in good standing with the Company, Executive shall be eligible to
receive, as additional compensation for the services to be rendered by Executive
under this Agreement, 10,000 options to purchase shares of the Company's common
stock pursuant to the Company's 1999 Stock Option Plan. Such options shall vest
one year from the date hereof.
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5. Other Benefits. (a) During the term of this Agreement the Executive
shall be entitled to participate in any benefit plans adopted by the Corporation
for the general and overall benefit of all employees and/or for key executives
of the Corporation such as health care, life insurance, disability, stock option
plans, tax, legal and financial planning services, pension, profit sharing and
savings.
(b) During the term of this Agreement, Executive shall be entitled
to a monthly car allowance of $400.00.
6. Vacation. Executive shall be entitled to a fully paid vacation of
three (3) weeks per calendar year, which vacation shall be scheduled at such
time or times as the Corporation in consultation with Executive may reasonably
determine.
7. Expenses. The Corporation shall pay or reimburse Executive for all
reasonable and necessary expenses incurred by him in connection with his duties
hereunder, upon submission by Executive to the Corporation of such reasonable
evidence of such expenses as the Corporation may require.
8. Insurance. The Corporation may from time to time apply for policies
of life, health and accident insurance or disability insurance upon the
Executive in such amounts as the Corporation deems appropriate. The Executive
agrees to aid the Corporation in procuring such insurance, including submitting
to a physical examination, if required, and completing any and all forms
required for application for any insurance policy.
9. Disclosure of Information. The Executive shall, during his
employment under this Agreement and thereafter, keep confidential and refrain
from disclosing to any unauthorized persons all data and information relating to
the respective businesses of the Corporation or any of its
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subsidiaries.
10. Intellectual Property Rights. (a) The Executive shall promptly
disclose to the Corporation in writing, any and all charts, layouts, maps,
inventions, improvements, techniques, markets, sales and advertising plans,
processes, concepts and plans, whether or not copyrightable or patentable,
secret processes and "know-how," conceived by the Executive during the term of
his employment by the Corporation (the "Executive's Work Product"), whether
alone or with others and whether during regular working hours and through the
use of facilities and property of the Corporation or otherwise, which directly
relates to the present business of the Corporation. Upon the Corporation's
request at any time or from time to time during the Term of the Executive's
employment, the Executive shall (i) deliver to the Corporation copies of the
Executive's Work Product that may be in his possession or otherwise available to
him, and (ii) execute and deliver to the Corporation such applications,
assignments and other documents as it may reasonably require in order to apply
for and obtain copyrights or patents in the United States of America and other
countries with respect to any Executive's Work Product that it deems to be
copyrightable or patentable, and/or otherwise to vest in itself full title
thereto.
(b) All documents that pertain to the Corporation, including but not
limited to the Executive's Work Product, shall be the sole and exclusive
property of the Corporation. Upon the termination of the Executive's employment,
all such documents that may be in his possession or otherwise available to him
or shall thereafter come into his possession or control shall be promptly
returned to the Corporation without the necessity of a request therefor.
11. Non-Competition Covenant. (a) The Executive shall not, during his
employment by the Corporation, engage, directly or indirectly, in any business
competitive with the business of
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the Corporation without the consent of the Board of Directors.
(b) For a period of one (1) year after the termination of the
Executive's employment hereunder (the "Non-Competition Period"), for any reason
whatsoever, other than a termination by the Corporation without good cause, or
by Executive for good reason (as hereinafter defined) the Executive shall not
(i) engage, directly or indirectly, as an officer, director, shareholder, owner,
partner, joint venturer or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales representative in
any business related to Internet products and services, and related activities
throughout the United States (the "Territory"), without the permission of the
Board of Directors, which permission shall not be unreasonably withheld or
delayed or (ii) induce or actively attempt to influence any other employee or
consultant of the Corporation to terminate his or her employment or consultancy
with the Corporation. Nothing herein contained shall be deemed to prevent
ownership by Executive and his associates (as said term is defined in regulation
14(A) promulgated under the Securities Exchange Act of 1934 as in effect on the
date hereof), collectively, of not more than 5% of the outstanding capital stock
of a corporation listed on a national securities exchange.
(c) (i) The parties to this Agreement consider the restrictions
contained herein reasonable as to the duration of the Non-Competition Period and
the extent of the Territory. However, if the duration of the Non-Competition
Period or the extent of the Territory herein specified should be judged
unreasonable by any Court or arbitration proceeding, the validity and effect of
the remaining provisions of this Agreement shall not be affected thereby and,
the duration of the Non-Competition Period shall be reduced by such number of
months and/or the area of the Territory shall be reduced such that, the
Territory and the Non-Competition Period shall be deemed
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reasonable so that the foregoing covenant not to compete may be enforced.
(ii) Executive agrees and recognizes that in the event of a
breach or threatened breach by Executive of the provisions of the foregoing
covenants, the Corporation may suffer irreparable harm, and that money damages
may not be an adequate remedy. Therefore, the Corporation shall be entitled as a
matter of right to specific performance of the covenants of Executive contained
herein by way of temporary or permanent injunctive relief in a Court of
competent jurisdiction.
12. Termination. This Agreement and Executive's employment may be
terminated in any one of the followings ways:
(a) Death. The death of Executive shall immediately terminate this
Agreement with no severance compensation due to Executive's estate.
(b) Disability. If, as a result of incapacity due to physical or
mental illness or injury, Executive shall have been absent from his full-time
duties hereunder for three (3) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
three (3) month period, but which shall not be effective earlier than the last
day of such three (3) month period), the Corporation may terminate Executive's
employment hereunder provided Executive is unable to resume his full-time duties
at the conclusion of such notice period. Also, Executive may terminate this
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Executive shall have
furnished the Corporation with a written statement from a qualified doctor to
such effect and provided, further, that, at the Corporation's request made
within thirty (30) days of the date of such written statement, Executive
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shall submit to an examination by a doctor selected by the Corporation who is
reasonably acceptable to Executive or Executive's doctor and such doctor shall
have concurred in the conclusion of Executive's doctor. In the event this
Agreement is terminated as a result of Executive's disability, Executive shall
(i) receive from the Company, in a lump-sum payment due within thirty (30) days
of the effective date of termination, the base salary for one (1) year and (ii)
the Corporation shall make the insurance premium payments contemplated by COBRA
for a period of eighteen (18) months after such termination.
(c) Good Cause. The Corporation may terminate this Agreement ten
(10) days after written notice to Executive for "Good Cause," which shall mean
any one or more of the following: (1) Executive's willful, material and
irreparable breach of this Agreement; (2) Executive's gross negligence in the
performance or intentional nonperformance (continuing for ten (10) days after
receipt of written notice of need to cure) of any of Executive's material duties
and responsibilities hereunder; (3) Executive's willful dishonesty, fraud or
misconduct with respect to the business or affairs of the Corporation which
materially and adversely affects the operations or reputation of the
Corporation; (4) Executive's conviction of a felony crime; or (5) confirmed
positive illegal drug test result. In the event of a termination for Good Cause,
as enumerated above, Executive shall have no right to any severance
compensation.
(d) Without Good Cause. At any time after the commencement of
employment, Executive may, without cause, terminate this Agreement and
Executive's employment, effective thirty (30) days after written notice is
provided to the Corporation. Executive may only be terminated without Good Cause
by the Corporation during the Term hereof if such termination is approved by a
majority of the members of the Board of Directors of the Corporation and
provided
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that the Executive receives at least one (1) month written notice. Should
Executive terminate with Good Reason or in the event that Executive is
terminated without Good Cause during the Term, Executive shall receive from the
Corporation, on such dates as would otherwise be paid by the Corporation, the
lesser of the base salary at the rate then in effect for a period of one (1)
year, or the base salary then in effect for the balance of the Term. Further, if
Executive is terminated without Good Cause or terminates his employment
hereunder with Good Reason, (a) the Corporation shall make the insurance premium
payments contemplated by COBRA for a period of six (6) months after such
termination, (b) the Executive shall be entitled to receive a prorated portion
of any annual bonus and other incentive compensation to which the Executive
would have been entitled for the year during which the termination occurred had
the Executive not been terminated, (c) all options to purchase the Corporation's
Common Stock based upon the schedule set forth in paragraph 4(b) shall vest
thereupon, and (d) the Executive shall be entitled to receive all other unpaid
benefits due and owing through Executive's last day of employment. If Executive
resigns or otherwise terminates his employment without Good Reason, rather than
the Corporation terminating his employment pursuant to this paragraph 12,
Executive shall receive no severance compensation.
(e) Corporation's Failure to Execute Initial Public Offering. In
the event that the Corporation does not complete an initial public offering of
the Corporation's securities which does not result in the gross proceeds of at
least $15,000,000 by March 15, 2000, the Corporation hereunder shall have the
right to terminate the employment agreement without any liability.
13. Indemnification. In the event Executive is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the
Corporation against Executive), by reason of the fact that he is or was
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performing services under this Agreement, then the Corporation shall indemnify
Executive against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Executive in
connection therewith to the maximum extent permitted by applicable law. The
advancement of expenses shall be mandatory. In the event that both Executive and
the Corporation are made a party to the same third-party action, complaint, suit
or proceeding, the Corporation agrees to engage competent legal representation,
and Executive agrees to use the same representation, provided that if counsel
selected by the Corporation shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Corporation shall pay all attorneys' fees of such separate counsel. Further,
while Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held liable to
the Corporation for errors or omissions made in good faith where Executive has
not exhibited gross, willful and wanton negligence and misconduct or performed
criminal and fraudulent acts which materially damage the business of the
Corporation.
14. Effect of Waiver. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach thereof.
15. Notices. Any notice permitted, required, or given hereunder shall
be in writing and shall be personally delivered; or delivered by any prepaid
overnight courier delivery service then in general use; or mailed, registered or
certified mail, return receipt requested, to the addresses designated herein or
at such other address as may be designated by notice given hereunder:
If to : Xxxxx Xxxxxx
00 Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
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If to : Urban Cool Network, Inc.
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
With a copy to: Xxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxx, Xxxxxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Delivery shall be deemed made when actually delivered, or if mailed,
three days after delivery to a United States Post Office.
16. Assignment. Executive shall not be entitled to assign his rights,
duties or obligations under this Agreement.
17. Amendments. The terms and provisions of this Agreement may be
amended or modified only by a written instrument executed by the party to be
charged by such amendment or modification.
18. Governing Law. The terms and provisions herein contained and all
the disputes or claims relating to this Agreement shall be governed by,
interpreted and construed in accordance with the internal laws of the State of
New York, without reference to its conflict of laws principles.
19. Arbitration. (a) In the event of a dispute between the parties
arising out of or relating to this Agreement, or the breach thereof, the parties
shall make every effort to amicably resolve, reconcile, and settle such dispute
between them. Should an amicable resolution not be possible, either party may
invoke arbitration.
(b) Subject to the provisions of Section 11(c)(ii) hereof, all
claims, disputes and other matters in controversy arising out of or related to
this Agreement or the performance or breach
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hereof, shall be decided by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the "AAA
Rules"), by a panel of three (3) arbitrators, in New York, New York. One (1)
such arbitrator shall be appointed by each of the parties within three (3) weeks
after being requested by the other party to make such appointment and the third
arbitrator shall be appointed by the two (2) arbitrators appointed by the
parties. In the event that a party does not appoint its arbitrator within such
three (3) week period, or the two (2) arbitrators appointed by the parties shall
fail to agree on the third arbitrator, such appointed arbitrator or arbitrators
shall be appointed by the American Arbitration Association in accordance with
the AAA Rules. The award shall state the facts and findings and shall be
rendered with reasons in writing. The arbitrators shall have no authority or
power to alter or modify any express condition or provision of this Agreement,
or to render any award which by its terms shall have the effect of altering or
modifying any express conditions or provisions of this Agreement. The award
rendered by the arbitrators shall be final and judgement may be entered upon it
in any court having jurisdiction thereof. The successful party to the
arbitration shall be entitled to an award for reasonable attorney's fees, as
determined by the arbitrators.
20. Captions. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
21. Merger and Severability. This Agreement shall constitute the entire
Agreement between the Corporation and Executive with respect to the subject
matter hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.
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22. Counterparts; Facsimile. This Agreement may be executed by
facsimile and in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have affixed their signatures
the day and year first above written.
Urban Cool Network, Inc.
By: /s/ Xxxxx X. Xxxxx, III
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Name: Xxxxx X. Xxxxx, III
Title: Chief Executive Officer
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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