EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") effective as of the 26th day of
March, 1998, between TEKNO COMIX, INC., a Florida corporation (the "Company"),
and Xxxxxx X. Xxxxxx, an individual, (the "Employee").
BACKGROUND
A. The Company is a wholly owned subsidiary of BIG ENTERTAINMENT, INC.,
a Florida corporation ("Big Entertainment") which is a diversified entertainment
company involved in the licensing of entertainment properties, the operation of
entertainment-related retail stores and the publishing and packaging of books;
and
B. The Company desires to employ the Employee and the Employee is
willing to be employed by the Company, pursuant to the terms and subject to the
conditions set forth in this Agreement; and
C. Big Entertainment is willing to join in this Agreement in order to
guaranty the payments due from Company to Employee and to issue the stock of Big
Entertainment and options to purchase the stock of Big Entertainment as set
forth hereunder.
NOW, THEREFORE, for and in consideration of the mutual agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
1. TERM; RESIDENCE; DUTIES. The initial term of this Agreement shall be
for three years from March 26, 1998 (the "Commencement Date"). Employee will
serve as the Executive Vice President and Chief Operating Officer of the
Company's Retail Division for such term, unless Employee's employment is sooner
terminated as provided below (the "Employment Period"). During the Employment
Period, Employee will devote all of his time to the duties provided for under
the terms of this Agreement.
As Executive Vice President and Chief Operating Officer - Retail
Division, Employee shall have such duties as are assigned to Employee by the
Board of Directors of the Company or the Company's Chief Executive Officer or
President. Such duties shall be performed at the Company's office located in
Boca Raton, Florida or other office in South Florida, and at such other places
as the needs, business, or opportunities of the Company may require from time to
time. In connection with the performance of Employee's duties, the Company will
supply Employee with services and facilities reasonably appropriate to such
duties and position.
2. BEST EFFORTS OF EMPLOYEE. Employee agrees to perform faithfully,
industriously, and to the best of Employee's ability, experience and talents,
all of the duties that may be required by this Agreement.
3. SALARY. As compensation for the services provided by Employee under
this Agreement, Company will pay Employee a salary as follows: (i) $75,000 from
the Commencement Date to March 26, 1999; (ii) $75,000 from March 26, 1999 to
March 26, 2000; and (iii) $125,000 from March 26, 2000 to March 26, 2001. In
accordance with the Company's payroll policy, wages will be paid bi-weekly. Upon
termination of this Agreement, payments under this Paragraph shall cease;
provided, however, that the Employee shall be entitled to payments for periods
or partial periods that occurred prior to the date of termination and for which
the Employee has not yet been paid.
4. SIGNING BONUS. Upon execution of this Agreement by the Company and
the Employee, Employee shall receive a signing bonus in the amount of
$50,000.00, payable in shares of Big Entertainment's Common Stock (the "Bonus
Stock"). The number of shares shall be determined based on the average closing
bid price of Big Entertainment's Common Stock as reported by NASDAQ, or such
other nationally recognized stock exchange on which Big Entertainment may be
listed for trading, for the thirty (30) trading days prior to the Commencement
Date. The Bonus Stock will carry a restrictive legend stating that the Bonus
Stock may not be sold, transferred or otherwise disposed of prior to close of
business on the second anniversary of the Commencement Date (the "Restricted
Period").
Employee understands that such shares have not been registered under
the Securities Act of 1933, as amended (the "Act"), or the securities laws of
any state, that the shares are for investment purposes only, and not with a view
to distribution or resale, nor with the intention of selling, transferring or
otherwise disposing of all or any part of such shares for any particular price,
or at any particular time, or upon the happening of any particular event or
circumstance, except selling, transferring, or disposing of said shares made in
compliance with all applicable provisions of the Act, the Rules and Regulations
promulgated by the Securities and Exchange Commission thereunder, and applicable
state securities laws; and that such shares must be held indefinitely unless
they are subsequently registered under the Act, or an exemption from such
registration is available, and will require an opinion of counsel that
registration is not required under the Act or such state securities laws, and
that the certificates to be issued will bear an additional legend indicating
that transfer of the shares has not been so registered and the legend may bear
the following or similar words:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state or other jurisdiction, and may not be sold, transferred,
pledged, hypothecated or otherwise disposed of in the absence of (1) an
effective Registration Statement for such securities under applicable
law, or (2) an
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opinion of counsel, satisfactory to Big Entertainment, that such
registration is not required.
(the "1933 Act Legend").
If Employee resigns his position, is terminated "for cause" (as defined
in Paragraph 16), or otherwise vacates his position due to death or disability
before the end of the Restricted Period, Employee will forfeit all rights to the
Bonus Stock and Employee will return all such certificates representing such
Bonus Stock to either the Company or Big Entertainment (at the direction of
Company) within twenty (20) days of such resignation, termination or date
Employee vacates his position.
In the event Company terminates Employee's employment under this
Agreement without cause (as defined by Paragraph 16), then any Bonus Stock which
is restricted and subject to forfeiture shall become unrestricted.
5. ANNUAL BONUS. Employee will be eligible, at the discretion of the
Board of Directors, for an annual bonus equal to the greater of (i) fifty
percent (50%) of Employee's annual salary or (ii) $50,000.00. The annual bonus
shall be based on Employee's achieving specific budgeted performance goals (the
"Performance Goals") in sales and earnings and shall be established and approved
by the Company's Board of Directors in its sole and absolute discretion. The
Performance Goals for 1998 shall be set out by the Board of Directors within 90
days of the date of this Agreement, and the Performance Goals for subsequent
years shall be set out by the Board of Directors by February 1 of each year. The
annual bonus shall be payable in shares of Big Entertainment's Common Stock
("Annual Stock") with the number of shares to be determined based on the closing
bid price of Big Entertainment's Common Stock as reported by NASDAQ, or such
other nationally recognized stock exchange on which Big Entertainment's stock
may be listed for trading, on the last business day prior to approval by Big
Entertainment's Board of Directors of the granting of the Annual Stock.
The Annual Stock will be restricted and subject to forfeiture (as
described below) for a period of three (3) years from the date of grant of such
Annual Stock. The Annual Stock shall become unrestricted as follows:
(i) One-third (1/3) of the Annual Stock shall become
unrestricted from one (1) year from the date of issuance of such Annual Stock;
(ii) One-third (1/3) of the Annual Stock shall become
unrestricted from two (2) years from the date of issuance of such Annual Stock;
and
(iii) One-third (1/3) of the Annual Stock shall become
unrestricted from three (3) years from the date of issuance of such Annual
Stock.
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The Annual Stock granted under this paragraph shall be restricted and
subject to forfeiture if Employee resigns his position, is terminated for
"cause" (as defined in Paragraph 16) or otherwise vacates his position due to
death or disability before the end of the period that the Annual Stock (or any
portion of the Annual Stock) becomes unrestricted (as described above). In the
event of such a forfeiture Employee will forfeit all rights to the Annual Stock
and Employee will return all such certificates representing such Annual Stock to
either the Company or Big Entertainment (at the direction of Company) within
twenty (20) days of such resignation, termination or date Employee vacates his
position.
In the event Company terminates Employee's employment under this
Agreement without cause (as defined by Paragraph 16), then any Annual Stock
which is restricted and subject to forfeiture shall become unrestricted.
Employee understands that the Annual Stock, like the Bonus Stock, have
not been registered under the Act, or the securities laws of any state, that the
shares are for investment purposes only, and not with a view to distribution or
resale, nor with the intention of selling, transferring or otherwise disposing
of all or any part of such shares for any particular price, or at any particular
time, or upon the happening of any particular event or circumstance, except
selling, transferring, or disposing of said shares made in compliance with all
applicable provisions of the Act, the Rules and Regulations promulgated by the
Securities and Exchange Commission thereunder, and applicable state securities
laws; and that such shares must be held indefinitely unless they are
subsequently registered under the Act, or an exemption from such registration is
available, and will require an opinion of counsel that registration is not
required under the Act or such state securities laws, and that the certificates
to be issued will bear a 1933 Act Legend as specified above.
6. STOCK OPTIONS. During the Employment Period, Employee shall be
eligible to receive options to purchase a total of 187,500 shares of Big
Entertainment's Common Stock (the "Options"), which Options shall have exercise
price equal to the closing bid price of the Common Stock as reported by NASDAQ,
or such other nationally recognized stock exchange on which Big Entertainment
may be listed for trading, at the close of business of the date prior to the
grant date. The Options shall be granted as follows: (a) 62,500 shares shall be
granted on the Commencement Date; (b) an additional 25,000 shares will be
granted on the first anniversary of the Commencement Date; (c) an additional
25,000 shares will granted on the second anniversary of the Commencement Date;
(d) an additional 37,500 shares will granted on the first anniversary of the
Commencement Date based on attainment of specific budgeted performance goals in
sales and earnings and shall be established and approved by the Company's Board
of Directors in its sole and absolute discretion; and (e) an additional 37,500
shares will be granted on the second anniversary of the Commencement Date based
on attainment of specific budgeted performance goals in sales and earnings and
shall be established and approved by the Company's Board of Directors in its
sole and absolute discretion. The Performance Goals for 1998 shall be
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set out by the Board of Directors within 90 days of the date of this Agreement,
and the Performance Goals for subsequent years shall be set out by the Board of
Directors by February 1 of each year. No grants will be made or required should
Employee not be employed by the Company on the applicable grant date. All
Options granted hereunder are non-qualified options as that term is defined in
Section 422 of the Internal Revenue Code of 1986, as amended, and will vest in
accordance with Big Entertainment's Stock Option Plan as in effect on the date
of such grant. A copy of Big Entertainment's Stock Option Plan as currently in
effect is attached hereto as Exhibit "A". In the event Employee's employment
with the Company is terminated by the Company without cause, then Employee shall
have six (6) months from the date of such termination to exercise any Options
granted by this Agreement, nothwithstanding any provision to the contrary in Big
Entertainment's Stock Option Plan.
7. MAJOR EVENTS. In the event that Big Entertainment either (i) sells
the Company (either through a sale of stock, sale of all or substantially all of
its assets or tax-free reorganization); or (ii) goes private, either through the
repurchase of shares held by the public through a tender offer, or through a
merger or consolidation into another corporation; or (iii) Big Entertainment is
sold to a third party (either through a sale of stock, sale of all or
substantially all of its assets or tax-free reorganization) (collectively a
"Major Event") then Employee's right to receive any future Options or Annual
Stock under this Agreement shall be terminated, and Big Entertainment shall have
the option of purchasing all of the stock of Big Entertainment and all of the
options to purchase the stock of Big Entertainment granted to Employee pursuant
to this Agreement. In the event Big Entertainment exercises such Option, it must
exercise such option to purchase all of Employee's Bonus Stock, Annual Stock and
Stock pursuant to the Options that have been issued pursuant to this Agreement,
whether such Stock or Options are restricted or otherwise subject to forfeiture.
The purchase price shall be equal to one hundred twenty-five percent (125%) of
the average closing bid price of the common stock of Big Entertainment as
reported by NASDAQ, or such other nationally recognized stock exchange on which
Big Entertainment may be listed for trading, for the twenty (20) trading days
ending on the date of the closing of the Major Event. Big Entertainment may
exercise its option to purchase pursuant to this paragraph by giving written
notice to Employee within thirty (30) days of the closing of the Major Event.
8. TAX MATTERS. Employee acknowledges that the value of the Bonus Stock
and the Annual Stock and the stock received by Employee upon exercise of any of
the Options will be required to be reported as income received by the Employee
based on the fair market value of the Bonus Stock and the Annual Stock, as such
stock becomes unrestricted and on the difference between the fair market value
of any stock purchased pursuant to the Options and the exercise price, pursuant
to Section 83 of the Internal Revenue Code of 1986 as amended (the "Code"). The
Employee and Company agree that the Options do not have a readily ascertainable
fair market value, as that term is defined in the Code. The Employee agrees that
he will not make an election to report the value of the Bonus Stock or the
Annual Stock as received in income pursuant to
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Section 83(b) of the Code, and will not report such income for tax purposes
until such stock becomes unrestricted.
Employee acknowledges that the Company will report the fair market
value of the Bonus Stock and the Annual Stock as salary paid to the Employee as
such stock becomes unrestricted, and will report such amounts on a Form W-2
filed with the Internal Revenue Service. Employee acknowledges that Company is
required to withhold the amount of Federal income taxes required in connection
with the payment of such salary, even though the payment of such salary is in
the form of stock. At Company's option, Company may either withhold other
amounts otherwise payable to Employee hereunder, or may, at Company's option,
agree to purchase a portion of the stock from Employee in an amount necessary to
yield the amount required to be withheld from Employee's salary. Such repurchase
shall be based on the prior thirty (30) day average closing bid price of Big
Entertainment common stock as reported by NASDAQ, or such other nationally
recognized stock exchange on which Big Entertainment may be listed for trade.
9. RELOCATION REIMBURSEMENT. The Company agrees to reimburse Employee
up to $25,000.00 for costs incurred in relocating to Boca Raton, Florida from
Plano, Texas. Reimbursable costs include, but are not limited to, moving of
household goods, travel to the area to locate housing and travel-related
expenses, costs of real estate commissions, closing costs, mortgage points (if
any) and temporary living expenses. No reimbursements will be made by the
Company without submission of appropriate supporting documentation and/or
receipts. Company shall reimburse such expenses within thirty (30) days of
submission of supporting documentation.
10. EXPENSES. The Company will reimburse Employee for actual
"out-of-pocket" expenses in accordance with Company's policies in effect from
time to time. Such expenses include, but are not limited to, expenses for
travel, entertainment, and miscellaneous incurred in the conduct of the business
of the Company. Employee shall keep appropriate records of such expenses and
submit receipts or other evidence relating to them in accordance with the
Company's policy.
11. CELLULAR TELEPHONE; LAPTOP COMPUTER. The Company shall provide
Employee with a cellular telephone and laptop computer for his use during the
Employment Period. The Company will, upon submission of appropriate receipts or
other supporting documentation, reimburse Employee for all business-related
expenses incurred in connection with such equipment.
12. VACATION; SICK LEAVE/HOLIDAYS. During the term of this Agreement,
Employee shall be entitled to annual paid vacation of three (3) weeks per year,
provided, however, that such vacation may not be taken during the first six (6)
months of the Employment Period. In addition, Employee shall be entitled to paid
sick time and paid holidays as provided within the Company's policies in effect
from time to time.
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13. FRINGE AND MEDICAL BENEFITS. Employee shall be eligible for
inclusion in the Company's Group Health Plan on the first day of the month after
completion of ninety (90) days of employment with the Company. Employee shall be
responsible for payment of a certain portion of the premium due for his
inclusion in the Group Health Plan.
Employee shall also be enrolled in the Company's Life and Long-Term
Disability Plans in accordance with the provisions of such policies, as same may
change from time to time. Employee shall bear no cost for Life and Long-Term
Disability coverage.
14. CONSIDERATION FOR PROMOTION. After completion of one full year of
employment with the Company, Employee shall be considered for promotion to the
position of President - Retail Division.
15. DEATH OR DISABILITY OF EMPLOYEE. If Employee dies during the term
of this Agreement, Employee's estate shall be entitled to such bonus payments
and payment of salary as may be due and owing Employee as of the date of
Employee's death, but due no other compensation of any kind. In the event
Employee become disabled during the term of this Agreement, subject to
governmental statutes and regulations, the Company may terminate this Agreement
at any time by giving Employee ninety (90) days' written notice to Employee. For
the purposes of this Agreement, the term "disability" shall mean a mental or
physical illness or condition that renders Employee incapable of performing all
of the essential functions of the services required of Employee under this
Agreement.
16. TERMINATION; SEVERANCE. In the event that Employee's employment
with the Company is terminated by the Company for any reason other than cause,
as defined in the following paragraph, prior to the end of the Employment
Period, the Company will pay to Employee a sum equal to six (6) months' salary
at the rate in effect at the time of termination (the "Severance Payments"),
which payments shall be distributed over a six (6) month period (the "Severance
Period"). All Severance Payments will be paid on a bi-weekly basis, in
accordance with the Company's payroll policy. If Employee obtains other
employment during the Severance Period, the Company may cease Severance Payments
and have no further obligation to Employee. Employee shall, three (3) days prior
to each bi-weekly payment of severance payments hereunder, deliver to Company a
notarized certification under penalty of perjury, that Employee has not obtained
employment or a position as an independent contractor with any other person or
company (the "Certification Statement") as follows:
CERTIFICATION
The undersigned hereby certifies to Tekno Comix, Inc., under
penalty of perjury, that he is not presently employed, self-employed or
engaged as an independent contractor with any person, corporation,
firm, partnership, or limited liability company or any other entity.
This
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certification is being issued in order to induce Tekno Comix, Inc. to
make certain severance payments to the undersigned pursuant to an
employment agreement dated March 26, 1998.
This Certification is given on [DATE].
/S/ XXXXXX X. XXXXXX
--------------------
Xxxxxx X. Xxxxxx
The Company shall have no obligation to deliver any bi-weekly severance
payment to Employee until Employee delivers such Certification Statement to
Company.
The Company will not be required to make Severance Payments if
Employee's employment with the Company is terminated due to "cause." For the
purposes of this Agreement, the term "cause" shall mean a failure or refusal on
the part of the Employee to perform substantially such person's duties (provided
that Company shall have given Employee ten (10) days written notice of such
failure, and such failure remains uncured, provided further that no such notice
will be required for any subsequent failures which are substantially similar to
the failure giving rise to the first such notice), the conviction of the
Employee of a crime, willful misconduct of the Employee contrary to the interest
of the Company which shall include, but not be limited to, violation of any
written or documented Company policies, the Employee's addiction to narcotics or
alcohol, or a material breach of the Employee's fiduciary duties to the Company.
In the event the Employee voluntarily terminates his employment with
the Company because the Company relocates its offices outside of Dade, Broward
or Palm Beach Counties, Florida, the Company will be deemed to have terminated
Employee without cause for purposes of this Agreement.
17. CONFIDENTIALITY AND NON-DISCLOSURE. Employee acknowledges that
Employee will have access to trade secrets and other confidential information
which is the property of Company and/or its affiliates, including but not
limited to, the marketing of the Company's products, and other information
relating to its present or future operations (all of the foregoing, whether or
not it qualifies as a "trade secret" under applicable law, is collectively
called "Confidential Information"). Employee recognizes that Confidential
Information is proprietary to the Company and its affiliates. Accordingly,
Employee agrees not to use or disclose any of the Confidential Information
during or after the term of this Agreement, except for the sole and exclusive
benefit of the Company, or pursuant to any relevant law or regulation, provided
in the latter case Employee shall give reasonable prior written notice of such
disclosure to the Company and only make such disclosure upon receipt of an
appropriate opinion of counsel confirming the necessity of such disclosure,
which opinion shall also be furnished to the Company. Upon any termination of
this Agreement, Employee will return to the Employee all tangible embodiments of
any Confidential Information. Employee agrees that each of the Company and its
affiliates would be irreparably injured by any breach
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of Employee's confidentiality agreement, that such injury would not be
adequately compensable by monetary damages, and that, accordingly, the Company
and any offended affiliate may specifically enforce the provisions of this
Paragraph by injunction or similar remedy by any court of competent
jurisdiction, without affecting any claim for damages.
18. REMEDIES AND REASONABILITY.
A. Employee agrees that, if Employee shall violate any of the
covenants or agreements contained in Paragraph 17 of this Agreement, the Company
shall be entitled to an accounting and repayment of all profits, compensation,
commissions, remuneration, or benefits which Employee directly or indirectly has
realized and/or may realize as a result of, growing out of, or in connection
with any such violation; such remedy shall be in addition to and not in
limitation of any injunctive relief or other rights or remedies to which the
Company may be entitled at law or in equity or under this Agreement.
B. With respect to the provisions of Paragraph 17, Employee
agrees that damages, by themselves, are an inadequate remedy at law, that a
material breach of the provisions of said Paragraph would cause irreparable
injury to the aggrieved party, and that the provisions of said Paragraph may be
specifically enforced by injunction or similar remedy in any court of competent
jurisdiction without affecting any claim for damages.
C. In the event that, notwithstanding the foregoing, any of
the provisions of Paragraph 17 shall be held to be invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue to be valid and
enforceable as though invalid or unenforceable parts had not been included
therein.
D. Employee has carefully read and considered the provisions
of Paragraphs 16 and 17, and having done so, agrees that the restrictions set
forth are fair and reasonable and are reasonably required for the protection of
the interests of the Company, its officers, directors, and other employees.
19. NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, postage paid, addressed as follows:
To Company: Big Entertainment, Inc..
0000 Xxxxxx Xxxx, Xxxxx 000 Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
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With copy to: Xxxxxx X. Xxxxxxx, Esquire
Xxxxxxxxx Traurig
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
To Employee: Xxxxxx X. Xxxxxx
0000 Xxxx Xxxx Xx.
Xxxxx Xxxxxxxxxx, XX 00000
Such addresses may be changed from time to time by either party by
providing written notice in the manner set forth above.
20. ARBITRATION. Except for the agreements contained in Paragraphs 17
and 18, the exclusive remedy with respect to any dispute arising between
Employee and the Company regarding the interpretation or enforcement of any
portion of this Agreement shall be determination by arbitration by a panel of
three (3) arbitrators under the rules of the Commercial Division of the American
Arbitration Association. Arbitration shall take place in Palm Beach County,
Florida, and any award, which may include attorneys' fees and costs, in the sole
discretion of the arbitration panel, may be enforced in any court of competent
jurisdiction. All awards and determinations of the arbitration shall be final.
No written interrogatories or recorded testimony shall be provided to either
party prior to any arbitration proceeding, but in his sole discretion the
arbitrator may compel either party to produce witnesses for interviews and
documents for inspection prior to any hearing.
21. APPLICABLE LAW; VENUE. This Agreement shall be governed by the
State of Florida. Venue for any action for either party in this Agreement shall
be the lowest state court of competent jurisdiction in Palm Beach County,
Florida.
22. ATTORNEYS' FEES. In the event that any action is filed in relation
to this Agreement, the unsuccessful party in such action shall pay to the
successful party in addition to all the sums that either party may be called on
to pay, a reasonable sum for attorneys fees, including fees incurred in
negotiation, preparation for trial and for any and all appeals.
23. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
24. AMENDMENTS. This Agreement, or any provisions hereof, may not be
amended, changed or modified without the prior written consent of each of the
parties hereto.
25. ENTIRE AGREEMENT. This Agreement and the agreements referred to in
it contain the entire agreement between the parties with respect to the
transactions
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provided for in them and supersede all previously written or oral negotiations,
commitments, representations and/or agreements.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EMPLOYER:
TEKNO COMIX, INC.,
a Florida corporation
By: /S/ XXXXXXXX XXXXXXXXXX
----------------------------
EMPLOYEE:
/S/ XXXXXX X. XXXXXX
--------------------
Xxxxxx X. Xxxxxx
JOINDER
Big Entertainment joins in this agreement in order to confirm its
obligations to guaranty payment of the salary due to Employee hereunder and to
confirm its obligation to issue the Bonus Stock, the Annual Stock on the Options
to Employee as set forth hereunder.
BIG ENTERTAINMENT, INC.,
a Florida corporation
By: /S/ XXXXXXXX XXXXXXXXXX, AS CEO
--------------------------------
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