XXXXX INTERACTIVE CORPORATION
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, effective as of August 1, 2001, between Xxxxx
Interactive Corporation (the "Company") and Xxxx Xxxxx (the "Executive").
R E C I T A L S:
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WHEREAS, the Company desires to employ the Executive and the Executive has
indicated his willingness to provide his services, on the terms and conditions
set forth herein;
NOW, THEREFORE, on the basis of the foregoing premises and in consideration
of the mutual covenants and agreements contained herein, the parties hereto
agree as follows:
Section 1. Employment. The Company hereby agrees to employ the Executive
and the Executive hereby accepts employment with the Company, on the terms and
subject to the conditions hereinafter set forth. Subject to the terms and
conditions contained herein, the Executive shall serve as the General Counsel of
the Company and, in such capacity, shall report directly to the Chief Executive
Officer and the Board of Directors and shall have such duties as are typically
performed by a general counsel of a corporation, together with such additional
duties, commensurate with the Executive's position as the General Counsel of the
Company, as may be assigned to the Executive from time to time by the Chief
Executive Officer or the Board of Directors of the Company (the "Board of
Directors").
Section 2. Term. Unless terminated pursuant to Section 6 hereof, the
Executive's employment hereunder shall commence on the date hereof and shall
continue during the period ending on the first anniversary of the date hereof
(the "Initial Term"). Thereafter, the Employment Term shall extend automatically
for consecutive periods of one year unless either party shall provide notice of
termination not less than sixty (60) days prior to an anniversary date of this
Agreement. The Initial Term, together with any extension pursuant to this
Section 2, is referred to herein as the "Employment Term."
Section 3. Compensation. During the Employment Term, the Executive shall be
entitled to the following compensation and benefits:
(a) Salary. As compensation for the performance of the Executive's
services hereunder, the Company shall pay to the Executive a salary
(the "Salary") of $250,000 per annum with increases, if any, as may be
approved in writing by the Board of Directors. The Salary shall be
payable in accordance with the payroll practices of the Company as the
same shall exist from time to time. In no event shall the Salary be
decreased during the Employment Term.
(b) Bonus Plan. The Executive shall be eligible to receive an annual cash
bonus ("Bonus") which shall be determined under the Company's then
current Bonus Plan; provided, however, that Executive shall receive a
guaranteed Bonus of $62,500 for the Initial Term.
(c) Options or Other Equity-Based Incentive Compensation. In addition to
the Salary and Bonus, if any, the Executive shall be eligible to
participate in any stock option or other equity-based incentive
compensation plan or program adopted by the Board of Directors for the
benefit of other senior executives of the Company.
(d) Benefits. In addition to the Salary and Bonus, if any, the Executive
shall be entitled to participate in health, insurance, pension and
other benefits provided to other senior executives of the Company on
terms no less favorable than those available to such senior executives
of the Company. The Executive shall also be entitled to the same
number of vacation days, holidays, sick days and other benefits as are
generally allowed to other senior executives of the Company in
accordance with the Company policy in effect from time to time.
Section 4. Exclusivity. During the Employment Term, the Executive shall
devote his full time to the business of the Company, shall faithfully serve the
Company, shall in all respects conform to and comply with the lawful and
reasonable directions and instructions given to him by the Chief Executive
Officer and/or the Board of Directors in accordance with the terms of this
Agreement, shall use his best efforts to promote and serve the interests of the
Company and shall not engage in any other business activity, whether or not such
activity shall be engaged in for pecuniary profit, except that the Executive may
(i) participate in the activities of professional trade organizations related to
the business of the Company, (ii) engage in personal investing activities and
(iii) engage in bar association activity, provided that activities set forth in
these clauses (i) through (iii), either singly or in the aggregate, do not
interfere in any material respect with the services to be provided by the
Executive hereunder.
Section 5. Reimbursement for Expenses. The Executive is authorized to incur
reasonable expenses in the discharge of the services to be performed hereunder,
including expenses for travel, lodging and similar items in accordance with the
Company's expense reimbursement policy, as the same may be modified by the
Company from time to time. The Company shall reimburse the Executive for all
such proper expenses upon presentation by the Executive of itemized accounts of
such expenditures in accordance with the financial policy of the Company, as in
effect from time to time.
Section 6. Termination and Default.
(a) Death. The Executive's employment shall automatically terminate upon
his death and upon such event, the Executive's estate shall be
entitled to receive the amounts specified in Section 6(f) below.
(b) Disability. If the Executive is unable to perform the duties required
of him under this Agreement because of illness, incapacity, or
physical or mental disability, the Employment Term shall continue and
the Company shall pay all compensation required to be paid to the
Executive hereunder, unless the Executive is unable to perform the
duties required of him under this Agreement for an aggregate of 120
days (whether or not consecutive) during any 12-month period during
the term of this Agreement, in which event the Executive's employment
shall terminate.
(c) Cause. In the event of termination pursuant to this Section 6(c) for
Cause, the Company shall deliver to the Executive written notice
setting forth the basis for such termination, which notice shall
specifically set forth the nature of the Cause which is the reason for
such termination. Termination of the Executive's employment hereunder
shall be effective upon delivery of such notice of termination. For
purposes of this Agreement, "Cause" shall mean: (i) the Executive's
failure (except where due to a disability contemplated by subsection
(b) hereof), neglect or refusal to perform his duties hereunder which
failure, neglect or refusal shall not have been corrected by the
Executive within 30 days of receipt by the Executive of written notice
from the Company of such failure, neglect or refusal, which notice
shall specifically set forth the nature of said failure, neglect or
refusal, (ii) any willful or intentional act of the Executive that has
the effect of injuring the reputation or business of the Company or
its affiliates in any material respect; (iii) any continued or
repeated absence from the Company, unless such absence is (A) approved
or excused by the Board of Directors or (B) is the result of the
Executive's illness, disability or incapacity (in which event the
provisions of Section 6(b) hereof shall control); (iv) use of illegal
drugs by the Executive or repeated drunkenness; (v) conviction of the
Executive for the commission of a felony; or (vi) the commission by
the Executive of an act of fraud or embezzlement against the Company.
(d) Good Reason. The Executive may terminate his employment for "Good
Reason" following a Substantial Breach (as hereinafter defined), but
only if such Substantial Breach shall not have been corrected by the
Company within thirty (30) days of receipt by the Company of written
notice from the Executive of the occurrence of such Substantial
Breach, which notice shall specifically set forth the nature of the
Substantial Breach which is the reason for such resignation. The term
"Substantial Breach" means (i) the failure by the Company to pay to
the Executive the Salary and Bonus, if any, in accordance with
Sections 3(a) and 3(b) hereof; (ii) the failure by the Company to
allow the Executive to participate in the Company's employee benefit
plans generally available from time to time to senior executives of
the Company; or (iii) the failure of any successor to all or
substantially all of the business and/or assets of the Company to
assume this Agreement; provided, however, that the term "Substantial
Breach" shall not include a termination of the Executive's employment
hereunder pursuant to Sections 6(b) or (c) hereof. The date of
termination of the Executive's employment under this Section 6(d)
shall be the effective date of any resignation specified in writing by
the Executive, which shall not be less than thirty (30) days after
receipt by the Company of written notice of such resignation, provided
that such resignation shall not be effective pursuant to this Section
6(d) and the Substantial Breach shall be deemed to have been cured if
such Substantial Breach is corrected by the Company during such 30-day
period.
(e) Other Termination. The Executive shall have the right to terminate his
employment at any time by giving notice of his resignation other than
for Good Reason. The Company may terminate the Executive's employment
at any time, with or without Cause.
(f) Payments. In the event that the Executive's employment terminates for
any reason, the Company shall pay to the Executive all amounts accrued
but unpaid hereunder through the date of termination in respect of
Salary or unreimbursed expenses. Other than a termination pursuant to
Section 2, in the event the Executive's employment is terminated by
the Company without Cause or by the Executive with Good Reason, in
addition to the amounts specified in the foregoing sentence, (i) the
Executive shall continue to receive the Salary (less any applicable
withholding or similar taxes) at the rate in effect hereunder on the
date of such termination periodically, in accordance with the
Company's prevailing payroll practices, for a period of six months
following the date of such termination (the "Severance Term") and (ii)
to the extent permissable under the Company's health plans, the
Executive shall continue to receive any health benefits provided to
him as of the date of such termination in accordance with Section 3(c)
hereof during the Severance Term. In the event the Executive accepts
other employment or engages in his own business prior to the last date
of the Severance Term, the Executive shall forthwith notify the
Company and the Company shall be entitled to set off from amounts due
the Executive under this Section 6(f) the amounts paid to the
Executive in respect of such other employment or business activity.
Amounts owed by the Company in respect of the Salary or reimbursement
for expenses under the provisions of Section 5 hereof shall, except as
otherwise set forth in this Section 6(f), be paid promptly upon any
termination.
(g) Survival of Operative Sections. Upon any termination of the
Executive's employment, the provisions of Sections 6(f) and 7 through
18 of this Agreement shall survive to the extent necessary to give
effect to the provisions thereof.
Section 7. Secrecy and Non-Competition.
(a) No Competing Employment. The Executive acknowledges that the
agreements and covenants contained in this Section 7 are essential to
protect the value of the Company's business and assets and by his
current employment with the Company and its subsidiaries, the
Executive has obtained and will obtain such knowledge, contacts,
know-how, training and experience and there is a substantial
probability that such knowledge, know-how, contacts, training and
experience could be used to the substantial advantage of a competitor
of the Company and to the Company's substantial detriment. Therefore,
the Executive agrees that for the period commencing on the date of
this Agreement and ending six months after the termination of the
Executive's employment hereunder (such period is hereinafter referred
to as the "Restricted Period") with respect to any State in which the
Company or any of its subsidiaries is engaged in business during the
Employment Term, the Executive shall not participate or engage,
directly or indirectly, for himself or on behalf of or in conjunction
with any person, partnership, corporation or other entity, whether as
an employee, agent, officer, director, shareholder, partner, joint
venturer, investor or otherwise, in any business activities if such
activity consists of any activity undertaken or expressly contemplated
to be undertaken by the Company or any of its subsidiaries or by the
Executive at any time during the Employment Term.
(b) Nondisclosure of Confidential Information. The Executive, except in
connection with his employment hereunder, shall not disclose to any
person or entity or use, either during the Employment Term or at any
time thereafter, any information not in the public domain or generally
known in the industry, in any form, acquired by the Executive while
employed by the Company or any predecessor to the Company's business
or, if acquired following the Employment Term, such information which,
to the Executive's knowledge, has been acquired, directly or
indirectly, from any person or entity owing a duty of confidentiality
to the Company or any of its subsidiaries or affiliates, relating to
the Company, its subsidiaries or affiliates, including but not limited
to information regarding customers, vendors, suppliers, trade secrets,
training programs, manuals or materials, technical information,
contracts, systems, procedures, mailing lists, know-how, trade names,
improvements, price lists, financial or other data (including the
revenues, costs or profits associated with any of the Company's
products or services), business plans, code books, invoices and other
financial statements, computer programs, software systems, databases,
discs and printouts, plans (business, technical or otherwise),
customer and industry lists, correspondence, internal reports,
personnel files, sales and advertising material, telephone numbers,
names, addresses or any other compilation of information, written or
unwritten, which is or was used in the business of the Company or any
subsidiaries or affiliates thereof. The Executive agrees and
acknowledges that all of such information, in any form, and copies and
extracts thereof, are and shall remain the sole and exclusive property
of the Company, and upon termination of his employment with the
Company, the Executive shall return to the Company the originals and
all copies of any such information provided to or acquired by the
Executive in connection with the performance of his duties for the
Company, and shall return to the Company all files, correspondence
and/or other communications received, maintained and/or originated by
the Executive during the course of his employment.
(c) No Interference. During the Employment Term and Restricted Period, the
Executive shall not, whether for his own account or for the account of
any other individual, partnership, firm, corporation or other business
organization (other than the Company), directly or indirectly solicit,
endeavor to entice away from the Company or its subsidiaries, or
otherwise directly interfere with the relationship of the Company or
its subsidiaries with any person who, to the knowledge of the
Executive, is employed by or otherwise engaged to perform services for
the Company or its subsidiaries (including, but not limited to, any
independent sales representatives or organizations) or who is, or was
within the then most recent twelve-month period, a customer or client,
of the Company, its predecessors or any of its subsidiaries.
Section 8. Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any of the
covenants contained in Section 7 hereof may result in material irreparable
injury to the Company or its subsidiaries or affiliates for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Company shall be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction, without the necessity of proving
irreparable harm or injury as a result of such breach or threatened breach of
Section 7 hereof, restraining the Executive from engaging in activities
prohibited by Section 7 hereof or such other relief as may be required
specifically to enforce any of the covenants in Section 7 hereof.
Section 9. Extension of Restricted Period. In addition to the remedies the
Company may seek and obtain pursuant to Section 8 of this Agreement, the
Restricted Period shall be extended by any and all periods during which the
Executive shall be found by a court to have been in violation of the covenants
contained in Section 7 hereof.
Section 10. Representations and Warranties of the Executive. The Executive
represents and warrants to the Company as follows:
(a) This Agreement, upon execution and delivery by the Executive, will be
duly executed and delivered by the Executive and (assuming due
execution and delivery hereof by the Company) will be the valid and
binding obligation of the Executive enforceable against the Executive
in accordance with its terms.
(b) Neither the execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby nor the performance of this
Agreement in accordance with its terms and conditions by the Executive
(i) requires the approval or consent of any governmental body or of
any other person or (ii) conflicts with or results in any breach or
violation of, or constitutes (or with notice or lapse of time or both
would constitute) a default under, any agreement, instrument,
judgment, decree, order, statute, rule, permit or governmental
regulation applicable to the Executive. Without limiting the
generality of the foregoing, the Executive is not a party to any
non-competition, non-solicitation, no hire or similar agreement that
restricts in any way the Executive's ability to engage in any business
or to solicit or hire the employees of any person.
The representations and warranties of the Executive contained in this
Section 10 shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
Section 11. Successors and Assigns; No Third-Party Beneficiaries. This
Agreement shall inure to the benefit of, and be binding upon, the successors and
assigns of each of the parties, including, but not limited to, the Executive's
heirs and the personal representatives of the Executive's estate. The Company
shall have the unrestricted right to assign this Agreement and to delegate all
or any part of its obligations hereunder to any party, but in such event such
party shall expressly assume all obligations of the Company hereunder and the
Company shall remain fully liable for the performance of all of such obligations
in the manner prescribed in this Agreement. Nothing in this Agreement shall
confer upon any person or entity not a party to this Agreement (except any
permitted assignee), or the legal representatives of such person or entity, any
rights or remedies of any nature or kind whatsoever under or by reason of this
Agreement.
Section 12. Waiver and Amendments. Any waiver, alteration, amendment or
modification of any of the terms of this Agreement shall be valid only if made
in writing and signed by the parties hereto; provided, however, that any such
waiver, alteration, amendment or modification is consented to on the Company's
behalf by the Board of Directors. No waiver by either of the parties hereto of
their rights hereunder shall be deemed to constitute a waiver with respect to
any subsequent occurrences or transactions hereunder unless such waiver
specifically states that it is to be construed as a continuing waiver.
Section 13. Severability and Governing Law. The Executive acknowledges and
agrees that the covenants set forth in this agreement are reasonable and valid
in geographical and temporal scope and in all other respects. If any of such
covenants or such other provisions of this Agreement are found to be invalid or
unenforceable by a final determination of a court of competent jurisdiction (a)
the remaining terms and provisions hereof shall be unimpaired and (b) the
invalid or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE.
Section 14. Notices. -------
(a) All communications under this Agreement shall be in writing and shall
be delivered by hand or facsimile or mailed by overnight courier or by
registered or certified mail, postage prepaid:
(1) if to the Executive, at 00 Xxxxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000 (facsimile: (000) 000-0000), or at such other
address or facsimile number as the Executive may have furnished
the Company in writing,
(2) if to the Company, at 000 Xxxxxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (facsimile: (000) 000-0000), marked for the attention
of the Chief Executive Officer, or at such other address or
facsimile number as it may have furnished in writing to the
Executive, or
(b) Any notice so addressed shall be deemed to be given: if delivered by
hand or facsimile, on the date of such delivery; if mailed by courier,
on the first business day following the date of such mailing; and if
mailed by registered or certified mail, on the third business day
after the date of such mailing.
Section 15. Section Headings. The headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof, affect the meaning or interpretation of this
Agreement or of any term or provision hereof.
Section 16. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto regarding the employment of
the Executive. This Agreement supersedes all prior negotiations, discussions,
correspondence, communications, understandings and agreements between the
parties relating to the subject matter of this Agreement.
Section 17. Severability. In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not affect the
remaining provisions of this Agreement which shall remain in full force and
effect.
Section 18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
XXXXX INTERACTIVE CORPORATION
By: /s/Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
/s/Xxxx Xxxxx
Xxxx Xxxxx
