EMPLOYMENT AGREEMENT
Exhibit 10.3
To: Xxxxxxx
Xxxx:
This
Employment Agreement (this “Agreement”),
dated
as of May 12, 2008 (the “Effective
Date”),
establishes the terms of your continued employment with SouthPeak Interactive
Corporation, a Delaware corporation (the “Company”).
1. Employment
Duties.
You and
the Company agree to your employment as Chief Executive Officer and President
on
the terms contained herein. In such position, you will report directory to
the
Company’s Board of Directors (the “Direct
Report”).
You
agree to perform whatever duties the Direct Report may assign you from time
to
time that are reasonably consistent with your position. During your employment,
you agree to devote your full business time, attention, and energies to
performing those duties (except as the Company may otherwise
agree).
2. Term.
The
initial term of this Agreement shall be for a period of three years, commencing
as of the Effective Date, unless terminated earlier pursuant to Section
7
below.
This Agreement shall automatically renew for successive one-year periods
thereafter (the initial term and each such renewal period are collectively
referred to as the “Term”)
unless, at least three months prior to the expiration of the initial term
or any
such renewal period, either party gives written notice to the other party
specifically electing to terminate this Agreement at the end of the then-current
initial term or renewal period, as applicable (a “Notice
of Non-Renewal”).
In
the event a Notice of Non-Renewal is delivered by either party as provided
above
then, as of the end of the Term, unless you are no longer an employee of
the
Company as of such time, you shall become an at-will employee of the Company
(provided that the provisions of this Agreement that expressly survive
termination shall continue to apply to you).
3. Compensation.
(a) Salary.
For all
services rendered by you under this Agreement, the Company will pay you an
annual salary (the “Salary”)
of not
less than US$150,000, which may be increased, but not decreased, from time
to
time in such amounts as may be determined by the Company’s Board of Directors
(the “Board”)
or the
compensation committee thereof, in accordance with its generally applicable
payroll practices.
(b) Bonus.
In
addition to your Salary, you shall be eligible during the Term to receive
an
annual bonus (the “Bonus”)
based
on the Company’s achievement of its financial performance goals, as determined
by the Board or its compensation committee. Any such Bonus earned hereunder
will
be paid within 90 days after the end of the Company’s fiscal year. You must be
employed at the end of the applicable fiscal year in order to receive any
Bonus
to which you are otherwise entitled pursuant to the terms of this Section
3(b).
(c) Equity.
You
shall be eligible to receive equity awards under any incentive compensation,
stock option or other equity plans of the Company now in effect or which
may be
in effect at any time during the Term, subject to the discretion of the Board
or
any committee thereof designated to administer any such plan.
4. Employee
Benefits.
During
the Term, the Company will provide you with the same benefits as it makes
generally available from time to time to the Company’s senior executives, as
those benefits are amended or terminated from time to time. Your participation
in the Company’s benefit plans will be subject to the terms of the applicable
plan documents and the Company’s generally applied policies, and the Company, in
its sole discretion, may adopt, modify, interpret, or discontinue such plans
or
policies.
5. Vacation.
You
shall accrue at least four weeks of paid vacation per year. All terms and
conditions of your vacation benefit will be governed by the Company’s policies
in effect from time to time.
6. Expenses.
The
Company will reimburse you for reasonable travel and other business-related
expenses you incur for the Company in performing your duties under this
Agreement. You must itemize and substantiate all requests for reimbursement
and
submit such reimbursement requests in accordance with the Company’s policies in
effect from time to time.
7. No
Other Employment.
While
the Company employs you, you agree that you will not, directly or indirectly,
provide services to any person or organization for which you receive
compensation or otherwise engage in activities that would conflict or interfere
significantly with your faithful performance of your duties as an employee
without the Board’s prior written consent. Notwithstanding the foregoing, you
may (a) make and manage personal passive business investments of your choice
and
serve in any director or similar type capacity with up to three civic,
educational or charitable organizations, or any trade association, without
seeking or obtaining the approval of the Board, provided such activities
do not
materially interfere or conflict with the performance of your duties hereunder,
and (b) with the approval of the Board, serve on the boards of directors
of
other corporations.
8. Termination.
Subject
to the provisions of this Section
8
and of
Section
9,
you and
the Company agree that it may terminate your employment, or you may resign,
prior to the expiration of the Term, except that, if you voluntarily resign,
you
must provide the Company with 30 days’ prior written notice (unless the Board or
your Direct Report has previously waived such notice in writing or authorized
a
shorter notice period).
(a) For
Cause.
The
Company may terminate your employment for “Cause”
if
you:
(i) commit
a
material breach of (A) your obligations or agreements under this Agreement
or
(B) any of the covenants regarding non-disclosure of confidential information,
assignment of intellectual property rights, non-competition and/or
non-solicitation (collectively, “Restrictive
Covenants”)
applicable to you under any stock option agreement or other agreement entered
into (whether before, on or after the date hereof) between you and the
Company;
(ii) willfully
neglect or fail to perform your material duties or responsibilities to the
Company, such that the business or reputation of the Company is (or is
threatened to be) materially and adversely affected;
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(iii) commit
an
act of embezzlement, theft, fraud or any other act of dishonesty involving
the
Company or any of its customers; or
(iv) are
convicted of or plead guilty or no contest to a felony or other crime that
involves moral turpitude.
Your
termination for Cause will be effective immediately upon the Company’s mailing
or written transmission of notice of such termination. Before terminating
your
employment for Cause under clauses (i) or (ii) above, the Company will specify
in writing to you the nature of the breach, act, omission, refusal, or failure
that it deems to constitute Cause and give you 30 days after you receive
such
notice to the correct the situation (and thus avoid termination for Cause),
if
such situation is capable of being corrected, unless the Company agrees to
extend the time for correction.
(b) Without
Cause.
Subject
to the applicable provisions in Sections
9
below,
the Company may terminate your employment under this Agreement before the
end of
the Term without Cause.
(c) Disability.
If you
become disabled (as defined below), the Company may terminate your employment.
You are “disabled”
if
you
are unable, despite whatever reasonable accommodations the law requires,
to
render services to the Company for more than 90 consecutive days because
of
physical or mental disability, incapacity, or illness. You are also
“disabled”
if
you
are found to be disabled within the meaning of the Company’s long-term
disability insurance coverage as then in effect (or would be so found if
you
applied for the coverage or benefits).
(d) Death.
If you
die during the Term, the Term will end as of the date of your
death.
9. Consequences
of Termination Prior to the Expiration of the Term.
(a) Payments
on Termination.
If you
resign or the Company terminates your employment with or without Cause or
because of disability or death, the Company will pay you any unpaid portion
of
your Salary pro-rated through the date of actual termination, reimburse any
substantiated but unreimbursed business expenses, pay any accrued and unused
vacation time (to the extent consistent with the Company’s policies), and
provide such other benefits as applicable laws or the terms of the benefits
require. Except to the extent the law requires otherwise or as otherwise
provided in this Agreement or in your option, restricted stock or other equity
instrument agreements, neither you nor your beneficiary or estate will have
any
rights or claims under this Agreement or otherwise to receive severance or
any
other compensation, or to participate in any other plan, arrangement, or
benefit, after such termination or resignation.
(b) Termination
Due to Disability.
If your
employment is terminated prior to the end of the Term due to disability,
as
determined in accordance with Section
8(c),
the
Company shall, in addition to the payments set forth in Section
9(a),
continue to pay your Salary, as then in effect, for a period of 3 months
after
the date of termination of your employment (after which time the Company
shall
have no further obligation to pay Salary hereunder).
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(c) Termination
by the Company Without Cause.
Anything
contained herein to the contrary notwithstanding, if before the end of the
Term
the Company terminates your employment without Cause (other than as a result
of
your death or disability), you shall be entitled to the following, in addition
to the payments set forth in Section
9(a):
(i) the
Company shall continue to pay your Salary, as then in effect, for a period
of 3
months after the date of termination of your employment (the “Separation
Period”)
(after
which time the Company shall have no further obligation to pay Salary
hereunder); and
(ii) the
Company shall provide you and your beneficiaries, throughout the Separation
Period and at the Company’s expense, with continued coverage under the group
medical care, disability and life insurance benefit plans or arrangements
in
which you are participating at the time of termination; provided, however,
that
if such coverage is precluded by the terms of the Company’s benefit or insurance
policies, the Company shall make a cash payment to you in an amount sufficient
to allow you to obtain comparable benefits for such period; and provided,
further, that the Company’s obligation to provide such coverage shall be
terminated if you obtain equivalent substitute coverage from another employer
at
any time during the Separation Period.
(d) Conditions
to Separation of Employment Benefits.
Notwithstanding anything to the contrary contained herein, it shall be a
condition to the Company’s continued obligations under Sections
9(b)
and
(c)
hereof
that you comply with, and you agree to return any payments previously made
to
you under Sections
9(b)
and
(c)
hereof
if you fail to comply with, any Restrictive Covenants applicable to you.
You are
not required to mitigate amounts payable under this Section
9(d)
by
seeking other employment or otherwise, nor must you return to the Company
amounts earned under subsequent employment.
10. Unauthorized
Disclosure; Non-Solicitation; Non-Competition; Proprietary
Rights.
(a) Unauthorized
Disclosure.
You
agree and understand that in your position with the Company, you have been
and
will be exposed to and have and will receive information relating to the
confidential affairs of the Company and its affiliates, including, without
limitation, technical information, intellectual property, business and marketing
plans, strategies, customer information, software, other information concerning
the products, promotions, development, financing, expansion plans, business
policies and practices of the Company and its affiliates and other forms
of
information considered by the Company and its affiliates to be confidential
and
in the nature of trade secrets (including, without limitation, ideas, research
and development, know-how, formulas, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and
business and marketing plans and proposals) (collectively, the “Confidential
Information”).
You
agree that at all times during your employment with the Company and thereafter,
you shall not disclose such Confidential Information, either directly or
indirectly, to any individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof
(each a “Person”)
without the prior written consent of the Company and shall not use or attempt
to
use any such information in any manner other than in connection with your
employment with the Company, unless required by law to disclose such
information, in which case you shall provide the Company with written notice
of
such requirement as far in advance of such anticipated disclosure as possible
so
as to enable the Company to seek an appropriate protective order or confidential
treatment. This confidentiality covenant has no temporal, geographical or
territorial restriction. Upon termination of your employment with the Company,
you shall promptly supply to the Company all property, keys, notes, memoranda,
writings, lists, files, reports, customer lists, correspondence, tapes, disks,
cards, surveys, maps, logs, machines, technical data and any other tangible
product or document which has been produced by, received by or otherwise
submitted to you during or prior to your employment with the Company, and
any
copies thereof in his (or capable of being reduced to his)
possession.
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(b) Non-Competition.
By and
in consideration of the Company’s entering into this Employment Agreement and
the payments to be made and benefits to be provided by the Company hereunder,
and in further consideration of your exposure to the Confidential Information
of
the Company and its affiliates, you agree that you shall not, during your
employment with the Company (whether during the Term or thereafter) and for
a
one-year period thereafter (the “Restriction
Period”),
directly or indirectly, own, manage, operate, join, control, be employed
by, or
participate in the ownership, management, operation or control of, or be
connected in any manner with, including, without limitation, holding any
position as a stockholder, director, officer, consultant, independent
contractor, employee, partner, or investor in, any Restricted Enterprise
(as
defined below); provided,
that in
no event shall ownership of two percent (2%) or less of the outstanding
securities of any class of any issuer whose securities are registered under
the
Securities Exchange Act of 1934, as amended, standing alone, be prohibited
by
this paragraph (b), so long as you do not have, or exercise, any rights to
manage or operate the business of such issuer other than rights as a stockholder
thereof. For purposes of this paragraph, “Restricted
Enterprise”
shall
mean any
Person that
is
engaged, directly or indirectly, in (or
intends or proposes to engage in, or has been organized for the purpose of
engaging in) interactive video game publishing.
During
the one-year period following the termination of your employment with the
Company, upon request of the Company, you shall notify the Company of your
then-current employment status.
(c) Non-Solicitation
of Employees.
During
the Restriction Period, you shall not directly or indirectly contact, induce
or
solicit (or assist any Person to contact, induce or solicit) for employment
any
person who is, or within twelve (12) months prior to the date of such
solicitation was, an employee of the Company or any of its
affiliates.
(d) Non-Interference
with Customers.
During
the Restriction Period, you shall not contact, induce or solicit (or
assist any Person to contact, induce or solicit) any Person which has a business
relationship with the Company or of any of its affiliates to terminate, curtail
or otherwise limit such business relationship.
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(e) Proprietary
Rights.
You
shall disclose promptly to the Company any and all inventions, discoveries,
and
improvements (whether or not patentable or registrable under copyright or
similar statutes), and all patentable or copyrightable works, initiated,
conceived, discovered, reduced to practice, or made by you, either alone
or in
conjunction with others, during your employment with the Company and related
to
the business or activities of the Company and its affiliates (the “Developments”).
Except to the extent any rights in any Developments constitute a work made
for
hire under the U.S. Copyright Act, 17 U.S.C. § 101 et seq. that are owned ab
initio by the Company and/or its applicable affiliate, you hereby assign
all of
your right, title and interest in and to all Developments (including all
intellectual property rights therein) to the Company or its nominee without
further compensation, including all rights or benefits therefor, including
without limitation the right to xxx and recover for past and future
infringement. you acknowledge that any rights in any developments constituting
a
work made for hire under the U.S. Copyright act, 17 U.S.C § 101 et seq. are
owned upon creation by the Company and/or its applicable affiliate as your
employer. Whenever requested to do so by the Company, you shall execute any
and
all applications, assignments or other instruments which the Company shall
deem
necessary to apply for and obtain trademarks, patents or copyrights of the
United States or any foreign country or otherwise protect the interests of
the
Company and its affiliates therein. These obligations shall continue beyond
the
end of your employment with the Company with respect to inventions, discoveries,
improvements or copyrightable works initiated, conceived or made by you while
employed by the Company, and shall be binding upon your employers, assigns,
executors, administrators and other legal representatives. If the Company
is
unable for any reason, after reasonable effort, to obtain your signature
on any
document needed in connection with the actions described in this paragraph,
you
hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents as your agent and attorney in fact to act for and your
behalf to execute, verify and file any such documents and to do all other
lawfully permitted acts to further the purposes of this section with the
same
legal force and effect as if executed by you.
(f) Remedies.
You
agree that any breach of the terms of this Section 10 would result in
irreparable injury and damage to the Company for which the Company would
have no
adequate remedy at law; you therefore also agree that in the event of said
breach or any threat of breach, the Company shall be entitled to an immediate
injunction and restraining order to prevent such breach and/or threatened
breach
and/or continued breach by you and/or any and all Persons acting for and/or
with
you, without having to prove damages, in addition to any other remedies to
which
the Company may be entitled at law or in equity. The terms of this paragraph
shall not prevent the Company from pursuing any other available remedies
for any
breach or threatened breach hereof, including, without limitation, the recovery
of damages from you. You and the Company further agree that the provisions
of
the covenants contained in this Section 10 are reasonable and necessary to
protect the businesses of the Company and its affiliates because of your
access
to Confidential Information and his material participation in the operation
of
such businesses.
11. Expiration.
The
expiration of this Agreement upon the end of the Term following the delivery
of
a Notice of Non-Renewal does not constitute termination without Cause and
does
not entitle you to any benefits under Section
9(c).
12. Cooperation
After Termination of Employment.
Following the termination of your employment with the Company for any reason,
you shall fully cooperate with the Company in all matters relating to the
winding up of your pending work on behalf of the Company including, but not
limited to, any litigation in which you are involved, and the orderly transfer
of any such pending work to other employees of the Company as may be designated
by the Company. The Company shall reimburse you for any out-of-pocket expenses
you incur in performing any work on behalf of the Company following the
termination of your employment.
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13. Restrictive
Covenants.
The
Company and you acknowledge that the Restrictive Covenants applicable to
you
pursuant to any agreement entered into between you and the Company (a) shall
remain in full force and effect, notwithstanding the execution and delivery
of
this Agreement by the parties, and (b) are intended by the parties to survive,
and do survive, the expiration or termination of this Agreement and your
employment with the Company.
14. Assignment.
The
Company shall assign this Agreement and its rights and obligations hereunder
in
whole, but not in part, to any corporation or other entity with or into which
the Company may hereafter merge or consolidate or to which the Company may
transfer all or substantially all of its assets, if in any such case such
corporation or other entity shall by operation of law or expressly in writing
assume all obligations of the Company hereunder as fully as if it had originally
been made a party hereto, but may not otherwise may not assign or otherwise
transfer this Agreement or any or all of its rights, duties, obligations,
or
interests hereunder. You may not assign or otherwise transfer this Agreement
or
any or all of your rights, duties, obligations, or interests
hereunder.
15. Severability.
If the
final determination of an arbitrator or a court of competent jurisdiction
declares, after the expiration of the time within which judicial review (if
permitted) of such determination may be perfected, that any term or provision
of
this Agreement is invalid or unenforceable, the remaining terms and provisions
will be unimpaired, and the invalid or unenforceable term or provision will
be
deemed replaced by a term or provision that is valid and enforceable and
that
comes closest to expressing the intention of the invalid or unenforceable
term
or provision.
16. Amendment;
Waiver.
Neither
you nor the Company may modify, amend or waive the terms of this Agreement
other
than by a written instrument signed by you and by another executive officer
of
the Company duly authorized by the Board. Either party’s waiver of the other
party’s compliance with any provision of this Agreement is not a waiver of any
other provision of this Agreement or of any subsequent breach by such party
of a
provision of this Agreement.
17. Withholding.
All
payments required to be made by the Company to you under this Agreement shall
be
subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Company may reasonably determine should be withheld
for payment to the applicable taxing authorities pursuant to any applicable
law
or regulation.
18. Governing
Law.
This
Agreement shall be governed by the laws of the Commonwealth of Virginia
exclusive of its choice of law provisions.
19. Survival.
Notwithstanding anything to the contrary contained in this Agreement, the
provisions of Sections
7
through
20
of this
Agreement shall survive the termination or expiration, for any reason, of
this
Agreement.
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20. Notices.
Notices
and other communications under this Agreement must be given in writing by
personal delivery, by certified mail, return receipt requested, or by overnight
delivery. You should send or deliver your notices to the Company’s corporate
headquarters, to the attention of the Company’s Secretary. The Company will send
or deliver any notices given to you at your address as reflected in the
Company’s personnel records. You and the Company may change the notice address
by providing notice of such change. You and the Company agree that notice
is
received on the date it is personally delivered, the date it is received
by
certified mail, or the date of guaranteed delivery by overnight service,
at the
applicable address set forth above.
21. Entire
Agreement.
This
Agreement supersedes any prior oral or written agreements, negotiations,
commitments, and writings between you and the Company with respect to the
subject matter hereof. All such other agreements, negotiations, commitments,
and
writings will have no further force or effect; and the parties to any such
other
negotiation, commitment, agreement, or writing will have no further rights
or
obligations thereunder.
[Signature
Page to Follow]
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If
you
accept the terms of this Agreement please sign in the space indicated below.
You
are encouraged to consult with any advisors you choose regarding this
Agreement.
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SOUTHPEAK
INTERACTIVE CORPORATION
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By:
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Name:
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Xxxxxxxx
Xxxx
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Title:
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Chairman,
President and Chief
Executive
Officer
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I
accept
and agree to the terms of employment set forth in this Agreement:
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Signature:
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Name:
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Xxxxxxx
Xxxx
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Date:
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May
12, 2008
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