EXHIBIT 10.7
XXXXXXXX.XXX CORP.
Employment Agreement
This Employment Agreement ("Agreement") is made and entered into this 2nd
day of November, 1999 by and between Xxxxxxxx.xxx, Corp., a Delaware corporation
(the "Company"), and Xxxxxx X. Paravia ("Executive").
A. Executive has the experience to provide services to the Company of an
extraordinary character which gives such services a unique value.
B. The Company desires to retain the services of Executive, and Executive
desires to be employed by the Company for the term of this Agreement.
The Company and Executive, intending to be legally bound, hereby agree as
follows:
1. Employment. The Company hereby employs Executive as the Chief
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Executive Officer of the Company. For the term of Executive's employment, and
upon the other conditions set forth in this Agreement, Executive accepts such
employment and agrees to perform services for the Company, subject always to
such resolutions as are established from time to time by the Board of Directors
of the Company.
2. Term. The term of Executive's employment hereunder shall commence
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on the execution date of this Agreement and continue through July 31, 2002
subject to the termination provisions contained herein. The Agreement may be
terminated by the Company only for cause as set forth below, and shall not
constitute "at will" employment.
3. Position and Duties.
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3.1. Services with the Company. During the term of this Agreement,
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Executive agrees to perform such duties and exercise such powers related thereto
as may from time to time be assigned to him by the Company's Board of Directors
(the "Board"). Executive shall duly and diligently perform all duties assigned
to him while in the employ of the Company. He shall be bound by and faithfully
observe and abide by all rules and regulations of the Company which are
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brought to his notice or of which he should be reasonably aware.
3.2. No Conflicting Duties. Executive shall devote sufficient
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productive time, ability, and attention to the business of the Company during
the term of this Agreement in a manner that will serve the best interests of the
Company. During the term hereof, Executive shall not serve as an officer,
director, employee, consultant or advisor to any other business without the
prior written consent of the Company's Board, which shall not be unreasonably
withheld. Executive hereby confirms he is under no contractual commitments
inconsistent with his obligations set forth in this Agreement. This Agreement
shall not be interpreted to prohibit Executive from making passive personal
investments or conduct private business affairs if those activities do not
materially interfere with the services required under this Agreement.
3.3. Uniqueness of Executive's Services. Executive hereby represents
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and agrees that the services to be performed under the terms of this Agreement
are of a special, unique, unusual, extraordinary, and intellectual character
that gives them a unique value. Executive recognizes the uniqueness of the
services he provides to the Company and realizes the Company may elect to
purchase a life insurance policy to protect against Executive's death for the
benefit of the Company. In such event, Executive shall reasonably cooperate and
take all steps necessary to assist Company in acquiring such policy or policies.
4. Compensation.
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4.1. Base Salary. As compensation for all services to be rendered
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by Executive under this Agreement, the Company shall pay to Executive a base
annual salary of One Hundred Fifty Thousand Dollars ($150,000.00) (the "Base
Salary") effective as of August 1, 1999. Executive's base salary shall be paid
on a regular basis in accordance with the Company's normal payroll procedures
and policies. Upon execution of this Agreement, Company shall pay Executive any
and all accrued salary.
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4.2 Options. Company and Executive have entered into an Option
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Agreement which is incorporated herein by reference.
4.3. Extension of Time to Exercise Presently Held Options. Executive
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presently possesses certain options to purchase stock in the Company, as
provided in the "Non-Qualified Stock Option Agreement" ("Internet Gaming
Agreement") which is attached hereto as Exhibit "A" and incorporated by
reference. The Company shall extend by five years all periods set forth in the
Non-Qualified Stock Option Agreement during which Executive may exercise the
options referred to in the Non-Qualified Stock Option Agreement. Provided
however, that in lieu of extending said options, the Company may at its sole and
absolute discretion, deliver to Executive four hundred and eighty thousand
(480,000) shares of the Company no later than December 15, 1999.
4.4. Public Offering Bonus. Company represents that it intends to
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pursue a public offering of its stock, and that it intends to exercise its best
efforts to engage an Investment Banking firm to underwrite its public offering.
Upon the execution of a Letter of Intent between the Company and an Investment
Banking firm relating to a public offering, Executive shall be paid fifty-
thousand ($50,000). Further, upon execution of an Investment Banking Agreement
to raise capital ("Investment Banking Agreement"), Executive shall be paid an
additional fifty-thousand dollars ($50,000).
In the event the Company does not sign a Letter of Intent prior to
entering into an Investment Banking Agreement, the Company shall pay Executive
One-Hundred Thousand ($100,000) dollars upon the Company's execution of an
Investment Banking Agreement. In the event the Company conducts a public
offering without the engaging an Investment Banking firm and/or signing an
Investment Banking Agreement, the Company shall pay Executive One-Hundred
Thousand ($100,000) dollars upon the filing with the Securities and Exchange
Commission of any Registration Statement for the sale of Company stock.
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4.5. Stock and Option Registration Rights. In the event the Company
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with the assistance of an Investment Banking firm, conducts a public offering of
the Company's shares, the Company shall provide Executive with registration
rights to all shares warrants and options which Executive then holds or
otherwise directly or constructively owns.
4.6 Payment Upon Sale or Merger of Company. In the event the
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Company shall merge, sell a controlling interest, or sell a majority of its
assets, the Company shall pay Executive two-hundred and fifty thousand
($250,000) dollars. Further, as to any vested but unexercised options to
purchases shares in the Company which are held by Executive at the earlier of
(1) the Company's execution of a Letter of Intent to (a) merge, (b) sell a
controlling interest, or (c) sell a majority of its assets, or (2) the date of
any such merger or sale is consummated, the Company shall pay Executive cash in
the amount equal to the number of vested options which Executive holds
multiplied by the difference between the consideration paid to the Company upon
a sale or merger of the Company on a per share basis less the exercise price of
the option.
4.7. Cash Incentive Bonus. The Company shall pay Executive an annual
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cash bonus ("Cash Bonus"). Said Cash Bonus shall equal two percent (2%) of the
Company's annual gross revenues in excess of one-million dollars, calculated
using Generally Accepted Accounting Principles. Said Cash Bonus shall be
payable annually no later than the fifteenth day of the third month following
the end of the Company's fiscal year.
4.8. Stock Bonus. The Company shall grant Executive options to
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purchase up to Two hundred thousand (200,000) shares of the Company's stock on
August 1st of each year of this Agreement at the stock's then fair market value.
Ownership of said options shall vest with Executive on the same date. Fair
market value is defined as the closing price of those shares as they are then
being traded on any stock exchange (including any "over the counter" trades).
The options shall be exercisable for a period of ten (10) years commencing on
the date of their grant.
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Executive may exercise the options, at his sole and absolute
discretion, by providing the Company with written notice accompanied by cash or
a cashier's check an amount equal to the product of the option exercise price
and the number of shares Executive desires to purchase pursuant to this
provision. Further, in electing to exercise the options, Executive shall not be
bound to exercise any particular or minimum number of options. Rather, Executive
may elect to exercise all or a portion of the Options on such dates as Executive
may choose.
4.9 Incentive Stock Options. The Company shall issue incentive stock
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options to Executive pursuant to the Company's qualified Incentive Stock Option
Plan. Upon the execution of this Agreement Executive will receive incentive
stock options equal to $100,000 at the date of grant which shall vest
immediately and shall terminate ten years from the date of grant. Executive may
exercise the incentive stock options, at his sole and absolute discretion, by
providing the Company with written notice accompanied by cash or a cashier's
check an amount equal to the product of the incentive stock option exercise
price and the number of shares Executive desires to purchase pursuant to this
provision. Further, in electing to exercise the incentive stock options,
Executive shall not be bound to exercise any particular or minimum number of
options. Rather, Executive may elect to exercise all or a portion of the
incentive stock options on such dates as Executive may choose.
4.10 Expenses. The Company shall reimburse Executive for all
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reasonable business or travel expenses and office related expenses incurred by
Executive in the performance of his duties; including but not limited to:
airfare, motor vehicle rental, lodging, meals, telephone, copy costs, and
supplies.
4.11 Housing Allowance. The Company shall pay Executive a housing
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allowance of $1,500 per month. Said amount shall be payable to Executive no
later than the tenth day of each month. Beginning on the first anniversary of
the Agreement's commencement, said housing
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allowance shall be adjusted for annual changes in the Consumer Price Index
("CPI"). Said adjustment shall occur on each subsequent anniversary of the
Agreement's commencement based on the prior year's CPI rate change. Further,
adjustments shall be cumulative.
4.12 Automobile Allowance. The Company shall pay Executive an
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automobile allowance of $500 per month. Said amount shall be payable to
Executive no later than the tenth day of each month.
4.13 Mobile Telephone. The Company will provide Executive with the
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exclusive use of a mobile (cellular and/or digital) telephone. Such use shall
be reasonable in nature and will be predominately for business purposes.
4.14 Business Travel. The Company and Executive recognize that it may
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periodically be necessary for Executive to travel on behalf of the Company. The
Company agrees that whenever Executive is required to travel a distance in
excess of that which may be reached within three hours or more by regularly
scheduled commercial air carriers, the Company will pay for Executive to travel
in business class or better. Further, regardless of whether the destination may
be reached in three hours or more, the Company shall pay for Executive to travel
business class or better if he would otherwise be required to take connecting,
stopover, or layover flights which would cumulatively result in a total travel
time of more than five hours.
5. Vacation, Sick Leave and Insurance
5.1 Annual Vacation. Executive shall be entitled to fifteen (15)
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days vacation time each year without loss of compensation. In the event that
Executive is unable for any reason to take the total amount of vacation time
authorized herein during any year, any unused vacation time shall carry over
from year to year. Vacation days will accrue at the rate of 1.25 days per each
month of service rendered. Any earned but unused vacation time will be paid to
Executive based upon his annual rate of all compensation paid in the previous
twelve months upon termination or expiration
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of this Agreement.
5.2. Sick Leave. Executive shall be entitled to twelve (12) days
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sick leave each year without loss of compensation. In the event that Executive
is unable for any reason to take the total amount of vacation time authorized
herein during any year, any unused vacation time shall carry over from year to
year. Sick leave days will accrue at the rate of 1 day per each month of service
rendered. Any earned but unused sick leave will be paid to Executive based upon
his annual rate of all compensation paid in the previous twelve months upon
termination or expiration of this Agreement.
5.3. Health Insurance. The Company shall provide Executive and his
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immediate family members with comprehensive PPO or POS health insurance which
shall cover, medical, dental and vision.
5.4 Long Term Disability Insurance. The Company shall provide
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Executive with "long term disability" insurance coverage. Coverage shall be for
the maximum amount for which Executive is eligible under the insurance
guidelines; however, coverage will never be below an amount equal to sixty
percent (60%) of Executive's monthly base salary. Executives' Base Salary as set
forth in section 4.1 will be increased by an amount equal to the premium for the
long term disability insurance, but the premium will be paid by Executive to the
issuer of the policy or their agent.
5.4 Life Insurance. The Company shall provide Executive a "whole
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life" Life Insurance policy in the amount of $500,000, naming such beneficiary
or beneficiaries as Executive may designate.
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6. Compensation Upon the Termination of Executive's Employment.
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6.1 In the event this Agreement is terminated prior to its expiration
for any reason except for Cause, as defined below, Executive shall be entitled
to receive Executive's then current Base Salary, Housing and Automobile
allowance through the date he is terminated. Further, Executive shall retain all
rights to vested shares and stock options, and all other rights under
sections 4.2, 4.3, 4.5, 4.6, 4.7, 4.8, and 4.9 of this Agreement.
The benefits provided for in this provision are exclusive of any other
rights or remedies which Executive would possess in the event the Company
terminates the Agreement without cause. The Company agrees that in the event it
terminates Executive's employment without cause, Executive retains all rights
and remedies available under the law, and the Company will not urge or otherwise
argue or assert in any legal, including judicial or arbitration, proceeding that
any provision of this Agreement as constitutes a waiver of rights by Executive.
6.2 In the event that Executive's employment is terminated pursuant
to section 10.2, Executive's beneficiary or beneficiary designated by Executive
in writing to the Company, or in the absence of such beneficiary, Executive's
estate, shall be entitled to receive Executive's then current Base Salary
through sixty (60) days after the date of his death.
7. Proprietary Matter. Except as permitted or directed by the Company,
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Executive shall not during the term of his employment or at any time thereafter
divulge, furnish, disclose, or make accessible (other than in the ordinary
course of the business of the Company) to anyone for use in any way any
confidential, secret, or proprietary knowledge or information of the Company
("Proprietary Matter") which Executive has acquired or become acquainted with or
will acquire or become acquainted with, whether developed by himself or by
others, including, but not limited to, any trade secrets, confidential or secret
designs, processes, formulae, software or computer programs, plans, devices or
material (whether or not patented or patentable, copyrighted or
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copyrightable) directly or indirectly useful in any aspect of the business of
the Company, any confidential customer, distributor or supplier lists of the
Company, any confidential or secret development or research work of the Company,
or any other confidential, secret or non-public aspects of the business of the
Company. Executive acknowledges that the Proprietary Matter constitutes a unique
and valuable asset of the Company acquired at great time and expense by the
Company, and that any disclosure or other use of the Proprietary Matter other
than for the sole benefit of the Company would be wrongful and would cause
irreparable harm to the Company. Both during and after the term of this
Agreement, Executive will refrain from any acts or omissions that would reduce
the value of Proprietary Matter to the Company. The foregoing obligations of
confidentiality, however, shall not apply to any knowledge or information which
is now published or which subsequently becomes generally publicly known, other
than as a direct or indirect result of the breach of this Agreement by
Executive.
8. Ventures. If, during the term of this Agreement, Executive is engaged
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in or associated with the planning or implementing of any project, program, or
venture involving the Company and a third party or parties, all rights in the
project, program, or venture shall belong to the Company and shall constitute a
corporate opportunity belonging exclusively to the Company. Except as expressly
approved in writing by the Company, Executive shall not be entitled to any
interest in such project, program, or venture or to any commission, finder's fee
or other compensation in connection therewith, other than the compensation to be
paid to Executive as provided in this Agreement.
9. Solicitation of Employees.
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9.1. Agreement Not to Solicit Employees. During his employment by the
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Company hereunder and for the one (1) year period following the termination of
such employment for any reason, Executive shall not, either directly or
indirectly, on his own behalf or in the service or on
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behalf of others solicit, divert or hire away, or attempt to solicit, divert or
hire away any person then employed full time by the Company.
10. Termination Prior to Expiration of the Term.
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10.1 Disability. Executive's employment shall terminate upon
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Executive becoming totally or permanently disabled for a period of six (6)
months or more. For purposes of this Agreement, the term "totally or permanently
disabled" or "total or permanent disability" means Executive's inability on
account of sickness or accident, whether or not job related, to engage in
regularly or to perform adequately his assigned duties under this Agreement.
Prior to terminating the Agreement pursuant to this provision, the Company shall
engage and consult one or more physicians as may be reasonable.
10.2 Death of Executive. Executive's employment shall terminate
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immediately upon the death of Executive.
10.3 Termination for Cause. The Company may only terminate
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Executive's employment for "Cause" (as hereinafter defined). Further, no
termination for "Cause" may be invoked by Company without first providing
Executive with at least thirty (30) days written notice to correct any breach,
default or causation. Such written notice shall set forth with reasonable
specificity the Company's basis for such notice of termination and Executive
shall have thirty (30) days to correct the condition set forth in the notice.
10.3.1. Cause Defined. For the purpose of this section, the
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termination of this Agreement by Company for any of the following reasons shall
be considered termination for Cause:
(i) Commission of a criminal act involving fraud, embezzlement
or breach of trust or other act which would prohibit
Executive from holding his position under the rules of the
Securities and Exchange Commission.
(ii) Willful, knowing and malicious violation of written
corporate policy or rules of the Company.
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(iii) Willful, knowing and malicious misuse, misappropriation,
or disclosure of any of the Proprietary Matters..
(iv) Misappropriation, concealment, or conversion of any money
or property of the Company.
(v) Being under the habitual influence of intoxicating liquors
or controlled substances while in the course of
employment.
(vi) Intentional and non-trivial damage or destruction of
property of the Company. For purposes of this provision
non-trivial is defined to mean damage occurring in the
course of a single act or occurrence in an amount
exceeding four hundred dollars.
(vii) Reckless and wanton conduct which endangers the safety of
other persons or property during the course of employment
or while on premises leased or owned by the Company.
(viii) The performance of duties in a habitually unsatisfactory
manner after being repeatedly advised in writing by the
Company of such unsatisfactory performance.
(ix) Continued incapacity on the part of Executive to perform
his duties, unless waived by the Company.
10.5. Surrender of Records and Property. Upon termination of his
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employment with the Company, Executive shall deliver promptly to the Company all
records, electronic media, manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, data, tables, and calculations or copies
thereof, which are the property of the Company and which relate in any way to
the business, products, practices or techniques of the Company, and all other
property (keys, office equipment, computers, mobile phones, credit cards, etc.)
of the Company and Proprietary Matter, including but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in his possession or
under his control.
11. Assignment. This Agreement shall not be assignable, in whole or in
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part, by either party without the written consent of the other party, except
that the Company may, without the
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consent of Executive, assign its rights and obligations under this Agreement to
any corporation, firm or other business entity (i) with or into which the
Company may merge or consolidate, or (ii) to which the Company may sell or
transfer all or substantially all of its assets or of which fifty percent (50%)
or more of the equity investment and of the voting control is owned, directly or
indirectly, by, or is under common ownership with, the Company. Upon such
assignment by the Company, the Company shall obtain the assignees' written
agreement enforceable by Executive to assume and perform, and after the date of
such assignment, the terms, conditions, and provisions imposed by this Agreement
upon the Company. After any such assignment by the Company and such written
agreement by the assignee, the Company shall be discharged from all further
liability hereunder and such assignee shall thereafter be deemed to be the
Company for the purposes of all provisions of this Agreement including this
section.
12. Indemnification. The company shall indemnify Executive as provided in
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the California Corporations Code, Company Articles or Company's Bylaws in effect
at the commencement of this Agreement. The scope of indemnification to which
Executive is entitled shall not be diminished, but may be expanded by the
Company, by amendment of the Company's Bylaws, Articles of Incorporation or
otherwise. Executive shall indemnify and hold the Company harmless from all
liability for loss, damages or injury resulting from the negligence or
misconduct of Executive.
13. Miscellaneous.
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13.1 Governing Law. This Agreement is made under and shall be
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government by and construed in accordance with the laws of the State of
California.
13.2 Entire Agreement. This Agreement contains the entire agreement
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of the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or
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warranties relating to the subject matter of this Agreement which are not set
forth herein. Any dispute(s) or differences(s) which arise during the course of
this Agreement and which either involve its interpretation or meaning, or relate
to performance required hereunder shall be submitted to and resolved by binding
arbitration; provided, however, that the parties are not waiving and are
expressly reserving their right to seek injunctive relief by judicial process.
Nevertheless, the parties may, by subsequent consent, agree to submit requests
for injunctive relief to an arbitrator or arbitration panel. If either party
shall, in the opinion of the other party, be in breach of or default in the
performance or observance of any term or condition of this Agreement, the non-
defaulting party shall notify the defaulting party in writing of such fact, and
the defaulting party shall have ten (10) days from the receipt of such notice to
remedy or correct such breach or default. If the non-defaulting party asserts
that the breach or default has not been timely and properly cured, it may
commence arbitration as described herein and ask the arbitrator to deem this
Agreement terminated and/or grant such relief as is shown appropriate. In the
event the parties are unable to agree upon an arbitrator to hear and resolve
their differences (hereinafter the "Dispute"), each party shall designate one
person licensed as an attorney in California. Said two attorneys shall select
the neutral arbitrator. Unless agreed upon by the parties to the contrary,
arbitration shall be by a single, neutral arbitrator (hereinafter, the
"Arbitrator"). If the two designated attorneys cannot agree on the selection of
the Arbitrator, the attorneys shall each select one arbitrator. The two
arbitrators so selected shall then confer and jointly select a third arbitrator
who shall preside over the parties' dispute as Arbitrator. The Arbitrator shall
have the full and absolute authority to interpret this Agreement, to deem
conduct by the parties as either in compliance with or in breach of this
Agreement, to terminate this Agreement, and (if a breach is found) to award
appropriate damages or relief. The Dispute shall be settled in accordance with
then existing substantive law and, to the fullest extent possible, with
California substantive law. While evidence may be
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accepted, omitted, considered or excluded in the discretion of the Arbitrator,
the Arbitrator shall be bound by the California rules of evidence and by the
California Arbitration Act (CCP 1280 et seq.). The final decision of the
Arbitrator shall be served on the parties, in writing, within twenty (20) days
after conclusion of the arbitration hearing. The Arbitrator's decision shall be
binding and conclusive. Neither party shall pursue, prosecute or otherwise file
any legal action or proceeding (other than to seek injunctive relief as
described above). Except as provided in CCP 1286.2, no appeal shall be taken
from the Arbitrator's decision or from any subsequent court order confirming
said decision. The parties shall equally advance the costs incurred by
arbitration. The Arbitrator, however, shall have the discretion to award such
costs as well as attorneys' fees to the party prevailing in the arbitration
proceedings.
13.3 Withholding Taxes. The Company may withhold from any benefits
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payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
13.4 Amendments. No amendment or modification of this Agreement
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shall be deemed effective unless made in writing signed by the parties hereto.
13.5 No Wavier. No term or condition of this Agreement shall be
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deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
13.6 Severability. To the extent any provision of this Agreement
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shall be invalid or unenforceable, it shall be considered deleted here from and
the remainder of such provision and of this Agreement shall be unaffected and
shall continue in full force and effect.
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13.7 Survival. Sections 4.2, 4.3, 4.4, 4.5, 4.6, 6, 7, 8, and 9
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shall survive termination of this Agreement.
13.8 Notices. Any and all notices, requests or other communications
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required or permitted in or by any provision of this Agreement shall be in
writing and may be delivered personally or by certified mail directed to the
addressee at such person's or entity's last known post office address, and if
given by certified mail, shall be deemed to have been delivered when deposited
in such, mail postage prepaid.
13.9 Legal Proceedings. In the event of legal proceedings, including
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arbitration as set forth in Section 14.2 above, the prevailing party shall be
entitled, in addition to such relief as is deemed to be appropriate, to recover
such costs and reasonable attorneys' fees as are incurred therein.
This Agreement is executed on ________________, 1999 at ________________,
California.
Company: Executive:
Xxxxxxxx.xxx Corp. Xxxxxx X. Paravia
By: __________________________ ___________________________
Title:________________________ Xxxxxx X. Paravia
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