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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into by and between BigStar
Entertainment, Inc., a Delaware corporation (the "Company"), and Xxxxx
Xxxxxxxxxxx, the undersigned individual ("Executive").
RECITAL
The Company and Executive desire to enter into an Employment
Agreement setting forth the terms and conditions of Executive's employment with
the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the Company and Executive agree as follows:
1. Employment.
(a) Term. The Company hereby employs Executive to serve
as CEO of the Company. The employment with the Company is not for any specified
period of time. As a result, either the Company or the Executive is free to
terminate the employment relationship at any time, subject to the other
provisions of this Agreement.
(b) Duties and Responsibilities. Executive will be
reporting to the Company's Board of Directors. Within the limitations
established by the Bylaws of the Company, the Executive shall have each and all
of the duties and responsibilities of that position and such other duties on
behalf of the Company, as may be assigned from time to time by the Company's
Board.
(c) Location. The location at which Executive shall
perform services for the Company shall be New York, New York.
(d) Board Seat. The Company shall nominate Executive to
continue to be a Board member while he is employed by the Company, and shall use
its commercially reasonable efforts to ensure his election to the Board.
2. Compensation.
(a) Base Salary. Executive shall be paid a base salary
("Base Salary") payable in bi-weekly installments consistent with Company's
payroll practices. The Base Salary shall be as follows:
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Calendar Year Amount
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1999 $160,000
2000 $200,000
2001 and thereafter $250,000
(b) Payment. Payment of all compensation to Executive
hereunder shall be made in accordance with the relevant Company policies in
effect from time to time, including normal payroll practices, and shall be
subject to all applicable employment and withholding taxes.
(c) Bonus. Executive shall also be entitled to a
guaranteed bonus as follows:
Calendar Year Amount
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1999 Quarterly bonus of
$22,500
2000 Quarterly bonus of
$5,000 ($10,000 if
the Company is
publicly traded)
2001 and thereafter Quarterly bonus of
$18,750 ($37,500 if the Company is
publicly traded)
3. Other Employment Benefits.
(a) Business Expenses. Upon submission of itemized
expense statements in the manner specified by the Company, Executive shall be
entitled to reimbursement for reasonable travel and other reasonable business
expenses duly incurred by Executive in the performance of his duties under this
Agreement.
(b) Benefit Plans. Executive shall be entitled to
participate in the Company's medical and dental plans, life and disability
insurance plans and retirement plans pursuant to their terms and conditions.
Executive shall be entitled to participate in any other benefit plan offered by
the Company to its employees during the term of this Agreement (other than stock
option or stock incentive plans, which are governed by Section 3(d) below).
Nothing in this Agreement shall preclude the Company from terminating or
amending any employee benefit plan or program from time to time.
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(c) Vacation. Executive shall be entitled to four (4)
weeks of vacation each year of full employment, exclusive of legal holidays, as
long as the scheduling of Executive's vacation does not interfere with the
Company's normal business operations.
(d) Stock Options. Executive shall be entitled to
options to acquire shares of the Common Stock of the Company pursuant to the
terms of the Company's 1999 Stock Option and Incentive Plan, subject to the
following terms:
(1) The number of shares for which the
options will become exercisable shall be 100,000 shares, subject to
vesting. The shares will vest in 1/48 equal amounts for each month
of continued employment by Executive.
(2) The exercise price for the options shall
be at seven dollars and twenty-five cents ($7.25) per share, as
appropriately adjusted for stock splits, stock dividends, and the
like.
(3) The vested options shall be exercisable
until the earlier of five (5) years after vesting or 90 days after
termination of Executive's employment with the Company. Executive
may elect within 30 days after termination for his stock options to
be non-incentive stock options, and in that event, the vested
options need not be exercised until five (5) years after the date of
vesting.
(4) Issuance of the options shall be in
accordance with all applicable securities laws and the other terms
and conditions of the Company's Stock Option Plan and the Stock
Option Agreement with Executive of even date herewith.
(5) Executive shall be given credit for two
years worth of vesting of his unvested options (and any stock
subject to vesting, if any) in the following events: (a) the
termination of Executive without cause (defined in Section 5(a)
below) or (b) the acquisition of the Company by merger, sale of all
or substantially all of the Company's assets, or other
reorganization resulting in a change of 50% or more in the ownership
of the Company's stock.
(e) No Other Benefits. Subject to Section 5(b),
Executive understands and acknowledges that the compensation specified in
Sections 2 and 3 of this Agreement shall be in lieu of any and all other
compensation, benefits and plans; provided, that each year the Board shall
review whether it is appropriate to award Executive additional stock options.
(f) Life Insurance. The Company shall pay for the
premiums of a universal life insurance policy with the benefits payable to the
Executive or his heirs, in the principal amount of $1 million, subject to the
Company being able to obtain such coverage on reasonable terms.
(g) Key Man Life Insurance. The Company shall obtain Key
Man Life Insurance on the life of the Executive, in the amount of $2 million,
with the proceeds payable to
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the Company. Executive shall cooperate in connection therewith as may be
reasonably requested by the Company (including but not limited to taking
physical exams).
4. Executive's Business Activities. Executive shall devote the
substantial portion of his entire business time, attention and energy
exclusively to the business and affairs of the Company, Executive may serve as a
member of the Board of Directors of other organizations that do not compete with
the Company, and may participate in other professional, civic, governmental
organizations and activities that do not materially affect his ability to carry
out his duties hereunder.
5. Termination of Employment.
(a) For Cause. Notwithstanding anything herein to the
contrary, the Company may terminate Executive's employment hereunder for cause
for any one of the following reasons: (1) conviction of a felony, or a
misdemeanor where imprisonment is imposed, (2) Executive's gross incompetence in
performing his duties hereunder, or (3) material breach of this Agreement which
breach is not cured within ten (10) days following written notice of such
breach. Upon termination of Executive's employment with the Company for cause,
the Company shall be under no further obligation to Executive for salary or
bonus, except to pay all accrued but unpaid base salary, accrued bonus (if any)
and accrued vacation to the date of termination thereof.
(b) Without Cause. The Company may terminate Executive's
employment hereunder at any time without cause, provided, however, that
Executive shall be entitled to severance pay in the amount of two (2) years of
Base Salary in addition to accrued but unpaid Base Salary and accrued vacation,
less deductions required by law, but if, and only if, Executive executes a valid
and comprehensive release of any and all claims that the Executive may have
against the Company in a form provided by the Company and Executive executes
such form.
(c) Termination for Good Reason. If Executive terminates
his employment with the Company for Good Reason (as hereinafter defined), he
shall be entitled to the vesting benefits set forth in Section 3(d)(5) and the
severance benefits set forth in Section 5(b). For purposes of this Agreement,
"Good Reason" shall mean any of the following: (i) relocation of the Company's
executive offices more than forty miles from the current location, without
Executive's concurrence; (ii) any material breach by the Company of this
Agreement; (iii) a material change in the principal line of business of the
Company, without Executive's concurrence, or (iv) any significant change in the
Executive's duties and responsibilities.
(d) Cooperation. After notice of termination, Executive
shall cooperate with the Company, as reasonably requested by the Company, to
effect a transition of Executive's responsibilities and to ensure that the
Company is aware of all matters being handled by Executive.
6. Disability of Executive. The Company may terminate this Agreement
without liability if Executive shall be permanently prevented from properly
performing his essential duties hereunder with reasonable accommodation by
reason of illness or other physical
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or mental incapacity for a period of more than 120 consecutive days. Upon such
termination, Executive shall be entitled to all accrued but unpaid Base Salary,
accrued bonus (if any) and accrued vacation.
7. Death of Executive. In the event of the death of Executive, the
Company's obligations hereunder shall automatically cease and terminate;
provided, however, that within 15 days the Company shall pay to Executive's
heirs or personal representatives Executive's Base Salary and accrued vacation
accrued to the date of death.
8. Confidential Information and Invention Assignments. Executive has
executed a Confidential Information and Invention Assignment Agreement (the
"Confidential Information and Invention Assignment Agreement"). The obligations
under the Confidential Information and Invention Assignment Agreement shall
survive termination of this Agreement for any reason.
9. Exclusive Employment. During employment with the Company, (a)
Executive will not do anything to compete with the Company's present or
contemplated business, nor will he plan or organize any competitive business
activity and (b) Executive will not enter into any agreement which conflicts
with his duties or obligations to the Company. Executive will not during his
employment or within one (1) year after it ends, without the Company's express
written consent, solicit or encourage any employee, agent, independent
contractor, supplier, consultant, investor, or alliance partner to terminate or
alter a relationship with the Company.
10. Assignment and Transfer. Executive's rights and obligations
under this Agreement shall not be transferable by assignment or otherwise, and
any purported assignment, transfer or delegation thereof shall be void.
11. No Inconsistent Obligations. Executive is aware of no
obligations, legal or otherwise, inconsistent with the terms of this Agreement
or with his undertaking employment with the Company. Executive will not disclose
to the Company, or use, or induce the Company to use, any proprietary
information or trade secrets of others. Executive represents and warrants that
he or she has returned all property and confidential information belonging to
all prior employers.
12. Miscellaneous.
(a) Attorneys' Fees. Should either party hereto, or any
heir, personal representative, successor or assign of either party hereto,
resort to legal proceedings in connection with this Agreement or Executive's
employment with the Company, the party or parties prevailing in such legal
proceedings shall be entitled, in addition to such other relief as may be
granted, to recover its or their reasonable attorneys' fees and costs in such
legal proceedings from the non-prevailing party or parties; provided, however,
that nothing herein is intended to affect the provisions of Section 12(l).
(b) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to conflict of law principles.
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(c) Entire Agreement. Except with respect to the Stock
Option Plan and Stock Option Agreement referenced in Section 3(d), this
Agreement, together with the Confidential Information and Invention Assignment
Agreement, contains the entire agreement and understanding between the parties
hereto and supersedes any prior or contemporaneous written or oral agreements,
representations and warranties between them respecting the subject matter
hereof.
(d) Amendment. This Agreement may be amended only by a
writing signed by Executive and by a duly authorized representative of the
Company.
(e) Severability. If any term, provision, covenant or
condition of this Agreement, or the application thereof to any person, place or
circumstance, shall be held to be invalid, unenforceable or void, the remainder
of this Agreement and such term, provision, covenant or condition as applied to
other persons, places and circumstances shall remain in full force and effect.
(f) Construction. The headings and captions of this
Agreement are provided for convenience only and are intended to have no effect
in construing or interpreting this Agreement. The language in all parts of this
Agreement shall be in all cases construed according to its fair meaning and not
strictly for or against the Company or Executive.
(g) Rights Cumulative. The rights and remedies provided
by this Agreement are cumulative, and the exercise of any right or remedy by
either party hereto (or by its successor), whether pursuant to this Agreement,
to any other agreement, or to law, shall not preclude or waive its right to
exercise any or all other rights and remedies.
(h) Nonwaiver. No failure or neglect of either party
hereto in any instance to exercise any right, power or privilege hereunder or
under law shall constitute a waiver of any other right, power or privilege or of
the same right, power or privilege in any other instance. All waivers by either
party hereto must be contained in a written instrument signed by the party to be
charged and, in the case of the Company, by an officer of the Company (other
than Executive) or other person duly authorized by the Company.
(i) Notices. Any notice, request, consent or approval
required or permitted to be given under this Agreement or pursuant to law shall
be sufficient if in writing, and if and when sent by certified or registered
mail, with postage prepaid, to Executive's residence (as noted in the Company's
records), or to the Company's principal office, as the case may be.
(j) Assistance in Litigation. Executive shall, during
and after termination of employment, upon reasonable notice, furnish such
information and proper assistance to the Company as may reasonably be required
by the Company in connection with any litigation in which it or any of its
subsidiaries or affiliates is, or may become a party; provided, however, that
such assistance following termination shall be furnished at mutually agreeable
times and for mutually agreeable compensation.
(k) Disputes. Any controversy, claim or dispute arising
out of or relating to this Agreement or the employment relationship, either
during the existence of the
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employment relationship or afterwards, between the parties hereto, shall be
litigated solely in state or federal court in New York, New York. Each party (1)
submits to the jurisdiction of such court, (2) waives the defense of an
inconvenient forum, (3) agrees that valid consent to service may be made by
mailing or delivery of such service to the New York Secretary of State (the
"Agent") or to the party at the party's last known address, if personal service
delivery can not be easily effected, and (4) authorizes and directs the Agent to
accept such service in the event that personal service delivery can not easily
be effected. EACH PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING
HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER MATTER INVOLVING THE PARTIES HERETO.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date set forth below.
BIGSTAR ENTERTAINMENT, INC. EXECUTIVE:
By: /s/ Xxxxx Xxxxxxxx /s/ Xxxxx Xxxxxxxxxxx
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Name: Xxxxx Xxxxxxxx Xxxxx Xxxxxxxxxxx
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Title: Executive Vice President
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Date: March 15, 1999
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