EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is being made as of this 22nd day of
March 2000 among XXXXXXXX ADVERTISING INCORPORATED, a Texas corporation
("Xxxxxxxx"), having its principal offices at 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx
000, Xxxxxxx, Xxxxxxx 00000, GCG Merger Corp., a Delaware corporation (the
"Company"), having its principal offices at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, MARKETING SERVICES GROUP, INC., a Nevada corporation and the parent
of the Company ("MSGI"), having its principal offices at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, and XXXXXXX X. XXXXXXX, an individual residing at 0000
Xxxxxxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Employee").
W I T N E S S E T H:
WHEREAS, Xxxxxxxx has entered into an Agreement and Plan of Merger, dated
of even date herewith (the "Merger Agreement"), pursuant to which Xxxxxxxx will
merge into and with the Company (the "Merger"), with the Company being the
surviving corporation of the merger; and
WHEREAS, on and prior to the date hereof, Employee is and has been an
employee of Xxxxxxxx; and
WHEREAS, this Agreement supersedes any prior employment agreement or
arrangement Employee has with Xxxxxxxx, and from and after the Effective Time
(as that term is defined in the Merger Agreement) any such employment agreement
or arrangement shall be null, void and of no further effect; and
WHEREAS, the Company desires to continue to employ Employee from and after
the Effective Time, and Employee desires to be employed by the Company, as its
Chief Executive Officer, upon the terms and conditions contained herein; and
WHEREAS, MSGI desires to employ Employee from and after the Effective
Time, and Employee desires to be employed by MSGI, as its Chief Operating
Officer, upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual premises and agreements
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment; Term of Employment.
The Company and MSGI hereby employ Employee, and Employee agrees to serve
the Company and MSGI, upon the terms and conditions contained herein subject to
the provisions of Section 9, commencing as of the Effective Time and continuing
for a period of three (3) years (the "Initial Term"). Following the Initial
Term, this Agreement and Employee's employment hereunder shall renew from year
to year (each a "Renewal Term") unless the Company or MSGI, on the one hand, or
Employee, on the other hand, shall notify the other in writing not later than
one hundred eighty (180) days prior to the end of the Initial Term or not later
than ninety (90) days prior to the end of the then current Renewal Term, as the
case may be, that such party elects for this Agreement and Employee's employment
hereunder to terminate at the end of the Initial Term or the then current
Renewal Term, as the case may be. As used herein, "Term" means this Initial Term
and any subsequent Renewal Term.
2. Duties and Powers of Employee.
During the Term, Employee agrees to devote substantially all of his time,
energy and efforts (vacations and reasonable absences due to illness excepted)
during regular business hours to the duties of his employment hereunder. In
performance of his duties, Employee shall be employed as the Chief Executive
Officer of the Company and the Chief Operating Officer of MSGI, shall report to
the Chairman and Chief Executive Officer of MSGI, and shall be subject to the
reasonable direction of the Board of Directors of MSGI or its designee. Employee
shall be available to travel as the needs of the business require. Employee
agrees that the Company and/or MSGI may obtain a life insurance policy on the
life of Employee naming the Company and/or MSGI as the beneficiary thereof.
3. Compensation and Benefits.
(a) As base compensation for his services to MSGI and the Company as set
forth hereunder, MSGI shall cause the Company to pay Employee a base salary
payable in semi-monthly installments at the annual rate of $300,000 for each
full year of the Term ("Base Salary"), which Base Salary will be reviewed no
less frequently than annually and may be increased, but not decreased, by the
Company from time to time; provided, however, in the event Employee is required
to work full time in New York City, MSGI shall cause the Company to increase
Employee's Base Salary to cover Employee's increased cost of living in the New
York City area, and MSGI and Employee shall negotiate in good faith such
increase in Employee's Base Salary.
(b) Employee shall be eligible to receive an annual bonus in an amount not
to exceed fifty percent (50%) of his Base Salary, which bonus shall be measured
by (i) Employee's success in integrating the operations, management, marketing
and financial controls of MSGI and the Company and (ii) the overall financial
performance of each of MSGI and the Company (the "Performance Bonus"), the
performance goals and criteria of which shall be mutually established in writing
at the beginning of each year of the Term by Employee, on the one hand, and the
Chairman and Chief Executive Officer of MSGI, on the other hand, and approved by
the Board of Directors of MSGI. The Performance Bonus may be modified from time
to time as determined in good faith by MSGI's Compensation Committee and
approved by its Board of Directors and agreed to by Employee.
(c) Employee shall be granted an option (the "Option") to purchase 250,000
shares of common stock of MSGI under the terms set forth in MSGI's 1999
Incentive and Nonqualified Stock Option Plan, at an exercise price per share of
common stock of MSGI subject to the fair market value on the date the option
grant is approved by the Board of Directors of MSGI. The Option shall be
evidenced by a separate Stock Option Agreement, dated the date hereof between
Employee and MSGI, and the Option will become vested and exercisable as set
forth in the Stock Option Agreement.
(d) Employee shall have the right to participate in any medical,
hospitalization, dental, disability income, life or similar insurance plans
maintained by the Company from time to time to the extent Employee's position,
tenure, salary, age, health and other qualifications make him/her eligible to
participate, and such other fringe benefits as are provided to the other
executive officers of the Company; provided, however, prior to the adoption by
the Company of its own medical, hospitalization, dental, disability income, life
or other similar insurance plans or fringe benefits (collectively, "Benefit
Plans"), the benefits provided to Employee pursuant to any benefit plans shall,
considered in the aggregate, not be less favorable to Employee and his
dependents than the benefits, considered in the aggregate, provided to Employee
as an employee of Xxxxxxxx on the date hereof.
4. Expenses.
(a) Employee shall be entitled to reimbursement for travel and other
out-of-pocket expenses reasonably incurred in the performance of his duties
hereunder, upon submission and approval of written statements and bills in
accordance with the then regular procedures of the Company. If Employee is
required to be away from his primary residence on Company or MSGI business for
more than five (5) consecutive business days, Employee shall be entitled to
travel at the Company's expense to Employee's primary residence during the
interim weekend or have Employee's spouse travel at the Company's expense to the
location where Employee is conducting business for the Company or MSGI.
(b) If Employee's primary residence is outside of the New York City area,
the Company will provide at the Company's expense a suitable corporate apartment
(with living, sleeping and kitchen facilities) in New York City for Employee's
use when working in the Company's New York City office. With prior approval from
the Chairman and Chief Executive Officer of MSGI, Employee's spouse shall be
entitled to travel to and from New York City at the Company's expense while
Employee is working in the Company's New York City office.
(c) If the Chairman and Chief Executive Officer of MSGI requires Employee
to maintain his primary office in the Company's New York City office, thus
necessitating the need for Employee to establish a residence in the New York
City area, the Company shall pay for Employee's reasonable moving expenses to
Employee's New York City area residence; provided further, if, prior to the time
Employee establishes his residence in the New York City area, Employee requests
that certain possessions of Employee be placed in storage and/or moved to a
secondary residence of Employee outside of the Atlanta metropolitan area, the
Company shall pay for Employee's reasonable storage expenses and/or moving
expenses to Employee's secondary residence.
(d) If Employee is required to maintain his primary office in the Company's
New York City office, and thus establish a residence in the New York City area,
(i) Employee shall be entitled to travel at the Company's expense each weekend
to Employee's secondary residence, whether such secondary residence be in or
outside of the metropolitan Atlanta area, or (ii) Employee's spouse shall be
entitled to travel at the Company's expense one time per week between the New
York City area and Employee's secondary residence, whether such secondary
residence be in or outside of the metropolitan Atlanta area.
5. Representations and Warranties of Employee. Employee represents and
warrants to MSGI and the Company that (a) Employee is under no contractual or
other restriction or obligation which is inconsistent with the execution of this
Agreement, the performance of his duties hereunder or the other rights of MSGI
and the Company hereunder, and (b) Employee is under no physical or mental
disability, with or without reasonable accommodations, that would hinder his
performance of duties under this Agreement.
6. Non-Competition; Non-Solicitation.
(a) Employee agrees that during the Employment Term he will not engage in,
or otherwise directly or indirectly be employed by, or act as a consultant, or
be a director, officer, employee, owner, agent, member or partner of, any other
business or organization that is or shall then be competing with the Company,
MSGI or any subsidiary of MSGI; provided, however, this provision shall not
prohibit Employee (i) from owning less than five percent (5%) of the outstanding
common stock of a corporation, if, at the time of its acquisition by Employee,
such stock is listed on a national securities exchange, is reported on NASDAQ,
or is regularly traded in the over-the-counter market by a member of a national
securities exchange, or (ii) from maintaining an ownership interest in and being
an employee of Xxxxxxx, Xxxxxxx and Xxxxxxxx, LLC.
(b) If this Agreement is terminated by MSGI or the Company for or without
Cause (as such term is defined in Section 9) or if Employee voluntarily
terminates his employment hereunder, Employee, for a period of three (3) years
from the date of such termination, shall not, directly or indirectly, solicit or
encourage any person who was a customer of the Company, MSGI or Xxxxxxxx during
the one (1) year prior to the date of such termination to cease doing business
with the Company, MSGI or any subsidiary or affiliate of the Company or MSGI.
(c) If this Agreement is terminated by MSGI or the Company for or without
Cause or if Employee voluntarily terminates his employment hereunder, Employee
agrees that for a period of two (2) years following the termination of
employment with the Company, Employee will not directly, or indirectly by
assisting others, recruit or hire, or attempt to recruit or hire any other
employee of MSGI, the Company or any subsidiary or affiliate of the Company or
MSGI.
7. Inventions; Patents; Copyrights.
Any interest in patents, patent applications, inventions, copyrights,
developments and processes ("Trade Secrets") which Employee during the Term of
this Agreement, directly or indirectly, develops relating to the fields in which
MSGI or the Company may then be engaged shall belong to the Company; provided,
however, Trade Secrets shall not mean any data or information that is a Trade
Secret hereunder (i) that has been voluntarily disclosed to the public by the
Company or any affiliate thereof or has become generally known to the public
(except where such public disclosure has been made by or through Employee or by
a third person or entity at the direction of Employee, without authorization
from MSGI), (ii) that has been independently developed and disclosed by parties
other than Employee or MSGI or the Company or any affiliate thereof to Employee
or to the public generally without a breach of any obligation of confidentiality
by any such person running directly or indirectly to MSGI or the Company or any
affiliate thereof, or (iii) that otherwise enters the public domain through
lawful means. Upon request of the Company, Employee shall execute all such
assignments and other documents and take all such other action as the Company
may reasonably request in order to vest in the Company all of his right, title,
and interest in and to such Trade Secrets, free and clear of all liens, charges,
and encumbrances.
8. Confidential Information and Non-Disclosure.
All confidential information which Employee may now possess, may obtain
during the Employment Term, or may create prior to the end of any Term under
this Agreement, relating to the businesses of the Company or MSGI, their
predecessors and any customer or supplier of the Company, MSGI or their
predecessors, shall not be published, disclosed or made accessible by him/her to
any other person, firm or corporation during the Term or any time thereafter
without the prior written consent of MSGI; provided, however, information shall
not be deemed confidential information if such information was generally
publicly available prior to the receipt thereof by Employee or subsequently
becomes generally available through no fault of Employee. Employee shall return
all tangible evidence of such confidential information to the Company or MSGI,
as the case may be, prior to or at the termination of his employment. Employee
also agrees not to disclose the terms of this Agreement to any third party,
except as required by law, other than to Employee's legal counsel, financial
advisors or spouse.
Termination
8. (a) Notwithstanding anything herein contained, if on or after the date
hereof and prior to the end of the Term, Employee is terminated for Cause (as
defined below) by either MSGI or the Company, then MSGI or the Company shall
have the right to give Employee written notice of termination of Employee's
services hereunder as of a date to be specified in such notice (which may not be
less than 14 days), and this Agreement shall terminate on the date so specified.
Termination for Cause shall mean Employee shall (i) be convicted of a felony
crime, (ii) commit any act or omit to take any action in bad faith and to the
material detriment of MSGI or the Company or any subsidiary or affiliate of MSGI
or the Company, (iii) commit an act of moral turpitude to the material detriment
of MSGI or the Company or any subsidiary or affiliate of MSGI or the Company,
(iv) commit an act of fraud against MSGI or the Company or any subsidiary or
affiliate of MSGI or the Company, (v) materially breach any term of this
Agreement and fail to correct such breach within ten (10) business days after
written notice thereof, or (vi) materially fail to perform reasonable minimum
standards as determined by the Board of Directors of MSGI and communicated in
writing to Employee; provided, that in the case of termination pursuant to (ii),
(iii), (iv) or (vi) such determination must be made by the Board of Directors of
MSGI after a meeting at which Employee was given an opportunity to explain such
actions. In the event this Agreement is terminated for Cause pursuant to this
Section 9(a) or Employee voluntarily terminates his employment hereunder, then
Employee shall be entitled to receive only his Base Salary at the rate provided
in Section 3 to the date on which termination shall take effect.
(b) In the event that Employee shall be physically or mentally
incapacitated or disabled or otherwise unable substantially to discharge his
duties hereunder for a period of ninety (90) consecutive days, then this
Agreement shall terminate upon notice in writing to Employee, and Employee shall
be entitled to receive (i) accrued but unpaid Base Salary through the effective
date of termination and (ii) accrued bonus and other compensation through the
effective date of termination. In the event of a dispute as to whether Employee
is incapacitated or disabled, the determination of such incapacity or disability
shall be made reasonably by the Board of Directors of MSGI, and shall consider
the advice of a physician, mutually acceptable to both MSGI and Employee, and
competent in the area to which such incapacity or disability relates.
(c) In the event that Employee shall die during the Term hereof, then this
Agreement shall terminate on the date of Employee's death, and Employee shall be
entitled to receive (i) accrued but unpaid Base Salary through the effective
date of termination and (ii) accrued bonus and other compensation through the
effective date of termination.
(d) Except as provided in Section 10, in the event that this Agreement is
terminated by MSGI or the Company without Cause or by Employee for Good Reason
(as defined below), Employee shall receive (i) all accrued but unpaid Base
Salary through the effective date of such termination of employment, (ii)
accrued bonus and other compensation through the effective date of such
termination of employment, and (iii) a severance payment consisting of a single
lump sum distribution (with no present value adjustment) equal to two (2) times
the then current annual Base Salary. Such lump sum distribution shall be paid to
Employee with ten (10) days of any such termination. For purposes hereof, "Good
Reason" means (w) the assignment to Employee of duties and responsibilities of
his employment that are materially different than the duties and
responsibilities normally assigned to and performed by a Chief Executive Officer
of the other subsidiaries of MSGI or a Chief Operating Officer of a company like
or similar to MSGI, and the assignment to Employee of such duties and
responsibilities continues for more than thirty (30) days following written
notice by Employee to the Boards of Directors of MSGI and the Company that the
Employee does not consent to the assignment to him/her of such duties and
responsibilities, (x) in order for Employee to reasonably perform the duties and
responsibilities of his employment, Employee must reside at a location other
than metropolitan Atlanta, Georgia or within 75 miles of MSGI's executive
offices in New York City without Employee's written consent, (y) MSGI's and the
Company's continued material breach of any of their obligations set forth in
Section 3 of this Agreement for more than thirty (30) days following written
notice by Employee to the Board of Directors of MSGI, specifying in reasonable
detail such alleged breached by MSGI or the Company, or (z) the material
diminution of Employee's duties and responsibilities as Employee has with
Xxxxxxxx as of the date hereof; provided, however, that for purposes hereof,
"Good Reason" shall not mean a good faith determination by the Board of
Directors of MSGI that the duties and responsibilities of Chief Executive
Officer of the Company and Chief Operating Officer of MSGI should not be held by
one person and a majority of directors vote at a meeting with a quorum present
that Employee should devote his full time and efforts to either of the positions
set forth herein, it being agreed that such determination shall not effect the
compensation or benefits granted to Employee during the Term of this Agreement.
(e) Notwithstanding anything to the contrary contained in this Section 9,
upon any termination of Employee's employment pursuant to Sections 9(a), (b),
(c) or (d), in addition to any amounts payable to Employee hereunder upon or
with respect to such termination, Employee shall have such rights under the
Stock Option Agreement and any other agreements between Employee and the Company
or its predecessor as are provided therein, and Employee also shall have such
benefits to which Employee may be entitled under benefit plans of MSGI and the
Company then in effect and in which Employee participates.
10. Merger, Etc.
In the event of a disposition during the Term hereof of the properties and
business of MSGI or the Company, substantially as an entirety, by merger,
consolidation, sale of assets, sale of stock or otherwise, then immediately
prior to such disposition Employee shall be entitled to terminate this Agreement
and receive within ten (10) days following the effective date of such
termination (i) all accrued but unpaid Base Salary through the effective date of
such termination of employment, (ii) accrued bonus and other compensation
through the effective date of such termination of employment, and (iii) a
severance payment consisting of a lump sum distribution (with no present value
adjustment) equal to three (3) times Employee's then current annual Base Salary.
11. Survival.
The covenants, agreements, representations, and warranties contained in or
made pursuant to this Agreement shall survive Employee's termination of
employment, irrespective of any investigation made by or on behalf of any party.
12. Modification.
This Agreement sets forth the entire understanding of the parties with
respect to the subject matter hereof, supersedes all existing agreements between
them concerning such subject matter, and may be modified only by a written
instrument duly executed by each party. Employee acknowledges that no other
representations, oral or written, have been made regarding the subject matter
hereof. Employee further acknowledges that the Employee has not relied upon any
oral or written representations not explicitly contained herein in executing
this agreement.
13. Notices.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given at the address of such party set forth in the preamble to this Agreement
(or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 13). In the case of a notice to
MSGI or the Company, a copy of such notice (which copy shall not constitute
notice) shall be delivered to Camhy Xxxxxxxxx & Xxxxx LLP, 0000 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn. Xxxx X. Annex, Esq. Notice to the estate
of Employee shall be sufficient if addressed to Employee as provided in this
Section 13. Any notice or other communication given by certified mail shall be
deemed given at the time of certification thereof, except for a notice changing
a party's address which shall be deemed given at the time of receipt thereof.
14. Waiver.
Any waiver by either party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict adherence to any term of this Agreement on one
or more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement. Any waiver must be in writing and signed by the party against
whom such waiver is asserted.
15. Binding Effect.
Employee's rights and obligations under this Agreement
shall not be transferable by Employee by assignment or otherwise, such rights
shall not be subject to encumbrance or the claims of Employee's creditors, and
any attempt to do any of the foregoing shall be void. The provisions of this
Agreement shall be binding upon and inure to the benefit of Employee and his
heirs and personal representatives, and shall be binding upon and inure to the
benefit of MSGI and the Company and their respective successors.
16. Headings.
The headings in this Agreement are solely for the convenience of reference
and shall be given no effect in the construction or interpretation of this
Agreement.
17. Counterparts; Governing Law.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. It shall be governed by, and construed in accordance with,
the laws of the State of New York, without giving effect to the rules and
principles governing the conflicts of laws. Each of the parties hereto agrees
that such court may award reasonable legal fees and expenses to the prevailing
party. Each of the parties hereto hereby irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York, County of New York, and of
any federal court located in the State of New York, County of New York, in
connection with any action or proceeding arising out of or relating to, or a
breach of, this Agreement. Employee hereby consents to, and waives any objection
to, the personal jurisdiction and venue of such courts, and further waives any
objections base upon such jurisdiction, including, without limitation, an
objection to the laying of venue or based upon the ground of forum
non-conveniens.
18. Effectiveness of Agreement.
This Agreement shall not become effective until the Effective Time. In the
event that the Merger does not occur on or before March 31, 2000, this Agreement
shall be null, void and of no further effect.
[Signatures on Next Page]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
XXXXXXXX ADVERTISING INCORPORATED
By: /s/ Xxxxxxx Xxxxxxx
-------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
GCG MERGER CORP.
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: J. Xxxxxx Xxxxxxx
Title: Chairman and CEO
MARKETING SERVICES GROUP, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------
Name: J. Xxxxxx Xxxxxxx
Title: Chairman and CEO
EMPLOYEE
By: /s/ Xxxxxxx Xxxxxxx
-------------------
Xxxxxxx X. Xxxxxxx
