EMPLOYMENT AGREEMENT
EXHIBIT
10.24
This
Employment Agreement (this “Agreement”) is made and entered into by and between
Digital Domain, Inc. (the “Company”) and Xxxxxx X. Xxxxxxx
(“Employee”).
1.
Employment.
The
Company agrees to employ Employee, and Employee agrees to perform his services
exclusively for the Company, on the terms and conditions set forth in this
Agreement.
2.
Term.
The
term
of this Agreement shall commence on January 16, 2007 (“Commencement Date”) and
shall terminate on January 15, 2009 (the “Term”), unless terminated sooner
pursuant to the provisions of Section 6. On the second anniversary of the
Commencement Date, the Term shall, subject to the termination provisions of
Section 6, be automatically extended for an additional period of one year
ending on January 15, 2010, unless either the Company or Employee notifies
the other in writing, not less than one hundred twenty (120) days prior to
such
second anniversary, that it or he does not wish the Term to be so
extended.
3.
Position
and Duties.
During
the term of his employment under this Agreement, Employee shall serve as
“General Counsel and Vice President” of the Company. In such position, Employee
will have the authority and responsibility normally attendant to an employee
holding such position and will, among other things, be responsible for
(i) overseeing and managing the legal department of the Company,
(ii) guiding the Company in all legal aspects of its activities, including,
without limitation, in the areas of litigation, contractual matters, employment,
and financing and other corporate transactions, (iii) participating as a
member of the Company’s Executive Staff, (iv) advising the Board of
Directors and the Chief Executive Officer of the Company on legal matters,
(v) using his best efforts to adhere to the budgets set forth and approved
by the Company, (vi) taking direction from the Board of Directors and Chief
Executive Officer of the Company and (vii) acting at all times in the
Company’s best interests. From time to time Employee may be asked to perform
other duties for the Company which may include, but shall not be limited to,
sitting on various committees, acting on behalf of the Company for trade
organizations, and/or assisting others in the Company in their divisions.
Employee shall report solely and directly to the Chief Executive Officer of
the
Company. Employee will at all times perform all of the duties and obligations
required of him by the terms of this Agreement in a loyal and conscientious
manner and to the best of Employee’s ability and experience. Employee shall
render the services required of him under this Agreement primarily in Los
Angeles County, California.
4.
Base
Salary and Bonus Compensation; Stock Option.
(a)
In
consideration for all rights and services provided by Employee, Employee shall
receive an annual base salary during the Term (the “Base Salary”), which shall
initially be in the amount of $300,000 and which shall be payable at such
intervals as salaries are paid by the Company to other employees of the Company
(but no less frequently than monthly), subject to the usual and required
employee payroll deductions and withholdings. Any increase in the Base Salary
during the Term shall be in the sole and absolute discretion of the Board of
Directors of the Company.
(b)
In
addition to the Base Salary, Employee will be eligible to receive bonuses in
such amounts, if any, as are determined by the Company’s Board of Directors in
its sole and absolute discretion. Employee must remain continuously employed
by
the Company through the date on which any such bonus is paid to be eligible
to
receive such bonus, and each such bonus shall be subject to all required
federal, state and local tax withholding.
(c)
Employee also shall be granted a non-qualified stock option (the “Option”) to
purchase an aggregate of 200,000 shares of the common stock (the “Common Stock”)
of the Company’s parent corporation, Wyndcrest DD Holdings, Inc. (“Wyndcrest”).
The Option shall vest as follows: one-eighth (1/8) thereof shall vest on the
date six (6) months following the Commencement Date and one-eighth (1/8)
portions thereof shall vest on the final date of each 6 month period thereafter
until such Option is fully vested, provided that all vesting under the Option
shall cease as of the date that Employee’s employment by the Company ceases for
any reason. The Option will have an exercise price per share equal to the fair
market value of a share of Common Stock on the date of grant, as determined
by
the Board of Directors of Wyndcrest, and will be governed in all other respects
by (and Employee agrees to enter into) Wyndcrest’s standard form of stock option
agreement, and by the terms of the equity incentive plan under which it is
granted.
5.
Expenses
and Benefits.
(a)
Employee shall be entitled to reimbursement for all reasonable and ordinary
expenses incurred by Employee in the course of, and directly related to, the
rendering of services pursuant to this Agreement in accordance with the
Company’s policies for reimbursement of such expenses, and the limitations
thereon, that are in effect at the time such expenses are incurred. Such
expenses shall be supported by reasonable documentation and accepted standards
and rules that the Company will put into place from time to time.
(b)
During his employment under this Agreement, Employee shall be entitled to
participate in or receive benefits under the Company’s medical, health,
disability, retirement, welfare, pension, profit-sharing and insurance plans
then in effect and generally made available from time to time to the senior
management employees of the Company, subject to and on a basis consistent with
the terms, conditions and overall administration of such plans and
arrangements.
(c)
Employee shall be entitled to twenty (20) days of paid vacation each 12-month
period during the Term. Such vacation time shall accrue and cumulate in
accordance with the Company’s vacation policy.
6.
Termination.
(a)
The
Company may terminate Employee’s employment and the Company’s obligations under
this Agreement at any time for any reason, or for no reason, for cause or
without cause, subject only to the termination compensation requirements set
forth in Section 7. The following shall constitute termination “for
cause”:
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(1)
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Employee’s
death or permanent disability; or
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(2)
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The
Company’s termination of Employee’s employment under any of the following
circumstances, which also shall without limitation each be deemed
to be a
material breach of this Agreement:
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(i)
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The
failure by Employee to substantially perform his duties (other than
any
such failure resulting from the Employee’s temporary incapacity due to
physical or mental illness);
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(ii)
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The
material breach by Employee of any material covenant contained in
this
Agreement or in Exhibit A attached
hereto;
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(iii)
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The
engaging by Employee in conduct adverse to the
Company;
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(iv)
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The
material breach by Employee of any material provision of the Company’s
rules, regulations, policies or procedures in effect from time to
time;
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(v)
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The
repudiation or purported termination of this Agreement by Employee
(other
than a termination by Employee pursuant to Section 6(b)); or
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(vi)
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The
conviction (by trial or upon a plea) of Employee of a felony involving
moral turpitude;
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provided
that, with respect to paragraphs (i), (ii), (iii) and (iv) supra,
if the
underlying breach is capable of cure, the basis of a “for cause” termination by
the Company shall only arise if such breach is not cured within thirty (30)
days
after written demand for cure is given to Employee by the Company identifying
such breach with reasonable particularity.
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(b)
Employee may terminate Employee’s employment under this Agreement and the
Company’s obligations under this Agreement if:
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(1)
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The
Company materially breaches any material covenant contained in this
Agreement which breach, if capable of cure, is not cured within thirty
(30) days after written demand for cure is given to the Company by
Employee identifying the breach with reasonable particularity;
or
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(2)
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The
Company assigns to Employee duties and responsibilities substantially
inconsistent with the duties and responsibilities described in Section
3
of this Agreement and (i) Employee thereafter notifies the Company
in
writing of the fact that Employee believes such has occurred, describing
with reasonable particularity the facts upon which such conclusion
is
based, and (ii) the Company fails, within thirty (30) days following
receipt of such notice, to reassign to Employee duties and
responsibilities substantially consistent with those described in
Section
3 hereof.
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(c)
Any
termination by the Company or by Employee pursuant to paragraphs (a) or (b)
of
this Section 6 shall be effected by written notice of termination given to
the
other, and such termination shall be effective upon the giving of such notice,
unless, in the case of a termination notice given by the Company to Employee,
such notice states that the termination shall become effective on a later date
(“Delayed Termination”), in which case such termination shall become effective
on the date set forth in the notice. In the event of a Delayed Termination,
the
Company shall have the right in its sole discretion to determine whether or
not
Employee comes into the office and works during the period of time from the
date
the notice is given until the termination date; provided that, in any case,
Employee shall be considered a full-time employee of the Company through the
termination date.
7.
Compensation
Upon Termination.
(a)
If
the Company terminates Employee’s employment and its obligations under this
Agreement for cause, the Company shall pay Employee his Base Salary and accrued
but unused vacation through the date on which his employment hereunder is
terminated, and the Company shall have no other obligations to Employee under
this Agreement after the date of termination; provided that the Company shall
retain all rights and remedies it may have against Employee by reason of any
breach of this Agreement by Employee.
(b)
If
the Company terminates Employee’s employment under this Agreement other than for
cause, or if Employee terminates such employment pursuant to Section 6(b) of
this Agreement, then in either such event the Company shall pay Employee his
accrued compensation through the date on which his employment is terminated,
and
additionally shall continue to pay to Employee the Base Salary for a period
equal to the remainder of the Term. Continuation of Base Salary under this
clause (b) shall be paid in accordance with the Company’s normal payroll
practices at the time such amounts would otherwise have been paid to Employee,
except as provided in Section 11(g) to comply with the requirements of Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”). The Company
retains the right to discontinue any severance payments if Employee, after
termination, acts in a manner so as to harm or defame the Company.
8.
Non-Solicitation
of Employees.
Employee
agrees that he will not at any time during the Term, or during the twelve-month
period following any termination of this Agreement or his employment hereunder,
solicit (directly or indirectly) any employees or then engaged contractors
of
the Company to render services as an employee or contractor for or on behalf
of
Employee or any other person.
9.
Confidentiality.
The
terms
of the Confidential Information and Inventions Agreement attached hereto as
Exhibit A are incorporated herein by this reference as if set forth in full
herein and Employee agrees to act in accordance with and be bound by all of
such
terms. Employee covenants and agrees to keep the specific terms and provisions
of this Agreement in strictest confidence and not to disclose the same to any
other person, other than (a) to Employee’s legal, financial and accounting
advisers, to the extent necessary in order for them to discharge their
professional responsibilities to Employee, (b) as required by applicable law
or
a court order binding on Employee, (c) in order to enforce or judicially
construe this Agreement, or (d) for the purpose of providing information
relating to Employee’s income to prospective employers, creditors and other
third parties with a legitimate financial interest therein.
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10.
Rules,
Regulations, Policies and Procedures.
Employee
acknowledges that he shall perform his services in full compliance with all
of
the Company’s rules, regulations, policies and procedures, as the same may be in
effect from time to time.
11.
Miscellaneous
Provisions.
(a)
Notices.
All
notices or other communications required or permitted to be given pursuant
to
this Agreement shall be in writing and shall be considered properly given if
delivered to the address set forth below, in the case of the Company, or to
the
address set forth beneath Employee’s signature hereto, in the case of Employee,
by (1) U.S. certified mail, return receipt requested, postage prepaid, (2)
facsimile with confirmation of successful transmission, or (3) personal
delivery. Either party may change his or its address by giving written notice
of
the change to the other party in accordance with this provision. Any notice
given prior to the notice of change of address shall not be affected by the
notice of address change.
Address
for the Company:
Digital
Domain, Inc.
000
Xxxx
Xxxxxx
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Chief Executive Officer
Telecopier:
(000) 000-0000
with
a
copy to:
D.
Xxxxxx
Xxxxxx
Xxxxxxxx
& Xxxxxx, LLP
0000
Xxxxxxx Xxxxxx
Xxxxx
000
Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
(b)
Entire
Agreement; Amendment.
This
Agreement constitutes the entire agreement between the parties with respect
to
the subject matter hereof and supersedes all prior agreements between the
parties with respect thereto. This Agreement may only be amended or modified
pursuant to a writing executed by both of the parties hereto.
(c)
Employee
Representation.
Employee hereby represents to the Company that the execution and delivery of
this Agreement by Employee and the Company and the performance by Employee
of
Employee’s duties hereunder shall not constitute a breach of, or otherwise
contravene, the terms of any employment agreement or other agreement or policy
to which Employee is a party or otherwise bound.
(d)
Governing
Law and Venue.
This
Agreement shall be enforced, governed by and construed in accordance with the
laws of the State of California. The parties agree that all actions or
proceedings initiated by either party hereto arising directly or indirectly
out
of this Agreement shall be litigated in federal or state court in Los Angeles,
California. The parties hereto expressly submit and consent in advance to such
jurisdiction and agree that service of summons and complaint or other process
or
papers may be made by registered or certified mail addressed to the relevant
party at the address set forth herein. The parties hereto waive any claim that
a
federal or state court in Los Angeles, California, is an inconvenient or an
improper forum.
(e)
Assignment.
This
Agreement, and all of Employee’s rights and duties hereunder, shall not be
assignable or delegable by Employee. Any purported assignment or delegation
by
Employee in violation of the foregoing shall be null and void ab initio
and of
no force and effect. This Agreement may be assigned by the Company to a person
or entity which is an affiliate or a successor in interest to substantially
all
of the business operations of the Company. Upon such assignment, the rights
and
obligations of the Company hereunder shall become the rights and obligations
of
such affiliate or successor person or entity.
(f)
Survival.
The
terms set forth in Sections 7-11, inclusive, shall survive any expiration or
termination of this Agreement.
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(g)
Section
409A.
All
payments of “nonqualified deferred compensation” (within the meaning of Section
409A of the Code) are intended to comply with the requirements of Code Section
409A, and shall be interpreted in accordance therewith. Neither party
individually or in combination may accelerate any such deferred payment, except
in compliance with Code Section 409A, and no amount shall be paid prior to
the
earliest date on which it is permitted to be paid under Code Section 409A.
In
the event that Employee is determined to be a “specified employee” (as defined
in Code Section 409A(a)(2)(B) (and regulations and guidance thereunder)) of
the
Company at a time when its stock is deemed to be publicly traded on an
established securities market, payments determined to be “nonqualified deferred
compensation” payable following termination of employment shall be made no
earlier than the earlier of (i) the last day of the sixth (6th) complete
calendar month following such termination of employment, or (ii) Employee’s
death, consistent with the provisions of Code Section 409A. Any payment delayed
by reason of the prior sentence shall be paid out in a single lump sum at the
end of such required delay period in order to catch up to the original payment
schedule. Unless otherwise expressly provided, any payment of compensation
by
the Company to Employee, whether pursuant to this Agreement or otherwise, shall
be made within two and one-half months (2½ months) after the end of the
Company’s fiscal year in which Employee’s right to such payment vests (i.e., is
not subject to a substantial risk of forfeiture for purposes of Code Section
409A). Notwithstanding anything herein to the contrary, no amendment may be
made
to this Agreement if it would cause the Agreement or any payment hereunder
not
to be in compliance with Code Section 409A.
(h)
Cooperation.
Employee shall provide Employee’s reasonable cooperation in connection with any
action or proceeding (or any appeal from any action or proceeding) which relates
to events occurring during Employee’s employment hereunder, provided that the
Company reimburses Employee for any costs or expenses reasonably incurred in
connection with such cooperation.
(i)
Severability.
If any
provision of this Agreement is determined to be invalid or unenforceable for
any
reason and to any extent, the remainder of this Agreement shall not be affected
thereby, but shall be enforced to the greatest extent permitted by
law.
(j)
Captions.
All
titles and captions of sections and subsections contained in this Agreement
are
for convenience of reference only and shall not be deemed part of this
Agreement.
(k)
Counterparts.
This
Agreement may be signed in counterparts, each of which shall be an original,
with the same effect as if the signatures thereto were upon the same
instrument.
[signature
page follows]
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In
witness whereof, the parties hereto intending to be bound thereby hereby execute
and deliver this Employment Agreement as of the __ day of December,
2006.
DIGITAL
DOMAIN, INC.
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______________________________________
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_______________________________________
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Xxxx
Xxxxx
Chief
Executive Officer
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XXXXXX
X. XXXXXXX
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Address:
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_______________________________________
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_______________________________________
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_______________________________________
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_______________________________________
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EXHIBIT
A
[See
Attached Employee Confidential Information and Inventions
Agreement]
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