EMPLOYMENT AGREEMENT
Exhibit
10.5
This
Employment Agreement,
dated
______, 2008 is made and entered into by and among PSYOP, Inc., a New York
corporation (the “Company”), [Insert Executive’s Name] (the “Executive”), and
Fortissimo Acquisition Corp., a Delaware corporation (“Parent”).
RECITALS
WHEREAS,
the Company is primarily engaged in the creative design and 3-D animation
for
the advertising industry and other industries;
WHEREAS,
Parent, FAC Acquisition Sub Corp., a New York corporation and a wholly-owned
subsidiary of Parent (“Merger Sub”), and the Company intend to effect a
merger (the
“Subsidiary Merger”) of the Merger Sub with and into the Company pursuant to an
Agreement and Plan of Merger and Interests Purchase Agreement, dated as
of
January 15, 2008, among Parent, Merger Sub, the Company, Psyop Services,
LLC,
each of the stockholders of the Company and Xxxxxx Xxxxx-Xxxxxxxx (the
“Stockholders’ Representative”) as agent and attorney-in-fact for each
Stockholder (the “Merger Agreement”) and the Business Corporation Law of the
State of New York with the Company to be the surviving corporation of the
Subsidiary Merger (the “Surviving Corporation”), which Merger will be followed,
as soon as reasonably practicable, by a merger of the Surviving Corporation
with
and into Parent (the “Upstream Merger”);
Whereas,
the
Company desires to continue to employ the Executive as [Insert
Position] following
the Subsidiary Merger;
Whereas,
Parent
desires to continue to employ the Executive in such capacity following
the
Upstream Merger; and
Whereas,
the
Executive has agreed to accept such continued employment on the terms and
conditions set forth in this Employment Agreement;
Now,
Therefore,
in
consideration of the premises and promises contained herein, the parties
agree
as follows:
1. Employment.
The
Company hereby employs the Executive as [insert position], and the Executive
hereby accepts such continued employment with the Company in such capacity.
As
[insert position], the Executive shall be responsible for the performance
of
[Insert Primary Job Duties]1 and
such
other responsibilities as are reasonably assigned to the Executive by the
CEO [or,
in
the case of the CEO, by the Board]. The Executive shall be accountable
to the
Chief Executive Officer of
the
Company (the “CEO”)
[other
than the CEO, who will be accountable to the Board] and
shall
perform and discharge faithfully, diligently, and to the best of his/her
ability, his/her duties and responsibilities hereunder. The Executive shall
devote his/her entire business time, loyalty, attention and efforts to
the
business and affairs of the Company and its affiliates. The Executive agrees
to
abide by the rules, regulations, instructions, personnel practices and
policies
of the Company and any changes therein that may be adopted from time to
time by
the Company.
2. Term.
The
term
of this Employment Agreement shall commence on the date of effectuation
of the
Subsidiary Merger (the “Commencement Date”) and shall continue in effect until
the third anniversary of the Commencement Date (the “Term of Employment”),
unless the Executive’s employment shall be terminated earlier pursuant to
Section 6 below or unless the Executive’s employment with the Company shall be
extended pursuant to the provisions of Section 6.4 below.
1 Primary Job
Duties and Responsibilities will be inserted here.
3. Compensation.
As
full
compensation for all services rendered by the Executive during the Term
of
Employment, the Company will provide to the Executive the
following:
3.1.
Base
Salary.
For the
one-year period commencing on the Commencement Date, the Executive shall
receive
an annualized base salary of Two Hundred and Twenty-Five Thousand Dollars
($225,000)2
(the
“Base Salary”), paid in equal bi-weekly installments in accordance with the
Company’s regularly established payroll
procedure. Thereafter, until the three-year anniversary of the
Commencement Date, provided the Executive remain employed by the Company,
the
Base Salary shall be increased on an annual basis by an amount not less
than the
product of (x) the Base Salary for the prior year and (y) the
percentage increase in the consumer price index for urban wage earners
and
clerical workers (as published by the United States Bureau of Labor Statistics)
from the previous year for the New York Metropolitan Area (New York-Northern
New
Jersey-Long Island, NY-NJ-CT-PA) (“CPI”).
3.2. Bonus.
The
Executive may be eligible to receive a discretionary annual bonus of up
to
$75,000. The actual bonus amount due to the Executive, if any, shall be
determined by the Board in its sole discretion. The compensation committee
of
the Board (the “Compensation Committee”) shall establish the Company milestones
to be achieved for each fiscal year in order for executive officers to
be
eligible for an annual bonus. Partial achievement of such milestones by
the
Company may result in a partial payment of such bonus, as the Compensation
Committee may determine from time to time in its sole discretion. Payment
of the
Executive’s bonus shall be made within thirty (30) days following the date on
which the audited financials for the Company’s prior fiscal year are
issued.
3.3.
Vacation. The
Executive shall be eligible for fifteen (15) days of paid vacation per
calendar
year, or such amount as provided by the Company’s vacation policy as in effect
from time to time in the event that such policy provides for more than
fifteen
(15) days of vacation. Up to five (5) accrued but unused vacation days
may be
carried forward for use during the following calendar year.
3.4.
Fringe Benefits.
The
Executive shall be eligible to participate in, and receive benefits under,
all
insurance and benefit programs that the Company establishes and makes available
to its similarly situated executives from time to time, to the extent that
the
Executive is eligible under (and subject to the provisions of) the plan
documents governing those programs. The benefits made available to the
Executive
and the rules, terms, and conditions for participation in such benefit
plans may
be modified, changed, or terminated by the Company at any time without
advance
notice to the Executive. The Company currently provides its executives
with the
following benefits, among others:
3.4.a. The
Company pays one hundred percent (100%) of the health and dental insurance
premium costs for the Executive and his/her family (as defined by the applicable
plan);
2 The
base
annual salaries will be $275,000 for Xx. Xxxxx-Xxxxxxxx and $200,000 for
Xx.
Xxxxxxxx.
2
3.4.b. The
Executive may participate in the Company’s 401(k) and profit sharing plans,
including Company matches and contributions, as set forth in the Company’s
401(k) plan; and
3.4.c. The
Company pays all short term and long term disability insurance premium
costs for
the Executive.
3.5. Withholdings.
All
compensation payable to the Executive shall be subject to applicable taxes
and
withholdings.
4. Expenses.
The
Executive shall be entitled to reimbursement by the Company for all reasonable
business and travel expenses incurred by him on the Company’s behalf during the
course of his/her employment, in accordance with Company policy and upon
the
presentation by the Executive of documentation itemizing such expenditures
and
attaching all supporting vouchers and receipts.
5. Proprietary
Rights, Non-Disclosure, Developments, Non-Competition, and Non-Solicitation.
As
a
condition of his/her employment, the Executive shall execute the Proprietary
Rights, Non-Disclosure, Developments, Non-Competition, and Non-Solicitation
Agreement (the “Restrictive Covenant Agreement”), attached hereto as Exhibit
A.
6. Termination.
Notwithstanding
any other provision hereof, the employment of the Executive by the Company
pursuant to this Employment Agreement shall terminate upon the occurrence
of any
of the following:
6.1.
Death and Disability. In
the
event of the Executive’s death, this Employment Agreement shall terminate
immediately. If the Executive shall, as a result of any physical or mental
illness or disability, be unable for a period of more than any three (3)
consecutive months or for periods aggregating more than 120 days during
any
360-day period to perform the services provided for herein, with or without
reasonable accommodation as that term is defined under applicable law,
the
Company may terminate the Executive’s employment. The Company shall determine in
good faith and in its sole and reasonable discretion whether the Executive
is
unable to perform the services provided for herein.
6.2.
Termination By Company For Cause.
The
Company may terminate the Executive's employment under this Employment
Agreement
at any time for Cause. The termination shall be evidenced by written notice
thereof to the Executive, specifying the Cause for termination. For purposes
hereof, the term “Cause” shall mean a good faith finding by the Board that the
Executive:
6.2.a. failed
to
perform (other than by reason of physical or mental illness or disability
for a
period of less than three (3) consecutive months or in aggregate less than
120
days during any 360-day period) his/her assigned duties diligently or
effectively or was negligent in the performance of these duties, provided
that
the Executive was given prior written notice of such deficiencies and was
granted thirty (30) days to correct any such deficiencies;
6.2.b. materially
breached this Employment Agreement in a manner other than as set forth
in 6.2.a,
which breach is materially adverse to the Company and has not been cured
within
thirty (30) days after written notice of such breach has been given to
the
Executive by the Company;
3
6.2.c. breached
his/her Proprietary Rights, Non-Disclosure, Developments, Non-Competition,
and
Non-Solicitation Agreement;
6.2.d. committed
fraud, theft or embezzlement;
6.2.e. committed
willful misconduct relating to the Company;
6.2.f. engaged
in any conduct that is
materially harmful to the business, interests or reputation of the Company;
or
6.2.g. was
convicted of, or pleaded guilty or nolo contendere to, any felony.
6.3.
Termination by the Executive for Good Reason. The
Executive may terminate his/her employment under this Employment Agreement
at
any time for “Good Reason.” Good Reason means the occurrence, without the
Executive’s prior written consent, of any of the events or circumstances set
forth in clauses (a), (b), (c), (d), or (e) below; provided, however, that
a
termination for Good Reason by the Executive can only occur if (i) the
Executive
has given the Company a written notice indicating the existence of a condition
giving rise to Good Reason (the “Notice of Termination”) and the Company has not
cured the condition giving rise to Good Reason within thirty (30) days
after
receipt of such Notice of Termination, and (ii) such Notice of Termination
is
given within sixty (60) days after the initial occurrence of the condition
giving rise to Good Reason.
6.3.a. a
material breach by the Company of the terms of this Employment
Agreement,
6.3.b. a
liquidation, bankruptcy or receivership of the Company or Parent;
6.3.c. the
relocation of the Executive’s place of work such that the distance from the
Executive’s primary residence to his/her place of work is increased by more than
fifty (50) miles,
6.3.d. any
material diminution of the Executive’s duties and responsibilities. For purposes
hereof, an isolated or inadvertent action by the Company that is not taken
in
bad faith and that is remedied by the Company as soon as practicable after
notice thereof is given by the Executive shall not be deemed a material
diminution of the Executive’s duties and responsibilities, or
6.3.e. the
failure of the Parent or Company to have a successor assume their obligations
under this Agreement in the event of a “Change of Control.” For purposes hereof,
“Change of Control” shall mean (i) any person or entity other than the Company
or Parent who acquires securities of the Company or Parent other than from
the
Executive or his/her affiliates (in one or more transactions) and has 50%
or
more of the total voting power of all the Company’s or Parent’s securities then
outstanding; (ii) a sale of all or substantially all of the assets of the
Company or Parent; or (iii) if the Company’s or Parent’s business is
substantially operated through its subsidiaries, a sale of all or substantially
all of the assets of all of the Company’s or Parent’s subsidiaries (taken as a
whole).
4
6.4. Termination
After the Term of Employment.
Beginning on the three-year anniversary of the Commencement Date, provided
the
Executive’s employment has not previously terminated, the Executive's employment
shall be on an at-will basis, and may be terminated at any time at the
Executive’s option or the option of the Company, as the case may be, on the
terms and subject to the conditions set forth in this Agreement.
| 7. |
Effect
of Termination.
|
7.1. Termination
By Company Without Cause or by Executive for Good Reason.
In the
event the Executive’s employment is terminated by the Company without “Cause” as
defined in Section 6.2 or in the event the Executive terminates his/her
employment for “Good Reason” as defined in Section 6.3, the Company shall be
obligated to pay the Executive all accrued salary, vacation pay, expense
reimbursements and any other sums due to the Executive through the date
of
termination. In addition, the Executive shall be entitled to receive the
following severance benefits provided the Executive executes and does not
revoke
a severance and release agreement drafted by and reasonably satisfactory
to the
Company: (i) for a period of six (6) months3
following the Executive’s date of termination, the Company will continue to pay
to the Executive, in accordance with the Company’s regularly established payroll
procedure, his/her Base Salary; (ii) should the Executive be eligible for
and
elect to continue receiving group medical and dental insurance pursuant
to the
federal “COBRA” law, 29 U.S.C. § 1161 et seq., the Company will, for twelve
(12) months4 following the Executive’s date of termination, pay
all premium costs for such continued coverage; and (iii) the Restrictive
Period (as defined in the Executive’s Restrictive Covenant Agreement) will be
deemed modified such that it is reduced to a six (6) month period5.
Notwithstanding any other provision set forth in this Employment Agreement,
in
the event the Executive’s employment is terminated by the Company without
“Cause” or the Executive terminates his/her employment for “Good Reason” prior
to the expiration of the Term of Employment, the Executive shall receive,
pursuant to the terms and conditions set forth herein, only the severance
benefits set forth in this Section 7.1, and shall not be eligible (nor
shall the
Company be liable) for any additional payments, benefits, compensation,
or
consideration whatsoever (including any bonus not yet paid and/or any contingent
payments as more fully described in Exhibit A to the Merger Agreement,
that the
Executive may have received had his/her employment not terminated).
7.2. Other
Terminations. Except
for a termination by the Company without “Cause” or by the Executive for “Good
Reason”, upon the termination of the Executive’s employment for any reason
before or after the expiration of the Term of Employment (including termination
of the Executive’s employment for “Cause” as defined in Section 6.2, by the
Executive without “Good Reason” as defined in Section 6.3, or upon the
Executive’s death or disability as defined in Section 6.1), the
obligations of the Company to pay the Executive's Compensation shall immediately
cease, and the Executive shall be entitled to only the base salary, vacation
pay, expense reimbursements and any other sums due to the Executive through
his/her last day of employment. The Executive shall not be entitled to
any other
compensation or consideration, including any bonus not yet paid and/or
any
contingent payments as more fully described in Exhibit A to the Merger
Agreement, that the Executive may have received had his/her employment
not
terminated.
7.3.
Distributions.
The
following rules shall apply with respect to distribution of the payments
and
benefits, if any, to be provided to the Executive under this Section
7:
3 Three
(3)
months in agreements for Messrs. Xxxxxxxx, Xxxx and Staves.
4 Three
(3)
months in agreements for Messrs. Xxxxxxxx, Xxxx and Staves.
5 Three
(3)
month period in agreements for Messrs. Xxxxxxxx, Xxxx and Staves.
5
(i) It
is
intended that each installment of the payments and benefits provided under
Section 7 shall be treated as a separate “payment” for purposes of Section 409A
of the U.S. Internal Revenue Code of 1986, as amended, and the guidance
issued
thereunder (“Section 409A”). Neither the Company nor the Executive shall have
the right to accelerate or defer the delivery of any such payments or benefits
except to the extent specifically permitted or required by Section
409A;
(ii) If,
as of
the date of the “separation from service” of the Executive from the Company, the
Executive is not a “specified employee” (each within the meaning of Section
409A), then each installment of the payments and benefits shall be made
on the
dates and terms set forth in Section 7; and
(iii) If,
as of
the date of the “separation from service” of the Executive from the Company, the
Executive is a “specified employee” (each, for purposes of this Agreement,
within the meaning of Section 409A), then:
(A)
Each
installment of the payments and benefits due under Section 7 that, in accordance
with the dates and terms set forth herein, will in all circumstances, regardless
of when the separation from service occurs, be paid within the Short-Term
Deferral Period (as hereinafter defined) shall be treated as a short-term
deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4)
to the
maximum extent permissible under Section 409A. For purposes of this Agreement,
the “Short-Term Deferral Period” means the period ending on the later of the
15th day of the third month following the end of the Executive’s tax year in
which the Executive’s separation from service occurs and the 15th day of the
third month following the end of the Company’s tax year in which the Executive’s
separation from service occurs; and
(B)
Each
installment of the payments and benefits due under Section 7 that is not
paid
within the Short-Term Deferral Period and that would, absent this subsection,
be
paid within the six-month period following the “separation from service” of the
Executive of the Company shall not be paid until the date that is six months
and
one day after such separation from service (or, if earlier, the death of
the
Executive), with any such installments that are required to be delayed
being
accumulated during the six-month period and paid in a lump sum on the date
that
is six months and one day following the Executive’s separation from service and
any subsequent installments, if any, being paid in accordance with the
dates and
terms set forth herein; provided, however, that the preceding provisions
of this
sentence shall not apply to any installment of payments and benefits if
and to
the maximum extent that that such installment is deemed to be paid under
a
separation pay plan that does not provide for a deferral of compensation
by
reason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating
to separation pay upon an involuntary separation from service) or Treasury
Regulation 1.409A-1(b)(9)(iv) (relating to reimbursements and certain other
separation payments). Such payments shall bear interest at an annual rate
equal
to the prime rate as set forth in the Eastern edition of the Wall Street
Journal
on the Date of Termination, from the Date of Termination to the date of
payment.
Any installments that qualify for the exception under Treasury Regulation
Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of
the
second taxable year of the Executive following the taxable year of the
Executive
in which the separation from service occurs.
6
8. Absence
of Restrictions. The
Executive represents and warrants that he is not bound by any employment
contracts, restrictive covenants or other restrictions that prevent him
from
entering into employment with, or carrying out his/her responsibilities
for, the
Company, or which are in any way inconsistent with any of the terms of
this
Employment Agreement.
9. Amendments.
Any
amendment to this Employment Agreement shall be made in writing and signed
by
the parties hereto.
10. Notice.
Any
notice required to be given, served or delivered to any of the parties
hereto
shall be sufficient if it is in writing and sent by certified or registered
mail
with proper postage prepaid, telecopier (with receipt confirmed), courier
service or personal delivery addressed as follows:
To
Executive:
[Insert
Name]
[Insert
Address]
with
a
copy (which
shall not constitute notice) to:
To
Company:
PSYOP,
Inc.
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxx Xxxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
E-mail:
xxxxx@xxxxx.xx
with
a
copy (which
shall not constitute notice) to:
Xxxxxxxx
Xxxxxx
000
Xxxxxxxxx Xxxxxx
|
Xxx
Xxxx, XX 00000
|
Attention:
Xxxxx X. Xxxxxx, Esq.
Telephone:
000-000-0000
Facsimile:
000-000-0000
E-mail:
xxxxxxx@xxxxxxxx.xxx
To
Parent:
Fortissimo
Acquisition Corporation
00
Xxxxxxxxx Xxxxxx
Xxxx
Afek
XX Xxx 00000
Xxxx
Xxxxxx 00000
Xxxxxx
Attention:
Xxxx X. Xxxxxxx
7
Telephone:
000-000-0-000-0000
Facsimile:
011-972-3-915-7411
E-mail:
xxxx@xxxxxxxxx.xxx
with
a
copy (which
shall not constitute notice) to:
Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
E-mail:
xxxxx.xxxxxxxx@xxxxxxxxxx.xxx
or
to
such other address as a party from time to time may designate by notice
to the
other.
11. Applicable
Law.
This
Employment Agreement shall be governed by and construed in accordance with
the
law of the State of New York (without reference to the conflicts of law
provisions thereof).
12. Dispute
Resolution.
The
Company and Executive mutually agree that any claim or controversy arising
out
of or relating to this Agreement, or any breach thereof, or otherwise arising
out of or relating to the Executive’s employment, compensation and benefits with
the Company or the termination thereof including any claim for discrimination
under any local, state or federal employment discrimination law, except
as
specifically excluded herein, shall be settled by arbitration in New York,
New
York administered by the American Arbitration Association under its National
Rules for the Resolution of Employment Disputes. Any claim or controversy
not
submitted to arbitration in accordance with this Paragraph 12 shall be
waived,
and thereafter, no arbitration panel or tribunal or court shall have the
power
to rule or make any award on any such claim or controversy. The award rendered
in any arbitration proceeding held under this Paragraph 12 shall be final
and
binding, and judgment upon the award may be entered in any court having
jurisdiction thereof. Claims for workers’ compensation or unemployment
compensation benefits are not covered by this Paragraph 12. Also not covered
by
this Paragraph 12
are
claims by the Company or by the Executive for temporary restraining orders
or
preliminary injunctions (“temporary equitable relief”) in cases in which such
temporary equitable relief would be otherwise authorized by law, including
but
not limited to claims for equitable relief arising out of a breach of the
Proprietary Rights, Non-Disclosure, Developments, Non-Competition, and
Non-
Solicitation Agreement referenced in Paragraph 5 of this Agreement. Both
the Company and the Executive expressly waive any right that any party
either
has or may have to a jury trial of any dispute arising out of or in any
way
related to the Executive’s employment with or termination from the
Company.
13. Entire
Agreement. This
Employment Agreement constitutes the entire agreement between the parties
and
supersedes all prior agreements and understandings, whether written or
oral,
relating to the subject matter of this Employment Agreement.
14. Successors
and Assigns.
This
Employment Agreement shall be binding upon and inure to the benefit of
the
parties and their respective successors and assigns, including any corporation
with which or into which the Company may be merged or which may succeed
to its
assets or business; provided, however, that the obligations of the Executive
are
personal and shall not be assigned by him. Upon effectuation of the Upstream
Merger, Parent shall be deemed to be the employer pursuant to this Employment
Agreement for all purposes hereof and all references to the Company herein
shall
be deemed to be references to Parent.
8
15. Acknowledgment.
The
Executive states and represents that he has had an opportunity to fully
discuss
and review the terms of this Employment Agreement with an attorney. The
Executive further states and represents that he has carefully read this
Employment Agreement, understands the contents herein, freely and voluntarily
assents to all of the terms and conditions hereof, and signs his/her name
of
his/her own free act.
16. Waiver.
No
delay
or omission by the Company in exercising any right under this Employment
Agreement shall operate as a waiver of that or any other right. No waiver
of any
provision of this Employment Agreement shall be effective unless in writing
and
signed by the party waiving its rights, and then such waiver or consent
shall be
effective only in the specific instance and for the specific purpose for
which
it was given.
17. Captions.
The
captions of the sections of this Employment Agreement are for convenience
of
reference only and in no way define, limit or affect the scope or substance
of
any section of this Employment Agreement.
18. Severability.
If any
provision of this Employment Agreement shall be invalid, illegal or otherwise
unenforceable, such provision shall be ineffective to the extent of such
invalidity, illegality or unenforceability without invalidating the remainder
of
such provision or the remaining provisions of this Employment
Agreement.
19. Section
409A of the Code.
This
Agreement is intended to comply with the provisions of Section 409A and
the
Agreement shall, to the extent practicable, be construed in accordance
therewith. Terms defined in the Agreement shall have the meanings given
such
terms under Section 409A if and to the extent required in order to comply
with
Section 409A. Notwithstanding the foregoing, to the extent that the Agreement
or
any payment or benefit hereunder shall be deemed not to comply with Section
409A, then neither the Company, the Board of Directors nor its or their
designees or agents shall be liable to the Executive or any other person
for any
actions, decisions or determinations made in good faith.
9
IN
WITNESS WHEREOF,
the
parties hereto have executed this Employment Agreement, as of the ______th
day
of __________, 2008.
PSYOP,
INC.
By:
______________________________________
Name:
Title:
EXECUTIVE:
____________________________________
[Insert
Executive’s Name]
By:
_______________________________________
Name:
Title:
10
