EMPLOYMENT AGREEMENT
Exhibit
10.3
THIS
AGREEMENT (the “Agreement”), made in New York, New York as of the 16th day of
May 2007,
between Xxxxxx Xxxxxx, Ltd., a Delaware corporation (the “Company”),
and Xxxxxxx
Xxxxxxxxx (“Executive”).
WHEREAS,
the Company intends to acquire all of the issued and outstanding ownership
interests of Compo Enhancements, LLC (“Compo”) pursuant to a Membership Interest
Purchase Agreement by and among the Company and the members of Compo, including
Executive (the “Membership Interest Purchase Agreement”);
WHEREAS,
this Agreement is to be effective upon the Closing (as defined in the Membership
Interest Purchase Agreement);
WHEREAS,
the Company wishes to ensure that it will continue to have the benefits of
Executive's services after the Closing on the terms and conditions hereinafter
set forth;
WHEREAS,
the Company and Executive acknowledge and agree that the retention of
Executive's services and Executive's agreement to enter into and adhere to
the
noncompetition, nonsolicitation and nondisclosure of proprietary information
provisions contained in this Agreement are critical reasons for the Company
entering into the Membership Interest Purchase Agreement and consummating the
transactions contemplated thereby; and
WHEREAS,
Executive desires to work for the Company on the terms and conditions
hereinafter set forth;
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants and agreements hereinafter
set forth, the Company and Executive agree as follows:
1. Term. The
term of employment shall commence upon the Closing, if one occurs (the
“Effective Date”) and shall continue until December 31, 2009, subject to earlier
termination as provided herein (the “Term”).
2. Employment.
(a) Employment
by the Company. Executive agrees to be employed by the Company
during the Term upon the terms and subject to the conditions set forth in this
Agreement. Executive shall serve as the President of the Company and
shall report to the Chief Executive Officer of the Company.
(b) Performance
of Duties. Throughout his employment with the Company, Executive
shall faithfully and diligently perform Executive’s duties in conformity with
the directions of the Company and serve the Company to the best of Executive’s
ability.
Except
as
otherwise consented to in writing by the Board of Directors of the Company,
Executive shall devote his full business time and best efforts to the business
and affairs of the Company. In his capacity as the President of the
Company, Executive shall have such duties and responsibilities as he may be
assigned by the Chief Executive Offer or the Board of Directors of the Company,
not inconsistent with his position as President of the
Company. Executive shall also cooperate as requested by the Company
in connection with the Company obtaining a life insurance policy for the
Executive.
3. Compensation
and Benefits.
(a) Base
Salary. The Company agrees to pay to Executive a base salary
(“Base Salary”) at the annual rate of $600,000. Payments of the Base
Salary shall be payable in equal installments in accordance with the Company’s
standard payroll practices.
(b) Annual
Bonus. Upon the approval of this Agreement, the Compensation
Committee of the Board of Directors of the Company (the “Compensation
Committee”) shall approve the following cash bonus opportunity with respect to
each fiscal year occurring during the Term:
(i) After
the
end of each fiscal year, the Company shall compute the change in the EBIT (as
defined below) between such fiscal year (the “Most Recently Completed Year”) and
the fiscal year immediately preceding the Most Recently Completed Year (such
change, the Company’s “EBIT Growth”). Based on such EBIT Growth, and
upon the Compensation Committee’s certification of the achievement of any such
EBIT Growth, Executive shall be paid (pursuant to the terms of 3(b)(ii) below)
a
cash bonus (the “Annual Bonus”) as follows:
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(A)
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with
respect to that portion of the Company’s EBIT Growth that is in range of
0% to 10% (if any), Executive shall be paid a cash bonus of 2% of
such
portion of EBIT Growth;
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(B)
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with
respect to that portion of the Company’s EBIT Growth (if any) that is in
the range of over 10% to 20%, Executive shall be paid a cash bonus
of 3%
of such portion of EBIT Growth; and
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(C)
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with
respect to that portion of the Company’s EBIT Growth (if any) that is over
20%, Executive shall be paid a cash bonus of 5% of such portion
of EBIT Growth.
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Notwithstanding
anything in this Section 3(b)(i) to the contrary, (X) the maximum aggregate
Annual Bonus to which Executive shall be eligible pursuant to this Section
3(b)
in any fiscal year shall be $1,400,000 and (Y) with respect to the 2007 fiscal
year, any Annual Bonus shall be pro-rated to reflect the percentage of the
year
in which Executive was employed with the Company. “EBIT” shall mean
the Company’s earnings before interest and taxes as determined in accordance
with United States generally accepted accounting principles consistently
applied. In calculating EBIT, the following items shall be
disregarded by the Compensation Committee: (a) the disposal of a
business or discontinued operations; (b) capital transactions undertaken by
the
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Company
during the fiscal year (other than the Compo transaction); (c) unbudgeted
changes in accounting principles or to changes in applicable law or regulations;
or (d) extraordinary items and other unusual or non-recurring charges as
provided under applicable accounting principles.
(ii) The
Annual Bonus, if any, shall be paid no later than March 15th after the
end of
the Most Recently Competed Fiscal Year, which is the calendar year, following
the Compensation Committee’s certification that the EBIT Growth targets have
been achieved, provided, that the Executive shall be actively employed through
such payment date.
(iii) Other
than with respect to the Annual Bonus relating to the 2007 fiscal year, the
Annual Bonus shall be granted under the Company’s 2006 Stock Incentive Plan as a
“Performance-Based Cash Award” (as defined under the Company’s 2006 Stock
Incentive Plan) and shall be subject to the terms and conditions under the
Company’s 2006 Stock Incentive Plan.
(c) Stock
Options. Upon the approval of this Agreement, the Compensation
Committee shall grant to the Executive the following stock options under the
Company’s 2006 Stock Incentive Plan to be effective upon, and subject to, the
occurrence of the Closing:
(i) an
option
to purchase an aggregate of 150,000 shares of common stock, par value $ 0.0001
per share of the Company (“Common Stock”), which shall vest in 50,000 share
increments on the first, second and third anniversaries of the Effective Date
(subject to the Executive’s continued employment through such
dates), shall have an exercise price of $45.00 per share, shall
remain exercisable for five (5) years from the Effective Date (subject to
earlier termination due to a termination of employment), and which
shall be pursuant to a Stock Option Grant Agreement of even date herewith
between the Company and Executive, in substantially the form attached hereto
as
Exhibit A.
(ii) an
option
to purchase an aggregate of 150,000 shares of Common Stock, which shall vest
in
50,000 share increments on the first, second and third anniversaries of the
Effective Date (subject to the Executive’s continued employment through such
date), shall have an exercise price of $50.00 per share, shall remain
exercisable for five (5) years from the Effective Date, and which shall be
pursuant to a Stock Option Grant Agreement of even date herewith between the
Company and Executive, in substantially the form attached hereto as Exhibit
B.
(d) Benefits. Executive
shall be entitled to participate in, to the extent Executive is otherwise
eligible under the terms thereof, the benefit plans and programs, and receive
the benefits, generally provided by the Company to senior executives of the
Company, including without limitation family medical insurance (subject to
applicable employee contributions). Executive shall be entitled to
receive vacation days in accordance with Company policy, such days to be accrued
in accordance with Company policy.
(e) Business
Expenses. The Company agrees to reimburse Executive for all
reasonable and necessary travel, business entertainment and other business
expenses incurred by Executive in connection with the performance of his duties
under this Agreement.
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Such
reimbursements shall be made by the Company on a
timely basis upon submission by Executive of vouchers in accordance with the
Company’s standard procedures.
(f)
No
Other Compensation or Benefits; Payment. The compensation and
benefits specified in this Section 3 and in Section 5 of this Agreement shall
be
in lieu of any and all other compensation and benefits. Payment of
all compensation and benefits to Executive specified in this Section 3 and
in
Section 5 of this Agreement (i) shall be made in accordance with the relevant
Company policies in effect from time to time to the extent the same are
consistently applied, including normal payroll practices, and (ii) shall be
subject to all legally required and customary withholdings.
(g) Cessation
of Employment. In the event Executive shall cease to be employed
by the Company for any reason, Executive’s compensation and benefits shall cease
on the date of such event, except as otherwise specifically provided herein
or
in any applicable employee benefit plan or program or as required by
law.
4. Termination
of Employment. Executive’s employment hereunder may be terminated
prior to the end of the Term under the following circumstances.
(a) Death. Executive’s
employment hereunder shall terminate upon Executive’s death.
(b) Executive
Becoming Totally Disabled. The Company may terminate Executive’s
employment hereunder at any time after Executive becomes “Totally
Disabled.” For purposes of this Agreement, Executive shall be
“Totally Disabled” in the event Executive is unable to perform the duties and
responsibilities contemplated under this Agreement, due to physical or mental
incapacity or impairment, for a period of either (A) 120 consecutive days or
(B)
6 months in any 12-month period . During any period that Executive
fails to perform Executive’s duties hereunder as a result of such incapacity due
to physical or mental illness (the “Disability Period”), Executive shall
continue to receive the compensation and benefits provided by Section 3 of
this
Agreement until Executive’s employment hereunder is terminated,
provided that such period shall not exceed 29
months. Notwithstanding the foregoing, the amount of base
compensation and benefits received by Executive during the Disability Period
shall be reduced by the aggregate amounts, if any, payable to Executive under
any disability benefit plan or program provided to Executive by the
Company.
(c) Termination
by the Company for Cause. The Company may terminate Executive’s
employment hereunder for Cause at any time after providing written notice to
Executive. For purposes of this Agreement, the term “Cause” shall
mean any of the following: (i) Executive’s neglect or failure or
refusal to perform his duties under this Agreement (other than as a result
of
total or partial incapacity due to physical or mental illness); (ii) any act
by
or omission of Executive constituting gross negligence or willful misconduct
in
connection with the performance of his duties that could reasonably be expected
to materially injure the reputation, business or business relationships of
the
Company or any of its affiliates; (iii) perpetration of an intentional and
knowing fraud against or affecting the Company or any of its affiliates or
any
customer, client, agent, or employee thereof; (iv) the commission by or
indictment of Executive for (A) a felony or (B) any misdemeanor involving moral
turpitude,
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deceit,
dishonesty or fraud (“indictment,” for these purposes, meaning a United
States-based indictment, probable cause hearing or any other procedure pursuant
to which an initial determination of probable or reasonable cause with respect
to such offense is made); (v) the breach of a covenant set forth in Section
6;
or (vi) any other material breach of this Agreement.
(d) Termination
by the Company Without Cause. The Company may terminate
Executive’s employment hereunder at any time for any reason or no reason by
giving Executive thirty (30) days prior written notice of the
termination. Following any such notice, the Company may reduce or
remove any and all of Executive’s duties, positions and titles with the
Company.
(e) Termination
Upon a Change in Control. If the Company terminates Executive’s
employment hereunder without Cause within 90 days after the occurrence of the
Change in Control Executive shall be entitled to the payments provided for
by
Section 5(d). For purposes of this Agreement, a “Change in Control”
shall be conclusively deemed to have occurred if any of the following shall
have
taken place:
(i) the
consummation of a transaction or a series of related transactions pursuant
to
which any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934 (“Exchange Act”), other than the Executive, his
designee(s) or “affiliate(s)” (as defined in Rule 12b-2 under the Exchange Act),
is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
forty percent (40%) or more of the combined voting power of the Company’s then
outstanding securities;
(ii) stockholders
of the Company approve a merger or consolidation of the Company with any other
entity, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than eighty percent (80%) of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation;
or
(iii) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of, or the
Company sells or disposes of, all or substantially all of the Company’s
assets.
(f) Termination
by Executive. Executive may terminate his employment hereunder at
any time for any reason or no reason by giving the Company thirty (30) days
prior written notice of the termination. Following any such notice,
the Company may reduce or remove any and all of Executive’s duties, positions
and titles with the Company.
5. Compensation
Following Termination. In the event that Executive’s employment
hereunder is terminated, Executive shall be entitled only to the following
compensation and benefits upon such termination:
(a) General. On
any termination of Executive’s employment prior to the end of the Term,
Executive shall be entitled to the following (collectively, the
“Standard
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Termination
Payments”), which shall be paid within 60
days of termination:
(i) any
accrued but unpaid Base Salary for services rendered through the date of
termination; provided, however, that in the event Executive’s employment is
terminated pursuant to Section 4(b), the amount of Base Salary received by
Executive during the Disability Period shall be reduced by the aggregate
amounts, if any, payable to Executive under any disability benefit plan or
program provided to Executive by the Company;
(ii) any
vacation accrued to the date of termination, in accordance with Company
policy;
(iii) any
accrued but unpaid expenses through the date of termination required to be
reimbursed in accordance with Section 3(d) of this Agreement; and
(iv) any
benefits to which he may be entitled upon termination pursuant to the grants
referred to in Section 3(c) hereof in accordance with the terms of such
grants.
(b) Termination
Prior to the Expiration of the Term by Reason of Death or Executive Becoming
Totally Disabled; Termination Prior to the Expiration of the Term by the Company
for Cause; Termination Prior to the Expiration of the Term by
Executive. In the event that Executive’s employment is terminated
prior to the expiration of the Term (i) by reason of Executive’s death pursuant
to Section 4(a) or Executive becoming Totally Disabled pursuant to Section
4(b),
(ii) by the Company for Cause pursuant to Section 4(c) or (iii) by Executive
pursuant to Section 4(f), Executive (or his estate, as the case may be) shall
be
entitled only to the Standard Termination Payments.
(c) Termination
Prior to the Expiration of the Term by the Company Without
Cause. In the event that Executive’s employment is terminated
prior to the expiration of the Term by the Company without Cause pursuant to
Section 4(d), Executive shall be entitled only to the following:
(i) the
Standard Termination Payments; and
(ii) the
continued payment of the Base Salary (as determined pursuant to Section 3(a))
throughout the Term. Such sums are to be paid at the times and in the
amounts such Base Salary would have been paid had Executive’s employment not
terminated; provided, however, that (A) no payments in excess of Executive’s
Separation Pay Limit shall be made for a six-month period following the date
of
termination, and (B) any amounts delayed pursuant to clause (A) shall be paid
in
a lump sum six months following the date of termination.
(iii) For
purposes of paragraphs (c) and (d) of this Section 5, Separation Pay Limit
means
the lesser of two times Executives annual compensation for the prior year or
two
times the Code Section 401(a)(17) limit for the year of termination
(d) Termination
Upon a Change of Control. In the event that the
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Company
terminates Executive’s employment hereunder
without Cause within 90 days after the occurrence of the Change in Control
pursuant to Section 4(e), Executive shall be entitled only to the following
payments:
(i) the
Standard Termination Payments; and
(ii) a
payment
of three times the total average compensation earned by Executive pursuant
to
Sections 3(a) and (b) hereof for the last three prior fiscal years (or since
the
Effective Date if shorter), up to that amount which is permitted to be paid
pursuant to Section 280G of the Code without the
imposition of any excise or other similar additional tax, which payment is
to be
made within 60 days of termination of employment.
(e) Effect
of Material Breach of Section 6 on Compensation and Benefits Following
Termination of Employment Pursuant to Sections 5(c)(ii) or
5(d)(ii). If, at the time of termination of Executive’s
employment for any reason prior to the expiration of the Term or any time
thereafter, Executive is in material breach of any covenant contained in Section
6 hereof, Executive (or his estate, as applicable) shall not be entitled to
any
payment (or if payments have commenced, any continued payment) under Sections
5(c)(ii) or 5(d)(ii).
(f) No
Further Liability; Release. Payment made and performance by the
Company in accordance with this Section 5 shall operate to fully discharge
and
release the Company and its directors, officers, employees, affiliates,
stockholders, successors, assigns, agents and representatives from any further
obligation or liability with respect to Executive’s employment and termination
of employment. Other than providing the compensation and benefits
provided for in accordance with this Section 5, the Company and its directors,
officers, employees, affiliates, stockholders, successors, assigns, agents
and
representatives shall have no further obligation or liability to Executive
or
any other person under this Agreement. The payment of any amounts
pursuant to this Section 5 (other than payments required by law) is expressly
conditioned upon the delivery by Executive to the Company of a release in form
and substance reasonably satisfactory to the Company of any and all claims
Executive may have against the Company and its directors, officers, employees,
affiliates, stockholders, successors, assigns, agents and representatives
arising out of or related to Executive’s employment by the Company and the
termination of such employment.
6. Exclusive
Employment; Non-competition; Non-solicitation; Nondisclosure of Proprietary
Information; Surrender of Records; Inventions and Patents; Code of
Ethics.
(a) No
Conflict; No Other Employment. During the period of Executive’s
employment with the Company, Executive shall not: (i) engage in any
activity which conflicts or interferes with or derogates from the performance
of
Executive’s duties hereunder nor shall Executive engage in any other business
activity, whether or not such business activity is pursued for gain or profit
and including service as a director of any other company, except as approved
in
advance in writing by the Company; provided, however, that Executive shall
be
entitled to manage his personal investments and otherwise attend to personal
affairs, including charitable, social and political activities, in a manner
that
does not unreasonably interfere with his responsibilities hereunder, or (ii)
accept or engage in any other
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employment,
whether as an employee or consultant or in any other capacity, and whether
or
not compensated therefor.
(b) Non-competition;
Non-solicitation.
(i) Executive
acknowledges and recognizes the highly competitive nature of the Company’s
business and that access to the Company’s confidential records and proprietary
information renders him special and unique within the Company’s
industry. In consideration of the payment by the Company to Executive
of amounts that may hereafter be paid to Executive pursuant to this Agreement
(including, without limitation, pursuant to Sections 3 and 5 hereof) and other
obligations undertaken by the Company hereunder, Executive agrees that through
December 31, 2011 (the “Covered Time”), Executive shall not, directly or
indirectly, engage (as owner, investor, partner, stockholder, employer,
employee, consultant, advisor, director or otherwise) in any Competing Business,
provided that the provisions of this Section 6(b) will not be deemed
breached merely because Executive, (X) owns less than 1% of the outstanding
common stock of a publicly-traded company (Y) owns no more than 50% of the
so
called “Preschoolians” business and/or sits on the board of such business,
provided that Executive is not active in the management of such business or
(Z)
participates in the so called “Preschoolians” business (including being active
in the management of such business), so long as (i) such participation does
not
occur prior to January 1, 2010, and (ii) such
“Preschoolians” business is substantially similar in scope and
business line and is conducted in a substantially similar manner as it is
presently conducted as of the date of this Agreement. For purposes of this
Agreement, “Competing Business” shall mean (i) any business in which the Company
or its affiliates are currently engaged anywhere in the world; and (ii) any
other business in which the Company engages in anywhere in the world during
the
Term (including any so called e-commerce business).
(ii) In
further consideration of the payment by the Company to Executive of amounts
that
may hereafter be paid to Executive pursuant to this Agreement (including,
without limitation, pursuant to Sections 3 and 5 hereof) and other obligations
undertaken by the Company hereunder, Executive agrees that during his employment
and the Covered Time, he shall not, directly or indirectly, (i) solicit,
encourage or attempt to solicit or encourage any of the employees, agents,
consultants or representatives of the Company or any of its affiliates to
terminate his, her, or its relationship with the Company or such affiliate;
(ii) solicit, encourage or attempt to solicit or encourage any of the
employees, agents, consultants or representatives of the Company or any of
its
affiliates to become employees, agents, representatives or consultants of any
other person or entity; (iii) solicit or attempt to solicit any customer, vendor
or distributor of the Company or any of its affiliates with respect to any
product or service being furnished, made, sold or leased by the Company or
such
affiliate; or persuade
or seek to persuade any customer of the Company or any affiliate to cease to
do
business or to reduce the amount of business which any customer has customarily
done or contemplates doing with the Company or such affiliate, whether or not
the relationship between the Company or its affiliate and such customer was
originally established in whole or in part through Executive’s
efforts. For purposes of this Section 6(b) only, the terms
“customer,” “vendor” and “distributor” shall mean a customer, vendor or
distributor who has done business with the Company or any of its affiliates
within twelve months preceding the termination of Executive’s
employment.
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(iii) During
Executive’s employment with the Company and during the Covered Time, Executive
agrees that upon the earlier of Executive’s (i) negotiating with any Competitor
(as defined below) concerning the possible employment of Executive by the
Competitor, (ii) receiving an offer of employment from a Competitor, or (iii)
becoming employed by a Competitor, Executive will (A) immediately provide notice
to the Company of such circumstances and (B) provide copies of Section 6 of
this
Agreement to the Competitor. Executive further agrees that the
Company may provide notice to a Competitor of Executive’s obligations under this
Agreement, including without limitation Executive’s obligations pursuant to
Section 6 hereof. For purposes of this Agreement, “Competitor” shall
mean any entity (other than the Company or any of its affiliates) that engages,
directly or indirectly, in any Competing Business.
(iv) Executive
understands that the provisions of this Section 6(b) may limit his ability
to
earn a livelihood in a business similar to the business of Compo, the Company
or
its affiliates but nevertheless agrees and hereby acknowledges that the
consideration provided under this Agreement, including any amounts or benefits
provided under Sections 3 and 5 hereof and other obligations undertaken by
the
Company hereunder, is sufficient to justify the restrictions contained in such
provisions. In consideration thereof and in light of Executive’s
education, skills and abilities, Executive agrees that he will not assert in
any
forum that such provisions prevent him from earning a living or otherwise are
void or unenforceable or should be held void or unenforceable.
(c) Proprietary
Information. Executive acknowledges that during the course of his
employment with the Company he will necessarily have access to and make use
of
proprietary information and confidential records of the Company and its
affiliates. Executive covenants that he shall not during the Term or
at any time thereafter, directly or indirectly, use for his own purpose or
for
the benefit of any person or entity other than the Company, nor otherwise
disclose, any proprietary information to any individual or entity, unless such
disclosure has been authorized in writing by the Company or is otherwise
required by law. Executive acknowledges and understands that the term
“proprietary information” includes, but is not limited to: (a)
inventions, trade secrets, ideas, processes, formulas, source and object codes,
data, programs, other works of authorship, know-how, improvements, research,
discoveries, developments, designs, and techniques regarding any of the
foregoing utilized by the Company or any of its affiliates; (b) the name
and/or address of any customer or vendor of the Company or any of its affiliates
or any information concerning the transactions or relations of any customer
or
vendor of the Company or any of its affiliates with the Company or such
affiliate or any of its or their partners, principals, directors, officers
or
agents; (c) any information concerning any product, technology, or procedure
employed by the Company or any of its affiliates but not generally known to
its
or their customers, vendors or competitors, or under development by or being
tested by the Company or any of its affiliates but not at the time offered
generally to customers or vendors; (d) any information
relating to the pricing or marketing methods, sales margins, cost of goods,
cost
of material, capital structure, operating results, borrowing arrangements or
business plans of the Company or any of its affiliates; (e) any information
which is generally regarded as confidential or proprietary in any line of
business engaged in by the Company or any of its affiliates; (f) any business
plans, budgets, advertising or marketing plans; (g) any information contained
in
any of the written or oral policies and procedures or manuals of the Company
or
any of its affiliates; (h) any information
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belonging
to customers or vendors of the Company or any of its affiliates or any other
person or entity which the Company or any of its affiliates has agreed to hold
in confidence; (i) any inventions, innovations or improvements covered by this
Agreement; and (j) all written, graphic and other material relating to any
of the foregoing. Executive acknowledges and understands that
information that is not novel or copyrighted or patented may nonetheless be
proprietary information. The term “proprietary information” shall not
include information generally available to and known by the public or
information that is or becomes available to Executive on a non-confidential
basis from a source other than the Company, any of its affiliates, or the
directors, officers, employees, partners, principals or agents of the Company
or
any of its affiliates (other than as a result of a breach of any obligation
of
confidentiality).
(d) Confidentiality
and Surrender of Records. Executive shall not during the Term or
at any time thereafter (irrespective of the circumstances under which
Executive’s employment by the Company terminates), except as required by law,
directly or indirectly publish, make known or in any fashion disclose any
confidential records to, or permit any inspection or copying of confidential
records by, any individual or entity other than in the course of such
individual’s or entity’s employment or retention by the Company. Upon
termination of employment for any reason or upon request by the Company,
Executive shall deliver promptly to the Company all property and records of
the
Company or any of its affiliates, including, without limitation, all
confidential records. For purposes hereof, “confidential records”
means all correspondence, reports, memoranda, files, manuals, books, lists,
financial, operating or marketing records, magnetic tape, or electronic or
other
media or equipment of any kind which may be in Executive’s possession or under
his control or accessible to him which contain any proprietary
information. All property and records of the Company and any of its
affiliates (including, without limitation, all confidential records) shall
be
and remain the sole property of the Company or such affiliate during the Term
and thereafter.
(e) Inventions
and Patents.
(i) The
Executive agrees that all processes, technologies and inventions (collectively,
"Inventions"), including new contributions, improvements, ideas and discoveries,
whether patentable or not, conceived, developed, invented or made by him during
the Term shall belong to the Company, provided that such Inventions grew out
of
the Executive's work with the Company or any of its subsidiaries or affiliates,
are related in any manner to the business (commercial or experimental) of the
Company or any of its subsidiaries or affiliates or are conceived or made on
the
Company's time or with the use of the Company's facilities or
materials. The Executive shall further: (a) promptly
disclose such Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent and other rights to such Inventions for
the
United States and foreign countries; (c) sign all papers necessary to carry
out
the foregoing; and (d) give testimony in support of the Executive's
inventorship.
(ii) If
any
Invention is described in a patent application or is disclosed to third parties,
directly or indirectly, by the Executive within two years after the termination
of the Executive's employment by the Company, it is to be presumed that the
Invention was conceived or made during the Term.
(iii) The
Executive agrees that the Executive will not assert any rights
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to
any
Invention as having been made or acquired by the Executive prior to the date
of
this Agreement, except for Inventions, if any, disclosed to the Company in
writing prior to the date hereof.
(iv) The
Company shall be the sole owner of all the products and proceeds of the
Executive's services hereunder, including, but not limited to, all materials,
ideas, concepts, formats, suggestions, developments, arrangements, packages,
programs and other intellectual properties that the Executive may acquire,
obtain, develop or create in connection with and during the Term, free and
clear
of any claims by the Executive (or anyone claiming under the Executive) of
any
kind or character whatsoever (other than the Executive's right to receive
payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
(f) Enforcement. Executive
acknowledges and agrees that, by virtue of his position, his services and access
to and use of confidential records and proprietary information, any violation
by
him of any of the undertakings contained in this Section 6 would cause the
Company and/or its affiliates immediate, substantial and irreparable injury
for
which it or they have no adequate remedy at law. Accordingly,
Executive agrees and consents to the entry of an injunction or other equitable
relief by a court of competent jurisdiction restraining any violation or
threatened violation of any undertaking contained in this Section
6. Executive waives posting by the Company or its affiliates of any
bond otherwise necessary to secure such injunction or other equitable
relief. Rights and remedies provided for in this Section 6 are
cumulative and shall be in addition to rights and remedies otherwise available
to the parties hereunder or under any other agreement or applicable
law.
(g) Code
of Ethics. Nothing in this Section 6 is intended to limit, modify
or reduce Executive’s obligations under the Company’s Code of
Ethics. Executive’s obligations under this Section 6 are in addition
to, and not in lieu of, Executive’s obligations under the Code of
Ethics. To the extent there is any inconsistency between this Section
6 and the Code of Ethics which would permit Executive to take any action or
engage in any activity pursuant to this Section 6 which he would be barred
from
taking or engaging in under the Code of Ethics, the Code of Ethics shall
control.
7. Assignment
and Transfer.
(a) Company. This
Agreement shall inure to the benefit of and be enforceable by, and may be
assigned by the Company without Executive’s consent to, any purchaser of all or
substantially all of the Company’s business or assets, or to any successor to
the Company or any assignee thereof (whether direct or indirect, by purchase,
merger, consolidation or otherwise).
(b) Executive.
The parties hereto agree that Executive is obligated under this Agreement to
render personal services during his employment of a special, unique, unusual,
extraordinary and intellectual character, thereby giving this Agreement special
value. Executive’s rights and obligations under this Agreement shall
not be transferable by Executive
11
by
assignment or otherwise, and any purported assignment, transfer or delegation
thereof shall be void; provided, however, that if Executive shall die, all
amounts then payable to Executive hereunder shall be paid in accordance with
the
terms of this Agreement to Executive’s estate.
8. Miscellaneous.
(a) Cooperation. Following
termination of employment with the Company for any reason, Executive shall
cooperate with the Company, as requested by the Company, to effect a transition
of Executive’s responsibilities and to ensure that the Company is aware of all
matters being handled by Executive.
(b) Mitigation. Executive
shall not be required to mitigate damages or the amount of any payment provided
to him under Section 5 of this Agreement by seeking other employment or
otherwise, nor shall the amount of any payments provided to Executive under
Section 5 be reduced by any compensation earned by Executive as the result
of
employment by another employer after the termination of Executive’s employment
or otherwise.
(c) Protection
of Reputation. During the Term and thereafter, Executive agrees
that he will take no action which is intended, or would reasonably be expected,
to harm the Company or any of its affiliates or its or their reputation or
which
would reasonably be expected to lead to unwanted or unfavorable publicity to
the
Company or its affiliates. Nothing herein shall prevent Executive
from making any truthful statement in connection with any legal proceeding
or
investigation by the Company or any governmental authority.
(d) Governing
Law; Consent to Jurisdiction. This Agreement shall be governed by
and construed (both as to validity and performance) and enforced in accordance
with the internal laws of the State of New York applicable to agreements made
and to be performed wholly within such jurisdiction, without regard to the
principles of conflicts of law or where the parties are located at the time
a
dispute arises. In the event of any controversy or claim arising out
of or relating to this Agreement or the breach or alleged breach hereof, each
of
the parties hereto irrevocably (a) consents to the jurisdiction of any state
court sitting in the County of New York, State of New York, or federal court
sitting in the County of New York, State of New York. (b) waives any objection
which it may have at any time to the laying of venue of any action or proceeding
brought in any such court and (c) waives any claim that such action or
proceeding has been brought in an inconvenient forum.
(e) Injunctive
Relief. Notwithstanding anything to the contrary contained
herein, the Company and any affiliate of the Company (if applicable) shall
have
the right to seek injunctive or other equitable relief from a court of competent
jurisdiction to enforce Section 6 of this Agreement without any obligation
to
post a bond.
(f) Entire
Agreement. This Agreement (including the plans referenced in
Section 3(d) of this Agreement) contain the entire agreement and understanding
between the parties hereto in respect of Executive’s employment from and after
the date hereof and supersede, cancel and annul any prior or contemporaneous
written or oral agreements, understandings, commitments and practices between
them respecting Executive’s employment from and after the date hereof, including
all prior employment agreements between the Company
12
and
Executive.
(g) Amendment. This
Agreement may be amended only by a writing which makes express reference to
this
Agreement as the subject of such amendment and which is signed by Executive
and,
on behalf of the Company, by its duly authorized officer.
(h) Severability.
If any provision of this Agreement or the application of any such provision
to
any party or circumstances shall be determined by any court of competent
jurisdiction or arbitration panel to be invalid or unenforceable to any extent,
the remainder of this Agreement, or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be enforced to the fullest extent permitted by law. If
any provision of this Agreement, or any part thereof, is held to be invalid
or
unenforceable because of the scope or duration of or the area covered by such
provision, the parties hereto agree that the court or arbitration panel making
such determination shall reduce the scope, duration and/or area of such
provision (and shall substitute appropriate provisions for any such invalid
or
unenforceable provisions) in order to make such provision enforceable to the
fullest extent permitted by law and/or shall delete specific words and phrases,
and such modified provision shall then be enforceable and shall be
enforced. The parties hereto recognize that if, in any judicial or
arbitral proceeding, a court or arbitration panel shall refuse to enforce any
of
the separate covenants contained in this Agreement, then that invalid or
unenforceable covenant contained in this Agreement shall be deemed eliminated
from these provisions to the extent necessary to permit the remaining separate
covenants to be enforced. In the event that any court or arbitration
panel determines that the time period or the area, or both, are unreasonable
and
that any of the covenants is to that extent invalid or unenforceable, the
parties hereto agree that such covenants will remain in full force and effect,
first, for the greatest time period, and second, in the greatest geographical
area that would not render them unenforceable.
(i) Construction. The
headings and captions of this Agreement are provided for convenience only and
are intended to have no effect in construing or interpreting this
Agreement. The language in all parts of this Agreement shall be in
all cases construed according to its fair meaning and not strictly for or
against the Company or Executive. As used herein, the words “day” or
“days” shall mean a calendar day or days.
(j) Section
409A Consistency. Any payments made pursuant to this Agreement
are intended to comply with Section 409A of the Code, and any ambiguities in
the
Agreement shall be resolved so as to comply with the requirements of Section
409A of the Code.
(k) Non-waiver. Neither
any course of dealing nor any failure or neglect of either party hereto in
any
instance to exercise any right, power or privilege hereunder or under law shall
constitute a waiver of any other right, power or privilege or of the same right,
power or privilege in any other instance. All waivers by either party
hereto must be contained in a written instrument signed by the party to be
charged and, in the case of the Company, by its duly authorized
officer.
(l) Notices. Any
notice required or permitted hereunder shall be in writing and shall be
sufficiently given if personally delivered or if sent by registered or certified
13
mail,
postage prepaid, with return receipt requested,
addressed:
(i) in
the
case of the Company, to :
|
If
to the Company:
|
|
|
Xxxxxx
Xxxxxx, Ltd
|
|
|
52-10
Xxxxxxx Xxx.
|
|
|
Xxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
|
|
|
Xxtention:
|
Chief
Executive Officer
|
|
Telephone
Number:
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(000)
000-0000
|
|
Facsimile
Number:
|
(000)
000-0000
|
|
With
a copy to:
|
|
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Xxxxx
X. Xxxxxx, Esq.
|
|
|
Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
|
|
|
1177
Xxxxxx xx xxx Xxxxxxxx
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Xxlephone
Number:
|
(000)
000-0000
|
|
Facsimile
Number:
|
(000)
000-0000
|
(ii) in
the
case of Executive, to Executive’s last known address as reflected in the
Company’s records, or to such other address as Executive shall designate by
written notice to the Company.
Any
notice given hereunder shall be deemed to have been given at the time of receipt
thereof by the person to whom such notice is given if personally delivered
or at
the time of mailing if sent by registered or certified mail.
(m) Assistance
in Proceedings, Etc. Executive shall, without additional
compensation, during and after the Term, upon reasonable notice, furnish such
information and proper assistance to the Company as may reasonably be required
by the Company in connection with any legal or quasi-legal proceeding, including
any external or internal investigation, involving the Company or any of its
affiliates.
(n) Survival. Cessation
or termination of Executive’s employment with the Company shall not result in
termination of this Agreement. The respective obligations of
Executive and the Company as provided in Sections 5, 6, 7 and 8 of this
Agreement shall survive cessation or termination of Executive’s employment
hereunder.
(o) Section
409A of the Code.
(i) It
is the
parties’ intention that this Agreement not result in any tax being imposed under
Section 409A of the Code and in the case of any ambiguity the Agreement shall
be
construed in such manner.
14
(ii) Notwithstanding
the foregoing, the Company makes no representations regarding the tax
implications of the compensation and benefits to be paid to Executive under
this
Agreement, including, without limitation, under Section 409A of the
Code. The parties agree that in the event a qualified tax advisor to
the Company or to Executive (neither party being required to retain such
advisor) reasonably advises that the terms hereof would result in Executive
being subject to tax under Section 409A of the Code, Executive and the Company
shall negotiate in good faith to amend this Agreement to the extent necessary
to
prevent the assessment of any such tax, including by delaying the payment dates
of any amounts hereunder.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
15
IN
WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
on
its behalf by an individual thereunto duly authorized and Executive has duly
executed this Agreement, all as of the date and year first written
above.
|
XXXXXX
XXXXXX, LTD
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||
|
By:
|
/s/
Xxxxxxxx X.
Xxxxxx
|
|
|
Name:
|
Xxxxxxxx
X. Xxxxxx
|
|
|
Title:
|
Chairman
and Chief Executive Officer
|
|
|
/s/
Xxxxxxx
Xxxxxxxxx
|
|
|
Name:
|
Xxxxxxx
Xxxxxxxxx
|
16
