EXHIBIT 10.61
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into effective as
of the 1st day of December 31, 2001, between INTERVISUAL BOOKS, INC., a
California corporation (the "Company"), and XXXXX X. XXXX (the "Executive").
R E C I T A L S:
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A. Executive has agreed to continue to be employed by the Company as its
Chairman of the Board Emeritus.
B. The Board of Directors of the Company (the "Board") believes that the
continued employment of Executive by the Company will contribute to the growth
and success of the Company. The Board desires to provide for the employment of
Executive and to make Executive's employment arrangements in the best interest
of the Company and its shareholders so as to encourage Executive's attention and
dedication to the Company. Executive is willing to commit himself to serve the
Company, on the terms and conditions herein provided.
A G R E E M E N T:
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NOW, THEREFORE, in consideration of the promises and covenants set forth
below, the parties hereto agree as follows:
1. Employment.
The Company hereby agrees to employ Executive, and Executive hereby agrees
to accept employment with the Company, on the terms and conditions set forth
herein.
2. Term.
The employment of Executive by the Company as provided in this
Agreement will commence on December 31, 2001, and shall end on December 31,
2003, unless further extended or sooner terminated as hereinafter provided.
3. Position and Duties.
Executive shall serve as Chairman of the Board Emeritus.
4. Compensation and Related Matters.
(a) Salary. For the period of December 31, 2001 through December 31,
2002, the Company shall pay to the Executive a salary of $165,000 per annum
unless adjusted as provided herein in semi-monthly installments in accordance
with the Company's regular payroll policies. For the period of December 31, 2001
through December 31, 2002, the Company shall pay to the Executive a salary of
$175,000
per annum unless adjusted as provided herein in semi-monthly installments in
accordance with the Company's regular payroll policies.
(b) Expenses. During the term of Executive's employment hereunder,
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by Executive in performing services hereunder, including all
expenses of travel and living expenses when away from home on business at the
request of and in the service of the Company, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures from
time to time established by the Company.
(c) Other Benefits. During the term of Executive's employment
hereunder, Executive shall be entitled to participate in the Company's 401(k)
plan, or such other plans established by the Company, and any general health
disability insurance plans from time to time generally applicable to executives
of the Company to the extent generally permitted by the terms of such plans.
(d) Vacations. Executive shall be entitled to five (5) weeks
(twenty-five (25) business days) of mandatory vacation during any calendar year
during the term hereof, subject to proration for employment for less than the
entire calendar year.
(e) Services Furnished. The Company shall furnish Executive with
office space and such other facilities and services as shall be reasonably
suitable to Executive's position and reasonably adequate for the performance of
Executive's duties as set forth in Section 3 hereof.
(f) Automobile Allowance. During Executive's employment hereunder,
the Company shall pay to Executive an automobile allowance of $600 per month,
which automobile may be used by Executive for both personal and business
purposes. Executive shall conform to the Company's policies regarding the use of
such automobile.
5. Offices.
During Executive's employment hereunder, Executive agrees to serve
without additional compensation as a director of the Company and, if elected or
appointed thereto, as a director of its subsidiaries (if any) and in one or more
executive offices of any of the Company's subsidiaries.
6. Confidential Information.
Executive acknowledges that by virtue of his employment with the
Company, he has knowledge of certain information which is confidential and
proprietary to the Company ("Proprietary Information"). Such information
includes, but is not limited to, (i) financial, legal, corporate, manufacturing,
marketing, competitive and other information available only to top management,
directors and officers of the Company; (ii) any and all other information
related to the Company of which Executive may become aware but which is not
generally known to outsiders; and (iii) other trade secrets which the Company
owns.
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Executive shall not disclose any Proprietary Information directly or
indirectly, either during or after his employment with the Company, without the
prior written consent of the Board of Directors of the Company. All such
Proprietary Information, including without limitation, all files, records,
documents, specifications, equipment, customer lists and similar items relating
to the business of the Company, whether prepared by Executive or otherwise
coming into his possession, shall remain the sole and exclusive property of the
Company.
The parties hereto acknowledge that the extensive "pop up" book
collection, both antique and contemporary, which constitutes part of The Xxxx
Museum and all of the related display cases are the sole property of the Xxxx
Museum and the Company has no rights of ownership to the books or display cases
which constitute a part of the collection of the Xxxx Museum. This paragraph
shall survive any termination of this Agreement.
7. Termination and Benefits Upon Termination.
Executive's employment hereunder may be terminated without any breach
of this Agreement, under the following circumstances:
(a) Death.
(1) Executive's employment hereunder shall terminate
automatically upon Executive's death.
(2) If Executive's employment is terminated because of
Executive's death pursuant to this Section 7(a), then the Company shall have no
further obligation or liability to Executive except the Company shall pay to
Executive's spouse, or if Executive leaves no spouse, to Executive's estate, (i)
the portion of Executive's salary which has been earned up to the Date of
Termination in accordance with this Agreement, and (ii) reimbursement for
business expenses properly incurred up to the Date of Termination (collectively
the "Minimum Payments").
(b) Disability.
(1) If, as a result of Executive's incapacity due to physical or
mental illness, Executive shall have been absent from his duties hereunder on a
full-time basis for an entire period of one hundred twenty (120) consecutive
days, and within ten (10) days after written notice of termination is given by
the Company to Executive (which may occur before or after the end of such one
hundred twenty (120) day period), Executive shall not have returned to the
performance of his duties hereunder on a full-time basis, the Company may
terminate Executive's employment hereunder pursuant to this Section 7(b).
During any period of time during which the Executive fails to perform
Executive's duties hereunder as a result of incapacity due to physical or mental
illness and prior to such time as Executive's employment is terminated,
Executive shall continue to receive his full salary at the rate then in effect
for such period until his employment is terminated pursuant to this Section
7(b), provided that the payments so made to Executive during any period of
disability or incapacity shall be reduced by the sum of the amounts,
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if any, paid or payable to Executive at or prior to the time of any such payment
of salary under disability benefit plans of the Company and which were not
otherwise previously applied to reduce any such payment.
(2) If Executive's employment is terminated because of
Executive's incapacity or disability pursuant to this Section 7(b), then the
Company shall have no further obligation or liability to Executive, except that
(i) Executive shall be entitled to receive the Minimum Payments, and (ii) the
Company shall continue Executive's base salary for a period of the lesser of one
hundred twenty (120) days or until Executive's death. In addition, the Company
shall provide (at the Company's expense) continuation coverage for Executive
under the Company's group health plan pursuant to COBRA for a period of twelve
(12) months after Executive's termination.
(c) Cause.
(1) The Company through action of the Board may terminate
Executive's employment hereunder for "Cause." For purposes of this Agreement,
the Company shall have "Cause" to terminate Executive's employment hereunder
upon:
(i) The willful and continued failure by Executive substantially to
perform his duties hereunder (other than any such failure resulting
from Executive's incapacity due to physical or mental illness), after
demand for substantial performance is delivered by the Board of
Directors that specifically identifies the manner in which the Board
of Directors believes Executive has not substantially performed his
duties; or
(ii) The willful engaging by Executive in misconduct which is materially
injurious to the Company, monetarily or otherwise, including the
misuse of any Proprietary Information (as that term is defined in
Section 6 hereof).
For purposes of this subsection, no act or failure to act on
Executive's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated for Cause without (A)
reasonable notice to Executive setting forth the reasons for the Company's
intention to terminate for Cause, (B) an opportunity for Executive, together
with his counsel, to be heard before the Board, and (C) delivery to Executive of
a Notice of Termination (as defined in subsection (e) hereof) from the Board
finding that in the good faith opinion of the Board, Executive was guilty of
conduct constituting Cause within the meaning of this subsection (c) and
specifying the particulars thereof in detail.
(2) If Executive's employment hereunder is terminated for Cause
pursuant to this Section 7(c), then the Company shall have no further obligation
or liability to Executive, except that Executive shall be entitled to receive
the Minimum Payments.
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(d) Termination by Company Other Than for Death, Disability, or
Cause.
(1) The Company shall, for any reason, be entitled to terminate
Executive's employment hereunder at any time other than on account of
Executive's death or disability and without Cause pursuant to this Section 7(d).
(2) If Executive's employment hereunder is terminated by the
Company pursuant to this Section 7(d), the Company shall have no further
obligation or liability to Executive, except that (i) Executive shall be
entitled to receive the Minimum Payments, and (ii) the Company shall pay to
Executive a severance payment consisting of the lesser of the sum of the Salary
payments due as of the date of termination under the remaining term of this
agreement or twelve (12) months of Executive's then current annual salary in
effect on termination. Such severance shall be payable in equal monthly
installments over the great of the remaining term of this agreement or a 12
month period after termination. In addition, the Company shall provide (at
Company's expense) continuation coverage for Executive under the Company's group
health plan pursuant to COBRA for a period of twelve (12) months after
Executive's termination.
(e) Termination by Executive for Good Reason.
(1) Executive may terminate Executive's employment hereunder for
Good Reason (as defined below) pursuant to this Section 7(e).
For purposes of this Agreement, "Good Reason" shall mean (A) the
failure by the Company to comply with any material provision of this Agreement
which has not been cured within forty-five (45) days after notice of such
non-compliance has been given by Executive to the Company, (B) any purported
termination of Executive's employment by the Company, except pursuant to
subsections 7(a), 7(b), 7(c) or 7(d) hereof or (C) without Executive's express
written consent, the assignment to Executive of any duties which would
constitute a material reduction in the importance of Executive's position,
authority or responsibilities as contemplated by Section 3 hereof or any other
material adverse change in such position, authority and responsibility.
(2) If Executive's employment hereunder is terminated by
Executive for Good Reason pursuant to this Section 7(e), then the Company shall
have no further obligation or liability to Executive, except (i) the Executive
shall be entitled to receive the Minimum Payments, and (ii) the Company shall
pay to Executive a severance payment the lesser of the sum of the Salary
payments due as of the date of termination under the remaining term of this
agreement or twelve (12) months of Executive's then current annual salary in
effect on termination. Such severance shall be payable in equal monthly
installments over the greater of the remaining term of this agreement or a 12
month period after termination. In addition, the Company shall provide (at the
Company's expense) continuation coverage for Executive under the Company's group
health plan pursuant to COBRA for a period of twelve (12) months after
Executive's termination.
(f) Resignation by Executive.
(1) Executive shall be entitled to terminate his Employment for
any reason at any time on thirty (30) days prior written notice delivered by
Executive to Company pursuant to this Section 7(f).
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(2) If Executive's employment is terminated by Executive
pursuant to this Section 7(f), the Company shall have no further obligation or
liability to Executive, except (i) that Executive shall be entitled to receive
the Minimum Payments.
(g) Notice of Termination. Any termination of Executive's employment
by the Company or by Executive (other than termination for death pursuant to
subsection 7(a) above) shall be communicated by written a Notice of Termination
to the other party hereto. For purposes of this Agreement, "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon, shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provisions so indicated and shall set forth the
Date of Termination.
(h) Date of Termination. "Date of Termination" shall mean (i) if
Executive's employment is terminated by death, the date of death, (ii) if
Executive's employment is terminated by disability, the date of the
determination of the disability, or (iii) if Executive's employment is
terminated for any other reason, thirty (30) days after Notice of Termination is
given.
8. Additional Covenants.
(a) No Duty to Mitigate. Executive shall not be required to mitigate
the amount of any payment provided for in Section 7 by seeking other employment.
(b) Excess Parachute Payment. Notwithstanding anything in this
Agreement to the contrary, if and to the extent (but only to the extent) that
any payment made under this Agreement shall constitute an "excess parachute
payment" under Section 28OG of the Internal Revenue Code as currently in effect
(or, if at the time of any such "excess parachute payment" said Section 28OG
shall have been amended to provide more favorable treatment to Executive without
materially adversely affecting the Company under said amended Section 28OG),
such payment shall be reduced or extended over a longer period of time to the
extent necessary to reduce such "excess parachute payment" to zero.
9. Specific Performance.
In the event of the breach by Executive of any of the provisions of
Section 6 hereof, the Company, in addition and supplementary to all other rights
and remedies existing in its favor and notwithstanding the provisions of Section
10 hereof, may apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce or
prevent any violations of the provisions thereof.
10. Arbitration.
The parties hereto acknowledge that it is in their best interests to
facilitate the informal resolution of any disputes arising out of this Agreement
or otherwise by mutual cooperation and without resorting to litigation. As a
result, if any party has a dispute arising hereunder or otherwise, including,
but not limited to, any claim for breach of any contract or covenant (express or
implied), any dispute regarding Executive's
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termination of employment from the Company, tort claims, claims for harassment
or discrimination (including, but not limited to, race, sex, religion, national
origin, age, handicap or disability), claims for compensation or benefits
(except where a benefit plan or pension plan or insurance policy specifies a
different claims procedure) and claims for violation of any federal, state or
other governmental law, statute, regulation or ordinance (except for claims
involving workers' compensation benefits), and the parties are unable to reach
agreement among themselves, then a settlement conference must be held within
thirty (30) days upon receipt of a notice by the complaining party describing in
detail the complaint and setting forth a proposed solution to the complaint. The
settlement conference will be held in any Los Angeles, California office of the
Judicial Arbitration and Mediation Services, Inc. ("JAMS"). The complaining
party must contact JAMS to schedule the conference and the parties must agree on
a retired judge from the JAMS panel. If the parties are unable to agree upon
such a retired judge, JAMS shall provide a list of three available judges and
each party may strike one judge. The remaining judge will serve as the mediator
at the settlement conference.
If the dispute is not settled by the above-described format, the
parties agree to submit the dispute to JAMS for binding arbitration. A
three-judge panel will be selected to arbitrate the dispute. JAMS will provide
the names of five potential arbitrators, giving each party the opportunity to
strike one name. The remaining three arbitrators will serve as the arbitration
panel. The parties agree that the arbitration must be initiated within the time
period of the statute of limitations applicable to the claim(s) if the claim(s)
had been filed in Court. Arbitration may be initiated by the aggrieved party by
sending written notice of an intent to arbitrate by registered certified mail to
all parties and to JAMS. The notice must contain a description of the dispute,
the amount involved and the remedies sought. If and when a demand for
arbitration is made by either party, the parties agree to execute a Submission
Agreement provided by JAMS, setting forth the rights of the parties if the case
is arbitrated and rules and procedures to be followed at the arbitration
hearing.
Nothing contained in this Section 10 shall prevent the Company from
seeking and obtaining equitable relief in a court to enforce any of its rights
under Section 6 hereof.
11. Representation by Counsel.
Executive acknowledges that he has been represented by legal counsel
in connection with this Agreement and has consulted with such legal counsel. The
Company shall reimburse Executive for all reasonable attorneys' fees and
expenses actually incurred by Executive, but not to exceed $6,000, in connection
with the negotiation and preparation of this Agreement.
12. Successors; Binding Agreement.
(a) 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, by agreement in
form and substance satisfactory to Executive, 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.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall
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entitle Executive to compensation from the Company in the same amount and on the
same terms as he would be entitled to hereunder if he terminated his employment
for Good Reason, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
12 or otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(b) This Agreement and all rights of Executive hereunder shall inure
to the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devisees and legatees. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee or other designee, or, if there be no
such designee, to Executive's estate.
13. Notice.
For purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to Executive: Xxxxx X. Xxxx
00000 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
If to Company: Intervisual Books, Inc.
0000 Xxxxx Xxxx Xxxx., #0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: President
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
Executive and by such officer of the Company as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. This Agreement, together with the documents referenced herein,
contains the entire agreement of the parties hereto with respect to the subject
matter hereof. It supersedes any and all other agreements, either oral or in
writing, between the parties hereto with respect to the employment of Executive
by the Company. No agreements or representations, oral or otherwise, express or
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implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of California.
15. Validity.
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
16. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
17. Survivability.
The provisions in Sections 4(f), 6, 8, 9 and 10 of this Agreement
shall survive any termination of this Agreement.
18. Attorneys' Fees.
In the event of any dispute arising out of the subject matter of this
Agreement, the prevailing party shall be entitled to recover from the
nonprevailing party its reasonable costs and expenses (including reasonable
attorneys' fees) incurred in arbitrating or otherwise resolving such dispute.
19. Withholding of Taxes; Tax Reporting.
The Company may withhold from any amounts payable under this Agreement
all such Federal, state, city and other taxes, and may file with appropriate
governmental authorities all such information, returns or other reports with
respect to the tax consequences of any amounts payable under this Agreement, as
may, in its reasonable judgment, be required by law.
20. Office Space.
After the termination of this Agreement, the Company agrees to provide
Executive with office space and reasonable access to phone, photocopying, and
other office equipment and resources. This provision shall survive any
termination of this Agreement.
21. Termination.
This Agreement shall terminate and be of no force or effect unless
$1,600,000 is released to the Company at the Second Closing (as defined in
Series A Preferred Stock Purchase Agreement between Intervisual Partners, LLC
and the Company dated December 31, 2001 (the "Purchase Agreement")), as provided
for in the Purchase Agreement. The parties acknowledge that unless such sum is
released from escrow to the
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Company at the Second Closing, this Agreement shall be null and void and of no
further effect.
[signature page follows]
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SIGNATURE PAGE TO EMPLOYMENT AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
"Company" INTERVISUAL BOOKS, INC., a
California corporation
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
CEO
"Executive" /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
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