EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (this “Agreement”)
is
entered into as of December 12, 2006 by and among Pro Elite, Inc., a New Jersey
corporation, with its principal office at 00000 Xxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the “Company”),
and
Xxxxxx X. Xxxxxx (“Employee,”
together with the Company, the “Parties”),
with
reference to the following facts:
WHEREAS,
the Company desires to employ the Employee, and Employee desires to be employed
by Company pursuant to the terms hereof;
WHEREAS,
Employee desires to commit to an agreement with the Company to serve as the
Company’s Chief Financial Officer; and
NOW,
THEREFORE, the Company and Employee desire to set forth in this Agreement the
terms and conditions of the Employee's employment with the Company.
ARTICLE
I
EMPLOYMENT;
TERM; DUTIES
1.1 Employment.
Upon
the terms and conditions hereinafter set forth, the Company hereby employs
Employee, and Employee hereby accepts employment to serve as the Company’s Chief
Financial Officer.
1.2 Duties.
Employee shall perform such duties for the Company as are prescribed by
applicable job specifications for the Chief Financial Officer, the Bylaws of
the
Company, and such other or additional duties as may be assigned to him from
time
to time by the Board of Directors of the Company (the “Board”).
Employee shall report to the Chief Executive Officer of the Company.
1.2.1 Employee
shall use his best efforts and abilities faithfully and diligently to promote
the Company’s business interests. For so long as Employee is employed by the
Company, Employee shall not, directly or indirectly, either as an employee,
employer, consultant, agent, investor, principal, partner, stockholder (except
as the holder of less than 1% of the issued and outstanding stock of a publicly
held corporation), corporate officer or director, or in any other individual
or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of the Company Group,
which includes the Company, Real Sport, Inc., EliteXC Live, Inc., and
XxxxxXX.xxx, Inc., and other entities the Company may form in the future, as
such businesses are now or hereafter conducted. Subject to the foregoing
prohibition and provided such services or investments do not violate any
applicable law, regulation or order, or interfere in any way with the faithful
and diligent performance by Employee of the services to the Company otherwise
required or contemplated by this Agreement, the Company expressly acknowledges
that Employee may:
(a) make
and
manage personal business investments of Employee’s choice without consulting the
Board of Directors (the “Board”); and
(b) serve
in
any capacity with any non-profit civic, educational or charitable organization
without consulting with the Board.
1.3 Covenants
of Employee
1.3.1 Reports.
Employee shall use his best efforts and skills to truthfully, accurately, and
promptly make, maintain, and preserve all records and reports that the Company
may, from time to time, request or require, fully account for all money,
records, equipment, materials, or other property belonging to the Company of
which he may have custody, and promptly pay and deliver the same whenever he
may
be directed to do so by the Board.
1.3.2 Rules
and Regulations.
Employee shall obey all rules, regulations and special instructions of the
Company and all other rules, regulations, guides, handbooks, procedures,
policies and special instructions applicable to the Company’s business in
connection with his duties hereunder and shall endeavor to improve his ability
and knowledge of the Company’s business in an effort to increase the value of
his services for the mutual benefit of the Company and the
Employee.
1.3.3 Opportunities.
Employee shall make all business opportunities of which he becomes aware that
are relevant to the Company’s business available to the Company, and to no other
person or entity or to himself individually.
1.4 Term.
The
term of this Employment Agreement shall be the period commencing on December
13,
2006, and ending upon the date of termination of Employee’s employment with the
Company (the “Term”).
ARTICLE
II
COMPENSATION
2.1 Base
Salary.
During
the Term, for all services rendered by Employee hereunder and all covenants
and
conditions undertaken by both Parties pursuant to this Agreement, the Company
shall pay, and Employee shall accept, as compensation, an annual base salary
of
$175,000 per year through November 30, 2007[,
and the amount determined by the Company thereafter, which shall reflect an
increase of no less than 5% per year][Is Xxxxxx guaranteed a 5% increase in
his
salary in light of the $50k guaranteed bonus?]
(“Base
Salary”).
This
Base Salary shall be payable in accordance with the normal payroll practices
of
the Company.
2.2 Performance
and Review.
Employee’s performance will be reviewed on no less than an annual
basis.
2.3 Bonus.
Employee shall receive a bonus of at least $50,000 at the end of each Year,
as
defined below in Section 2.4. Subject to the minimum bonus, the amount of the
Bonus shall be based on the following two factors, each of which shall be given
equal weight in determining the bonus amount Employee will receive that
Year:
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2.3.1 The
Company’s performance, based on the performance criteria established by the
Company’s Compensation Committee in its sole discretion; and
2.3.2 The
Employee’s job performance, based on the performance criteria established by the
Company’s Compensation Committee in its sole discretion.
2.4 Options.
Employee shall be granted options to acquire 400,000 shares of the Company’s
common stock under the Company’s 2006 Stock Compensation Plan. The
options will be exercisable at $2.00 per share and options shall vest in equal
installments every 90 days from the date of this Agreement for each Year during
the Term until all options have been fully vested. A “Year”
shall
be a 360-day period, commencing on December 1 and ending on November 30 of
the
following year, with the exception of the first year, which starts on December
___, 2006 and ends on November 30, 2007. The options can only vest upon the
conclusion of a 90-day period. In the event this Agreement is terminated
pursuant to Section 4.1 of this Agreement, Employee shall not thereafter be
able
to exercise any options that are not vested.
2.5 Withholding.
The
Company may deduct from any compensation payable to Employee (including payments
made pursuant to Section 2 of this Agreement in connection with or following
termination of employment) amounts sufficient to cover Employee’s share of
applicable federal, state and/or local income tax withholding, old-age and
survivors’ and other social security payments, state disability and other
insurance premiums and payments.
ARTICLE
III
BUSINESS
EXPENSES
3.1 Business
Expenses.
Employee
will be reimbursed for all reasonable, out-of-pocket business expenses incurred
in the performance of his/her duties on behalf of the Company consistent with
the Company’s policies and procedures, including prior approval requirements and
submission of appropriate supporting documentation.
3.2 Housing
Allowance.
For the
first six (6) months of the Term, Employee shall be entitled to a housing
allowance of up to $4,000 per month[,
payable in a manner consistent with the Company’s practices and policies
therefor.][Does Pro Elite plan on adopting such a policy? Or would you rather
have the housing allowance payable at the end of each
month?]
ARTICLE
IV
TERMINATION
OF EMPLOYMENT
4.1 Termination
4.1.1 Employee’s
employment pursuant to this Agreement shall terminate on the earliest to occur
of the following, subject to Section 4.4:
(a) November
30, 2010;
3
(b) upon
the
death of Employee (“Death”);
(c) upon
the
delivery to Employee of written notice of termination by the Company if Employee
shall suffer a physical or mental disability or illness which renders Employee,
in the reasonable judgment of the Board, unable to perform his duties and
obligations under this Agreement, with or without reasonable accommodation,
for
either 60 consecutive days or 180 days in any 12-month period (“Disability”);
(d) upon
delivery to Company of written notice of termination by the Employee for Good
Reason;
(e) upon
delivery to Employee of written notice of termination by the Company For Cause;
or
(f) November
30, 2007
if
Employee does not receive a written notice from the Company by October 31,
2007
of its intention to continue Employee’s
employment as Chief Financial Officer for the period beginning on December
1,
2007 until November 30, 2008;
(g) November
30, 2008
if
Employee does not receive a written notice from the Company by October 31,
2008
of its intention to continue Employee’s
employment as Chief Financial Officer for the period beginning on December
1,
2008 until November 30, 2009; or
(h) November
30, 2009
if
Employee does not receive a written notice from the Company by October 31,
2009
of its intention to continue Employee’s
employment as Chief Financial Officer for the period beginning on December
1,
2009 until November 30, 2010.
4.2 Certain
Definitions.
For
purposes of this Agreement, the following terms shall have the following
meanings:
4.2.1 “For
Cause”
shall
mean, in the context of a basis for termination of Employee’s employment with
the Company, that:
(a) Employee
is convicted
of, or pleas nolo
contendere
(no
contest) to, any crime (whether or not involving the Company) constituting
a
felony in the jurisdiction involved;
(b) Employee’s
willful misconduct in the performance of Employee’s duties
hereunder;
(c) Employee’s
gross negligence in the performance of his duties hereunder or willful and
repeated failure or refusal to perform such duties as may be delegated to
Employee by Company commensurate with his position; or
(d) Employee
is in material breach of any provision of this Agreement, which breach is not
cured or corrected within ten (10) days of written notice thereof from the
Company.
4
4.2.2 “Good
Reason”
giving
rise to Employee’s right to terminate this Agreement means if
Employee claims that Company has materially breached this Agreement, Employee
shall have first provided written notice to Company of any such claimed material
breach with exact details of the claimed material breach and Company shall
have
had thirty (30) days from the date of receipt of such written notice to cure
any
such breach; if curable, and in the event Company does so cure such breach
within said thirty (30) days, such claimed breach shall not constitute good
reason or a breach of this Agreement.
4.3 Effect
of Termination.If
Employee’s employment is terminated by the Company without cause or by the
Employee for Good Reason, and provided that Employee executes and delivers
to
the Company, and does not revoke, a written release (the “Release”)
of any
and all claims against the Company with respect to all matters arising out
of
Employee’s employment by the Company, or the termination thereof (other than
claims for any entitlements under the terms of this Agreement, claims
under
any plans or programs of the Company under which Employee has accrued a benefit,
and rights to indemnification under applicable law or agreement), the
Company agrees to pay to Employee the Base Salary through the end of that
particular Year, provided that Employee receive at least four months’ payment
(“Severance”).
The
Company shall be entitled to defer payment of any amounts under this Section
4
until the expiration of any period during which Employee shall have the right
to
revoke the Release.
Employee
shall not be entitled to Severance if Employee’s employment is terminated
pursuant to (a), (b), (d), (e), (f), (g), or (h) of Subsection 4.1.1.
4.4 Notwithstanding
Section 4.1.1, Employee acknowledges that the Company has the right to terminate
Employee’s employment without cause and that such termination shall not be a
breach of this Agreement or any other express or implied agreement between
the
Company and Employee. Accordingly, in the event of such termination, Employee
shall be entitled only to those benefits specifically provided for in this
Agreement in the event of such termination, and shall not have any other rights
to any compensation or damages from the Company for breach of contract or tort
arising from such termination.
4.5 Employee
acknowledges that in the event of termination of his employment for any reason:
(a) Employee shall not be entitled to any severance or other compensation from
the Company, except as specifically provided in Section 4.3; and (b) Employee
shall not be entitled to participate in any employee benefits plans except
as
provided in such plans or as required by law. Without limitation on the
generality of the foregoing, this Section supersedes any plan or policy of
the
Company that provides for severance to its officers or employees, and Employee
shall not be entitled to any benefits under any such plan or
policy.
ARTICLE
V
INVENTIONS
AND TRADEMARK; CONFIDENTIAL INFORMATION; NON-
DISCLOSURE;
UNFAIR COMPETITION; CONFLICT OF INTEREST
5.1 Inventions
and Trademark.
All
ideas, inventions, trademarks, proprietary information, know-how, processes
and
other developments or improvements developed by Employee, alone or with others,
during the Term, that are within the scope of Company’s business operations or
that relate to Company’s work or projects, are the exclusive property of
Company. In that regard, Employee agrees to disclose promptly to Company any
and
all inventions, discoveries, trademarks, proprietary information, know-how,
processes or improvements, patentable or otherwise, that he may make from the
beginning of Employee’s employment until the termination thereof, that relate to
the business of Company, whether such is made solely or jointly with others.
Employee further agrees that, during the Term, he will provide Company with
a
reasonable level of assistance, at Company’s sole option and expense, to obtain
patents in the United States of America, or elsewhere on any such ideas,
inventions, trademarks and other developments, and agrees to execute all
documents necessary to obtain such patents in the name of Company.
5
5.2 Confidential
Information.
Employee shall hold and keep confidential for the benefit of Company all secret
or confidential information, files, documents other media in which confidential
information is contained, knowledge or data (collectively the “Confidential
Information”)
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by Employee during his employment
by
Company or any of its affiliated companies. Confidential Information does not
include information that is already public knowledge at the time of disclosure
(other than by acts by Employee or his representatives in violation of this
Agreement) or that is provided to Employee by a third party without an
obligation with Company to maintain the confidentiality of such information.
After termination of Employee’s employment with Company, he shall not, without
the prior written consent of Company, or as may otherwise be required by law
or
legal process, communicate or divulge any Confidential Information to anyone
other than Company and those designated by it. Employee shall acknowledge that
all confidential documents are and shall remain the sole and exclusive property
of Company regardless of who originally acquired the confidential documents.
Employee agrees to return to Company promptly upon the expiration or termination
of his employment or at any other time when requested by Company, any and all
property of Company, including, but not limited to, all confidential documents
and copies thereof in his possession or control. Any loss resulting from a
breach of the foregoing obligations by Employee to protect the Confidential
Information could not be reasonably or adequately compensated in damages in
an
action at law. Therefore, in addition to other remedies provided by law or
this
Agreement, Company shall have the right to obtain injunctive relief, in the
appropriate court, at any time, against the dissemination by Employee of the
Confidential Information, or the use of such information by Employee in
violation hereof.
5.2.1 Restriction
on Use of Confidential/Trade Secret Information.
Employee agrees that his use of confidential/trade secret information is subject
to the following restrictions for an indefinite period of time so long as the
confidential/trade secret information has not become generally known to the
public:
(a) Non-Disclosure.
Employee agrees that he will not publish or disclose, or allow to be published
or disclosed, confidential/trade secret information to any person without the
prior written authorization of the Company unless pursuant to Employee’s job
duties to the Company under this Agreement.
(b) Non-Removal/Surrender.
Employee agrees that he will not remove any confidential/trade secret
information from the offices of the Company or the premises of any facility
in
which the Company is performing services, except pursuant to his duties under
this Agreement. Employee further agrees that he shall surrender to the Company
all documents and materials in his possession or control which contain
confidential/trade secret information and which are the property of the Company
upon the termination of this Agreement, and that he shall not thereafter retain
any copies of any such materials.
6
5.2.2 Non-Solicitation
of Customers/Prohibition Against Unfair Competition.
Employee agrees that at no time after his employment with the Company will
he
engage in competition with the Company while making any use of the Company’s
confidential/trade secret information. Employee agrees that he will not directly
or indirectly accept or solicit, whether as an employee, independent contractor
or in any other capacity, the business of any customer of the Company with
whom
Employee worked or otherwise had access to the Company’s confidential/trade
secret information pertaining to its business with that customer during the
last
year of his employment with the Company.
5.3 Non-Solicitation
During Employment.
Employee shall not during his employment inappropriately interfere with the
Company’s business relationship with its customers or suppliers or solicit any
of the employees of the Company to leave the employ of the Company.
5.4 Non-Solicitation
of Employees.
Employee agrees that, for one year following the termination of his employment,
he shall not, directly or indirectly, ask or encourage any of the Company’s
employees to leave their employment with the Company or solicit any of the
Company’s employees for employment.
5.5 Breach
of Provisions.
If the
Employee breaches any of the provisions of this Section 5, or in the event
that
any such breach is threatened by the Employee, in addition to and without
limiting or waiving any other remedies available to the Company at law or in
equity, the Company shall be entitled to immediate injunctive relief in any
court, domestic or foreign, having the capacity to grant such relief, to
restrain any such breach or threatened breach and to enforce the provisions
of
this Section 5.
5.6 Reasonable
Restrictions.
The
parties acknowledge that the foregoing restrictions, as well as the duration
and
the territorial scope thereof as set forth in this Section 5, are under all
of
the circumstances reasonable and necessary for the protection of the Company
and
its business.
5.7 Definition.
For
purposes of this section 5, the term “Company”
shall
be deemed to include any parent, subsidiary or affiliate of the
Company.
ARTICLE
VI
MISCELLANEOUS
6.1 Binding
Effect; Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective legal representatives, heirs, distributees, successors and
assigns. Employee may not assign any of his rights and obligations under this
Agreement. The Company may assign its rights and obligations under this
Agreement to any successor entity.
7
6.2 Notices.
Any
notice provided for herein shall be in writing and shall be deemed to have
been
given or made (a) when personally delivered or (b) when sent by telecopier
and
confirmed within 48 hours by letter mailed or delivered to the party to be
notified at its or his/hers address set forth herein; or three days after being
sent by registered or certified mail, return receipt requested, (or by
equivalent xxxxxxx with delivery documentation such as FEDEX or UPS) to the
address of the other party set forth or to such other address as may be
specified by notice given in accordance with this section 6.2:
|
If
to the Company:
|
Pro
Elite, Inc.
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
Xx Xxxx
|
|
If
to Employee:
|
Xxxxxx
X. Xxxxxx
______________________
______________________
Telephone: (___)
___________
Facsimile: (___)
_____________
|
6.3 Severability.
If any
provision of this Agreement, or portion thereof, shall be held invalid or
unenforceable by a court of competent jurisdiction, such invalidity or
unenforceability shall attach only to such provision or portion thereof, and
shall not in any manner affect or render invalid or unenforceable any other
provision of this Agreement or portion thereof, and this Agreement shall be
carried out as if any such invalid or unenforceable provision or portion thereof
were not contained herein. In addition, any such invalid or unenforceable
provision or portion thereof shall be deemed, without further action on the
part
of the parties hereto, modified, amended or limited to the extent necessary
to
render the same valid and enforceable.
6.4 Waiver.
No
waiver by a party hereto of a breach or default hereunder by the other party
shall be considered valid, unless expressed in a writing signed by such first
party, and no such waiver shall be deemed a waiver of any subsequent breach
or
default of the same or any other nature.
6.5 Entire
Agreement.
This
Agreement sets forth the entire agreement between the Parties with respect
to
the subject matter hereof, and supersedes any and all prior agreements between
the Company and Employee, whether written or oral, relating to any or all
matters covered by and contained or otherwise dealt with in this Agreement.
This
Agreement does not constitute a commitment of the Company with regard to
Employee’s employment, express or implied, other than to the extent expressly
provided for herein.
6.6 Amendment.
No
modification, change or amendment of this Agreement or any of its provisions
shall be valid, unless in writing and signed by the party against whom such
claimed modification, change or amendment is sought to be enforced.
8
6.7 Authority.
The
Parties each represent and warrant that it/he or she has the power, authority
and right to enter into this Agreement and to carry out and perform the terms,
covenants and conditions hereof.
6.8 Attorneys’
Fees.
If
either party hereto commences an arbitration or other action against the other
party to enforce any of the terms hereof or because of the breach by such other
party of any of the terms hereof, the prevailing party shall be entitled, in
addition to any other relief granted, to all actual out-of-pocket costs and
expenses incurred by such prevailing party in connection with such action,
including, without limitation, all reasonable attorneys’ fees, and a right to
such costs and expenses shall be deemed to have accrued upon the commencement
of
such action and shall be enforceable whether or not such action is prosecuted
to
judgment.
6.9 Titles.
The
titles of the sections of this Agreement are inserted merely for convenience
and
ease of reference and shall not affect or modify the meaning of any of the
terms, covenants or conditions of this Agreement.
6.10 Applicable
Law; Choice of Forum.
This
Agreement, and all of the rights and obligations of the parties in connection
with the employment relationship established hereby, shall be governed by and
construed in accordance with the substantive laws of the State of California
without giving effect to principles relating to conflicts of law.
6.11 Arbitration.
6.11.1 Scope.
To the
fullest extent permitted by law, Employee and the Company agree to the binding
arbitration of any and all controversies, claims or disputes between them
arising out of or in any way related to this Agreement, the employment
relationship between the Company and Employee and any disputes upon termination
of employment, including but not limited to breach of contract, tort,
discrimination, harassment, wrongful termination, demotion, discipline, failure
to accommodate, family and medical leave, compensation or benefits claims,
constitutional claims; and any claims for violation of any local, state or
federal law, statute, regulation or ordinance or common law. For the purpose
of
this agreement to arbitrate, references to “Company” include all parent,
subsidiary or related entities and their employees, supervisors, officers,
directors, agents, pension or benefit plans, pension or benefit plan sponsors,
fiduciaries, administrators, affiliates and all successors and assigns of any
of
them, and this agreement to arbitrate shall apply to them to the extent
Employee’s claims arise out of or relate to their actions on behalf of the
Company.
6.11.2 Arbitration
Procedure.
To
commence any such arbitration proceeding, the party commencing the arbitration
must provide the other party with written notice of any and all claims forming
the basis of such right in sufficient detail to inform the other party of the
substance of such claims. In no event shall this notice for arbitration be
made
after the date when institution of legal or equitable proceedings based on
such
claims would be barred by the applicable statute of limitations. The arbitration
will be conducted in Los Angeles, California, by a single neutral arbitrator
and
in accordance with the then-current rules for resolution of employment disputes
of the American Arbitration Association (“AAA”).
The
Arbitrator is to be selected by the mutual agreement of the Parties. If the
Parties cannot agree, the Superior Court will select the arbitrator. The parties
are entitled to representation by an attorney or other representative of their
choosing. The arbitrator shall have the power to enter any award that could
be
entered by a judge of the trial court of the State of California, and only
such
power, and shall follow the law. The award shall be binding and the Parties
agree to abide by and perform any award rendered by the arbitrator. The
arbitrator shall issue the award in writing and therein state the essential
findings and conclusions on which the award is based. Judgment on the award
may
be entered in any court having jurisdiction thereof. The Company shall bear
the
costs of the arbitration filing and hearing fees and the cost of the
arbitrator.
9
6.12 This
Agreement shall not be terminated by any voluntary or involuntary dissolution
of
the Company resulting from either a merger or consolidation in which the Company
is not the consolidated or surviving corporation, or a transfer of all or
substantially all of the assets of the Company. In the event of any such merger
or consolidation or transfer of assets, Employee’s rights, benefits and
obligations hereunder shall be assigned to the surviving or resulting
corporation or the transferee of the Company’s assets.
[Signature
page to follow]
10
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
|
/s/
Xxxxxx X.
Xxxxxx
Xxxxxx
X. Xxxxxx
|
Pro
Elite, Inc., a New Jersey corporation
By:/s/
Xxxxxxx
XxXxxx
Xxxxxxx
XxXxxx, Chief Executive Officer
|
11
