EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of September 1, 1998, by and
between GEM Communications, LLC, a Delaware limited liability company
("Employer"), and Xxxxxxx X. Xxxxxxx ("Executive"):
Background
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Employer wishes to retain Executive and Executive wishes to
be employed by Employer on the terms and conditions set forth in this
Agreement.
In consideration of the mutual covenants and agreements set
forth herein, the parties hereto, intending to be legally bound hereby, agree
as follows:
ARTICLE I
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TERM OF AGREEMENT AND EMPLOYMENT
Section 1.01 Commencing on the date of this Agreement and for a period
ending on August 31, 2001, subject to earlier termination as provided in
Article VI hereof, Employer hereby employs Executive and Executive hereby
accepts employment with Employer as the President and Chief Executive Officer
of Employer. Subject to the direction and ultimate authority of the Chairman of
the Board and the Board of Directors of Employer, Executive shall be
responsible for the overall performance of GEM (the "Business") and, in
particular, Executive shall be responsible (i) for growing the Business'
earnings on an aggressive and consistent basis, (ii) improving profitability of
the Business' existing publications and trade shows, (iii) initially the
Executive's responsibilities will cover all North American operations but he
will be expected to cooperate with and participate in Employer's and TOIC's
worldwide gaming strategy and (iv) developing new products and services. The
Executive's responsibilities shall be determined from time to time in the sole
discretion of the Chairman of the Board of Employer. Employer, The Official
Information Company ("TOIC") and Employer's and TOIC's subsidiaries are
collectively referred to below as the "Related Entities."
Section 1.02 The term of this Agreement shall continue from year to
year after August 31, 2001, unless terminated by written notice, given by
either party to the other, on or before the date which is one year prior to the
expiration date of the term hereof or prior to the expiration of any extended
term.
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ARTICLE II
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DUTIES AND OBLIGATIONS OF EXECUTIVE
Section 2.01 At all times during the performance of this Agreement,
Executive shall adhere to each Related Entity's policies, rules and regulations
governing the conduct of its employees, now in effect, or as subsequently
adopted or amended.
Section 2.02 Executive shall devote substantially all of his business
time, ability and attention to the operations of the Businesses during the term
of this Agreement and shall not, whether directly or indirectly, render any
services to any other person or organization, whether for compensation or
otherwise, except with Employer's prior written consent.
ARTICLE III
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COMPENSATION
Section 3.01 As full compensation for his services hereunder, Employer
shall pay Executive an annual salary of One Hundred Thousand ($160,000),
payable in equal semi-monthly installments (the "Base Salary"). On each
December 31, the Base Salary shall be increased by an amount equal to the
percentage increase during the previous calendar year in the Consumer Price
Index, All Items, in the New York City metropolitan area.
Section 3.02 In addition to the Base Salary, Executive shall be
eligible to participate in TOIC's Key Employee Bonus Plan (the "Bonus Plan").
The Chief Executive Officer of TOIC has the authority in its sole and absolute
discretion to select the participants in the Bonus Plan and to determine the
bonus formula for each participant. Contemporaneously with the execution of
this Agreement, Employer shall deliver a letter stating that Executive has been
selected to participate in the Bonus Plan with respect to 1998 but that shall
be guaranteed a minimum bonus of $15,000 for 1998.
Section 3.03 Contemporaneously with the execution of this Agreement,
Employer and Executive are executing an agreement in the form attached as
Exhibit A pursuant to which Executive is being granted 1,750 Equity
Appreciation Units under TOIC's Key Executive Equity Appreciation Plan.
ARTICLE IV
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BENEFITS
Section 4.01 Executive shall be entitled to participate in all benefit
plans generally available to employees of Employer and, subject to Section 6,
to receive vacation, sick leave and leaves of absence in accordance with
general employee policies.
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ARTICLE V
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BUSINESS EXPENSES
Section 5.01 Employer shall reimburse Executive, in accordance with
Employer's policies, for all reasonable out-of-pocket business expenses
incurred by Executive in the performance of his duties hereunder. Executive
shall furnish to Employer documentary evidence of each such expense in the form
required to comply with Employer's policies and all applicable federal and
state tax statutes and regulations issued thereunder for the substantiation of
such expense as a tax deduction.
Section 5.02 Employer shall reimburse Executive up to $100,000 (plus a
gross-up for any taxes paid by Executive with respect to relocation expenses
referred to in clauses (i) and (ii) below) for (i) customary and necessary
expenses to move his family, household goods and other personal property from
Ohio to the New York City metropolitan area, (ii) real estate expenses related
to selling Employee's Ohio house and purchasing a house in the New York City
metropolitan area and (iii) customary and reasonable travel and lodging
expenses incurred by Executive prior to such move (in accordance with
Employer's travel policies). Executive shall furnish to Employer documentary
evidence of each such expense in the form required to comply with Employer's
policies and all applicable federal and state tax statutes and regulations
issued thereunder for the substantiation of such expense as a tax deduction.
Executive shall have completed his relocation by no later than June 1, 1999.
ARTICLE VI
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TERMINATION OF EMPLOYMENT
Section 6.01 Termination with Cause. Employer may terminate
Executive's employment at any time for Cause by giving written notice of such
termination to Executive. For purposes of this Agreement, cause shall mean:
(a) The conviction of Executive of a felony;
(b) Fraud, embezzlement or other misappropriation by Executive of
funds or property of Employer or any of its affiliates;
(c) A breach of any of Executive's fiduciary duties as an employee of
Employer;
(d) Any gross misconduct of Executive which is injurious in any
material respect to Employer or any of its affiliates; or
(e) Executive's failure to perform in any material respect his
obligations under this Agreement.
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If Employer terminates Executive's employment for Cause under
this Section 6.01, Executive shall cease receiving his Base Salary as of the
date of such termination, shall not be entitled to any severance pay, and shall
cease as of the date of such termination to participate in the benefit plans
generally available to employees of Employer in which Executive is then
participating. Employer will assure that Executive receives all benefits
required by law, e.g., COBRA, but Executive will receive no other benefit
hereunder.
Section 6.02 Termination Resulting from Death or Disability. If, as
the result of any physical or mental disability, Executive shall fail or be
unable to perform in a satisfactory manner a material portion of his duties and
obligations hereunder for a period of 180 consecutive days or for a total of
180 days in any twelve (12) month period, Employer may, upon thirty (30) days
prior written notice to Executive, terminate Executive's employment hereunder.
Any dispute as to a disability shall be resolved by a medical doctor selected
jointly by Employer and Executive, or, failing agreement, by the President of
the American Medical Association.
The death of Executive shall terminate this Agreement and his
employment hereunder, effective at the time of death.
In the event of termination resulting from disability or
death, Executive or his estate, as the case may be, shall receive Executive's
Base Salary through the date of termination and a pro-rated portion (based on
the number of days in the year in which Executive was employed) of the Bonus,
if any, calculated for the portion of such calendar year through the last day
of the month preceding the month in which Executive's employment terminated.
Executive's participation in the benefits plans generally available to
employees of Employer shall cease as of the date of such termination, with the
exception of a disability insurance plan, if any.
Section 6.03 Termination for Other Reasons. Employer may terminate
this Agreement and Executive's employment for any reason at any time by giving
written notice of such termination to Executive. If Executive's employment is
terminated by Employer pursuant to this provision (i.e., other than for Cause,
death or disability), Executive shall cease receiving his Base Salary and to
participate in Employer's benefit plans as of the date of such termination. If,
however, Employer shall promptly receive from Executive a release of Employer
and its affiliates, in form and substance satisfactory to Employer (the
"Release"), from any and all claims which Executive may have in respect of such
termination or under this Agreement, (a) Employer shall pay Executive severance
pay in an amount equal to Executive's Base Salary (calculated at the rate of
Executive's annual salary at the time of such termination) for one (1) year
after the date of such termination (the "Severance Period") and a pro-rated
portion (based on the number of days in the year in which Executive was
employed) of the Bonus, if any, calculated for the portion of such calendar
year through the last day of the month preceding the month in which Executive's
employment terminated, and (b) Employer shall maintain in full force and effect
Executive's continued participation in the benefit plans generally available to
employees of Employer in which Executive was participating immediately prior to
such termination until the earlier of (i) one (1) year after the date of such
termination and (ii) Executive's commencement of full-time employment with a
new employer. At the end of the period of participation in such benefit plans,
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Employer will assure that Executive receives all additional benefits required
by law, e.g., COBRA. The payment of the severance pay referred to in clause (a)
above shall be made as follows: (i) one-half of the amount calculated based
upon Executive's Base Salary shall be payable upon delivery of the Release,
(ii) one-half of the amount calculated based upon Executive's Base Salary shall
be payable during the Severance Period in accordance with the same schedule of
payments provided for Executive's Base Salary pursuant to Section 3.01
beginning six months after the date of termination and (iii) the amount
calculated based upon the pro-rated bonus shall be payable in accordance with
the Key Employee Bonus Plan.
Section 6.04 Mitigation. Executive agrees to use reasonable efforts to
mitigate any severance pay hereunder, beginning six months after termination,
by seeking other comparable employment or consultancy arrangements. Subject to
Section 7.01(a), if during the Severance Period the Executive accepts other
employment or consultancy, the portion of the severance pay awarded to the
Executive hereunder that is based upon Executive's Base Salary shall be reduced
by the amount of any compensation payable as a result of such other employment
or consultancy.
ARTICLE VII
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NON-COMPETITION, CONFIDENTIALITY
AND NON-SOLICITATION COVENANTS
Section 7.01 Executive acknowledges that Executive's employment
hereunder will provide Executive with access on a continual basis to
confidential and proprietary information concerning each of the Businesses,
which is not readily available to the public; and that Employer would not enter
into this Agreement but for the covenants (the "Restrictive Covenants")
contained in this Article VII. Accordingly, Executive agrees that:
(a) During the term of employment hereunder and, for a period of one
(1) year thereafter (the "Restricted Period"), Executive shall not, directly or
indirectly, (i) engage in any business that is competitive with the Businesses
for his own account; or (ii) render any services which constitute engaging in
any business that is competitive with the Businesses in any capacity to any
person (other than with the consent or at the direction of Employer); nor shall
Executive own an equity interest in any person which is engaged in any business
that is competitive with the Businesses (such activities being "Competitive
Activities"), provided, however, that Executive may own, directly or
indirectly, solely as a passive investment, securities of any person which are
traded on any national securities exchange or NASDAQ, if Executive is not a
controlling person of, or a member of a group which controls, such person, and
does not, directly or indirectly, own five percent (5%) or more of any class of
securities of such person.
In the event that Executive's employment is terminated by Employer
pursuant to Section 6.03 of this Agreement and Executive has received an offer
or opportunity to engage in any Competitive Activities during the Restricted
Period, Executive shall notify the Company that he has received such an offer
or opportunity, representing that such offer is a bona fide and firm offer and
that he intends to accept the same unless precluded hereby, specifying the
specific
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employment title and duties or other interest so offered and the terms of such
offer and consenting to the Company contacting appropriate officials at such
other company solely for the purpose of verifying the nature and terms of the
employment or other interest offered. Following receipt of such notice, the
Company shall notify Executive within 10 business days thereof whether it is
willing, in its sole discretion, to waive the provisions of this Section
7.01(a) with respect to such proposed Competitive Activity. If the Company does
not waive the provisions of this Section 7.01(a) with respect to such proposed
Competitive Activity, then Executive shall be relieved of his obligation to
mitigate pursuant to Section 6.04.
(b) Executive shall forever maintain in strictest confidence all
information relating to each of the Businesses and to each of the Related
Entities, which is known or becomes known to Executive, including, without
limitation, trade secrets, know-how, financial statements and data, contracts
(whether oral or written), customer and advertiser lists, rate schedules,
pricing policies, marketing plans and strategies, and business acquisition
plans (collectively, the "Confidential Information"), and shall not, except in
connection with the business affairs of Employer and its affiliates, disclose
any Confidential Information to any person, other than with the express written
consent of Employer. Confidential Information shall not include information
which Executive can demonstrate (A) has become generally available to the
public other than as a result of a disclosure by Executive, (B) was available
to Executive on a non-confidential basis prior to its disclosure to Executive
by Employer, or (C) has become available to Executive on a non-confidential
basis from a source other than Employer, provided that such source is not known
by Executive after reasonable inquiry to be bound by a confidentiality
agreement with Employer or otherwise prohibited from transmitting the
information to Executive by a legally binding obligation.
Notwithstanding anything in this Agreement to the contrary, in the
event that a request or demand is made upon Executive, by written
interrogatory, request for information or documents, subpoena, court order,
civil investigative demand or other legal process, to disclose any Confidential
Information, which disclosure is not otherwise permitted hereunder, Executive
will provide Employee with prompt notice of any such request or demand so that
Employer may seek an appropriate protective order or waive compliance with the
provisions of this Agreement. Executive will not oppose action by, and will
cooperate with, Employer in any effort to obtain an appropriate protective
order.
All memoranda, notes, lists, records and other documents (and all
copies thereof) constituting Confidential Information heretofore or hereafter
made or compiled by Executive or made available to Executive concerning any of
the Businesses shall be the property of the respective Related Entities, shall
be kept confidential in accordance with the provisions of this Section 7.01(b),
and shall be delivered to the respective Related Entities promptly upon
termination of this Agreement or at any earlier or later time upon the request
of Employer.
(c) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any current employee, officer or director of
any of the Related Entities to leave the employment of his employer, or hire
any current or former employee, officer or director of, any of the Related
Entities.
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(d) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any person who is a customer or advertiser of
any of the Related Entities, or the affiliates or associates thereof, to
discontinue such person's business relationship with any of the Related
Entities.
Section 7.02 Executive acknowledges and agrees that (i) Executive has
had an opportunity to seek advice of counsel in connection with this Agreement;
(ii) the Restrictive Covenants are reasonable in scope and in all other
respects; (iii) any violation of the Restrictive Covenants will result in
irreparable injury to the Related Entities; (iv) money damages would be an
inadequate remedy at law for the Related Entities in the event of a breach of
any of the Restrictive Covenants by Executive; and (v) specific performance in
the form of injunctive relief would be an adequate remedy for the Related
Entities.
Employer and Executive hereby submit to the jurisdiction of the Courts
of the State of New York to enforce the Restrictive Covenants and agree that if
Executive breaches or threatens to breach a Restrictive Covenant, Employer (or
any of the other Related Entities) shall be entitled, in addition to all other
remedies, to an injunction restraining any such breach, without any bond or
other security being required and without the necessity of showing actual
damages.
ARTICLE VIII
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ARBITRATION
Section 8.01 Except as otherwise set forth in Section 7.02 above,
Employer and Executive each waives any right each may have to a civil lawsuit
and trial by jury in connection with any dispute between them arising out of,
concerning or connected with this Agreement and each agrees that, upon the
written request of the other party, any such dispute shall be submitted to
arbitration. Arbitration shall take place in the City of New York, or such
other place as the parties may agree, and shall be governed by the rules of the
American Arbitration Association.
Section 8.02 Employer and Executive shall select one (1) arbitrator to
hear and determine the dispute from a list of five (5) candidates provided by
the American Arbitration Association.
Section 8.03 The arbitrator's award shall be final and binding on the
parties and the arbitrator may invoke any remedy available in equity or at law,
including, without limitation, injunctions and restraining orders. The parties
agree to the jurisdiction of the Courts of the State of New York for
confirmation and enforcement of the arbitrator's award.
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ARTICLE IX
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GENERAL PROVISIONS
Section 9.01 In the event of arbitration or an action at law or in
equity to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees and costs. The
arbitrator's fees and costs incurred shall be borne by the losing party.
Section 9.02 This Agreement supersedes any and all other agreements,
whether oral or in writing, between the parties hereto with respect to the
subject matter hereof. Each party acknowledges that no representations,
inducements, promises or agreements, whether oral or in writing, have been made
by any party, or on behalf of any party, which are not embodied herein. No
agreement, promise or statement not contained in this Agreement shall be valid
and binding, unless agreed to in writing and signed by the parties sought to be
bound thereby.
Section 9.03 Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, faxed, or sent
by courier service (with next day delivery requested) or the U.S. Postal
Service by express mail (with next day delivery requested). Any such notice or
communication shall be deemed given and effective, in the case of personal
delivery, upon receipt by the other party, in the case of faxed, upon
transmission of the fax, in the case of a courier service or the U.S. Postal
Service, upon the next business day, after dispatch of the notice or
communication. Any such notice or communication shall be addressed as follows:
If to Employer:
The Official Information Company
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
If to Executive:
Xx. Xxxxxxx X. Xxxxxxx
00000 Xxxxxxx Xxxx Xxxxx
Xxx Xxxxxxx, Xxxx 00000
Any person named above may designate another address or fax number by giving
notice in accordance with this Section to the other persons named above.
Section 9.04 This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, without regard to principles
of conflicts of law.
Section 9.05 No breach of any provision hereof may be waived unless in
writing. Waiver of any breach of any provision hereof shall not be deemed a
waiver of any other breach of the same or any other provision hereof. This
Agreement may be amended only by a written agreement, executed by the parties
hereto.
Section 9.06 In the event any one or more of the provisions contained
in this Agreement shall be held by an arbitrator or court of competent
jurisdiction to be invalid or unenforceable in any respect, the validity and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby and the parties will attempt to agree upon
a valid and enforceable provision which shall be a reasonable substitute for
such invalid and unenforceable provision in light of the tenor of this
Agreement, and, upon so agreeing, shall incorporate such substitute provision
in this Agreement.
Section 9.07 This Agreement may be executed in any number of
counterparts and each such duplicate counterpart shall constitute an original,
any one of which may be introduced in evidence or used for any other purpose
without the production of its duplicate counterpart. Moreover, notwithstanding
that any of the parties did not execute the same counterpart, each counterpart
shall be deemed for all purposes to be an original, and all such counterparts
shall constitute one and the same instrument, binding on all the parties
hereto.
Section 9.08 Both parties hereto acknowledge that they have had the
advice of counsel before entering into this Agreement, have fully read the
Agreement and understand the meaning and import of all the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the day and year first above
written.
GEM COMMUNICATIONS, LLC
By:_______________________________
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Xxxxxxx X. Xxxxxxx
