EXHIBIT 10E
EMPLOYMENT AGREEMENT WITH XXXX X. XXXX
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made this 1st day of August, 1995, by and
between Xxxx X. Xxxx, an individual with offices at 0 Xxxx Xxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx 00000 ("Employee") and The Toen Group Inc., a Nevada
corporation ("the Company"), with its principal offices at 0 Xxxx Xxxxx, Xxxxx
000, Xxxxxx, XX 00000.
WHEREAS, Employee has over 25 years of experience in mergers,
acquisitions, and corporate finance and management; and,
WHEREAS, the Company desires to employ Employee to serve the Company on
the Company's Board of Directors and as its President, and to provide advice
concerning mergers and acquisitions, corporate finance, day to day management,
guidance with respect to general business decisions, and other duties commonly
performed by the President of a publicly-held company ("Services").
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Employee agree as follows:
1. Employment
The Company hereby employs Employee as the Company's President, to
provide the Company with advice and services, on an as-needed basis,
effective the date hereof and continuing through the Employment Period
(as defined below).
2. Scope of Services
The services to be provided by Employee under this Agreement shall be
all those necessary or proper to manage the Company, and to evaluate
and advise the Company's Board of Directors on transactions between the
Company and third parties.
3. Term of Employment
This Agreement shall have an initial term of five (5) years (the
"Employment Period"), retroactive to , the date Employee first began
providing the Services (the "Employment Period"). Thereafter, this
Agreement will automatically be extended on a year-to-year basis unless
Employee or the Company shall serve written notice on the other party
terminating the Agreement; provided, however, that Employee and the
Company shall agree in writing as to Employee's continuing
compensation. Notice to terminate shall be in writing and shall be
delivered at least ten (10) days prior to the end of the Employment
Period, as extended, as provided herein.
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4. Duties of Employee
Employee shall devote that amount of time, as necessary, on a monthly
basis, to fulfilling his obligations under this Agreement. The
particular amount of time may vary from day to day or week to week. The
Company understands that Employee serves as an officer and/or director
for other companies which require some of Employee's professional time
but which, except as disclosed by Employee in writing and waived by the
Company's Board of Directors, do not conflict with Employee's
obligations hereunder. Employee agrees that he will at all times,
faithfully and to the best of his experience, ability, and talents, but
expressly subject to events, services of others, and all other events
outside of Employee's control, perform all the duties required of him
under this Agreement.
5. Compensation
Compensation to Employee for services provided pursuant to this
Agreement shall consist of the following:
A) Fixed Annual Compensation. In consideration for the Services
provided hereunder, the Company shall pay to Employee an annual
salary ("Fixed Annual Compensation") at the rate of $54,000 per
annum, beginning the Effective Date. Fixed Annual Compensation
payable to Employee by the Company hereunder shall be paid at
such times and in such amounts as the Company may designate in
accordance with the Company's usual practices, but, unless agreed
by Employee, in no event less than once monthly.
B) Business Expense Reimbursement. Employee shall be entitled to an
aggregate of $1,000 per month for employee business expenses in
excess of those for which Employee makes an accounting to the
Company. To the extent that Employee does not utilize all or any
portion of the foregoing expense reimbursement account in any
given month, the unused amount shall be cumulated and carried
forward from month-to-month until used. Employee shall also be
entitled to reimbursement of all reasonable and customary
business travel and entertainment expenses for which Employee
makes an adequate accounting to the Company. The determination of
the adequacy of the accounting and reasonableness of the expenses
shall be within the reasonable discretion of the Company's
independent certified accountants taking into consideration the
substantiation requirements of the Internal Revenue Code of 1986,
as amended (the "Code"). If verification is provided, the
non-deductibility of such expenses for tax purposes shall not
affect Employee's right to reimbursement.
C) Additional Incentive Compensation. In addition to the Fixed
Annual Compensation to be provided to Employee hereunder, the
Company shall also provide Employee with such additional
incentive compensation ("Additional Incentive Compensation") in
the form of reimbursement of expenses, securities of the Company,
stock options or a deferred compensation arrangement customarily
utilized for top management executives in the Company's line of
business, and shall include but not be limited to the following:
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i) Life Insurance Policy - a split rate life insurance policy
for the benefit of Employee in the amount of not less than
$1,000,000 (the "Life Insurance Policy"). The Company agrees
to make all premium payments under the Life Insurance
Policy. Employee shall be entitled to name the Luke Family
Trust u/t/d May 20, 1990 (the "Trust"), the Alison Xxxxxx
Xxxx Trust (the "Alison Trust") or the Xxxxxxx Xxxxx Xxxx
Trust (the "Xxxxxxx Trust"), or in combination of them, as
the beneficiary or beneficiaries of such policy. Upon the
death of Employee during the Initial Employment Period of
this Agreement, and upon the payment of benefits pursuant to
the Life Insurance Policy, such benefits shall be allocated
as follows: (i) the Company shall be entitled to
reimbursement of all premiums actually paid under such
policy plus six percent (6%) per annum interest on such
amounts actually paid, and (ii) the beneficiary or
beneficiaries named under such policy shall be entitled to
receive the remainder of such benefits. Employee agrees that
the Company may secure additional insurance on Employee's
life for the benefit of the Company and that Employee shall
cooperate with the Company in connection with the
application process for such insurance.
ii) Directors and Officers Liability Insurance - insurance
generally maintained for by publicly-held companies for the
benefit of their directors and officers against all costs,
charges and expenses whatsoever incurred or sustained in
connection with any action, suit or proceeding to which such
officers or directors may be made a party by reason of being
or having been a director or officer. Such insurance
coverage shall be provided by the Company and the Company
shall use its best efforts to cause such insurance to be
maintained in effect for not less than six (6) years from
the date of termination of this Agreement, or from the date
of a change in control (as defined herein), whichever is the
longer period, and containing terms and conditions that are
acceptable to Employee.
iii) Fringe Benefits. In addition to the foregoing, upon request
by Employee, Employee shall receive and shall continue to
receive such fringe benefits ("Fringe Benefits") as he now
enjoys and as shall become available in the future to those
with similar executive positions in the leisure and
entertainment industries, including without limitation: (i)
club memberships (including initiation fees, annual dues and
other recurring expenses) in an amount not to exceed $20,000
in each year of the Initial Employment Period; (ii)
first-class air travel and private air travel (if first
class air travel is not practicable in Employee's sole
judgment) for all trips made by Employee outside of the
United States in connection with the Services provided to
the Company; (iii) the lease of an automobile of Employee's
choice for use by Employee, and reimbursement for all
expenses incurred in connection with such automobile, and
(iv) reimbursement of Employee's personal legal and
accounting expenses related to Employee's association with
the Company in an amount not to exceed $50,000 in each year
of the Initial Employment Period.
iv) Stock Option. The Company agrees to execute with Employee a
Stock Option Agreement (the "Option") consistent with the
Company's existing plans or guidelines in which the Company
will grant Employee stock options to purchase
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Seven Hundred Fifty Thousand (750,000) shares of common
stock of the Company (the "Option Shares") at one hundred
ten percent (110%) of the Market Value (as defined herein)
as of the date of the Option. Such Options shall vest to
Employee immediately upon execution of the Option. In the
event of any change in the common stock of the Company by
reason of stock dividends, stock splits, reverse stock
splits, spin-offs, mergers, recapitalizations, combinations,
conversions, exchanges of shares or the like or the issuance
of shares of common stock or any class of securities
directly or indirectly convertible into or exchangeable for
common stock after the date hereof, the number and kind of
shares subject to the Option shall be appropriately
adjusted.
For the purpose of this Agreement, "Market Price" shall mean the
average bid price on the date of exercise of the Option, or any portion
thereof, or, in case no sale takes place on such day, the closing bid
price for the last executed trade, in each case on the NASD Electronic
Bulletin Board or the securities exchange to which the shares of common
stock of the Company (or its successor, if any) are listed or admitted
to trading or, if not listed or admitted to trading, the average of the
closing bid price as furnished by two members of the National
Association of Securities Dealers Inc. selected by Employee for that
purpose. In the absence of one or more such quotations, the Market
Price shall be based upon the book value per share calculated on the
basis of the Company's most recent financial statements.
6. Registration of the Company Shares
The Company will register the Option Shares with the Securities and
Exchange Commission on a Form S-1 or other applicable registration
statement within one (1) year from the date hereof. Option Shares
issued prior to registration will be done so only in reliance on
exemptions from registration provided by Section 4(2) of the Securities
Act of 1933 (the "Act"), Regulation D of the Act, and applicable state
securities laws. Such issuance shall be in reliance on representations
and warranties of Employee set forth below, to be updated upon
exercise.
7. Opportunities Rejected by the Company
Opportunity Compensation. If, commencing the Effective Date, during the
Employment Period, because of the Company's financial condition, the
Board elects not to proceed to acquire any project or potential
acquisition submitted, identified and/or selected by Employee, then
Employee, upon notification to the Company's Board, shall be entitled
to submit the project elsewhere (a "Opportunity") and Employee shall be
entitled to any and all fees or profits resulting from Employee's
referral or placement of such Opportunity (the "Opportunity
Compensation"); provided, however, that Employee's efforts related to
such Opportunity shall be of an incidental nature and shall not
interfere with Employee's Services to the Company other than in a de
minimis manner; and the Opportunity may not be offered to a third party
on terms more favorable to such third party than the terms proposed to
the Company at the time that the Company's Board elected not to
proceed.
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8. Place of Services
The Services provided by Employee hereunder will be performed primarily
through the Company's offices in Irvine, California, except as
otherwise mutually agreed by Employee and the Company. It is understood
and expected that Employee may make contacts with persons and entities
and perform services in other locations as deemed appropriate and
directed by the Company.
9. Status
Employee will act as an employee in the performance of duties under
this Agreement. Accordingly, the Company will be responsible for
payment of all federal, state, and local taxes on compensation paid
under this Agreement, including income and social security taxes,
unemployment insurance, and any other taxes as may be required.
10. Termination
(A) Termination for Disability. If, during the Employment Period,
Employee shall be unable to provide the Services for three (3)
consecutive months because of illness, accident, or other
incapacity, the Company shall have the right to terminate this
Agreement upon written notice to Employee within ten (10) days
after the end of any such three (3) month period. Termination
under this Paragraph shall be effective upon receipt by
Employee of the written notice.
(B) Death. In the event of Employee's death, this Agreement and
all rights and obligations hereunder shall immediately be
terminated.
(C) Termination for Cause. The Company may, at its option,
terminate this Agreement by giving written notice of
termination to Employee without prejudice to any other remedy
to which the Company may be entitled either at law, in equity,
or under this Agreement, if Employee:
(i) Willfully breaches or neglects the duties that Employee
is required to perform under the terms of this
Agreement;
(ii) Fails to promptly comply with and carry out all
directives of the Company's Board of Directors; or
(iii)Is convicted of committing any dishonest or unlawful
act.
(D) Termination Other Than For Cause. This Agreement shall terminate
immediately on the occurrence of any one of the following events:
(i) The occurrence of circumstances, in the judgment of the
Company's Board of Directors, that make it
impracticable for the Company to continue its present
line(s) of business;
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(ii) The decision of and upon notice by Employee to
voluntarily terminate this Agreement;
(iii) The loss by Employee of legal capacity;
(iv) If the Company institutes, or has instituted against it
any bankruptcy proceeding for reorganization for
rearrangement of the party's financial affairs;
(v) If the Company has a receiver of its assets or property
appointed because of insolvency;
(vi) If the Company makes a general assignment for the
benefit of creditors; or
(vii)If the Company otherwise becomes insolvent or unable
to timely satisfy all obligations in the ordinary
course of business.
(E) Effect of Termination on Compensation. In the event of the
Termination Other Than For Cause prior to the completion of
the Employment Period, Employee shall be entitled to a lump
sum payment equal to the balance of all compensation due to
Employee, including but not limited to salary and benefits
under this Agreement, and to the rights to exercise any
remaining, previously unexercised Options. Notwithstanding
anything contained herein to the contrary, Employee's right to
exercise any exercised Options shall continue for two (2)
years following the date of termination.
13. Representations and Warranties of the Company
The Company represents and warrants to Employee that:
(A) Corporate Existence. The Company is a corporation duly
organized, validly existing, and in good standing under the
laws of the State of Nevada, with corporate power to own
property and carry on its business as it is now being
conducted.
(B) Financial Information. The Company has or will cause to be
delivered concurrently with the execution of this Agreement,
copies of the Disclosure Documents (as defined in Paragraph
14(D)(1)) which accurately set forth the financial condition
of the Company as of the respective dates of such documents.
(C) Capitalization. The capitalization of Company is, as of the
date hereof, comprised of Fifty Million (50,000,000) shares of
authorized $.01 par value common stock of which no more than
Eight Hundred Thousand (800,000) shares are issued and
outstanding, and Six Hundred Sixty Eight Thousand (668,000)
warrants to purchase common stock ("Warrants"). All issued and
outstanding shares and the Warrants are legally issued, fully
paid, and nonassessable, and are not issued in violation of
the preemptive or other right of any person.
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(D) No Conflict. This Agreement has been duly executed by the
Company and the execution and performance of this Agreement
will not violate, or result in a breach of, or constitute a
default in any agreement, instrument, judgment, decree or
order to which the Company is a party or to which the Company
is subject, nor will such execution and performance constitute
a violation or conflict of any fiduciary duty to which the
Company is subject.
(E) Full Disclosure. The information concerning the Company
provided to Employee pursuant to this Agreement is, to the
best of the Company's knowledge and belief, complete and
accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a
material fact required to make the statements made, in light
of the circumstances under which they were made, not
misleading.
(F) Date of Representations and Warranties. Each of the
representations and warranties of the Company set forth in
this Agreement is true and correct at and as of the date of
execution of this Agreement.
14. Representations and Warranties of Employee
Employee represents and warrants to the Company that he understands and
acknowledges that any Option Shares issued prior to registration will
be so issued in reliance on the exemptions from registration provided
by Section 4(2) of the Act Regulation D, and applicable state
securities laws. Representations and warranties by Employee in this
paragraph will be used and relied upon by the Company to determine
whether any issuance of Option Shares may be made to Employee pursuant
to Section 4(2) of the Act and Regulation D and applicable state
securities laws, and Employee will notify the Company immediately of
any material changes to the representations made herein. In this
regard, Employee represents and warrants that:
(A) Disclosure Documents. Employee has been furnished with a copy of
the Company's most recent Annual Report on Form 10-K and all
reports or documents required to be filed under Sections 13(a),
14(a), and 15(d) of the Securities and Exchange Act of 1934, as
amended, including but not limited to quarterly reports on Form
10-Q, current reports on Form 8-K, and proxy statements (the
"Disclosure Documents"). In addition, Employee has been furnished
with a description of the Company's capital structure and any
material changes in the Company's financial condition that may
not have been disclosed in the Disclosure Documents.
(B) Employee Suitability. By reason of Employee's knowledge and
experience in financial and business matters in general, and
investments in particular, Employee is capable of evaluating the
merits and risks of this transaction and in bearing the economic
risks of an investment in the Option Shares and fully understand
the speculative nature of such securities and the possibility of
such loss. Further, Employee represents to the Company:
(1) Employee is fully aware that any Option Shares issued to
Employee prior to registration will be "Restricted
Securities" as defined by Rule 144 of the Act and that any
resale of such securities by Employee may be governed by
Rule 144. Employee is further aware of the specific
restrictions on resale of such securities contained in Rule
144.
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(2) Employee will not sell, transfer or otherwise dispose of any
Option Shares issued or reserved for issuance hereunder
prior to registration except in compliance with the Act.
(3) Any and all certificates representing the Option Shares
issued prior to registration of such shares, and any and all
securities issued in replacement thereof or in exchange
therefore, shall bear the following legend:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 (the
"Act") and are "restricted securities" as that term
is defined in Rule 144 under the Act. The shares may
not be offered for sale, sold, or otherwise
transferred except pursuant to an effective
Registration Statement under the Act or pursuant to
an exemption from registration under the Act, the
availability of which is to be established to the
satisfaction of the Company."
15. Indemnification
The Company and Employee agree to indemnify, defend and hold each other
harmless from and against all demands, claims, actions, losses,
damages, liabilities, costs and expenses, including without limitation,
interest, penalties and attorneys' fees and expenses asserted against
or imposed or incurred by either party by reason of or resulting from a
breach of any representation, warranty, covenant, condition, or
agreement of the other party to this Agreement.
The Company further agrees to indemnify defend and hold Employee
harmless from and against all demands, claims, actions, losses,
damages, liabilities, costs and expenses, including without limitation,
interest, penalties and attorneys' fees and expenses asserted against
or imposed or incurred by Employee arising from Employee's fulfillment
of his duties as an officer and director to the maximum extent
permitted by the Nevada Corporation Code.
In addition to the foregoing indemnity, the Company agrees to indemnify
and hold harmless Employee, and each other person controlling Employee
or any of its affiliates (collectively, the "Indemnified Parties" and
each an "Indemnified Party"), within the meaning of either Section 15
of the Act, or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") from and against any losses, claims,
damages and liabilities (or actions in respect thereof), joint or
several, which are related to or arise out of or are based upon any
untrue or alleged untrue statement of material fact or any omission or
alleged omission of material fact required to be stated or necessary to
make other statements, in light of the circumstances in which they are
made, not misleading contained in any document, report or material
provided to an relied upon by Employee to prepare any registration
statement, prospectus, prospectus supplement license application or
other materials or reports filed by the Company with any regulatory
agency.
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16. Inside Information - Securities Laws Violations
In the course of the performance of his duties, Employee may become
aware of information which may be considered "inside information"
within the meaning of the Federal Securities Laws, Rules and
Regulations. Employee acknowledges that his use of such information to
purchase or sell securities of the Company, or its affiliates, or to
transmit such information to any other party with a view to buy, sell
or otherwise deal in the securities of the Company or its affiliates is
prohibited by law and would constitute a breach of this Agreement and
notwithstanding the provisions of this Agreement will result in the
immediate termination of the Agreement.
17. Miscellaneous
(A) Subsequent Events. Employee and the Company each agree to notify
the other party if, subsequent to the date of this Agreement,
either party incurs obligations which could compromise their
efforts and obligations under this Agreement.
(B) Amendment. This Agreement may be amended or modified at any time
and in any manner only by an instrument in writing executed by
the parties hereto.
(C) Further Actions and Assurances. At any time and from time to
time, each party agrees, at its or their expense, to take actions
and to execute and deliver documents a may be reasonably
necessary to effectuate the purposes of this Agreement.
(D) Waiver. Any failure of any party to this Agreement to comply with
any of its obligations, agreements, or conditions hereunder may
be waived in writing by the party to whom such compliance is
owed. The failure of any party to this Agreement to enforce at
any time any of the provisions of this Agreement shall in no way
be construed to be a waiver of any such provision or a waiver of
the right of such party thereafter to enforce each and every such
provision. No waiver of any breach of or non-compliance with this
Agreement shall be held to be a waiver of any other or subsequent
breach or non- compliance.
(E) Assignment. Neither the Company nor employee shall assign their
rights or obligations under the Agreement without the prior
written consent of the other. However, the Options granted to
Employee shall be assignable by Employee without the consent of
or notice to the Company.
(F) Notices. Any notice or other communication required or permitted
by this Agreement must be in writing and shall be deemed to be
properly given when delivered in person to an officer of the
other party, when deposited in the United States mails for
transmittal by certified or registered mail, postage prepaid, or
when deposited with a public telegraph company for transmittal,
or when sent by facsimile transmission charges prepared, provided
that the communication is addressed:
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(1) In the case of the Company:
The Toen Group Inc.
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
(2) In the case of Employee:
Xxxx X. Xxxx
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
or to such other person or address designated by the Company
or Employee to receive notice.
(G) Headings. The section and subsection headings in this
agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(H) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
(I) Governing Law. This Agreement was negotiated and is being
contracted for in the State of California, and shall be
governed by the laws of the State of California, notwith
standing any conflict-of-law provision to the contrary.
(J) Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their
respective heirs, administrators, executors, successors, and
assigns.
(K) Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior
agreements, arrangements, or understandings between the
parties relating to the subject matter of this Agreement. No
oral understan dings, statements, promises, or inducements
contrary to the terms of this Agreement exist. No
representations, warranties, covenants, or conditions, express
or implied, other than as set forth herein, have been made by
any party.
(L) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in
full force and effect.
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(M) Facsimile Counterparts. A facsimile, telecopy, or other
reproduction of this Agreement may be executed by one or more
parties hereto and such executed copy may be delivered by
facsimile of similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be
considered valid, binding and effective for all purposes. At
the request of any party hereto, all parties agree to execute
an original of this Agreement as well as any facsimile,
telecopy or other reproduction hereof.
(N) Termination of Any Prior Agreements. Effective the date
hereof, all prior rights of Employee relating to the accrual
or payment of any form of compensation or other benefits from
the Company based upon any agreements other than this
Agreement, whether written or oral, entered into prior to the
date hereof, are hereby terminated.
(O) Consolidation or Merger. Subject to the provisions hereof, in the
event of a sale of the stock, or substantially all of the stock,
of the Company, or consolidation or merger of the Company with or
into another corporation or entity, or the sale of substantially
all of the operating assets of the Company to another
corporation, entity or individual, the Company may assign its
rights and obligations under this Agreement to its successor-in-
interest and such successor-in-interest shall be deemed to have
acquired all rights and assumed all obligations of the Company
hereunder; provided, however, that in no event shall the duties
and services of Employee provided for in Paragraph 2 hereof, or
the responsibilities, authority or powers commensurate therewith,
change in any material respect as a result of such sale of stock,
consolidation, merger or sale of assets.
(P) Time is of the Essence. Time is of the essence of this
Agreement and of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective the date first written above.
"Employee"
/s/ Xxxx X. Xxxx
---------------------------------------
Xxxx X. Xxxx
"Company"
THE TOEN GROUP INC.
a Nevada corporation
By: /s/ The Toen Group Inc.
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[FLJ\AGR:TOENEMPL.AGR]
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