Exhibit 10(y)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 1st day of August, 1995, by and between TRACER Design, Inc., an Arizona
corporation (the "Company"), and Xxxx Xxxxxx, an individual ("Employee").
WITNESSETH:
WHEREAS, the Company desires to retain the services of Employee, and
Employee desires to be employed by the Company, on the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Company and Employee, intending
to be legally bound, hereby agree as follows:
1. Employment. The Company hereby employs Employee as an Engineering Manager for
the Company, and Employee accepts such employment and agrees to perform services
for the Company, subject always to such resolutions as are established from time
to time by the Board of Directors of the Company, for the period and upon the
other terms and conditions set forth in this Agreement.
2. Term. The term of Employee's employment hereunder shall commence on
the date hereof, and shall continue until this Agreement is terminated by either
party, for any reason whatsoever, this being an "at will" employment agreement,
provided that Sections 5 and 10 of this Agreement shall govern the amount of any
compensation to be paid to Employee upon termination of this Agreement.
3. Position and Duties.
3.1 Service with the Company. During the term of this
Agreement, Employee agrees to perform such executive employment duties as the
Company's Board of Directors (the "Board") or the President or his designees
shall assign to him from time to time.
3.2 No Conflicting Duties. During the term hereof, Employee
shall not serve as an officer, director, employee, consultant or advisor to any
other business without the prior written consent of the Company's Board of
Directors. Employee hereby confirms that he is under no contractual commitments
inconsistent with his obligations set forth in this Agreement, and that during
the term of this Agreement, he will not render or perform
services, or enter into any contract to do so, for any other corporation, firm,
entity or person which are inconsistent with the provisions of this Agreement.
4. Compensation.
4.1 Base Salary. As compensation for all services to be
rendered by Employee under this Agreement, the Company shall pay to Employee a
base annual salary of Ninety Thousand Dollars ($90,000) (the "Base Salary"),
which shall be paid on a regular basis in accordance with the Company's normal
payroll procedures and policies. The amount of the Base Salary shall be reviewed
annually by the Board of Directors.
4.2 Bonuses. Employee shall be eligible to participate in such
cash bonus programs as the Board establishes from time to time in its discretion
for employees of similar position in the Company.
4.3 Stock Options. The Board of Directors of the Company will
grant to Employee an stock option to purchase up to 11,596 shares of Company's
Class A Common Stock at an exercise price of $.01 per share. Such option shall
be granted pursuant to the Company's 1995 Equity Incentive Plan (the "Plan") and
a grant letter in the form attached as Exhibit A. The option shall be a
"nonqualified" option for tax purposes.
4.4 Participation in Benefit Plans. Employee shall be included
to the extent eligible thereunder in any and all plans of the Company providing
general benefits for the Company's employees, including but not limited to
insurance, 401(k) plan, vacation, sick days, and holidays. Employee's
participation in any such plan or program shall be subject to the provisions,
rules and regulations applicable thereto.
4.5 Business Expenses. In accordance with the Company's
policies established from time to time, the Company will pay or reimburse
Employee for all reasonable and necessary out-of-pocket expenses incurred by him
in the performance of his duties under this Agreement, subject to the
presentment of appropriate vouchers.
5. Compensation Upon the Termination of Employee's Employment by the
Company.
5.1 In the event that Employee's employment is terminated
pursuant to Section 10.1, 10.3, or 10.4, then Employee shall be entitled to
receive Employee's then current monthly Base Salary through the date his
employment is terminated, but no other compensation of any kind or amount.
5.2 In the event Employee's employment is terminated pursuant
to Section 10.2, Employee's beneficiary or a beneficiary designated by Employee
in writing to the Company, or in the absence of such beneficiary, Employee's
estate, shall be entitled to receive
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Employee's then current monthly Base Salary through the end of the month in
which his death occurs, but no other compensation of any kind or amount.
5.3 In the event Employee is terminated by the Company
pursuant to Section 10.5, the Company shall pay to Employee, as a severance
allowance, his then current monthly Base Salary for the four week period
following the date of termination, plus the pro rata portion of his monthly Base
Salary for accrued but unused vacation days.
All payments required to be made by the Company to Employee pursuant to
this Section 5 shall be paid in the manner and at the times specified in Section
4.1 hereof.
6. Confidential Information. Except as permitted or directed by the
Company's Board, Employee shall not during the term of his employment under this
Agreement or at any time thereafter divulge, furnish, disclose or make
accessible (other than in the ordinary course of the business of the Company) to
anyone for use in any way any confidential or secret knowledge or information of
the Company which Employee has acquired or become acquainted with or will
acquire or become acquainted with prior to the termination of the period of his
employment by the Company (including employment by the Company prior to the date
of this Agreement), whether developed by himself or by others, concerning any
trade secrets, confidential or secret designs, processes, formulae, software or
computer programs, plans, devices or material (whether or not patented or
patentable, copyrighted or copyrightable) directly or indirectly useful in any
aspect of the business of the Company, any confidential customer or supplier
lists of the Company, any strategic or financial plans, any confidential or
secret development or research work of the Company, or any other confidential,
secret or nonpublic aspects of the business of the Company. Employee
acknowledges that the above-described knowledge or information constitutes a
unique and valuable asset of the Company acquired at great time and expense by
the Company, and that any disclosure or other use of such knowledge or
information other than for the sole benefit of the Company would be wrongful and
would cause irreparable harm to the Company both during and after the term of
this Agreement, Employee will refrain from any acts or omissions that would
reduce the value of the use of such knowledge or information to the Company. The
foregoing obligations of confidentiality, however, shall not apply to any
knowledge or information which is now published or which subsequently becomes
generally publicly known, other than as a direct or indirect result of the
breach of this Agreement by Employee.
7. Patent and Related Matters.
7.1 Disclosure and Assignment. Employee will promptly disclose
in writing to the Company complete information concerning each and every
invention, discovery, improvement, device, design, apparatus, practice, process,
software or computer program, method or product, whether or not patentable or
copyrightable, made, developed, perfected, devised, conceived or first reduced
to practice by Employee, either solely or in collaboration with others, during
Employee's employment under this Agreement, or for the period in which
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a covenant not to compete is in effect hereunder as to Employee, whether or not
during regular working hours, relating either directly or indirectly to the
business, products or practices of the Company (hereinafter referred to as the
"Inventions"). Employee, to the extent that he has the legal right to do so,
hereby acknowledges that any and all of the Inventions are the property of the
Company and hereby assigns and agrees to assign to the property of the Company
any and all of Employee's right, title and interest in and to any and all of the
Inventions without further payment.
7.2 Future Inventions. As to any future Inventions made by
Employee which relate to the business, products or practices of the Company and
which are first conceived or reduced to practice during the term of this
Agreement, or for the period in which a covenant not to compete is in effect
hereunder as to Employee, but which are claimed for any reason to belong to an
entity or person other than the Company, Employee will promptly disclose the
same in writing to the Company and shall not disclose the same to others if the
Company, within twenty (20) days thereafter, shall claim ownership of such
Inventions under the terms of this Agreement.
7.3 Limitations of Sections 7.1 and 7.2. The provisions of
Sections 7.1 and 7.2 shall not apply to any Invention meeting the following
conditions (an "Excluded Invention"):
(a) such Invention was developed entirely on Employee's own
time; and
(b) such Invention was made without the use of any Company
equipment, supplies, facilities or trade secret information; and
(c) such Invention does not relate (i) directly to the
business of the Company, or (ii) to the Company's actual or demonstrably
anticipated research or development; and
(d) such Invention does not result from any work performed by
Employee for the Company; and
(e) Employee informs the Company in writing within one month
after commencing work on any Invention that is to be an Excluded Invention and
again informs the Company in writing that such Invention has been developed
within one (1) month of the date when development of such Invention is complete.
7.4 Assistance of Employee. Upon the request of the Company
and without further compensation therefor, but at no expense to Employee, and
whether during the term of this Agreement or thereafter, Employee will do all
lawful acts, including, but not limited to, the execution of papers and lawful
oaths and the giving of testimony, that in the opinion of the Company, its
successors and assigns, may be necessary or desirable in obtaining, sustaining,
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reissuing, extending and enforcing United States and foreign Letters Patents,
including, but not limited to, design patents, on any and all of the Inventions,
and for perfecting, affirming and recording the Company's complete ownership and
title thereto, and to cooperate otherwise in all proceedings and matters
relating thereto.
7.5 Records. Employee will keep complete, accurate and
authentic accounts, notes, data and records of all of the Inventions in the
manner and form requested by the Company. Such accounts, notes, data and records
shall be the property of the Company, and, upon its request, Employee will
promptly surrender the same to it or, if not previously surrendered upon its
request or otherwise, Employee will surrender the same, and all copies thereof,
to the Company upon the conclusion of his employment.
7.6 Obligations, Restrictions and Limitations. Employee
understands that the Company may enter into agreements or arrangements with
agencies of the United States Government, and that the Company may be subject to
laws and regulations which impose obligations, restrictions and limitations on
it with respect to inventions and patents which may be acquired by it or which
may be conceived or developed by employees, consultants or other agents
rendering services to it. Employee agrees that he shall be bound by all such
obligations, restrictions and limitations applicable to any said invention
conceived or developed by him during the term of this Agreement and shall take
any and all further action which may be required to discharge such obligations
and to comply with such restrictions and limitations.
8. Ventures. If, during the term of this Agreement, Employee is engaged
in or associated with the planning or implementing of any project, program or
venture involving the Company and a third party or parties, all rights in the
project, program or venture shall belong to the Company and shall constitute a
corporate opportunity belonging exclusively to the Company. Except as approved
by the Company's Board of Directors, Employee shall not be entitled to any
interest in such project, program or venture or to any commission, finder's fee
or other compensation in connection therewith other than the salary to be paid
to Employee as provided ln this Agreement.
9. Non-Competition; Solicitation of Customers and Solicitation of
Employees.
9.1 Non-Competition.
(a) Employee agrees that, during the period of his employment
hereunder and for a period of twelve (12) months following the termination of
his employment with the Company for any reason, he shall not, directly or
indirectly, engage in competition with the Company in the business of creating,
distributing or conducting games on the Internet within any state in the United
States, or any country, in which the Company is then conducting its business
(the "Territory") in any manner or capacity (e.g., as a management consultant,
principal, partner, officer, director, stockholder or management employee).
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(b) Ownership by Employee, as a passive investment, of less
than 2 1/2% of the outstanding shares of capital stock of any corporation listed
on a national securities exchange or publicly traded in the over-the-counter
market shall not constitute a breach of this Section 9.
(c) Employee further agrees that, during the term of this
Agreement and for eighteen (18) months after its termination, he will not,
directly or indirectly, assist or encourage any other person in carrying out,
directly or indirectly, any activity that would be prohibited by the above
provisions of this Section 9 if such activity were carried out by Employee,
either directly or indirectly, and in particular Employee agrees that he will
not, directly or indirectly, induce any employee of the Company to carry out,
directly or indirectly, any such activity.
9.2 Agreement Not to Solicit Customers. Employee agrees that
during his employment by the Company hereunder and for the period in which a
covenant not to compete is in effect hereunder as to Employee, he will not,
either directly or indirectly, on his own behalf or in the service or on behalf
of others, solicit, divert or appropriate, or attempt to solicit, divert or
appropriate, to any competing business (i) any person or entity whose account
with the Company was sold or serviced by or under the supervision of Employee
during the year preceding the termination of such employment, or (ii) any person
or entity whose account with the Company has been directly solicited at least
twice by the Company within the twelve (12) month period prior to the date of
termination of employment.
9.3 Agreement Not to Solicit Employees. Employee agrees that
during his employment by the Company hereunder and for the three (3) year period
following the termination of such employment for any reason, he will not, either
directly or indirectly, on his own behalf or in the service or on behalf of
others solicit, divert or hire away, or attempt to solicit, divert or hire away
any person then employed by the Company or then serving as a sales
representative of the Company.
10. Termination.
10.1 Disability. Employee's employment shall terminate upon
Employee's becoming totally or permanently disabled for a period of six (6)
months or more. For purposes of this Agreement, the term "totally or permanently
disabled" or "total or permanent disability" means Employee's inability on
account of sickness or accident, whether or not job-related, to engage in
regularly or to perform adequately his assigned duties under this Agreement. A
reasonable determination by the Board of Directors of the existence of a
disability shall be conclusive for all purposes hereunder. In making such
determination of disability, the Board of Directors may utilize such advice and
consultation as the Board of Directors deems appropriate, but there is no
requirement of procedure or formality associated with the making of a
determination of disability.
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10.2 Death of Employee. Employee's employment shall terminate
immediately upon the death of Employee.
10.3 Termination for Cause. The Company may terminate
Employee's employment at any time for "Cause" (as hereinafter defined)
immediately upon written notice to Employee. Such written notice shall set forth
with reasonable specificity the Company's basis for such termination. As used
herein, the term "Cause" shall mean that Employee shall have in the reasonable
judgment of the Board of Directors (i) committed a criminal act or an act of
fraud, embezzlement, breach of trust or other act of gross misconduct, (ii)
willfully violated written corporate policy or rules of the Company, or (iii)
wilfully or habitually refused to follow the written directions given by the
Board of Directors or Employee's supervisors from time to time or breached any
covenant or obligation under this Agreement or other agreement with the Company.
10.4 Resignation. Employee's employment shall be terminated on
the earlier of the date that is one (1) months following the written submission
of Employee's resignation to the Board or the earlier date such resignation is
accepted by the Board.
10.5 Termination Without Cause. The Company may terminate
Employee's employment without cause upon written notice to Employee. Termination
"without cause" shall mean termination of employment on any basis other than
termination of Employee's employment hereunder pursuant to Sections 10.1, 10.2,
10.3 or 10.4.
10.6 Surrender of Records and Property. Upon termination of
his employment with the Company, Employee shall deliver promptly to the Company
all records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company and which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets
and confidential information of the Company, including, but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in his possession or
under his control.
11. Assignment. This Agreement shall not be assignable, in whole or in
part, by either party without the written consent of the other party, except
that the Company may, without the consent of Employee, assign its rights and
obligations under this Agreement to any corporation, firm or other business
entity (i) with or into which the Company may merge or consolidate, or (ii) to
which the Company may sell or transfer all or substantially all of its assets or
of which 50% or more of the equity investment and of the voting control is
owned, directly or indirectly, by, or is under common ownership with, the
Company. Upon such assignment by the Company, the Company shall obtain the
assignees' written agreement enforceable by Employee to assume and perform, from
and after the date of such assignment, the terms, conditions, and provisions
imposed by this Agreement upon the Company. After
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any such assignment by the Company and such written agreement by the Assignee,
the Company shall be discharged from all further liability hereunder and such
assignee shall thereafter be deemed to be the Company for the purposes of all
provisions of this Agreement including this Section 11.
12. Injunctive Relief. Employee agrees that it would be difficult to
compensate the Company fully for damages for any violation of the provisions of
this Agreement, including without limitation the provisions of Sections 6, 7, 9
and 10.6. Accordingly, Employee specifically agrees that the Company shall be
entitled to temporary and permanent injunctive relief to enforce the provisions
of this Agreement. This provision with respect to injunctive relief shall not,
however, diminish the right of the Company to claim and recover damages in
addition to injunctive relief.
13. Miscellaneous.
13.1 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Arizona.
13.2 Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understanding with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement which are not set forth herein.
13.3 Withholding Taxes. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.
13.4 Amendments. No amendment or modification of this
Agreement shall be deemed effective unless made in writing signed by the parties
hereto.
13.5 No Waiver. No term or condition of this Agreement shall
be deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
13.6 Severability. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted here
from and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect. In furtherance and not
in limitation of the foregoing, should the duration or geographical
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extent of, or business activities covered by any provision of this Agreement be
in excess of that which is valid and enforceable under applicable law, then such
provision shall be construed to cover only that duration, extent or activities
which may validly and enforceably be covered. Employee acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement shall be given the construction which renders its provisions valid and
enforceable to the maximum extent (not exceeding its express terms) possible
under applicable law.
13.7 Survival. Sections 6, 7, 8, 9 and 10.6 shall survive
termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement
as of the day and year set forth above.
TRACER Design, Inc.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Its: President
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"THE COMPANY"
/s/ Xxxxxxx Xxxxxx
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Xxxx Xxxxxx
"Employee"
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EXHIBIT A
[Attach form of Grant Letter with Plan]
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