EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
1st day of November, 2004 by and between ROO Group, Inc., a Delaware corporation
(hereinafter called the "Company"), and Xxxxxx Xxxxx (hereinafter called the
"Executive").
RECITALS
A. The Board of Directors of the Company (the "Board") desires to employ
the Executive in an executive capacity and to compensate him therefor.
B. The Executive is willing to make his services available to the Company
on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. Employment.
1.1 Employment and Term. The Company hereby agrees to employ the
Executive and the Executive hereby agrees to serve the Company, on the terms and
conditions set forth herein, for the period commencing on the date hereof and
expiring on October 31, 2007 (the "Initial Term") unless sooner terminated as
hereinafter set forth; provided, however, that commencing on November 1, 2007
and each November 1 thereafter, the Initial Term of this Agreement shall
automatically be extended for two additional years unless at least ninety (90)
days prior to such November 1 date, the Company shall have delivered to the
Executive or the Executive shall have delivered to the Company written notice
that the term of the Executive's employment hereunder will not be extended.
1.2 Duties of Executive. The Executive shall serve as the President,
Chief Executive Officer and Chairman of the Board of the Company and shall have
powers and authority superior to any other officer or employee of the Company or
of any subsidiary of the Company. Subject to the preceding sentence, during the
term of employment, the Executive shall diligently perform all services as may
be reasonably assigned to him by the Board, and shall exercise such power and
authority as may from time to time be delegated to him by the Board. The
Executive shall be required to report solely to, and shall be subject solely to,
the supervision and direction of the Board at duly called meetings thereof, and
no other person or group shall be given authority to supervise or direct
Executive in the performance of his duties. The Executive shall devote
substantially all his working time and attention to the business and affairs of
the Company (excluding any vacation and sick leave to which the Executive is
entitled), render such services to the best of his ability, and use his
reasonable best efforts to promote the interests of the Company. It shall not be
a violation of this Agreement for the Executive to (A) serve on corporate, civic
or charitable boards or committees, (B) manage Executive's personal investments
or (C) perform other roles as approved in writing by the Board, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement.
2. Compensation.
2.1 Base Salary. Commencing on the effective date of this Agreement,
the Executive shall receive a base salary at the annual rate of not less than
$250,000 (the "Base Salary") during the term of this Agreement, with such Base
Salary payable in installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes. On each anniversary
of this agreement (the "Salary Adjustment Date"), the Executive's then Base
Salary shall be increased by an amount equal to the previous year's Base Salary
multiplied by ten percent (10%). The Executive's Base Salary shall also be
reviewed against milestones set by the Board or the Compensation Committee, and
be increased in line with these milestones at any time or from time to time. The
Base Salary shall also be increased at any time and from time to time as shall
be substantially consistent with increases in base salary awarded in the
ordinary course of business to other key executives of the Company and its
subsidiaries. The Base Salary, if increased, shall not thereafter be decreased
for any reason.
2.3 Other Benefits. The Executive shall be provided with the use of
a motor vehicle and the company shall contribute 10% of the executive's base
salary to a 401K or similar plan dependent on the requirements of the country of
residence of the executive from time to time.
2.2 Incentive Compensation. The Executive shall be entitled to
receive such bonus payments or incentive compensation as may be determined at
any time or from time to time by the Board or the Compensation Committee thereof
in its discretion. Such potential bonus payments and/or incentive compensation
shall be considered at least annually by the Board or any Compensation Committee
thereof.
2.3 Payment. Payment to the Executive of the compensation set forth
in Section 2 and the reimbursement and other benefits set forth in Section 3 may
be made through a subsidiary of the Company; provided, however, that this
Agreement shall remain between the Executive and the Company.
3. Expense Reimbursement and Other Benefits.
3.1 Expense Reimbursement. During the term of Executive's employment
hereunder, the Company, upon the submission of reasonable supporting
documentation by the Executive, shall reimburse the Executive for all reasonable
expenses actually paid or incurred by the Executive in the course of and
pursuant to the business of the Company, including reasonable expenses for
travel and entertainment.
3.2 Incentive, Savings and Retirement Plans. During the Initial
Term, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable to other key
executives of the Company and its subsidiaries, in each case comparable to those
currently in effect or as subsequently amended. Such plans, practices, policies
and programs, in the aggregate, shall provide the Executive with compensation,
benefits and reward opportunities at least as favorable as the most favorable of
such compensation, benefits and reward opportunities provided at any time
hereafter with respect to other key executives.
3.3 Welfare Benefit Plans. During the Initial Term, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, any medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs in effect at any time
hereafter with respect to other key executives.
3.4 Working Facilities. During the term of Executive's employment
hereunder, the Company shall furnish the Executive with an office and such other
facilities and services suitable to his position and adequate for the
performance of his duties hereunder.
3.5 Vacation. During the Initial Term, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its subsidiaries as in effect at any
time hereafter with respect to other key executives of the Company and its
subsidiaries; provided, however, that in no event shall Executive be entitled to
fewer than four weeks paid vacation per year.
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3.6 Relocation. During the term of this Agreement, if the Executive
is asked to relocate to another country or region other than Executive's current
permanent residence and the Executive elects to make such move, then Executive
shall be provided with relocation assistance as provided below:
(a) The Company will negotiate an amount acceptable to the
employee to cover the costs, for Executive and his family, of house-hunting
trips and the cost of transporting Executive, his family, furniture, household
effects, and vehicles, to the country or region;
(b) The Company shall pay Executive's travel, temporary living
expenses, including housing, whether hotel or apartment, and meals, during the
period in which Executive has vacated his prior residence and before Executive
has moved into his new residence; and
(c) the Company shall pay all costs incurred by the Executive
and his family to obtain visas and as a result of any penalty payments arising
from the relocation.
(d) the Company will pay all reasonable costs associated with
relocating the Executive and his Family back to the country of origin of the
executive when required during the term of this agreement or at the termination
of this agreement.
3.7 Cost of Living Adjustment. During the term of this Agreement,
the Company shall pay on behalf of the Executive an agreed amount per month to
offset the difference between (A) the housing and utility costs (including,
without limitation, phone, electricity, gas, cable and internet) that Executive
and his family paid in Executive's prior country or region of residence and (B)
the housing and utility costs (including, without limitation, phone,
electricity, gas, cable and internet) that Executive and his family shall pay in
the relocated country or region.
4. Termination.
4.1 Termination for Cause. Notwithstanding anything contained to the
contrary in this Agreement, this Agreement may be terminated by the Company for
Cause. As used in this Agreement, "Cause" shall only mean (i) an act or acts of
personal dishonesty taken by the Executive and intended to result in substantial
personal enrichment of the Executive at the expense of the Company, (ii) subject
to the following sentences, repeated violation by the Executive of the
Executive's material obligations under this Agreement which are demonstrably
willful and deliberate on the Executive's part and which are not remedied in a
reasonable period of time after receipt of written notice from the Company, or
(iii) the conviction of the Executive for any criminal act which is a felony.
Upon any determination by the Company's Board of Directors that Cause exists
under clause (ii) of the preceding sentence, the Company shall cause a special
meeting of the Board to be called and held at a time mutually convenient to the
Board and Executive, but in no event later than ten (10) business days after
Executive's receipt of the notice contemplated by clause (ii). Executive shall
have the right to appear before such special meeting of the Board with legal
counsel of his choosing to refute any determination of Cause specified in such
notice, and any termination of Executive's employment by reason of such Cause
determination shall not be effective until Executive is afforded such
opportunity to appear. Any termination for Cause pursuant to clause (i) or (iii)
of the first sentence of this Section 4.1 shall be made in writing to Executive,
which notice shall set forth in detail all acts or omissions upon which the
Company is relying for such termination. Upon any termination pursuant to this
Section 4.1, the Executive shall be entitled to be paid his Base Salary to the
date of termination and the Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior to
the date of termination and reimbursement of all relocation costs of the
Executive and his family, as applicable).
4.2 Disability. Notwithstanding anything contained in this Agreement
to the contrary, the Company, by written notice to the Executive, shall at all
times have the right to terminate this Agreement, and the Executive's employment
hereunder, if the Executive shall, as the result of mental or physical
incapacity, illness or disability, fail to perform his duties and
responsibilities provided for herein for a period of more than one hundred
twenty (120) consecutive days in any 12-month period. Upon any termination
pursuant to this Section 4.2, the Executive shall be entitled to be paid his
Base Salary to the date of termination plus 3 months salary and the Company
shall have no further liability hereunder (other than for reimbursement for
reasonable business expenses incurred prior to the date of termination and
reimbursement of all relocation costs of the Executive and his family, as
applicable).
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4.3 Death. In the event of the death of the Executive during the
term of his employment hereunder, the Company shall pay to the estate of the
deceased Executive an amount equal to the sum of (x) any unpaid amounts of his
Base Salary to the date of his death, plus (y) six months of Base Salary, and
the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of the
Executive's death and reimbursement of all relocation costs of the Executive and
his family, as applicable).
4.4 Termination Without Cause. At any time the Company shall have
the right to terminate Executive's employment hereunder by written notice to
Executive; provided, however, that the Company shall (i) pay to Executive any
unpaid Base Salary accrued through the effective date of termination specified
in such notice as well as reimburse Executive for reasonable business expenses
incurred prior to the date of the Executive's termination and all relocation
costs of the Executive and his family, as applicable, and (ii) pay to the
Executive in a lump sum, in cash within thirty (30) days after the date of
employment termination, an amount equal to the product of (x) the sum of the
Executive's then Base Salary plus the amount of the highest annual bonus or
other incentive compensation payment theretofore made by the Company to the
Executive, and (y) three. The Company shall be deemed to have terminated the
Executive's employment pursuant to this Section 4.4 if such employment is
terminated (i) by the Company without Cause, or (ii) by the Executive
voluntarily for "Good Reason." For purposes of this Agreement, "Good Reason"
means.
(a) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section 1.2 of this Agreement, or any other action by the
Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(b) any failure by the Company to comply with any of the
provisions of Section 2, Section 3 or Section 7 of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(c) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this Agreement;
(d) any failure by the Company to comply with and satisfy
Section 10(c) of this Agreement; or
(e) any termination by the Executive for any reason during the
three-month period following the effective date of any "Change in Control".
For purposes of this Section 4.4, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
5. Change in Control. For purposes of this Agreement, a "Change in
Control" shall mean:
(a) The acquisition (other than by or from the Company), at any time
after the date hereof, by any person, entity or "group" within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 15% or more of either the then
outstanding shares of common stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally in the election of
directors; or
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(b) All or any of the two (2) individuals who, as of the date
hereof, constitute the Board (as of the date hereof the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for
purposes of this Agreement, considered as though such person were a member of
the Incumbent Board; or
(c) Approval by the shareholders of the Company of (A) a
reorganization, merger or consolidation with respect to which persons who were
the shareholders of the Company immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more than 75% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's then outstanding voting
securities, (B) a liquidation or dissolution of the Company, or (C) the sale of
all or substantially all of the assets of the Company, unless the approved
reorganization, merger, consolidation, liquidation, dissolution or sale is
subsequently abandoned.
(d) The approval by the Board of the sale, distribution and/or other
transfer or action (and/or series of sales, distributions and/or other transfers
or actions from time to time or over a period of time), that results in the
Company's ownership of less than 50% of the Company's current assets.
6. Restrictive Covenants.
6.1 Nondisclosure. During his employment and for twelve (12) months
thereafter, Executive shall not divulge, communicate, use to the detriment of
the Company or for the benefit of any other person or persons, or misuse in any
way, any Confidential Information (as hereinafter defined) pertaining to the
business of the Company, unless required by a court of law. Any Confidential
Information or data now or hereafter acquired by the Executive with respect to
the business of the Company shall be deemed a valuable, special and unique asset
of the Company that is received by the Executive in confidence and as a
fiduciary, and Executive shall remain a fiduciary to the Company with respect to
all of such information. For purposes of this Agreement, "Confidential
Information" means all material information about the Company's business
disclosed to the Executive or known by the Executive as a consequence of or
through his employment by the Company (including information conceived,
originated, discovered or developed by the Executive) after the date hereof, and
not generally known.
6.2 Nonsolicitation of Employees. While employed by the Company and
for a period of six (6) months thereafter, Executive shall not directly or
indirectly, for himself or for any other person, firm, corporation, partnership,
association or other entity, attempt to employ or enter into any contractual
arrangement with any employee or former employee of the Company, unless such
employee or former employee has not been employed by the Company for a period in
excess of six months.
6.3 Injunction. It is recognized and hereby acknowledged by the
parties hereto that a breach by the Executive of any of the covenants contained
in Section 6.1, 6.2 or 6.3 of this Agreement will cause irreparable harm and
damage to the Company, the monetary amount of which may be virtually impossible
to ascertain. As a result, the Executive recognizes and hereby acknowledges that
the Company shall be entitled to an injunction from any court of competent
jurisdiction enjoining and restraining any violation of any or all of the
covenants contained in this Section 6 by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
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7. Other Matters.
7.1 Election of Executive as Director. For so long as the Executive
continues to serve as the Company's President or Chief Executive Officer, the
Company shall cause the nomination of the Executive as a director of the Company
at each shareholder meeting at which election of directors is considered and
otherwise use its best efforts to cause the election of the Executive as a
director of the Company.
7.2 Conflicts With Certain Existing Arrangements. The Company
acknowledges that it has received and reviewed Executive's non-competition
covenants with his prior employer, a copy of which is attached hereto as Exhibit
B. The Company agrees that (x) it shall not hereafter acquire a "Conflicting
Organization" or otherwise expand its present business activities such that
Executive could reasonably be expected to be deemed in breach or violation of
such non-competition covenants, and (y) it shall indemnify and hold harmless the
Executive from any and all damages that Executive may hereafter suffer or incur
by reason of any such Company acquisition or expansion of business after the
date hereof.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
9. Notices: Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered by hand or when deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company: ROO Group, Inc.
00 Xxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Executive: Xxxxxx Xxxxx
0X Xxxxxxxxxx Xxx. Xxxx
Xxxxxxx 0000
Xxxxxxxxx
or to such other addresses as either party hereto may from time to time give
notice of to the other in the aforesaid manner.
10. Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
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(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets which
assumes and agrees to perform this Agreement by operation of law or otherwise.
11. Severability. The invalidity of any one or more of the words, phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases, sentences, clauses or sections
contained in this Agreement shall be declared invalid, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, or section or sections had not been inserted. If
such invalidity is caused by length of time or size of area, or both, the
otherwise invalid provision will be considered to be reduced to a period or area
which would cure such invalidity.
12. Waivers. The waiver by either party hereto of a breach or violation of
any term or provision of this Agreement shall not operate nor be construed as a
waiver of any subsequent breach or violation.
13. Damages. Nothing contained herein shall be construed to prevent the
Company or the Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement.
14. No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
(other than the parties hereto and, in the case of Executive, his heirs,
personal representative(s) and/or legal representative) any rights or remedies
under or by reason of this Agreement.
15. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement.
16. Certain Reduction of Payments by the Company. In the event that any
payment or benefit received or to be received by Executive in connection with a
termination of his employment with Employer would constitute a "parachute
payment" within the meaning of Code Section 280G or any similar or successor
provision to 280G and/or would be subject to any excise tax imposed by Code
Section 4999 or any similar or successor provision, then Employer shall assume
all liability for the payment of any such tax and Employer shall immediately
reimburse Executive on a "grossed-up" basis for any income taxes attributable to
Executive by reason of such Employer payment and reimbursements.
17. Reimbursement of Legal Expenses. The Company shall promptly reimburse
Executive for all reasonable legal fees incurred by Executive in connection with
the preparation, negotiation and execution of this Agreement and ancillary
documents.
18. Director & Officer Insurance. Until such time as the Company obtains
director and officer insurance ("D&O Insurance") for the Executive, the Company
shall immediately pay to the Executive any losses, damages, liabilities, costs
and expenses of any kind or nature whatsoever (including without limitation
reasonable attorneys' fees, costs and expenses, which shall be paid by the
Company in advance) incurred by or asserted against the Executive from and after
the date hereof, whether direct, indirect or consequential, as a result of or
arising from or in any way relating to any claim, demand, suit, action or
proceeding (including any inquiry or investigation) by any person, including
without limitation any shareholder or third party, whether threatened or
initiated, asserting a claim for any legal or equitable remedy under any statute
or regulation, including, but not limited to, any federal or state securities
laws, or under any common law or equitable cause or otherwise, arising from or
in connection with Executive's duties and obligations pursuant to this Agreement
or the actions or omissions of Executive in his role as President, Chief
Executive Officer or Chairman of the Board of Directors of the Company or any
Director or Officer position in any subsidiary or associated company of the
Company.
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19. Entire Agreement. This agreement supersedes any previous agreement
between the parties except that any options issued under previous employment
agreements will survive.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
COMPANY:
ROO GROUP, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Executive Officer
EXECUTIVE:
/s/ Xxxxxx Xxxxx
-------------------------------------
Xxxxxx Xxxxx
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EXHIBIT A
STOCK OPTION AGREEMENT
EXHIBIT B
EXECUTIVE'S NON-COMPETITION COVENANTS WITH PRIOR EMPLOYER(S)
