EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made as of June 1, 2000, is by and between MindArrow
Systems, Inc., a Delaware corporation (the "Employer"), and Xxxxxx X.
Xxxxxxxx (the "Employee").
In consideration of the mutual covenants contained in this Agreement, the
Employer and Employee hereby agree as follows:
CANCELLATION OF PRIOR EMPLOYMENT AGREEMENT
The employment agreement dated September 28, 1999 between Employer and
Employee is hereby deemed null and void in its entirety and is replaced in full
by this subject agreement.
1. TERM
1.1 Term. The term of this Agreement shall be three (3) years having
commenced
on October 1, 1999. Thereafter, the Agreement shall automatically renew each
year for a term of one (1) year, unless either party provides written notice to
the other at least ninety (90) days prior to the expiration of the term.
Provided that in the event of a "change in control" as defined in the written
"Change In Control Agreement," the Change In Control Agreement shall supercede
this Agreement.
1.2 Office and Support. Employee shall be provided an office and support
staff, including but not limited to secretarial services, at Employer's
principal place of business.
1.3 Place of Performance. In connection with Employee's employment by
Employer, Employee shall be based at Employer's office in Aliso Viejo,
California, except for required travel on Employer's business to an extent
substantially consistent with Employee's customary business travel practices.
2. DUTIES OF THE EMPLOYEE
2.1 Title. Employee shall have the title of Chief Executive Officer and
Co-Chairman of the Board of Directors of MindArrow Systems, Inc.
2.2 Duties. Employee shall have the responsibilities and authority as are
customarily performed by such officer and as may from time to time be assigned
to Employee by the Board of Directors of Employer. Employee will continue to
have for the term of this Agreement all authority and responsibility that the
Employee had at the time this Agreement commenced. Employee will report to the
Board of Directors.
2.3 Extent of Duties. Employee shall devote substantially his full time,
attention and energies to the business of the Employer.
2.4 Non-Disclosure of Confidential Information. Employee has previously
signed the Employer's written Confidentiality and Non-Solicitation Agreement, a
copy of which is attached for reference as Exhibit 1. Employee shall at all
times abide by the terms of such agreement.
2.5 Inventions. Employee has previously signed the Employer's written
Employee Inventions Agreement, a copy of which is attached for reference as
Exhibit 2. Employee shall at all times abide by the terms of such Agreement.
3. COMPENSATION AND BENEFITS
3.1 Base Compensation. As compensation for services rendered under this
Agreement, the Employee shall receive a base salary during the first year of
this Agreement at the annual rate of $284,000. On or before October 1, 2000, and
each year thereafter, the Board of Directors shall review and adjust Employee's
base salary in consideration of the Company's performance and in consideration
of average base compensation of senior executives of similarly situated
companies. Employee's salary shall be paid monthly in accordance
with Employer's normal practices.
3.2 Bonus. As additional performance-based compensation, Employee shall
participate in "Tier 1" of the Company-wide Profit-sharing Plan, as follows:
The Bonus Pool amounts to the 20% of the Company's quarterly Operating Income.
The Pool will be distributed to employees actively employed by the Company on
the last day of the month following the close of a fiscal quarter, as follows:
Xxxxx 0 = 40% of the Pool
Xxxxx 0 = 25% of the Pool
Xxxxx 0 = 15% of the Pool
Xxxxx 0 = 12% of the Pool
Xxxxx 0 = 8% of the Pool
Employee shall receive 46% of Level 1 amount.
Each of Levels 2 through 5 shall be allocated ratably among members of each
Level, except that the individual share of any Level shall not be higher than in
higher levels. In the event that a lower-level employees' share is calculated as
higher than a next higher Level, then each of the two levels shall be taken
together as one. Incentive Bonuses shall be paid quarterly and shall be
reconciled annually in the event of any returns or credits.
3.3 Benefits. Employee shall be entitled to the following benefits:
3.3.1 Health Insurance Benefits. Employer will provide insurance for
medical, dental, and vision coverage for Employee and Employee's dependents.
Employer shall pay the premiums for such coverage.
3.3.2 Disability Insurance. Employer shall provide Employee with
disability insurance to provide coverage at the rate of sixty percent (60%) of
Employee's base compensation in the event that Employee becomes permanently
disabled.
3.3.3 Life Insurance. Employer shall procure for Employee a term life
insurance policy with a death benefit of $1,000,000.
3.3.4 Vacation and Holidays. Employee is entitled to 4 weeks paid
vacation per year and all legal holidays.
3.3.5 Car Allowance. Employee will receive a base car allowance of
$750 per month. In addition, Employer shall pay for gas, maintenance, repair,
registration, and insurance. In addition, the Employee shall be entitled to
receive an amount of $5,000 every two years as a down payment on a new vehicle.
3.3.6 Additional Benefits. In addition to the benefits set forth
above, Employee shall be entitled to participate in all other employee benefit
plans and employee benefits, including any retirement, pension, or profit-
sharing plans developed which may hereafter be adopted by Employer such that
Employee shall have the same rights and privileges to participate in such plans
and benefits as any other executive employee during the term of this Agreement.
Participation in any benefit plans shall be in addition to the compensation
provided for in Section 3.1.
3.4 Business Expenses. Employer shall provide Employee with a corporate
credit card for Employee's use. Employee shall not use the credit card other
than for business expenses. All corporate travel, hotels, meals and
entertainment and other business expenses including cellular telephone will be
paid for by the Employer. Itemization and business expense forms with original
receipts will be turned in monthly for reimbursement. Employer will cover any
professional seminars, conferences attended, as well as professional
organizational memberships and dues.
4. TERMINATION OF EMPLOYMENT
4.1 Termination by Employer. The Employee's employment hereunder may be
terminated by Employer under the following circumstances:
4.1.1 Death of Employee. This Agreement shall terminate automatically
without notice upon the death of Employee.
4.1.2 Disability. This Agreement shall not terminate upon the
temporary disability of the Employee, but the Employer may terminate this
Agreement upon the permanent disability of the Employee. Employee shall be
permanently disabled if: (1) he is disabled as defined in a disability insurance
policy purchased by or for the benefit if the Employee; or (2) he is unable
because of a medical, physical, or mental condition to perform substantially all
of his duties for 9 consecutive months for Employer that he performed prior to
such incapacitation.
4.1.3 With Cause. Employer may terminate Employee's employment at any
time for "cause." For purposes of this Agreement, the Employer shall have
"Cause" to terminate the Employee's employment hereunder upon the following: (1)
the willful and continued failure by the Employee substantially to perform his
duties hereunder (other than failure resulting from the Employee's incapacity
due to physical or mental illness); or (2) the willful engaging by the Employee
in misconduct which is materially injurious to the Employer, monetarily or
otherwise. For purposes of this paragraph, no act, or failure to act, on the
part of the Employee shall be considered "Willful" unless done, or omitted to be
done, not in good faith and without reasonable belief by him that his action or
omission was in the best interest of the Employer. Notwithstanding the
foregoing, the Employee shall not be deemed to have been terminated for Cause
without (i) reasonable notice to the Employee setting forth reasons for the
Employer's intention to terminate of Cause and granting Employee 90 days to cure
the remedy (if possible) the reasons for termination; (ii) an opportunity for
the Employee, together with his counsel, to be heard before the Board, and (iii)
delivery to the Employee of a Notice of Termination as defined in section 4.2
hereof from the board finding that in the good faith opinion of the Board the
Employee was guilty of misconduct set forth above in clause (1) or (2) of the
preceding paragraph and was unable to cure or remedy the reasons for
termination, and specifying the particulars thereof in detail.
4.1.4 Without Cause. The Employer may terminate Employee's employment
without cause or reason upon ninety (90) days written notice following a
majority vote of the Board of Directors and subject to the provisions below.
4.2 Termination By Employee. The Employee's employment hereunder may be
terminated by Employee under the following circumstances:
4.2.1 Resignation For Good Reason. Employee may resign his employment
upon Fifteen (15) days written notice for "good reason." For purposes of this
provision, "good reason" shall exist if any other the following have occurred at
any time within 180 days of Employee's notice:
(i) Employer makes a general assignment for the benefit of
creditors, files a voluntary bankruptcy petition, files a petition or
answer seeking a reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any law, there shall have been
filed any petition or application for the involuntary bankruptcy of Employer, or
other similar proceeding, in which an order for relief is entered or which
remains undismissed for a period of 30 days or more, or Employer seeks, consents
to, or acquiesces in the appointment of a trustee, receiver, or liquidator of
Employer or any material party of its assets; or
(ii) there are material changes in Employee's titles,
duties, or responsibilities without his express written consent; or
(iii) the Employer fails to pay Employee the compensation
and benefits required under this Agreement.
4.2.2 For Other Than Good Reason. Employee may resign "at-will" or
for any reason other than "good reason" upon Ninety (90) days written notice to
Employer.
4.3 Notice of Termination. Any terminations of the Employee's employment
by the Employer or by the Employee shall be communicated by written " Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
employment under the provision so indicated.
4.4 Date of Termination. "Date of Termination" shall mean (i) if the
Employee's employment is terminated by his death, the date of his death; and
(ii) if the Employee's employment is terminated for any other reason, the date
on which a Notice of Termination is received by Employer or Employee.
4.5 Payment of Salary, Vacation, and Incentive Bonus Upon Termination or
Resignation. Upon termination or resignation for any reason, Employee shall
receive all compensation earned through the termination date and shall also
receive payment for all accrued but unused vacation at Employee's then current
base salary. Employee shall also receive his Incentive Bonus for the fiscal
quarter in process at the Date of Termination. Employee shall also be reimbursed
for all reasonable expenses incurred through the Date of Termination.
4.6 Supplemental Severance Compensation. In the event that Employee is
terminated for reasons other than death, permanent disability (as defined above)
or for Cause, Employer shall pay Employee a lump sum severance payment equal to
two times the Employee's annual salary and earned bonuses as of the Date of
Termination, which amount shall be paid within five business days of the date of
Notice of Termination is delivered to Employee. In addition, all unvested stock
options shall become fully vested.
4.6.1 In the event Employee is terminated because of permanent
disability of the Employee as described in Section 3.1.(b) Employee shall be
entitled to receive all compensation payable up to the Date of Termination
notwithstanding his temporary or permanent disability; any such payment however,
shall be reduced by disability insurance benefits, if any, paid to Employee
under policies (other than group policies) for which Employer pays all premiums
and Employee is the beneficiary.
4.7 Remedies. Any termination of this Agreement shall not prejudice any
other remedy to which the Employer or Employee may be entitled, either at law,
equity, or under this Agreement.
5. INDEMNIFICATION
5.1 Indemnification. To the fullest extent permitted by applicable law,
Employer agrees to indemnify, defend and hold Employee harmless from any and all
claims, actions, costs, expenses, damages and liabilities, including without
limitation, reasonable attorneys' fees, hereafter or heretofore arising out of
or in connection with activities of Employer or its employees, including
Employee, or other agents in connection with and within the scope of this
Agreement or by reason of the fact that he is or was a director or officer of
Employer or any affiliate of Employer. To the fullest extent permitted by
applicable law, Employer shall advance to Employee expenses of defending any
such action, claim or proceeding. However, Employer shall not indemnify Employee
or defend Employee against, or hold him harmless from any claims, damages,
expenses or liabilities, including attorneys' fee, resulting from the gross
negligence or willful misconduct of Employee. The duty to indemnify shall
survive the expiration or early termination of this Agreement as to any claims
based on facts or conditions which occurred or are alleged to have occurred
prior to expiration or termination.
6. GENERAL PROVISIONS
6.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
6.2 Entire Agreement. This Agreement supersedes any and all other
Agreements, whether oral or in writing between the parties with respect to the
employment of the Employee by the Employer.
6.3 Successors and Assigns. This Agreement, all terms and conditions
hereunder, and all remedies arising herefrom, shall inure to the benefit of and
be binding upon Employer, any successor in interest to all or substantially all
of the business and/or assets of the Employer, and the heirs, administrators,
successors and assigns of Employee. Except as provided in the preceding
sentence, the rights and obligation of the parties hereto may not be assigned or
transferred by either party without the prior written consent of the other
party.
6.4 Notices. For purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement, shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid as follows:
If to Employee:
Xxxxxx X. Xxxxxxxx
0000 Xxx Xxx Xxxxxxxx
Xxx Xxxxxxxx, Xxxxxxxxxx 00000
If to Employer:
MindArrow Systems, Inc.
000 Xxxxxxxxxx, Xxx. 000
Xxxxx Xxxxx, XX 00000
Attn: Human Resources
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
6.5 Severability. If any provision of this Agreement is prohibited by or
is unlawful or unenforceable under any applicable law of any jurisdiction as to
such jurisdiction, such provision shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof.
6.6 Section Headings. The section headings used in this Agreement are for
convenience only and shall not affect the construction of any terms of this
Agreement.
6.7 Survival of Obligations. Termination of this Agreement for any reason
shall not relieve Employer or Employee of any obligation accruing or arising
prior to such termination.
6.8 Amendments. This Agreement may be amended only by written agreement of
both Employer and Employee.
6.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute only one legal instrument. This Agreement shall
become effective when copies hereof, when taken together, shall bear the
signatures of both parties hereto. It shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
6.10 Fees and Costs. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys fees, costs and necessary disbursements in
addition to any other relief to which that party may be entitled.
6.11 Conflicts With Change in Control Agreement. For any provision of this
agreement which conflicts with any provision of Employee's Change in Control
Agreement, the provision of this Agreement shall take precedence.
"EMPLOYER"
MindArrow Systems, Inc.
By____________________________
President
"EMPLOYEE"
______________________________
Xxxxxx X. Xxxxxxxx
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