EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is entered into this 14th day of
January, 2009 between Xxxx Xxxxxxx (“Executive”) and Zoo Games, Inc. (the
“Company”).
1. Term of
Employment The Company hereby agrees to employ Executive, and
Executive hereby accepts employment with the Company, upon the terms set forth
in this Agreement, for the period commencing on the date hereof (the
“Commencement Date”) and ending on the three year anniversary of the
Commencement Date, unless sooner terminated in accordance with the provisions of
Section 4 or extended as hereinafter provided (such period, as it may be
extended or terminated, is the “Agreement Term”). Beginning on the
three year anniversary of the Commencement Date, and on each anniversary of the
Commencement Date thereafter, the Agreement Term shall extend for an additional
one year period from the then current expiration date of the Agreement Term
unless at least 60 days prior to the anniversary date either Executive or the
Company provides written notice to the other party electing not to extend the
Agreement Term.
2. Title;
Capacity. The Company will employ Executive, and Executive
agrees to work for the Company, as its Chief Executive Officer to perform the
duties and responsibilities inherent in such position and such other duties and
responsibilities as the Company shall from time to time assign to
Executive. Executive shall report to the Board of Directors (the
“Board”) of Zoo Entertainment, Inc., the Company’s parent corporation (“Parent”)
and shall be subject to the supervision of, and shall have such authority as is
delegated by the Board, which authority shall be sufficient to perform
Executive’s duties hereunder. Executive shall devote Executive’s full
business time and reasonable best efforts in the performance of the foregoing
services, provided that Executive may accept other board memberships or serve in
a like capacity in other charitable organizations that are not in conflict with
Executive’s primary responsibilities and obligations to the Company, subject to
Board approval with such approval not to be unreasonably withheld.
3. Compensation and
Benefits.
(a) Salary. As
of the Commencement Date, the Company shall pay Executive a base salary of
$325,000 per year, payable in accordance with the Company’s customary payroll
practices (the “Base Salary”). The Base Salary thereafter shall be
subject to annual review and adjustment as determined by the Company in its
discretion on the anniversary of the Commencement Date each year of the
Agreement Term.
(b) Discretionary
Bonus. The Board may, from time to time, award Executive an
annual bonus, in the sole discretion of the Board (the “Bonus”). The
discretionary bonus, if any, shall be in addition to Executive’s Base Salary,
and shall be determined in the sole discretion of the Board and based on such
factors as the Company’s budget set for the fiscal year, and the Executive and
the Company’s performances during the fiscal year. Executive must be
employed by the Company or one of its affiliates on the date such Bonus, if any,
is paid, and such Bonus shall be paid within seven (7) days of the
completion of the Company’s annual audit.
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(c) Equity
Compensation. On the Commencement Date, the Company shall
grant to Executive equity in the form of options to acquire 750,000 shares of
common stock of the Company at an exercise price per share equal to the per
share fair market value, as determined in accordance with Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), of the Company’s common
stock as of the Commencement Date (the “Option”). Provided Executive is
employed by the Company on each vesting date, the Option shall vest in
equal installments on each of the three (3) anniversaries of the Commencement
Date and, except as otherwise provided in this Agreement, subject to such other
terms and conditions as set forth in the Company’s standard form of option
agreement. The Option shall be exercisable for a period of ten years
from the date of the grant. Any equity granted shall be governed in
all respects by the Company’s stock and equity plans in effect on the
Commencement Date.
(d) Fringe
Benefits. Executive shall be entitled to participate in all
bonus and benefit programs that the Company establishes and makes available to
its executive employees, if any, to the extent that Executive’s position,
tenure, salary, age, health and other qualifications make Executive eligible to
participate, including, but not limited to, health care plans, life insurance
plans, disability insurance, retirement plans, and all other benefit plans from
time to time in effect. Executive shall also be entitled to take four
weeks of fully paid vacation in accordance with Company policy.
(e) Reimbursement of Certain
Expenses. Executive shall be reimbursed for such reasonable
and necessary business expenses incurred by Executive while Executive is
employed by the Company, which are directly related to the furtherance of the
Company’s business. The Executive must submit any request for
reimbursement no later than ninety (90) days following the date that such
business expense is incurred in accordance with the Company’s reimbursement
policy regarding same and business expenses must be substantiated by appropriate
receipts and documentation. The Company may request additional
documentation or a further explanation to substantiate any business expense
submitted for reimbursement, and retains the discretion to approve or deny a
request for reimbursement. If a business expense reimbursement is not
exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), any reimbursement in one calendar year shall not affect the
amount that may be reimbursed in any other calendar year and a
reimbursement (or right thereto) may not be exchanged or liquidated for
another benefit or payment. Any business expense reimbursements
subject to Section 409A of the Code shall be made no later than the end of the
calendar year following the calendar year in which such business expense is
incurred by the Executive.
4. Termination of Employment
Period. The Employment Period shall terminate upon the
occurrence of any of the following:
(a) Termination of the Agreement
Term. At the expiration of the Agreement Term, but only if
appropriate notice is given in accordance with Section 1.
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(b) Termination for
Cause. At the election of the Company, for cause upon written
notice by the Company to Executive. For the purposes of this Section,
“Cause” for termination shall be deemed to exist upon the occurrence of any of
the following:
(i) a
good faith finding by the Company that Executive has engaged in dishonesty,
negligence or misconduct that injures the Company;
(ii) Executive’s
conviction or entry of nolo contendere to any felony or a crime involving moral
turpitude, fraud or embezzlement of Company property; or
(iii) Executive’s
material breach of his duties under this Agreement, which, if curable, has not
been cured by Executive within ten (10) days after he shall have received
written notice from the Company stating the nature of such breach.
(c) Voluntary Termination by the
Company or for Good Reason. At the election of the Company,
without Cause, at any time upon 30 days prior written notice by the Company to
Executive or by Executive for Good Reason (as defined below).
(d) Death or
Disability. Thirty days after the death or determination of
disability of Executive. As used in this Agreement, the determination
of “disability” shall occur when Executive, due to a physical or mental
disability, for a period of 90 consecutive days, or 180 days in the aggregate
whether or not consecutive, during any 360-day period, is unable to perform the
services contemplated under this Agreement. A determination of
disability shall be made by a physician satisfactory to both Executive and the
Company, provided that if Executive and
the Company do not agree on a physician, Executive and the Company shall each
select a physician and these two together shall select a third physician, whose
determination as to disability shall be binding on all
parties. Notwithstanding the foregoing, if and only to the extent
that Executive’s disability is a trigger for the payment of deferred
compensation, as defined in Section 409A of the Code, “disability” shall have
the meaning set forth in Section 409A(a)(2)(C) of the Code.
(e) Voluntary Termination by
Executive. At the election of Executive upon not less than 30
days prior written notice by him to the Company.
5. Effect of
Termination.
(a) Termination for Cause, at
the Election of Executive, at Death, for Disability or Upon Expiration of the
Agreement Term. In the event that Executive’s employment is
terminated for Cause, upon Executive’s death, at the election of Executive, for
Executive’s Disability or upon the expiration of the Agreement Term, the Company
shall have no further obligations under this Agreement other than to pay to
Executive salary and accrued vacation through the last day of Executive’s actual
employment by the Company.
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(b) Voluntary Termination by the
Company or for Good Reason. In the event that Executive’s
employment is terminated without Cause or for Executive’s resignation for Good
Reason, beginning immediately after the date of such termination, the Company
shall pay Executive, in addition to the amounts provided for in Section 5(a)
above, severance in a lump sum in an amount equivalent to one (1) year of annual
base salary then in effect as of the date of termination. The payment
of the severance is conditioned upon Executive’s delivery and non-revocation of
a release of claims as against the Company, and the lump sum payment shall be
made fourteen (14) days after the effective date of such
release. Notwithstanding the foregoing, if any of the benefits or
payments set forth herein are subject to Section 409A of the Code, no benefits
triggered by a termination of employment will be paid hereunder until the
Executive incurs a “separation from service” as defined in Section
409A(a)(2)(A)(i) of the Code.
(c) Notwithstanding
any other provision with respect to the timing of payments under Section 5(b)
if, at the time of the Executive’s termination, the Executive is deemed to be a
“specified employee” of the Company within the meaning of Section
409A(a)(2)(B)(i) of the Code, then only to the extent necessary to comply with
the requirements of Section 409A of the Code, any payments to which the
Executive may become entitled under Section 5(b) which are subject to Section
409A of the Code (and not otherwise exempt from its application) will be
withheld until the first business day of the thirteenth month following the date
of termination, at which time the Executive shall be paid an aggregate amount
equal to one year of payments otherwise due to the Executive under the terms of
Section 5(b) as applicable. After the first business day of the
thirteenth month following the date of termination and continuing each month
thereafter, the Executive shall be paid the regular payments otherwise due to
the Executive in accordance with the terms of Section 5(b), as thereafter
applicable.
(d) As
used in this Agreement, “Good Reason” means,
without Executive’s written consent, (a) the assignment to Executive of duties
inconsistent in any material respect with the duties of a Chief Executive
Officer; or (b) a material reduction in Base Salary or other benefits; or (c)
the reassignment of Executive to work at a geographic location more than 50
miles from the Company’s current principal place of business; or (d) a Change of
Control (as defined below) of Parent or the Company that occurs following 18
months after the Commencement Date. Notwithstanding the occurrence of
any of the events enumerated in this paragraph, an event shall not be deemed to
constitute Good Reason if, (i) Executive does not report the conditions which
the Executive believes to be Good Reason to the Company within 45 days of such
conditions occurring and (ii) within 30 days after the Executive provides notice
of Good Reason to the Company, the Company has fully corrected such Good Reason
and made the Executive whole for any such losses. For purposes
hereof, “Change of Control” means a merger or consolidation involving the
Company or Parent, other than a merger or consolidation which would result in
the voting securities of the Company or parent outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or the parent of such
surviving entity) at least 50% of the total voting power represented by the
voting securities of the Company or Parent or the surviving entity or
parent of such surviving entity outstanding immediately after such merger or
consolidation, or the sale or disposition by the Company or Parent of all or
substantially all of the Company’s or Parent’s assets.
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6. Nondisclosure and
Noncompetition.
(a) Proprietary
Information.
(i) Executive
agrees that all information and know-how, whether or not in writing, of a
private, secret or confidential nature concerning the Company’s business or
financial affairs (collectively, “Proprietary Information”) is and shall be the
exclusive property of the Company. By way of illustration, but not
limitation, Proprietary Information may include inventions, products, processes,
methods, techniques, formulas, designs, drawings, slogans, tests, logos, ideas,
practices, projects, developments, plans, research data, financial data,
personnel data, computer programs and codes, and customer and supplier
lists. Executive will not disclose any Proprietary Information to
others outside the Company except in the performance of Executive’s duties or
use the same for any unauthorized purposes without written approval by the
Board, either during or after Executive’s employment, unless and until such
Proprietary Information has become public knowledge or generally known within
the industry without fault by Executive, or unless otherwise required by
law.
(ii) Executive
agrees that all files, letters, memoranda, reports, records, data, sketches,
drawings, laboratory notebooks, program listings, or other written,
photographic, electronic or other material containing Proprietary Information,
whether created by Executive or others, which shall come into Executive’s
custody or possession, shall be and are the exclusive property of the Company to
be used by Executive only in the performance of Executive’s duties for the
Company.
(iii) Executive
agrees that Executive’s obligation not to disclose or use information, know-how
and records of the types set forth in paragraphs (i) and (ii) above, also
extends to such types of information, know-how, records and tangible property of
subsidiaries and joint ventures of the Company, clients or customers of the
Company or suppliers to the Company or other third parties who may have
disclosed or entrusted the same to the Company or to Executive in the course of
the Company’s business.
(b) Prior Contracts and
Inventions; Information Belonging to Third Parties. Executive
represents that there are no contracts to assign Inventions between any other
person or entity and Executive. Executive further represents that (i)
Executive is not obligated under any consulting, employment or other agreement
which would affect the Company's rights or my duties under this Agreement, (ii)
there is no action, investigation, or proceeding pending or threatened, or any
basis therefore known to Executive involving Executive’s prior employment or any
consultancy or the use of any information or techniques alleged to be
proprietary to any former employer, and (iii) the performance of Executive’s
duties as an employee of the Company will not breach, or constitute a default
under any agreement to which Executive is bound, including, without limitation,
any agreement limiting the use or disclosure of proprietary information acquired
in confidence prior to engagement by the Company. Executive will not,
in connection with Executive’s employment by the Company, use or disclose to the
Company any confidential, trade secret or other proprietary information of any
previous employer or other person to which Executive is not lawfully
entitled.
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(c) Noncompetition and
Nonsolicitation.
(i) During
the Employment and for a period of twelve months after the termination of
Executive’s employment with the Company for any reason, Executive will not
directly or indirectly, absent the Company’s prior written approval, render
services of a business, professional or commercial nature to any other person or
entity that competes with the Company in the same geographical area where the
Company does business at the time this covenant is in effect (or where the
Company has made, as of the effective date of termination, active plans to do
business), whether such services are for compensation or otherwise, whether
alone or in conjunction with others, as an employee, as a partner, or as a
shareholder (other than as the holder of not more than 1% of the combined voting
power of the outstanding stock of a public company), officer or director of any
corporation or other business entity, or as a trustee, fiduciary or in any other
similar representative capacity. Such period is hereafter referred to as the
“Executive Non-Compete Period”.
(ii) During
the Employment Period and until the conclusion of the Executive Non-Compete
Period, Executive will not, directly or indirectly, recruit, solicit or induce,
or attempt to recruit, solicit or induce any employee or employees of the
Company to terminate their employment with, or otherwise cease their
relationship with, the Company.
(iii) During
the Employment Period and until the conclusion of the Executive Non-Compete
Period, Executive will not, directly or indirectly, solicit, divert or take
away, or attempt to solicit, divert or take away, the business or patronage of
any of the clients, customers or accounts, or prospective clients, customers or
accounts, of the Company.
(d) If
any restriction set forth in this Section 6 is found by any court of competent
jurisdiction to be unenforceable because it extends for too long a period of
time or over too great a range of activities or in too broad a geographic area,
it shall be interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.
(e) The
restrictions contained in this Section 6 are necessary for the protection of the
business and goodwill of the Company and are in exchange for payments made to
Executive for Executive’s ownership interest in the Company and are considered
by Executive to be reasonable for such purpose. Executive agrees that
any breach of this Section will cause the Company substantial and irrevocable
damage and therefore, in the event of any such breach, in addition to such other
remedies which may be available, the Company shall have the right to seek
specific performance and injunctive relief. The Company shall be
entitled to recover its reasonable attorneys’ fees in the event it prevails in
such an action.
7. Entire Agreement - Prior
Agreements. This Agreement constitutes the entire agreement
between the parties and supersedes the Employment Agreement, dated April 16,
2008, as amended, entered into between the Company and Executive, and any other
prior agreements and understandings, whether written or oral relating to the
subject matter of this Agreement.
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8. Amendment. This
Agreement may be amended or modified only by a written instrument executed by
both the Company and Executive.
9. Governing
Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the New York without regard to
principles of conflicts of laws thereunder.
10. Notices. Any
notice or other communication required or permitted by this Agreement to be
given to a party shall be in writing and shall be deemed given if delivered
personally or by commercial messenger or courier service, or mailed by U.S.
registered or certified mail (return receipt requested), or sent via facsimile
(with receipt of confirmation of complete transmission) to the party at the
party’s last known address or facsimile number or at such other address or
facsimile number as the party may have previously specified by like notice. If
by mail, delivery shall be deemed effective 3 business days after mailing in
accordance with this Section.
11. Jury
Waiver. Executive and the Company hereby waive trial by jury
with respect to any claims arising under or relating to this Agreement or
Executive’s employment at the Company.
12. Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of both parties and their respective successors and assigns, including
any corporation into which the Company may be merged or which may succeed to its
assets or business, provided, however, that the
obligations of Executive are personal and shall not be assigned by
Executive.
13. Miscellaneous.
(a) No
Waiver. No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other
right. A waiver or consent given by the Company on any one occasion
shall be effective only in that instance and shall not be construed as a bar or
waiver of any right on any other occasion.
(b) Severability. In
case any provision of this Agreement shall be invalid, illegal or otherwise
unenforceable, the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.
(c) Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
14. Tax
Consequences. Notwithstanding any other provision of this
Agreement to the contrary, the Company makes no guarantee of any tax
consequences to the Executive including, without limitation, under section 409A
of the Code, and has advised Executive to seek independent advice prior to the
execution of this Agreement.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year set forth above.
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/s/ Xxxx Xxxxxxx
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XXXX
XXXXXXX
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ZOO
GAMES, INC.
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By:
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/s/ Xxxx Xxxxx
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Name:
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Xxxx
Xxxxx
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Its:
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Chief
Operating
Officer
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