EXHIBIT 10.2
XXXXXXX EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") dated as of January 1, 2004 is by
and between Xxxxxx.xxx, Inc., a Delaware corporation ("the Company"), and Xxxx
X. Xxxxxxx ("Executive"), in connection with the Company's engagement of
Executive for personal services.
1. EMPLOYMENT; DUTIES AND ACCEPTANCE:
Employment by Company.
The Company hereby engages Executive, and Executive hereby agrees to serve
as Senior Vice President Operations of the Company on the terms and conditions
of this Agreement. Throughout the Term of this Agreement, Executive shall,
subject to the provisions contained herein, devote substantially all of his work
time to the employment described hereunder. Executive shall report solely to the
President /Chief Executive Officer
Location of Employment.
Executive shall render his services at the Company's offices at 0000 Xx
Xxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx; provided, however, that Executive
agrees to render his services at such other locations from time-to-time as the
proper performance of Executives duties may reasonably require.
Duties.
Executive shall have the following duties:
(a) Define the vision, direction, and goals of the Operations
Division consistent with the Company's AOP and Strategic Plan.
(b) Direct all operations of the Company.
(c) Support the Chief Executive Officer in the management of
investor relations activities such as working with Wall Street analysts,
participating in quarterly conference calls, investor conferences and other
shareholder related events.
(d) Guide and direct the Operations Division in the development,
production, promotion and sale of the Company's products and services.
(e) Establish operating policies consistent with the Company's
broad policies and objectives, and ensure their timely execution.
(f) Ensure that the operating responsibilities, authorities and
accountability of all direct subordinates are defined and understood, and that
they are aligned with the Company's AOP and Strategic Plan.
(g) Participate in mergers and acquisition projects and due
diligence, and drive the integration of newly acquired operations.
(h) Perform such other executive duties as the Chief Executive
Officer may reasonably require.
2. TERM:
The term of Executive's employment hereunder shall commence as of the date
hereof (the "Effective Time") and, unless sooner terminated pursuant to Section
7 of this Agreement, end at the close of business two (2) years following the
date either party notifies the other in writing, which notice of termination has
been delivered in accordance with this Agreement that the Company or Executive
elects to end the term of Executive's employment on a date no earlier than the
last day of such two (2) year period (the Term").
3. COMPENSATION AND BENEFITS:
(a) Salary.
During the first year of the Term, Executive shall receive a salary (the
"Annual Salary") at the rate of $300,000 per annum. During the second year of
the Term, Executive shall receive an Annual Salary of $325,000. All Salary shall
be less such deductions as shall be required to be withheld by applicable law
and regulations and shall be pro-rated for any period that does not constitute a
full twelve (12) month period.
(b) Bonuses.
Executive shall be entitled to bonuses as follows:
(i) For each year of the Term, a maximum bonus at the
Board's discretion, but Executive shall receive not less than 40% of the Annual
Salary based on mutually agreed upon business objectives, provided, that in any
event Executive shall receive at least 20% of the Annual Salary for each year if
the Company is profitable for such year.
(ii) The business objectives for years one and two of the
Term shall be determined before the start of each year of the Term. For purposes
of determining profitability, the applicable period shall be June 1 to May 31
and shall be based on EBITDA, excluding any extraordinary items, as reflected in
the Company's securities filings.
(c) Stock Options.
In addition to 300,000 stock options previously granted to Executive (the
"Old Options"), Executive is hereby granted 300,000 stock options pursuant to
the Company's 1998 Stock Option Plan. The 300,000 new stock options will have an
exercise price equal to the closing price of the Company's Common Stock on the
Effective Date. The stock options are five (5) year options and shall vest on
the Effective Date. Additionally, all unvested Old Options shall vest as of the
Effective Date.
(d) Severance.
Nothing in this Agreement shall be construed to limit in any way
Executives Supplement to Employment Agreement dated as of August 27, 2003 or the
Amendment thereto dated February 19, 2004, each of which is hereby incorporated
herein by reference. To the contrary, it is
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the parties' intent that said Supplement and Amendment shall remain in full
force and effect with regard to the terms contained therein upon the execution
of this Agreement.
4. PARTICIPATION IN EXECUTIVE BENEFIT PLANS:
(a) Fringe Benefits. Executive shall be permitted during the Term
to participate in any group life, medical, hospitalization, dental, health and
accident and disability plans, supplemental health care plans and plans
providing for life insurance coverage, and any other plans and benefits,
generally maintained by Company for Executives of the stature and rank of
Executive during the Term hereof, each in accordance with the terms and
conditions of such plans (collectively referred to herein as "Fringe Benefits");
provided, however, that Company shall not be required to establish or maintain
any such Fringe Benefits.
(b) Vacation. Executive shall accrue, in addition to personal days
and days on which Company is closed, paid vacation days at the rate of 6.16
hours per pay period or up to four weeks per year.
(c) Expenses. The Company will reimburse Executive for actual and
necessary travel and accommodation costs, entertainment and other business
expenses incurred as a necessary part of discharging the Executive's duties
hereunder, subject to receipt of reasonable and appropriate documentation by the
Company and in accordance with Company policy. The Company will also reimburse
Executive $750 per month for all business related operating expenses of
Executive's automobile. Additionally, Executive will receive or be reimbursed
for a cellular phone.
(d) Personal Financial Counseling. The Company shall reimburse
Executive for personal financial counseling services up to $10,000.
Notwithstanding the foregoing, if any payment pursuant to this subparagraph
would be subject to income tax, then Executive shall be entitled to receive an
additional payment in an amount such that after payment of any income taxes,
Executive is fully reimbursed for payments due hereunder.
5. CERTAIN COVENANTS OF EXECUTIVE:
Without in any way limiting or waiving any right or remedy accorded to
Company or any limitation placed upon Executive by law, Executive agrees as
follows:
(a) Confidential Information: Executive agrees that, neither
during the Term nor at anytime thereafter shall Executive (i) disclose to any
person, firm or corporation not employed by the Company or any affiliate of
either (the "Protected Company") or not engaged to render services to any
Protected Company or (ii) use for the benefit of himself, or others, any
confidential information of any Protected Company obtained by the Executive
prior to the execution of this Agreement, during the Term or any time
thereafter, including, without limitation, "know-how," trade secrets, details of
suppliers, pricing policies, financial data, operational methods, marketing and
sales information or strategies, product development techniques or plans or any
strategies relating thereto, technical processes, designs and design projects,
and other proprietary information of any Protected Company; provided, however,
that this provision shall not preclude the Executive from (x) upon advice of
counsel and notice to the Company, making any disclosure required by any
applicable law or (y) using or disclosing information known generally to the
public (other than information known generally to the public as a result of any
violation of this Section 5(a)).
(b) Property of Company. Any interest in trademarks,
service-marks, copyrights, copyright applications, patents, patent applications,
slogans, developments and processes
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which the Executive, during the Term, may develop relating to the business of
the Company in which the Company may then be engaged and any memoranda, notes,
lists, records and other documents (and all copies thereof) made or compiled by
the Executive or made available to the Executive concerning the business of any
Protected Company shall belong and remain in the possession of any Protected
Company, and shall be delivered to the Company promptly upon the termination of
the Executive's employment with Company or at any other time on request.
(c) Non-Interference. Executive will not, during the Term hereof
and for a period of one (1) year after the Term induce any person who is an
employee of the Company to terminate his relationship with the Company.
(d) Non-Competition. Without the prior written consent of the
Company, Employee shall not be employed by the Internet gaming divisions of
Magna, Inc., TVG, Inc. or by any other Internet gaming division of a direct
competitor of the Company during, or for one year after the termination of, his
employment with the Company. The parties agree that, as of the date this
Agreement is being executed, the only existing competitors of the Company are
the Internet gaming divisions of Magna, Inc. and TVG, Inc.
6. OTHER PROVISIONS:
(a) Rights and Remedies Upon Breach. If the Executive breaches, or
threatens to commit a breach of, any of the provisions of Section 5 hereof (the
"Restrictive Covenants"), the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company at law or in equity.
(b) Accounting. The right and remedy to require the Executive to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits (collectively "Benefits") derived or
received by the Executive as a result of any transactions constituting a breach
of any of the Restrictive Covenants, and the Executive shall account for and pay
over such Benefits to the Company.
(c) Severability of Covenants. If any court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and shall
be given full effect, without regard to the invalid portions.
(d) Blue-Penciling. If any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration or
geographic scope of such provision, such court shall have the power to reduce
the duration or scope of such provision and, in its reduced form, such provision
shall then be enforceable.
(e) Enforceability in Jurisdictions. The parties intend to and
hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts
of any jurisdiction within the geographical scope of such Restrictive Covenants.
If the courts of any one or more of such jurisdictions hold the Restrictive
Covenants unenforceable by reason of the breadth of such scope or otherwise, it
is the intention of the parties that such determination not bar or in any way
affect Company's right to the relief provided in this Section 6 in the courts of
any other jurisdiction within the geographical scope of such Restrictive
Covenants, as to breaches of such Restrictive Covenants
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in such other respective jurisdictions, such Restrictive Covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
(f) Injunctive Relief. Executive agrees and understands that the
remedy at law for any breach by Executive of the provisions of Section 5 hereof
may be inadequate and that damages resulting from such breach may not be
susceptible to being measured in monetary terms. Accordingly, it is acknowledged
that upon Executive's breach of any provision of Section 5 hereof, the Company
shall be entitled to seek to obtain from any court of competent jurisdiction
injunctive relief to prevent the continuation of such breach. Nothing contained
herein shall be deemed to limit the Company's remedies at law or in equity for
any breach of the provisions of Section 5 hereof which may be available to the
Company.
7. TERMINATION:
(a) Termination for Cause. The Company shall have the option to
terminate Executive upon the occurrence of any of the following:
(i) the Executive's theft or embezzlement of the Company's
money, equipment, or securities;
(ii) the Executive's conviction of a felony (other than a
traffic violation) which results in material injury to the Company;
(iii) the Executive's willful act of disloyalty that is
intended to and results in material injury to the Company;
(iv) the failure of the Executive to be licensable in his
capacity as Senior Vice President of Operations of the Company;
(v) the Executive's chronic alcoholism or addiction to
non-medically prescribed drugs; or
(vi) breach by the Executive of his confidentiality, no
solicitation, and non-competition covenants contained in his employment
agreement with the Company.
Any act or omission of the Executive based upon authority given pursuant
to the Articles of Incorporation of the Company or Bylaws of the Company or a
resolution duly adopted by the Company's Board of Directors or based upon the
advice of counsel for the Company shall be conclusively deemed to be done by
Executive in good faith and in the best interests of the Company.
If Executive's services are terminated as set forth in this subsection,
Executive's services shall cease as of such effective date of termination and
all compensation shall cease as of such effective date.
(b) Termination With Good Reason or Without Cause. If during the
Term the Executive resigns for Good Reason or his employment is terminated
without Cause:
(i) The Company will pay Executive the Executive's Annual
Salary, any earned and unpaid bonus, accrued and unused vacation, if any, and
Fringe Benefits to the extent reasonably available due Executive for balance of
the remaining Term of the Agreement.
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As used herein, Good Reason shall mean only:
(i) withdrawal by the Company from Executive of any
substantial part of his duties then being performed, or
responsibility or authority then being carried, by Executive, or a
material change in the Executive's reporting lines;
(ii) assignment by the Company to Executive of substantial
additional duties or responsibilities which are inconsistent with
the duties or responsibilities then being carried by Executive; or
(iii) reduction in the level of Executive's responsibility,
authority, autonomy, title, compensation, executive perquisites, or
other employee benefits;
(iv) the Company's material breach of Executive's employment
agreement (or any other agreement between Executive and the
Company); and the failure of the Company to cure such breach within
thirty (30) days of notice thereof;
(v) material fraud on the part of the Company; or
(vi) discontinuance of the active operation of business of the
Company, or insolvency of the Company, or the filing by or against
the Company of a petition in bankruptcy or for reorganization or
restructuring pursuant to applicable insolvency or bankruptcy law.
8. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES:
(a) Right to Enter Into Agreement. Executive has the unfettered
right to enter into this entire Agreement on all of the terms, covenants and
conditions hereof; and Executive has not done or permitted to be done anything,
which may curtail or impair any of the rights granted to Company herein.
(b) Breach Under Other Agreement or Arrangement. Neither the
execution and delivery of this Agreement nor the performance by Executive of any
of his obligations hereunder will constitute a violation or breach of, or a
default under, any agreement, arrangement or understanding, or any other
restriction of any kind, to which Executive is a party or by which Executive is
bound.
(c) Services Rendered Deemed Special, Etc. Executive acknowledges
and agrees that the services to be rendered by him hereunder are of a special,
unique, extraordinary and intellectual character which gives them peculiar
value, the loss of which cannot be adequately compensated for in an action at
law and that a breach of any term, condition or covenant hereof will cause
irreparable harm and injury to the Company and in addition to any other
available remedy the Company will be entitled to seek injunctive relief.
9. USE OF NAME:
The Company shall have the right during the Term hereof to use Executive's
name, biography and approved likenesses in connection with Company's business,
including advertising their products and services; and the Company may grant
such rights to others, but not for use as a direct endorsement.
10. ARBITRATION:
Any dispute whatsoever arising out of or referable to this Agreement,
including, without limitation, any dispute as to the rights and entitlements and
performance of the parties under this Agreement or concerning the termination of
Executive's employment or of this Agreement or its
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construction or its validity or enforcement, or as to the arbitrator's
jurisdiction, or as to the ability to arbitrate any such dispute, shall be
submitted to final and binding arbitration in Los Angeles, California by and
pursuant to the Labor Arbitration Rules of the American Arbitration Association
with discovery proceedings pursuant to Section 1283.05 of the California Code of
Civil Procedure. The arbitrator shall be entitled to award any relief, which
might be available at law or in equity, including that of a provisional,
permanent or injunctive nature. The prevailing party in such arbitration as
determined by the arbitrator, or in any proceedings in respect thereof as
determined by the person presiding, shall be entitled to receive its or his
reasonable attorneys' fees incurred in connection therewith.
11. NOTICES:
(a) Delivery. Any notice, consent or other communication under
this Agreement shall be in writing and shall be delivered personally, telexed,
sent by facsimile transmission or overnight courier (regularly providing proof
of delivery) or sent by registered, certified, or express mail and shall be
deemed given when so delivered personally, telexed, sent by facsimile
transmission or overnight courier, or if mailed two (2) days after the date of
deposit in the United States mail as follows: to the parties at the following
addresses (or at such other address as a party may specify by notice in
accordance with the provisions hereof to the other):
If to Executive, to his address at:
0000 Xxxxxxxxx Xxxx
Xx Xxxxxx, XX 00000
If to Company, to its address at:
Xxxxxx.xxx, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: President / Chief Executive Officer
Fax (000) 000-0000
(b) Change of Address. Either party may change its address for
notice hereunder by notice to the other party in accordance with this Section
11.
12. COMPLETE AGREEMENT; MODIFICATION AND TERMINATION:
This Agreement contains a complete statement of all the arrangements
between the parties with respect to the matters covered hereby and, supersedes
all existing agreements between the parties concerning the subject matter
hereof, including that certain Employment Agreement dated as of June 3, 2002 as
amended by Amendment dated as of March 31, 2003. Notwithstanding the foregoing,
that certain Supplement to Employment Agreement dated as of August 27, 2003 as
amended on February 19, 2004 shall remain in full force and effect in accordance
with its terms. This Agreement may be amended, modified, superseded or canceled,
and the terms and conditions hereof may be waiver, by the party waiving
compliance. No delay on the part of any party in exercising any shall operate as
a waiver thereof, nor shall any waiver on the part of any party of any such
right or remedy, nor any single or partial exercise of any such right or remedy
preclude any other or further exercise thereof or the exercise of any other
right or remedy.
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13. HEADINGS:
The headings in this Agreement are solely for the convenience of reference
and shall not affect its interpretation.
14. INDEMNIFICATION:
The Company will indemnify, defend, and hold Executive harmless from and
against any and all demands, actions, claims, suits, liabilities, losses,
damages, fees (including reasonable attorneys' fees) and expenses relating to
any acts or omissions to act in the course or scope of his duties he performs on
behalf of the Company while employed by it and/or while serving as an Executive
and/or director of the Company, and to provide indemnification and Executives
and directors liability insurance to him at least to the same extent that it
provides such indemnification and insurance to the Executives and directors of
the Company. Executive will have the option to select his own counsel or be
represented by counsel for the Company. The provisions herein shall survive the
termination of Executive's employment with the Company for any reason.
15. ATTORNEYS' FEES:
If either the Company or the Executive brings an action to enforce the
Executive's employment agreement, the prevailing party will be entitled to
recover its/his reasonable attorneys' fees.
WHEREFORE, the parties hereto have executed this Agreement as of the day
and year first above written.
/s/ Xxxx X. Xxxxxxx
---------------------------
Xxxx X. Xxxxxxx
Agreed to and Accepted:
Xxxxxx.xxx, Inc., a
Delaware corporation
By:/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Its: President & Chief Executive Officer
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