EXHIBIT 7
Employment Contracts with Registrant
Xxxx.xxx, Inc.
(A Development Stage Company)
As of December 31, 1998
and for the years ended
December 31, 1998 and 1997
and for the period October 4, 1988 (Inception)
to December 31, 1998
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of October ___,
1999, by and between XXXX.xxx, Inc., a Florida corporation (the "Company"), and
Xxxxx Xxxxxx, (the "Executive").
R E C I T A L S:
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THEREFORE, In consideration of the above recitals and of the mutual
promises and conditions in this Agreement, it is agreed as follows:
A. The Company recognizes that the Executive's contributions to the
growth and success of the Company has been substantial and desires to assure
itself of Executive's continued service.
B. The Board of Directors of the Company (the "Board") has determined
that it is in the best interest of the Company and its stockholders to assure
that the Company will have the continued dedication of the Executive.
C. The Executive agrees to continue to serve as an executive employee
of the Company in the capacity of President of Sales and Marketing.
A G R E E M E N T
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NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Term of Agreement. This Agreement shall commence on the
date hereof and shall expire on the second (2nd) anniversary of the Effective
Date hereof; provided, further, that this Agreement may be terminated prior to
such second anniversary pursuant to the terms of this Agreement. Unless the
Company or Executive gives written notice to the other party at least ninety
(90) days before the expiration of this Agreement, this Agreement's Employment
Period shall be extended for an additional term of one (1) year. This
Agreement's Employment Period shall include any automatic extensions pursuant to
the preceding sentence.
2. Terms of Employment.
(a) Employment. Subject to earlier termination as
provided in this Agreement, the Company hereby agrees to continue the Executive
in its employ as the President for the period commencing on the Effective Date
and ending upon the second anniversary of the Effective Date (the "Employment
Period").
(b) Termination. The Employment Period will continue
until the first to occur of: (i) the second anniversary of the Effective Date;
(ii) Executive's death or Disability; (iii) Executive's resignation for Good
Reason; (iv) termination of the Executive's employment by the Board for Cause;
(v) termination of the Executive's employment for any reason whatsoever other
than Cause.
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(c) Notice of Termination. Any termination by the
Company for Cause or by Executive for Good Reason shall be communicated by
Notice of Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and 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.
(d) Date of Termination. "Date of Termination" shall
mean the date specified in the Notice of Termination where required or in any
other case upon ceasing to perform services to the Company; provided that if,
within fifteen (15) days after any Notice of Termination, one party notified the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date finally determined to be the Date of Termination,
either by mutual written agreement of the parties or by a binding and final
arbitration award.
(e) Duties During Employment Period.
(1) During the Employment Period, the Executive's
position, including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised or assigned
at any time during the ninety (90)-day period immediately preceding the
Effective Date.
(2) During the Employment Period, and excluding any
periods of illness or vacation to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Company and its Affiliates and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder,
to use the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period, it shall not be
a violation of this Agreement for the Executive to (A) serve on corporate, civic
or charitable boards or committees as reasonably approved by the Board, (B)
deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage Personal investments (not to exceed five percent
[5%] of any Person), 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. It is expressly understood and agreed
that to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive's performance to this Company.
3. Benefits Upon Termination of Employment. Upon
termination of the Employment Period for the reasons set forth below, Executive
shall be entitled to the following benefits (and such benefits shall be
Executive's sole remedy against the Company):
(a) Expiration of Employment Period, Death,
Disability or Retirement. If the Employment Period terminates pursuant to
clauses (i) or (ii) of paragraph 2(b) hereof, Executive's benefits shall be
determined (as applicable) in accordance with the Company's retirement,
survivor's benefits, insurance and other applicable programs and plans then in
effect.
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(b) Termination With Cause. If the Employment Period
terminates pursuant to clause (iv) of 2(b) hereof, the Company shall pay
Executive his or her full Base Salary through the Date of Termination at the
rate in effect on the Date of Termination, plus all other amounts to which
Executive is entitled under any compensation plan of the Company at the time
such payments are due.
(c) Termination Without Cause; Resignation for Good
Reason. If the Employment Period terminates pursuant to clauses (iii) or (v) of
paragraph 2(b) hereof, Executive shall be entitled to all of the benefits
provided below:
(1) The Company shall pay Executive his or her full
Base Salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given.
(2) For a ninety (90)-day period after such
termination, the Company will arrange to provide to Executive at the Company's
expense with benefits under (or substantially similar to) the Company's medical
plans in existence on the Date of Termination (including, if applicable, the
Company's Executive Medical Program); provided further that benefits otherwise
receivable by Executive pursuant to this clause (2) shall be reduced to the
extent comparable benefits are actually received by Executive from any
collateral source (i.e., personal insurance, other employment benefits, etc.)
during such ninety (90)-day period, and any such benefits actually received by
Executive shall be reported by Executive to the Company.
(3) For a ninety (90)-day period after such
termination, the Company will arrange to provide to Executive at the Company's
expense with continued benefits under the Company's group life insurance plan in
existence on the Date of Termination; provided that if the Company's insurers
refuse to continue to provide coverage of Executive in the group plan at rates
not in excess of twice the rate paid for Executive's coverage immediately prior
to the Date of Termination, then in lieu of such continued group life insurance
benefits, the Company shall pay Executive, in a lump sum on the Date of
Termination, an amount equal to twice the rate paid for Executive's coverage
immediately prior to the Date of Termination.
(4) The Company and the Executive agree that it will
be difficult if not impossible to determine the amount of Executive's damages in
the event of a material breach by the Company of its obligations hereunder,
including a termination of the Executive other than for Cause, because of the
difficulty of quantifying the value of Executive's opportunity to earn bonuses
of common stock hereunder, as well as the value that such stock would have in
the future. Therefore, Executive shall be entitled to receive as liquidated
damages a one-time cash payment of $1,000,000.00, less any payroll taxes which
are required to be withheld from such payment, which shall be in compensation
for the Base Salary, benefits, and potential for stock bonuses.
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(d) Mitigation. Executive shall not be required to
mitigate the amount of any payment provided for in this paragraph 3 by seeking
other employment or otherwise, nor shall the amount of any payment provided for
in this paragraph 3 (except as expressly provided in clause (2) of paragraph
3(c) hereof) be reduced by any compensation or benefits received by Executive as
the result of employment by another employer after the Date of Termination or
otherwise.
4. Base Salary.
During the term of this Agreement, Company agrees to pay Executive a
Base Salary of $250,000.00 per year. The Base Salary shall be payable in equal
bi-weekly installments subject to all applicable withholdings and deductions.
The Base Salary payable to Executive under this Agreement shall be subject to
yearly increases at a rate of ten percent (10%) of the previous year's Base
Salary. Notwithstanding the foregoing, the Executive shall not be entitled to
any salary until such time as the Escrow under the Stock Purchase Agreement to
which this Agreement is an Exhibit "F" shall have Closed, as defined by said
agreement, or said agreement is terminated.
5. Stock Options.
In addition to the Base Salary provide for above, Company herewith
grants to Executive a restricted stock option (the "RSO") to acquire shares of
common stock of Company. The RSO shall be require Executive to pay the sum of
One Dollar ($1.00) per share, which the Board of Directors of Company has
determined to equal the fair market value of the common stock of Company on the
date of this Agreement. The RSO is subject to substantial restrictions and risk
of forfeiture as defined by Section 83 of the Internal Revenue Code of 1986, as
amended. Executive shall only be able to exercise the RSO for a period of two
(2) years from the date of this Agreement. The RSO may be exercised by Executive
in accordance with the following benchmarks: (i) When gross sales of Company
reach $10,000,000 for any twelve (12) month period during the term of this
Agreement, Executive may acquire 250,000 shares of Company's common stock; (ii)
When gross sales of Company for any twelve month period during the term of this
Agreement is greater than $50,000,000, but less than $100,000,000, Executive may
acquire an additional 250,000 shares of Company's common stock; (iii) When gross
sales for any twelve month period equals $100,000,000 or more, for any twelve
month period during the term of this Agreement, Executive may acquire an
additional 500,000 shares of Company's common stock. In no event shall the
number of shares of Company common stock which Executive may acquire exceed One
Million (1,000,000) shares. After Executive has obtained the right to acquire
1,000,000 shares of common stock of the Company, Executive shall have the right
to acquire additional shares of common stock of Company. Executive shall have
the right to acquire One Hundred Thousand (100,000) shares of Company common
stock for each $50,000,000 in gross sales for any twelve month period during the
term of this Agreement. The option price per share shall also be $1.00. To
exercise the option granted Executive by Company, Executive shall serve written
notice upon Company of the intent to exercise the option and shall tender
payment to the Company at the time of the notice of exercise. In the event that
Company shall not attain the gross receipts required in order for Executive to
acquire the shares of common stock within the time periods set forth in this
Agreement, the option granted Executive shall lapse, terminate and be of no
further force or effect.
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6. Other Compensation
During the term of this Agreement, Executive shall be entitled to
receive all other benefits of employment generally available to other executive
and managerial employees, including medical, dental, vision, and disability
insurance benefits, and participation in Company's pension plan and
profit-sharing plan, if any.
Executive shall be entitled to a four (4) week paid vacation each year
commencing on the date of this Agreement.
During the term of this Agreement, Company shall furnish Executive with
the total sum of $1,000.00 per month automobile and cellular telephone
allowance.
During the term of this Agreement, Company shall maintain a
$1,000,000.00 annual term life insurance policy payable to the Executive's
beneficiary designation.
7. Confidential Information. Executive acknowledges that the
Trade Secrets obtained by him during the Employment Period and during his
employment with the Company and its Affiliates prior to the Effective Date
concern the business or affairs of the Company and its Affiliates. Therefore,
Executive agrees that he will not disclose to any unauthorized Person or use for
his own account any of such trade secrets without the Board's written consent,
unless and to the extent that a Trade Secret becomes generally known to and
available for use by the public other than as a result of Executive's acts or
omissions to act. Executive agrees to deliver to Company at the termination of
the Employment Period, or at any other time the Company may request, all
memoranda, notes, plans, records, reports and other documents (and copies
thereof) relating to the business of the Company and its Affiliates which he may
then possess or have under his Control. Disclosure or use by the Executive of
such Trade Secrets shall not be precluded if such disclosure or use is in
response to a valid order of a court or other governmental body of the United
States or any political subdivision thereof, or, if in the written opinion of
counsel reasonably acceptable to the Company, is required by law or is necessary
to establish rights under this Agreement. Notwithstanding the foregoing, the
terms of this paragraph 7 shall not apply if Executive is terminated without
Cause or resigns for Good Reason as defined in clause (5) of the definition of
"Good Reason."
8. Inventions and Patents.
(a) Executive agrees that all Inventions,
innovations or improvements of a proprietary nature in the Company's or any of
its Affiliates' methods of conducting their business (including new
contributions, improvements, ideas and discoveries, whether patentable or not)
("Inventions") conceived or made by him during his employment pursuant to this
Agreement or prior employment with the Company belong to the Company. Executive
will promptly disclose such Inventions, innovations or improvements to the Board
and perform, at the sole cost and expense of the Company, all actions reasonably
requested by the Board to establish and confirm such ownership by the Company.
Notwithstanding the foregoing, the terms of this subparagraph 8(a) shall not
apply if Executive is terminated without Cause or resigns for Good Reason as
defined in clause (5) of the definition of "Good Reason."
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(b) California Employee Patent Act Notification.
In accordance with ss.2872 of the California Employee Patent Act, West's Cal.
Lab. Code ss.2870 et seq., Executive is hereby advised that subparagraph 8(a)
does not apply to any invention, new development or method (and all copies and
tangible embodiments thereof) made solely by Executive for which no equipment,
facility, material, Trade Secrets or Inventions of the Company or its Affiliates
was used and which was developed entirely on Executive's own time; provided,
however, that subparagraph 8(a) shall apply if the invention, new development or
method (i) relates to the Company's or any of its Affiliate's actual or
demonstrably anticipated businesses or research and development, or (ii) results
from any work performed by Executive for the Company or any of its Affiliates.
9. Non-Solicitation.
(a) Employees. Executive agrees that during the
Employment Period and for one (1) year thereafter, he and all Persons under his
Control will not knowingly, either directly or indirectly, for himself or for
any other Persons (i) call on, solicit, or take away, or attempt to call on,
solicit or take away any Person then employed by the Company and/or its
Affiliates or (ii) employ any employee of the Company and/or its Affiliates who
voluntarily terminates such employment until three (3) months have passed
following termination of such employment. Notwithstanding the foregoing, the
terms of this subparagraph 9(a) shall not apply if Executive is terminated
without Cause or resigns for Good Reason as defined in clause (5) of the
definition of "Good Reason."
(b) Customers. Executive agrees that during the
Employment Period and for one (1) year thereafter, he and all Persons under his
Control will not knowingly, directly or indirectly, for himself or for any other
Person, call upon, solicit, or take away a Person who is then, or during the
immediately preceding year was, a customer of the Company and/or its Affiliates,
or encourage any customer to curtail its business with the Company and/or its
Affiliates, or to attempt to do any of the foregoing. Notwithstanding the
foregoing, the terms of this subparagraph 9(b) shall not apply if Executive is
terminated without Cause or resigns for Good Reason as defined in clause (5) of
the definition of "Good Reason."
(c) Non-Competition. Executive agrees that
during his employment hereunder and for one (1) year thereafter, he and all
Persons under his Control will not engage world-wide, directly or indirectly,
for himself or for any other Person, in any business which competes with the
business of the Company or its Affiliates as such business (including but not
limited to, classifieds e-commerce, setting up and/or selling of malls, auction
houses, supersites, internet service provider, or web design) exists up to (and
including) the date on which this Agreement expires or is terminated.
Notwithstanding the foregoing, the terms of this subparagraph 9(c) shall not
apply if Executive is terminated without Cause or resigns for Good Reason as
defined in clause (5) of the definition of "Good Reason."
(d) Blue Pencil. If, at the time of enforcement
of any provision of subparagraphs 9(a) or 9(b) above, a court holds that the
restrictions stated therein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances will be substantially for the stated period,
scope or area.
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(e) Enforcement. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this paragraph 9; therefore, in the event of a breach by
Executive of any of the provisions of this paragraph 9, the Company or its
successors or assigns may in addition to other rights and remedies existing in
its favor, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions hereof. In order to deter and punish any breach by
Executive of this paragraph 9, the parties agree that in addition to any other
rights and remedies that the Company may have in the event that Executive
breaches paragraph 9, Executive shall pay to the Company the sum of One Million
Dollars (U.S. $1,000,000.00) as a penalty.
10. Successors and Assigns; Binding Agreement.
(a) This Agreement shall not be assignable by
the Company except pursuant to paragraph 10(b) below. This Agreement shall not
be assignable by Executive during Executive's lifetime.
(b) Upon a Change of Control, the Company will
require any successor (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. Failure of the Company to obtain such assumption and agreement
in writing prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Executive to terminate his employment with
the Company for Good Reason.
(c) This Agreement shall inure to the benefit of
and be enforceable, on the one hand, by the Company and its successors and
assigns pursuant to paragraph 10(b) above and, on the other hand, by the
Executive and Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive 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 is no such designee,
to Executive's estate.
11. Withholding. All payments to Executive pursuant to this
Agreement shall be subject to all applicable federal, state and local
withholding regulations determined by the Company's independent certified public
accountants.
12. No Inconsistent Agreements. Any and all employment,
severance or other similar agreements heretofore executed between the Company,
on the one hand, and Executive, on the other, are hereby terminated.
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13. Notices. Any notice provided for in this Agreement must be
in writing and must be either personally delivered, sent by overnight courier
(i.e., Federal Express) or mailed by first-class mail, return receipt requested,
to the recipient at the address below indicated:
To the Company:
Xxxx.xxx, Inc.
00000 Xxxxx Xxxxx
0xx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
To Executive:
Xxxxx Xxxxxx
c/o Xxxxx Xxxxxxxx, Esq.
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party. Any
notices under this Agreement will be deemed to have been given when so
personally delivered, one (1) day after being sent by overnight courier and five
(5) days after being mailed.
14. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law. The parties agree that (i) the provisions of this Agreement
shall be severable in the event that any of the provisions hereof are for any
reason whatsoever invalid, void or otherwise unenforceable, (ii) such invalid,
void or otherwise unenforceable provisions shall be automatically replaced by
other provisions which are as similar as possible in terms to such invalid, void
or otherwise unenforceable provisions but are valid and enforceable, and (iii)
the remaining provisions shall remain enforceable to the fullest extent
permitted by law.
15. Complete Agreement. This Agreement and those documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
17. Governing Law. All questions concerning the construction,
validity and interpretation and enforcement of this Agreement will be governed
by the internal law, and not the law of conflicts, of the State of California,
and the exclusive jurisdiction and venue for any action arising out of or
relating to this Agreement shall be the Federal and State courts in the State of
California, County of Orange, and each party hereby submits itself to the
jurisdiction of said courts.
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18. Remedies. Except when expressly provided otherwise, each
of the parties to this Agreement will be entitled to enforce his rights under
this Agreement specifically, to recover damages by reason of any breach of any
provisions of this Agreement and to exercise all other rights existing in his
favor.
19. Amendments and Waivers; Third Party Beneficiaries. Any
provision of this Agreement may be amended or waived only with the prior written
consent of the Company and Executive. The failure of any party to insist, in any
one (1) or more instances, upon performance of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition.
20. Arbitration. Any dispute or controversy arising under or
in connection with paragraph 2(d) of this Agreement shall be settled exclusively
in arbitration in Orange County, California by and in accordance with the rules
of the American Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction; provided, however,
that Executive shall be entitled to seek specific performance of his right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
21. Definitions.
"Affiliates" shall mean, with respect to any Person,
another Person who Controls, or is Controlled by, or is under common Control
with, such first Person. Notwithstanding the foregoing, an Affiliate of the
Company shall be limited to Subsidiaries of the Company and to other Persons
engaged in one or more of the same or any similar businesses as the Company and
its Subsidiaries. Further, any Affiliate of a member of the Stockholder Group
shall include such member's Family Group.
"Agreement" means this Employment Agreement.
"Base Salary" shall mean Executive's regular
compensation before bonuses [commission] and fringe benefits.
"Board" means the Board of Directors of the Company.
"Cause" shall mean (1) the commission by Executive of
a felony, fraud, embezzlement or an act of serious moral turpitude which, in the
good faith judgment of the Board, is likely to cause material harm to the
customer relations, operations, business prospects or reputation of the Company
or any of its Affiliates, provided that in the absence of a conviction or plea
of nolo contendere, the Company will have the burden of proving the commission
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of such act by a preponderance of the evidence, (ii) the commission of any act
by Executive constituting financial dishonesty against the Company or any of its
Affiliates, provided that, in the absence of a conviction or plea of nolo
contendere, the Company will have the burden of proving the commission of such
act by a preponderance of the evidence, (iii) the repeated failure by Executive
to follow the lawful directives of the Board with respect to a matter or matters
within the control of the Executive, provided that, if such breach described in
clause (iii) may be cured by Executive, he will, subject to the following
proviso, be given written notice (a "default notice") of such breach and will be
given an opportunity to cure such breach to the reasonable satisfaction of the
Board within a reasonable period of time not to exceed thirty (30) days of
receipt of such written notice (time being of the essence with respect thereto),
and provided, further, that Executive will only be entitled to receive one (1)
such default notice during any twelve (12) month period of employment hereunder;
or (iv) the willful and material breach by Executive of the provisions of
paragraphs 2(d)(i), 5, 6 and 7 hereof, provided that, if such breach described
in this clause (iv) may be cured by Executive, he will, subject to the following
proviso, be given a "default notice" of such breach and will be given an
opportunity to cure such breach to the reasonable satisfaction of the Company
Board within thirty (30) days of receipt of such written notice (time being of
the essence with respect hereto), and provided, further, that Executive will
only be entitled to receive one (1) such default notice during each twelve (12)
month period of employment hereunder.
"Change of Control" means (i) any event (including,
without limitation, the sale or issuance of capital stock, merger,
consolidation, recapitalization, or reorganization) which results in the
Stockholder Group owning (either directly or indirectly through the ownership of
Holding or any other Person) securities with less than a majority of the
ordinary voting power of the Company or its successors or (ii) a sale of all, or
substantially all, of the consolidated assets of the Company to any Person not
Controlled by the Stockholder Group.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" shall have the meaning set forth in the
preamble to this Agreement.
"Control" and all conjugations thereof (e.g.,
Controlled or Controlling) means the direct or indirect power or right to
Control, direct or cause the direction of the management or policies of another
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Date of Termination" shall have the meaning set
forth in paragraph 2(d) of this Agreement.
"Disability" shall mean a physical or mental
Disability which shall cause the Executive to have failed to perform a
substantial portion of the services required hereunder for a period of six (6)
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consecutive months or for a period of twelve (12) months during any twenty-four
(24)-month period; provided that the Company shall provide Executive with its
written reasons which led the Board to believe that Executive had a Disability,
or if a physician selected by the Company and Executive, after examining the
Executive (and Executive agrees to submit to all such reasonable examinations),
shall determine that the Executive has suffered a physical or mental Disability
that will more likely than not prevent him from performing the services required
hereunder for a period of six (6) consecutive months or for a period of twelve
(12) months during any twenty-four (24)-month period. In the event that the
Board and the Executive cannot select an examining physician within ten (10)
days after the Board advises Executive in writing that it believes a Disability
has occurred, a physician shall be selected by the medical director of a
hospital designated by the Company which is not affiliated with the Company. The
determination of any physician hereunder shall be binding and conclusive on the
parties, and the Board may not require Executive to submit to an examination
within six (6) months after a previous examination wherein Executive was deemed
not to have a Disability.
"Executive" shall have the meaning set forth in the
preamble to this Agreement.
"Executive Medical Program" means the Company's
Executive Medical Program as in existence from time to time, whereby certain
executives (which may not necessarily include the Executive) are reimbursed for
the uninsured portion of substantially all of their medical expenses.
"Good Reason" shall mean, without Executive's express
written consent, the occurrence of any one (1) or more of the following:
(1) a reduction by the Company of
Executive's salary as in effect on the date hereof or as the same shall be
increased from time to time prior to the occurrence of a Change of Control;
(2) a material reduction by the Company
of Executive's protection under the Company-paid medical (including, if
applicable, the Company's Executive Medical Program) and group life insurance
plans;
(3) the Company requiring Executive to
be based at a location in excess of the larger territory of twenty-five (25)
miles from the location where Executive is based immediately prior to the
Effective Date;
(4) any violation by the Company of
paragraph 2(e)(1) hereof; or
(5) any violation of paragraph 10(b)
hereof.
Executive shall have the right to resign for Good Reason even if Executive is
then suffering from a Disability.
"Inventions" shall have the meaning set forth in
paragraph 8 of this Agreement.
"Notice of Termination" shall have the meaning set
forth in paragraph 2(d) of this Agreement.
"Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a governmental entity or any department or agency thereof.
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"Subsidiary" shall mean any Person which the Company
has the direct or indirect right to control, direct or cause direction of
management and policies of, whether through the ownership of voting securities,
by contrast or otherwise.
"Trade Secrets" means any information, method,
program or compilation of information which is used in the Company's or any
Affiliate's business and which is confidential and proprietary, including, but
not limited to, all lists of past, present or prospective customers or suppliers
of the Company and its Affiliates.
22. Interpretation. Unless clearly expressed to the contrary,
the words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole, including the exhibits and schedules hereto,
as the same from time to time may be amended or supplemented and not any
particular paragraph, subparagraph or clause contained in this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in masculine, feminine or neuter gender shall include the masculine,
feminine and the neuter.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
"Company"
---------------------------
By:
Its:_______________________
"Executive"
/s/Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx
13
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of October 20,
1999, by and between XXXX.xxx, Inc., a Florida corporation (the "Company"), and
Xxxxx Xxxxxxx, (the "Executive").
R E C I T A L S:
----------------
THEREFORE, In consideration of the above recitals and of the mutual
promises and conditions in this Agreement, it is agreed as follows:
A. The Company recognizes that the Executive's contributions to the
growth and success of the Company has been substantial and desires to assure
itself of Executive's continued service.
B. The Board of Directors of the Company (the "Board") has determined
that it is in the best interest of the Company and its stockholders to assure
that the Company will have the continued dedication of the Executive.
C. The Executive agrees to continue to serve as an executive employee
of the Company in the capacity of President of Sales and Marketing.
A G R E E M E N T
-----------------
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Term of Agreement. This Agreement shall commence on the
date hereof and shall expire on the second (2nd) anniversary of the Effective
Date hereof; provided, further, that this Agreement may be terminated prior to
such second anniversary pursuant to the terms of this Agreement. Unless the
Company or Executive gives written notice to the other party at least ninety
(90) days before the expiration of this Agreement, this Agreement's Employment
Period shall be extended for an additional term of one (1) year. This
Agreement's Employment Period shall include any automatic extensions pursuant to
the preceding sentence.
2. Terms of Employment.
(a) Employment. Subject to earlier termination
as provided in this Agreement, the Company hereby agrees to continue the
Executive in its employ as the Chairman of the Board and Chief Executive Officer
for the period commencing on the Effective Date and ending upon the second
anniversary of the Effective Date (the "Employment Period").
(b) Termination. The Employment Period will
continue until the first to occur of: (i) the second anniversary of the
Effective Date; (ii) Executive's death or Disability; (iii) Executive's
resignation for Good Reason; (iv) termination of the Executive's employment by
the Board for Cause; (v) termination of the Executive's employment for any
reason whatsoever other than Cause.
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(c) Notice of Termination. Any termination by
the Company for Cause or by Executive for Good Reason shall be communicated by
Notice of Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and 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.
(d) Date of Termination. "Date of Termination"
shall mean the date specified in the Notice of Termination where required or in
any other case upon ceasing to perform services to the Company; provided that
if, within fifteen (15) days after any Notice of Termination, one party notified
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date finally determined to be the Date of Termination,
either by mutual written agreement of the parties or by a binding and final
arbitration award.
(e) Duties During Employment Period.
(1) During the Employment Period, the
Executive's position, including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised or assigned at any time during the ninety (90)-day period immediately
preceding the Effective Date.
(2) During the Employment Period, and
excluding any periods of illness or vacation to which the Executive is entitled,
the Executive agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and its Affiliates
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Employment Period,
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees as reasonably approved by
the Board, (B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage Personal investments (not to exceed five
percent [5%] of any Person), 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. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's performance to this Company.
3. Benefits Upon Termination of Employment. Upon termination
of the Employment Period for the reasons set forth below, Executive shall be
entitled to the following benefits (and such benefits shall be Executive's sole
remedy against the Company):
(a) Expiration of Employment Period, Death,
Disability or Retirement. If the Employment Period terminates pursuant to
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clauses (i) or (ii) of paragraph 2(b) hereof, Executive's benefits shall be
determined (as applicable) in accordance with the Company's retirement,
survivor's benefits, insurance and other applicable programs and plans then in
effect.
(b) Termination With Cause. If the Employment
Period terminates pursuant to clause (iv) of 2(b) hereof, the Company shall pay
Executive his or her full Base Salary through the Date of Termination at the
rate in effect on the Date of Termination, plus all other amounts to which
Executive is entitled under any compensation plan of the Company at the time
such payments are due.
(c) Termination Without Cause; Resignation for
Good Reason. If the Employment Period terminates pursuant to clauses (iii) or
(v) of paragraph 2(b) hereof, Executive shall be entitled to all of the benefits
provided below:
(1) The Company shall pay Executive his or
her full Base Salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given.
(2) For a ninety (90)-day period after such
termination, the Company will arrange to provide to Executive at the Company's
expense with benefits under (or substantially similar to) the Company's medical
plans in existence on the Date of Termination (including, if applicable, the
Company's Executive Medical Program); provided further that benefits otherwise
receivable by Executive pursuant to this clause (2) shall be reduced to the
extent comparable benefits are actually received by Executive from any
collateral source (i.e., personal insurance, other employment benefits, etc.)
during such ninety (90)-day period, and any such benefits actually received by
Executive shall be reported by Executive to the Company.
(3) For a ninety (90)-day period after such
termination, the Company will arrange to provide to Executive at the Company's
expense with continued benefits under the Company's group life insurance plan in
existence on the Date of Termination; provided that if the Company's insurers
refuse to continue to provide coverage of Executive in the group plan at rates
not in excess of twice the rate paid for Executive's coverage immediately prior
to the Date of Termination, then in lieu of such continued group life insurance
benefits, the Company shall pay Executive, in a lump sum on the Date of
Termination, an amount equal to twice the rate paid for Executive's coverage
immediately prior to the Date of Termination.
(4) The Company and the Executive agree that
it will be difficult if not impossible to determine the amount of Executive's
damages in the event of a material breach by the Company of its obligations
hereunder, including a termination of the Executive other than for Cause,
because of the difficulty of quantifying the value of Executive's opportunity to
earn bonuses of common stock hereunder, as well as the value that such stock
would have in the future. Therefore, Executive shall be entitled to receive as
liquidated damages a one-time cash payment of $1,000,000.00, less any payroll
taxes which are required to be withheld from such payment, which shall be in
compensation for the Base Salary, benefits, and potential for stock bonuses.
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(d) Mitigation. Executive shall not be required
to mitigate the amount of any payment provided for in this paragraph 3 by
seeking other employment or otherwise, nor shall the amount of any payment
provided for in this paragraph 3 (except as expressly provided in clause (2) of
paragraph 3(c) hereof) be reduced by any compensation or benefits received by
Executive as the result of employment by another employer after the Date of
Termination or otherwise.
4. Base Salary.
During the term of this Agreement, Company agrees to pay Executive a
Base Salary of $250,000.00 per year. The Base Salary shall be payable in equal
bi-weekly installments subject to all applicable withholdings and deductions.
The Base Salary payable to Executive under this Agreement shall be subject to
yearly increases at a rate of ten percent (10%) of the previous year's Base
Salary. Notwithstanding the foregoing, the Executive shall not be entitled to
any salary until such time as the Escrow under the Stock Purchase Agreement to
which this Agreement is an Exhibit "E" shall have Closed, as defined by said
agreement, or said agreement is terminated.
5. Stock Options.
In addition to the Base Salary provide for above, Company herewith
grants to Executive a restricted stock option (the "RSO") to acquire shares of
common stock of Company. The RSO shall be require Executive to pay the sum of
One Dollar ($1.00) per share, which the Board of Directors of Company has
determined to equal the fair market value of the common stock of Company on the
date of this Agreement. The RSO is subject to substantial restrictions and risk
of forfeiture as defined by Section 83 of the Internal Revenue Code of 1986, as
amended. Executive shall only be able to exercise the RSO for a period of two
(2) years from the date of this Agreement. The RSO may be exercised by Executive
in accordance with the following benchmarks: (i) When gross sales of Company
reach $10,000,000 for any twelve (12) month period during the term of this
Agreement, Executive may acquire 250,000 shares of Company's common stock; (ii)
When gross sales of Company for any twelve month period during the term of this
Agreement is greater than $50,000,000, but less than $100,000,000, Executive may
acquire an additional 250,000 shares of Company's common stock; (iii) When gross
sales for any twelve month period equals $100,000,000 or more, for any twelve
month period during the term of this Agreement, Executive may acquire an
additional 500,000 shares of Company's common stock. In no event shall the
number of shares of Company common stock which Executive may acquire exceed One
Million (1,000,000) shares. After Executive has obtained the right to acquire
1,000,000 shares of common stock of the Company, Executive shall have the right
to acquire additional shares of common stock of Company. Executive shall have
the right to acquire One Hundred Thousand (100,000) shares of Company common
stock for each $50,000,000 in gross sales for any twelve month period during the
term of this Agreement. The option price per share shall also be $1.00. To
exercise the option granted Executive by Company, Executive shall serve written
notice upon Company of the intent to exercise the option and shall tender
payment to the Company at the time of the notice of exercise. In the event that
Company shall not attain the gross receipts required in order for Executive to
acquire the shares of common stock within the time periods set forth in this
Agreement, the option granted Executive shall lapse, terminate and be of no
further force or effect.
4
6. Other Compensation
During the term of this Agreement, Executive shall be entitled to
receive all other benefits of employment generally available to other executive
and managerial employees, including medical, dental, vision, and disability
insurance benefits, and participation in Company's pension plan and
profit-sharing plan, if any.
Executive shall be entitled to a four (4) week paid vacation each year
commencing on the date of this Agreement.
During the term of this Agreement, Company shall furnish Executive with
the total sum of $1,000.00 per month automobile and cellular telephone
allowance.
During the term of this Agreement, Company shall maintain a
$1,000,000.00 annual term life insurance policy payable to the Executive's
beneficiary designation.
7. Confidential Information. Executive acknowledges that the
Trade Secrets obtained by him during the Employment Period and during his
employment with the Company and its Affiliates prior to the Effective Date
concern the business or affairs of the Company and its Affiliates. Therefore,
Executive agrees that he will not disclose to any unauthorized Person or use for
his own account any of such trade secrets without the Board's written consent,
unless and to the extent that a Trade Secret becomes generally known to and
available for use by the public other than as a result of Executive's acts or
omissions to act. Executive agrees to deliver to Company at the termination of
the Employment Period, or at any other time the Company may request, all
memoranda, notes, plans, records, reports and other documents (and copies
thereof) relating to the business of the Company and its Affiliates which he may
then possess or have under his Control. Disclosure or use by the Executive of
such Trade Secrets shall not be precluded if such disclosure or use is in
response to a valid order of a court or other governmental body of the United
States or any political subdivision thereof, or, if in the written opinion of
counsel reasonably acceptable to the Company, is required by law or is necessary
to establish rights under this Agreement. Notwithstanding the foregoing, the
terms of this paragraph 7 shall not apply if Executive is terminated without
Cause or resigns for Good Reason as defined in clause (5) of the definition of
"Good Reason."
8. Inventions and Patents.
(a) Executive agrees that all Inventions,
innovations or improvements of a proprietary nature in the Company's or any of
its Affiliates' methods of conducting their business (including new
contributions, improvements, ideas and discoveries, whether patentable or not)
("Inventions") conceived or made by him during his employment pursuant to this
Agreement or prior employment with the Company belong to the Company. Executive
will promptly disclose such Inventions, innovations or improvements to the Board
and perform, at the sole cost and expense of the Company, all actions reasonably
requested by the Board to establish and confirm such ownership by the Company.
Notwithstanding the foregoing, the terms of this subparagraph 8(a) shall not
apply if Executive is terminated without Cause or resigns for Good Reason as
defined in clause (5) of the definition of "Good Reason."
5
(b) California Employee Patent Act Notification.
In accordance with ss.2872 of the California Employee Patent Act, West's Cal.
Lab. Code ss.2870 et seq., Executive is hereby advised that subparagraph 8(a)
does not apply to any invention, new development or method (and all copies and
tangible embodiments thereof) made solely by Executive for which no equipment,
facility, material, Trade Secrets or Inventions of the Company or its Affiliates
was used and which was developed entirely on Executive's own time; provided,
however, that subparagraph 8(a) shall apply if the invention, new development or
method (i) relates to the Company's or any of its Affiliate's actual or
demonstrably anticipated businesses or research and development, or (ii) results
from any work performed by Executive for the Company or any of its Affiliates.
9. Non-Solicitation.
(a) Employees. Executive agrees that during the
Employment Period and for one (1) year thereafter, he and all Persons under his
Control will not knowingly, either directly or indirectly, for himself or for
any other Persons (i) call on, solicit, or take away, or attempt to call on,
solicit or take away any Person then employed by the Company and/or its
Affiliates or (ii) employ any employee of the Company and/or its Affiliates who
voluntarily terminates such employment until three (3) months have passed
following termination of such employment. Notwithstanding the foregoing, the
terms of this subparagraph 9(a) shall not apply if Executive is terminated
without Cause or resigns for Good Reason as defined in clause (5) of the
definition of "Good Reason."
(b) Customers. Executive agrees that during the
Employment Period and for one (1) year thereafter, he and all Persons under his
Control will not knowingly, directly or indirectly, for himself or for any other
Person, call upon, solicit, or take away a Person who is then, or during the
immediately preceding year was, a customer of the Company and/or its Affiliates,
or encourage any customer to curtail its business with the Company and/or its
Affiliates, or to attempt to do any of the foregoing. Notwithstanding the
foregoing, the terms of this subparagraph 9(b) shall not apply if Executive is
terminated without Cause or resigns for Good Reason as defined in clause (5) of
the definition of "Good Reason."
(c) Non-Competition. Executive agrees that
during his employment hereunder and for one (1) year thereafter, he and all
Persons under his Control will not engage world-wide, directly or indirectly,
for himself or for any other Person, in any business which competes with the
business of the Company or its Affiliates as such business (including but not
limited to, classifieds e-commerce, setting up and/or selling of malls, auction
houses, supersites, internet service provider, or web design) exists up to (and
including) the date on which this Agreement expires or is terminated.
Notwithstanding the foregoing, the terms of this subparagraph 9(c) shall not
apply if Executive is terminated without Cause or resigns for Good Reason as
defined in clause (5) of the definition of "Good Reason."
(d) Blue Pencil. If, at the time of enforcement
of any provision of subparagraphs 9(a) or 9(b) above, a court holds that the
restrictions stated therein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances will be substantially for the stated period,
scope or area.
6
(e) Enforcement. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this paragraph 9; therefore, in the event of a breach by
Executive of any of the provisions of this paragraph 9, the Company or its
successors or assigns may in addition to other rights and remedies existing in
its favor, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions hereof. In order to deter and punish any breach by
Executive of this paragraph 9, the parties agree that in addition to any other
rights and remedies that the Company may have in the event that Executive
breaches paragraph 9, Executive shall pay to the Company the sum of One Million
Dollars (U.S. $1,000,000.00) as a penalty.
10. Successors and Assigns; Binding Agreement.
(a) This Agreement shall not be assignable by
the Company except pursuant to paragraph 10(b) below. This Agreement shall not
be assignable by Executive during Executive's lifetime.
(b) Upon a Change of Control, the Company will
require any successor (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. Failure of the Company to obtain such assumption and agreement
in writing prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle Executive to terminate his employment with
the Company for Good Reason.
(c) This Agreement shall inure to the benefit of
and be enforceable, on the one hand, by the Company and its successors and
assigns pursuant to paragraph 10(b) above and, on the other hand, by the
Executive and Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive 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 is no such designee,
to Executive's estate.
11. Withholding. All payments to Executive pursuant to this
Agreement shall be subject to all applicable federal, state and local
withholding regulations determined by the Company's independent certified public
accountants.
12. No Inconsistent Agreements. Any and all employment,
severance or other similar agreements heretofore executed between the Company,
on the one hand, and Executive, on the other, are hereby terminated.
7
13. Notices. Any notice provided for in this Agreement must be
in writing and must be either personally delivered, sent by overnight courier
(i.e., Federal Express) or mailed by first-class mail, return receipt requested,
to the recipient at the address below indicated:
To the Company:
Xxxx.xxx, Inc.
00000 Xxxxx Xxxxx
0xx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
To Executive:
Xxxxx Xxxxxxx
c/o Xxxxx Xxxxxxxx, Esq.
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party. Any
notices under this Agreement will be deemed to have been given when so
personally delivered, one (1) day after being sent by overnight courier and five
(5) days after being mailed.
14. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law. The parties agree that (i) the provisions of this Agreement
shall be severable in the event that any of the provisions hereof are for any
reason whatsoever invalid, void or otherwise unenforceable, (ii) such invalid,
void or otherwise unenforceable provisions shall be automatically replaced by
other provisions which are as similar as possible in terms to such invalid, void
or otherwise unenforceable provisions but are valid and enforceable, and (iii)
the remaining provisions shall remain enforceable to the fullest extent
permitted by law.
15. Complete Agreement. This Agreement and those documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
17. Governing Law. All questions concerning the construction,
validity and interpretation and enforcement of this Agreement will be governed
by the internal law, and not the law of conflicts, of the State of California,
and the exclusive jurisdiction and venue for any action arising out of or
relating to this Agreement shall be the Federal and State courts in the State of
California, County of Orange, and each party hereby submits itself to the
jurisdiction of said courts.
8
18. Remedies. Except when expressly provided otherwise, each
of the parties to this Agreement will be entitled to enforce his rights under
this Agreement specifically, to recover damages by reason of any breach of any
provisions of this Agreement and to exercise all other rights existing in his
favor.
19. Amendments and Waivers; Third Party Beneficiaries. Any
provision of this Agreement may be amended or waived only with the prior written
consent of the Company and Executive. The failure of any party to insist, in any
one (1) or more instances, upon performance of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition.
20. Arbitration. Any dispute or controversy arising under or
in connection with paragraph 2(d) of this Agreement shall be settled exclusively
in arbitration in Orange County, California by and in accordance with the rules
of the American Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction; provided, however,
that Executive shall be entitled to seek specific performance of his right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
21. Definitions.
"Affiliates" shall mean, with respect to any Person,
another Person who Controls, or is Controlled by, or is under common Control
with, such first Person. Notwithstanding the foregoing, an Affiliate of the
Company shall be limited to Subsidiaries of the Company and to other Persons
engaged in one or more of the same or any similar businesses as the Company and
its Subsidiaries. Further, any Affiliate of a member of the Stockholder Group
shall include such member's Family Group.
"Agreement" means this Employment Agreement.
"Base Salary" shall mean Executive's regular
compensation before bonuses [commission] and fringe benefits.
"Board" means the Board of Directors of the Company.
"Cause" shall mean (1) the commission by Executive of
a felony, fraud, embezzlement or an act of serious moral turpitude which, in the
good faith judgment of the Board, is likely to cause material harm to the
customer relations, operations, business prospects or reputation of the Company
or any of its Affiliates, provided that in the absence of a conviction or plea
of nolo contendere, the Company will have the burden of proving the commission
9
of such act by a preponderance of the evidence, (ii) the commission of any act
by Executive constituting financial dishonesty against the Company or any of its
Affiliates, provided that, in the absence of a conviction or plea of nolo
contendere, the Company will have the burden of proving the commission of such
act by a preponderance of the evidence, (iii) the repeated failure by Executive
to follow the lawful directives of the Board with respect to a matter or matters
within the control of the Executive, provided that, if such breach described in
clause (iii) may be cured by Executive, he will, subject to the following
proviso, be given written notice (a "default notice") of such breach and will be
given an opportunity to cure such breach to the reasonable satisfaction of the
Board within a reasonable period of time not to exceed thirty (30) days of
receipt of such written notice (time being of the essence with respect thereto),
and provided, further, that Executive will only be entitled to receive one (1)
such default notice during any twelve (12) month period of employment hereunder;
or (iv) the willful and material breach by Executive of the provisions of
paragraphs 2(d)(i), 5, 6 and 7 hereof, provided that, if such breach described
in this clause (iv) may be cured by Executive, he will, subject to the following
proviso, be given a "default notice" of such breach and will be given an
opportunity to cure such breach to the reasonable satisfaction of the Company
Board within thirty (30) days of receipt of such written notice (time being of
the essence with respect hereto), and provided, further, that Executive will
only be entitled to receive one (1) such default notice during each twelve (12)
month period of employment hereunder.
"Change of Control" means (i) any event (including,
without limitation, the sale or issuance of capital stock, merger,
consolidation, recapitalization, or reorganization) which results in the
Stockholder Group owning (either directly or indirectly through the ownership of
Holding or any other Person) securities with less than a majority of the
ordinary voting power of the Company or its successors or (ii) a sale of all, or
substantially all, of the consolidated assets of the Company to any Person not
Controlled by the Stockholder Group.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" shall have the meaning set forth in the
preamble to this Agreement.
"Control" and all conjugations thereof (e.g.,
Controlled or Controlling) means the direct or indirect power or right to
Control, direct or cause the direction of the management or policies of another
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Date of Termination" shall have the meaning set
forth in paragraph 2(d) of this Agreement.
"Disability" shall mean a physical or mental
Disability which shall cause the Executive to have failed to perform a
substantial portion of the services required hereunder for a period of six (6)
consecutive months or for a period of twelve (12) months during any twenty-four
(24)-month period; provided that the Company shall provide Executive with its
written reasons which led the Board to believe that Executive had a Disability,
or if a physician selected by the Company and Executive, after examining the
Executive (and Executive agrees to submit to all such reasonable examinations),
shall determine that the Executive has suffered a physical or mental Disability
that will more likely than not prevent him from performing the services required
hereunder for a period of six (6) consecutive months or for a period of twelve
10
(12) months during any twenty-four (24)-month period. In the event that the
Board and the Executive cannot select an examining physician within ten (10)
days after the Board advises Executive in writing that it believes a Disability
has occurred, a physician shall be selected by the medical director of a
hospital designated by the Company which is not affiliated with the Company. The
determination of any physician hereunder shall be binding and conclusive on the
parties, and the Board may not require Executive to submit to an examination
within six (6) months after a previous examination wherein Executive was deemed
not to have a Disability.
"Executive" shall have the meaning set forth in the
preamble to this Agreement.
"Executive Medical Program" means the Company's
Executive Medical Program as in existence from time to time, whereby certain
executives (which may not necessarily include the Executive) are reimbursed for
the uninsured portion of substantially all of their medical expenses.
"Good Reason" shall mean, without Executive's express
written consent, the occurrence of any one (1) or more of the following:
(1) a reduction by the Company of
Executive's salary as in effect on the date hereof or as the same shall be
increased from time to time prior to the occurrence of a Change of Control;
(2) a material reduction by the Company of
Executive's protection under the Company-paid medical (including, if applicable,
the Company's Executive Medical Program) and group life insurance plans;
(3) the Company requiring Executive to be
based at a location in excess of the larger territory of twenty-five (25) miles
from the location where Executive is based immediately prior to the Effective
Date;
(4) any violation by the Company of
paragraph 2(e)(1) hereof; or
(5) any violation of paragraph 10(b) hereof.
Executive shall have the right to resign for Good Reason even if Executive is
then suffering from a Disability.
"Inventions" shall have the meaning set forth in
paragraph 8 of this Agreement.
"Notice of Termination" shall have the meaning set
forth in paragraph 2(d) of this Agreement.
"Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a governmental entity or any department or agency thereof.
11
"Subsidiary" shall mean any Person which the Company
has the direct or indirect right to control, direct or cause direction of
management and policies of, whether through the ownership of voting securities,
by contrast or otherwise.
"Trade Secrets" means any information, method,
program or compilation of information which is used in the Company's or any
Affiliate's business and which is confidential and proprietary, including, but
not limited to, all lists of past, present or prospective customers or suppliers
of the Company and its Affiliates.
22. Interpretation. Unless clearly expressed to the contrary,
the words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole, including the exhibits and schedules hereto,
as the same from time to time may be amended or supplemented and not any
particular paragraph, subparagraph or clause contained in this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in masculine, feminine or neuter gender shall include the masculine,
feminine and the neuter.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
"Company"
---------------------------
By:
Its:_______________________
"Executive"
/s/Xxxxx Xxxxxxx
---------------------------
Xxxxx Xxxxxxx
12
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of November 1,
1999, by and between XXXX.xxx, Inc., a Florida corporation (the "Company"), and
Xxxxx Xxxxx Xxxxxx, (the "Executive").
R E C I T A L S:
----------------
THEREFORE, In consideration of the above recitals and of the mutual
promises and conditions in this Agreement, it is agreed as follows:
A. The Company recognizes that the Executive's contributions to the
growth and success of the Company has been substantial and desires to assure
itself of Executive's continued service.
B. The Board of Directors of the Company (the "Board") has determined
that it is in the best interest of the Company and its stockholders to assure
that the Company will have the continued dedication of the Executive.
C. The Executive agrees to continue to serve as an executive employee
of the Company in the capacity of President of Sales and Marketing.
A G R E E M E N T
-----------------
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Term of Agreement. This Agreement shall commence on the
date hereof and shall expire on the second (2nd) anniversary of the Effective
Date hereof; provided, further, that this Agreement may be terminated prior to
such second anniversary pursuant to the terms of this Agreement. Unless the
Company or Executive gives written notice to the other party at least ninety
(90) days before the expiration of this Agreement, this Agreement's Employment
Period shall be extended for an additional term of one (1) year. This
Agreement's Employment Period shall include any automatic extensions pursuant to
the preceding sentence.
2. Terms of Employment.
(a) Employment. Subject to earlier termination as
provided in this Agreement, the Company hereby agrees to continue the Executive
in its employ as the Founder and President of Sales and Marketing and Product
Development for the period commencing on the Effective Date and ending upon the
second anniversary of the Effective Date (the "Employment Period").
(b) Termination. The Employment Period will continue
until the first to occur of: (i) the second anniversary of the Effective Date;
(ii) Executive's death or Disability; (iii) Executive's resignation for Good
Reason; (iv) termination of the Executive's employment by the Board for Cause;
(v) termination of the Executive's employment for any reason whatsoever other
than Cause.
1
(c) Notice of Termination. Any termination by the
Company for Cause or by Executive for Good Reason shall be communicated by
Notice of Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and 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.
(d) Date of Termination. "Date of Termination" shall
mean the date specified in the Notice of Termination where required or in any
other case upon ceasing to perform services to the Company; provided that if,
within fifteen (15) days after any Notice of Termination, one party notified the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date finally determined to be the Date of Termination,
either by mutual written agreement of the parties or by a binding and final
arbitration award.
(e) Duties During Employment Period.
(1) During the Employment Period, the
Executive's position, including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised or assigned at any time during the ninety (90)-day period immediately
preceding the Effective Date.
(2) During the Employment Period, and
excluding any periods of illness or vacation to which the Executive is entitled,
the Executive agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and its Affiliates
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Employment Period,
it shall not be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees as reasonably approved by
the Board, (B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage Personal investments (not to exceed five
percent [5%] of any Person), 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. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's performance to this Company.
3. Benefits Upon Termination of Employment. Upon termination
of the Employment Period for the reasons set forth below, Executive shall be
entitled to the following benefits (and such benefits shall be Executive's sole
remedy against the Company):
2
(a) Expiration of Employment Period, Death,
Disability or Retirement. If the Employment Period terminates pursuant to
clauses (i) or (ii) of paragraph 2(b) hereof, Executive's benefits shall be
determined (as applicable) in accordance with the Company's retirement,
survivor's benefits, insurance and other applicable programs and plans then in
effect.
(b) Termination With Cause. If the Employment Period
terminates pursuant to clause (iv) of 2(b) hereof, the Company shall pay
Executive his or her full Base Salary through the Date of Termination at the
rate in effect on the Date of Termination, plus all other amounts to which
Executive is entitled under any compensation plan of the Company at the time
such payments are due.
(c) Termination Without Cause; Resignation for Good
Reason. If the Employment Period terminates pursuant to clauses (iii) or (v) of
paragraph 2(b) hereof, Executive shall be entitled to all of the benefits
provided below:
(1) The Company shall pay Executive his or
her full Base Salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given.
(2) For a ninety (90)-day period after such
termination, the Company will arrange to provide to Executive at the Company's
expense with benefits under (or substantially similar to) the Company's medical
plans in existence on the Date of Termination (including, if applicable, the
Company's Executive Medical Program); provided further that benefits otherwise
receivable by Executive pursuant to this clause (2) shall be reduced to the
extent comparable benefits are actually received by Executive from any
collateral source (i.e., personal insurance, other employment benefits, etc.)
during such ninety (90)-day period, and any such benefits actually received by
Executive shall be reported by Executive to the Company.
(3) For a ninety (90)-day period after such
termination, the Company will arrange to provide to Executive at the Company's
expense with continued benefits under the Company's group life insurance plan in
existence on the Date of Termination; provided that if the Company's insurers
refuse to continue to provide coverage of Executive in the group plan at rates
not in excess of twice the rate paid for Executive's coverage immediately prior
to the Date of Termination, then in lieu of such continued group life insurance
benefits, the Company shall pay Executive, in a lump sum on the Date of
Termination, an amount equal to twice the rate paid for Executive's coverage
immediately prior to the Date of Termination.
(4) The Company and the Executive agree that
it will be difficult if not impossible to determine the amount of Executive's
damages in the event of a material breach by the Company of its obligations
hereunder, including a termination of the Executive other than for Cause,
because of the difficulty of quantifying the value of Executive's opportunity to
earn bonuses of common stock hereunder, as well as the value that such stock
would have in the future. Therefore, Executive shall be entitled to receive as
liquidated damages a one-time cash payment of $1,000,000.00, less any payroll
taxes which are required to be withheld from such payment, which shall be in
compensation for the Base Salary, benefits, and potential for stock bonuses.
3
(d) Mitigation. Executive shall not be
required to mitigate the amount of any payment provided for in this paragraph 3
by seeking other employment or otherwise, nor shall the amount of any payment
provided for in this paragraph 3 (except as expressly provided in clause (2) of
paragraph 3(c) hereof) be reduced by any compensation or benefits received by
Executive as the result of employment by another employer after the Date of
Termination or otherwise.
4. Base Salary.
During the term of this Agreement, Company agrees to pay Executive a
Base Salary of $250,000.00 per year. The Base Salary shall be payable in equal
bi-weekly installments subject to all applicable withholdings and deductions.
The Base Salary payable to Executive under this Agreement shall be subject to
yearly increases at a rate of ten percent (10%) of the previous year's Base
Salary. Notwithstanding the foregoing, the salary of Executive shall be $10,000
per month until such time as the Escrow under the Stock Purchase Agreement to
which this Agreement is an Exhibit "D" shall have Closed, as defined by said
agreement, or said agreement is terminated.
5. Stock Options.
In addition to the Base Salary provide for above, Company herewith
grants to Executive a restricted stock option (the "RSO") to acquire shares of
common stock of Company. The RSO shall be require Executive to pay the sum of
One Dollar ($1.00) per share, which the Board of Directors of Company has
determined to equal the fair market value of the common stock of Company on the
date of this Agreement. The RSO is subject to substantial restrictions and risk
of forfeiture as defined by Section 83 of the Internal Revenue Code of 1986, as
amended. Executive shall only be able to exercise the RSO for a period of two
(2) years from the date of this Agreement. The RSO may be exercised by Executive
in accordance with the following benchmarks: (i) When gross sales of Company
reach $10,000,000 for any twelve (12) month period during the term of this
Agreement, Executive may acquire 250,000 shares of Company's common stock; (ii)
When gross sales of Company for any twelve month period during the term of this
Agreement is greater than $50,000,000, but less than $100,000,000, Executive may
acquire an additional 250,000 shares of Company's common stock; (iii) When gross
sales for any twelve month period equals $100,000,000 or more, for any twelve
month period during the term of this Agreement, Executive may acquire an
additional 500,000 shares of Company's common stock. In no event shall the
number of shares of Company common stock which Executive may acquire exceed One
Million (1,000,000) shares. After Executive has obtained the right to acquire
1,000,000 shares of common stock of the Company, Executive shall have the right
to acquire additional shares of common stock of Company. Executive shall have
the right to acquire One Hundred Thousand (100,000) shares of Company common
stock for each $50,000,000 in gross sales for any twelve month period during the
term of this Agreement. The option price per share shall also be $1.00. To
exercise the option granted Executive by Company, Executive shall serve written
notice upon Company of the intent to exercise the option and shall tender
payment to the Company at the time of the notice of exercise. In the event that
Company shall not attain the gross receipts required in order for Executive to
acquire the shares of common stock within the time periods set forth in this
Agreement, the option granted Executive shall lapse, terminate and be of no
further force or effect.
4
6. Other Compensation
During the term of this Agreement, Executive shall be entitled to
receive all other benefits of employment generally available to other executive
and managerial employees, including medical, dental, vision, and disability
insurance benefits, and participation in Company's pension plan and
profit-sharing plan, if any.
Executive shall be entitled to a four (4) week paid vacation each year
commencing on the date of this Agreement.
During the term of this Agreement, Company shall furnish Executive with
the total sum of $1,000.00 per month automobile and cellular telephone
allowance.
During the term of this Agreement, Company shall maintain a
$1,000,000.00 annual term life insurance policy payable to the Executive's
beneficiary designation.
7. Confidential Information. Executive acknowledges that the
Trade Secrets obtained by him during the Employment Period and during his
employment with the Company and its Affiliates prior to the Effective Date
concern the business or affairs of the Company and its Affiliates. Therefore,
Executive agrees that he will not disclose to any unauthorized Person or use for
his own account any of such trade secrets without the Board's written consent,
unless and to the extent that a Trade Secret becomes generally known to and
available for use by the public other than as a result of Executive's acts or
omissions to act. Executive agrees to deliver to Company at the termination of
the Employment Period, or at any other time the Company may request, all
memoranda, notes, plans, records, reports and other documents (and copies
thereof) relating to the business of the Company and its Affiliates which he may
then possess or have under his Control. Disclosure or use by the Executive of
such Trade Secrets shall not be precluded if such disclosure or use is in
response to a valid order of a court or other governmental body of the United
States or any political subdivision thereof, or, if in the written opinion of
counsel reasonably acceptable to the Company, is required by law or is necessary
to establish rights under this Agreement. Notwithstanding the foregoing, the
terms of this paragraph 7 shall not apply if Executive is terminated without
Cause or resigns for Good Reason as defined in clause (5) of the definition of
"Good Reason."
8. Inventions and Patents.
(a) Executive agrees that all Inventions,
innovations or improvements of a proprietary nature in the Company's or any of
its Affiliates' methods of conducting their business (including new
contributions, improvements, ideas and discoveries, whether patentable or not)
("Inventions") conceived or made by him during his employment pursuant to this
Agreement or prior employment with the Company belong to the Company. Executive
will promptly disclose such Inventions, innovations or improvements to the Board
and perform, at the sole cost and expense of the Company, all actions reasonably
requested by the Board to establish and confirm such ownership by the Company.
Notwithstanding the foregoing, the terms of this subparagraph 8(a) shall not
apply if Executive is terminated without Cause or resigns for Good Reason as
defined in clause (5) of the definition of "Good Reason."
5
(b) California Employee Patent Act
Notification. In accordance with ss.2872 of the California Employee Patent Act,
West's Cal. Lab. Code ss.2870 et seq., Executive is hereby advised that
subparagraph 8(a) does not apply to any invention, new development or method
(and all copies and tangible embodiments thereof) made solely by Executive for
which no equipment, facility, material, Trade Secrets or Inventions of the
Company or its Affiliates was used and which was developed entirely on
Executive's own time; provided, however, that subparagraph 8(a) shall apply if
the invention, new development or method (i) relates to the Company's or any of
its Affiliate's actual or demonstrably anticipated businesses or research and
development, or (ii) results from any work performed by Executive for the
Company or any of its Affiliates.
9. Non-Solicitation.
(a) Employees. Executive agrees that during
the Employment Period and for one (1) year thereafter, he and all Persons under
his Control will not knowingly, either directly or indirectly, for himself or
for any other Persons (i) call on, solicit, or take away, or attempt to call on,
solicit or take away any Person then employed by the Company and/or its
Affiliates or (ii) employ any employee of the Company and/or its Affiliates who
voluntarily terminates such employment until three (3) months have passed
following termination of such employment. Notwithstanding the foregoing, the
terms of this subparagraph 9(a) shall not apply if Executive is terminated
without Cause or resigns for Good Reason as defined in clause (5) of the
definition of "Good Reason."
(b) Customers. Executive agrees that during
the Employment Period and for one (1) year thereafter, he and all Persons under
his Control will not knowingly, directly or indirectly, for himself or for any
other Person, call upon, solicit, or take away a Person who is then, or during
the immediately preceding year was, a customer of the Company and/or its
Affiliates, or encourage any customer to curtail its business with the Company
and/or its Affiliates, or to attempt to do any of the foregoing. Notwithstanding
the foregoing, the terms of this subparagraph 9(b) shall not apply if Executive
is terminated without Cause or resigns for Good Reason as defined in clause (5)
of the definition of "Good Reason."
(c) Non-Competition. Executive agrees that
during his employment hereunder and for one (1) year thereafter, he and all
Persons under his Control will not engage world-wide, directly or indirectly,
for himself or for any other Person, in any business which competes with the
business of the Company or its Affiliates as such business (including but not
limited to, classifieds e-commerce, setting up and/or selling of malls, auction
houses, supersites, internet service provider, or web design) exists up to (and
including) the date on which this Agreement expires or is terminated.
Notwithstanding the foregoing, the terms of this subparagraph 9(c) shall not
apply if Executive is terminated without Cause or resigns for Good Reason as
defined in clause (5) of the definition of "Good Reason."
(d) Blue Pencil. If, at the time of
enforcement of any provision of subparagraphs 9(a) or 9(b) above, a court holds
that the restrictions stated therein are unreasonable under circumstances then
existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances will be substantially for
the stated period, scope or area.
6
(e) Enforcement. The parties hereto agree
and acknowledge that money damages may not be an adequate remedy for any breach
of the provisions of this paragraph 9; therefore, in the event of a breach by
Executive of any of the provisions of this paragraph 9, the Company or its
successors or assigns may in addition to other rights and remedies existing in
its favor, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions hereof. In order to deter and punish any breach by
Executive of this paragraph 9, the parties agree that in addition to any other
rights and remedies that the Company may have in the event that Executive
breaches paragraph 9, Executive shall pay to the Company the sum of One Million
Dollars (U.S. $1,000,000.00) as a penalty.
10. Successors and Assigns; Binding Agreement.
(a) This Agreement shall not be assignable
by the Company except pursuant to paragraph 10(b) below. This Agreement shall
not be assignable by Executive during Executive's lifetime.
(b) Upon a Change of Control, the Company
will require any successor (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. Failure of the Company to obtain such assumption and
agreement in writing prior to the effectiveness of any such succession shall be
a breach of this Agreement and shall entitle Executive to terminate his
employment with the Company for Good Reason.
(c) This Agreement shall inure to the
benefit of and be enforceable, on the one hand, by the Company and its
successors and assigns pursuant to paragraph 10(b) above and, on the other hand,
by the Executive and Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive 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 is no such designee,
to Executive's estate.
11. Withholding. All payments to Executive pursuant to this
Agreement shall be subject to all applicable federal, state and local
withholding regulations determined by the Company's independent certified public
accountants.
12. No Inconsistent Agreements. Any and all employment,
severance or other similar agreements heretofore executed between the Company,
on the one hand, and Executive, on the other, are hereby terminated.
7
13. Notices. Any notice provided for in this Agreement must be
in writing and must be either personally delivered, sent by overnight courier
(i.e., Federal Express) or mailed by first-class mail, return receipt requested,
to the recipient at the address below indicated:
To the Company:
Xxxx.xxx, Inc.
00000 Xxxxx Xxxxx
0xx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
To Executive:
Xxx Xxxxxx
c/o Cadden, Xxxxxx & Xxxxxxxxxx LLP
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
or such other address or to the attention of such other Person as the recipient
party shall have specified by prior written notice to the sending party. Any
notices under this Agreement will be deemed to have been given when so
personally delivered, one (1) day after being sent by overnight courier and five
(5) days after being mailed.
14. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law. The parties agree that (i) the provisions of this Agreement
shall be severable in the event that any of the provisions hereof are for any
reason whatsoever invalid, void or otherwise unenforceable, (ii) such invalid,
void or otherwise unenforceable provisions shall be automatically replaced by
other provisions which are as similar as possible in terms to such invalid, void
or otherwise unenforceable provisions but are valid and enforceable, and (iii)
the remaining provisions shall remain enforceable to the fullest extent
permitted by law.
15. Complete Agreement. This Agreement and those documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
17. Governing Law. All questions concerning the construction,
validity and interpretation and enforcement of this Agreement will be governed
by the internal law, and not the law of conflicts, of the State of California,
8
and the exclusive jurisdiction and venue for any action arising out of or
relating to this Agreement shall be the Federal and State courts in the State of
California, County of Orange, and each party hereby submits itself to the
jurisdiction of said courts.
18. Remedies. Except when expressly provided otherwise, each
of the parties to this Agreement will be entitled to enforce his rights under
this Agreement specifically, to recover damages by reason of any breach of any
provisions of this Agreement and to exercise all other rights existing in his
favor.
19. Amendments and Waivers; Third Party Beneficiaries. Any
provision of this Agreement may be amended or waived only with the prior written
consent of the Company and Executive. The failure of any party to insist, in any
one (1) or more instances, upon performance of the terms or conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition.
20. Arbitration. Any dispute or controversy arising under or
in connection with paragraph 2(d) of this Agreement shall be settled exclusively
in arbitration in Orange County, California by and in accordance with the rules
of the American Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction; provided, however,
that Executive shall be entitled to seek specific performance of his right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
21. Definitions.
"Affiliates" shall mean, with respect to any Person,
another Person who Controls, or is Controlled by, or is under common Control
with, such first Person. Notwithstanding the foregoing, an Affiliate of the
Company shall be limited to Subsidiaries of the Company and to other Persons
engaged in one or more of the same or any similar businesses as the Company and
its Subsidiaries. Further, any Affiliate of a member of the Stockholder Group
shall include such member's Family Group.
"Agreement" means this Employment Agreement.
"Base Salary" shall mean Executive's regular compensation
before bonuses [commission] and fringe benefits.
"Board" means the Board of Directors of the Company.
"Cause" shall mean (1) the commission by Executive of a
felony, fraud, embezzlement or an act of serious moral turpitude which, in the
good faith judgment of the Board, is likely to cause material harm to the
customer relations, operations, business prospects or reputation of the Company
or any of its Affiliates, provided that in the absence of a conviction or plea
of nolo contendere, the Company will have the burden of proving the commission
of such act by a preponderance of the evidence, (ii) the commission of any act
9
by Executive constituting financial dishonesty against the Company or any of its
Affiliates, provided that, in the absence of a conviction or plea of nolo
contendere, the Company will have the burden of proving the commission of such
act by a preponderance of the evidence, (iii) the repeated failure by Executive
to follow the lawful directives of the Board with respect to a matter or matters
within the control of the Executive, provided that, if such breach described in
clause (iii) may be cured by Executive, he will, subject to the following
proviso, be given written notice (a "default notice") of such breach and will be
given an opportunity to cure such breach to the reasonable satisfaction of the
Board within a reasonable period of time not to exceed thirty (30) days of
receipt of such written notice (time being of the essence with respect thereto),
and provided, further, that Executive will only be entitled to receive one (1)
such default notice during any twelve (12) month period of employment hereunder;
or (iv) the willful and material breach by Executive of the provisions of
paragraphs 2(d)(i), 5, 6 and 7 hereof, provided that, if such breach described
in this clause (iv) may be cured by Executive, he will, subject to the following
proviso, be given a "default notice" of such breach and will be given an
opportunity to cure such breach to the reasonable satisfaction of the Company
Board within thirty (30) days of receipt of such written notice (time being of
the essence with respect hereto), and provided, further, that Executive will
only be entitled to receive one (1) such default notice during each twelve (12)
month period of employment hereunder.
"Change of Control" means (i) any event (including,
without limitation, the sale or issuance of capital stock, merger,
consolidation, recapitalization, or reorganization) which results in the
Stockholder Group owning (either directly or indirectly through the ownership of
Holding or any other Person) securities with less than a majority of the
ordinary voting power of the Company or its successors or (ii) a sale of all, or
substantially all, of the consolidated assets of the Company to any Person not
Controlled by the Stockholder Group.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" shall have the meaning set forth in the
preamble to this Agreement.
"Control" and all conjugations thereof (e.g.,
Controlled or Controlling) means the direct or indirect power or right to
Control, direct or cause the direction of the management or policies of another
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Date of Termination" shall have the meaning set
forth in paragraph 2(d) of this Agreement.
"Disability" shall mean a physical or mental
Disability which shall cause the Executive to have failed to perform a
substantial portion of the services required hereunder for a period of six (6)
consecutive months or for a period of twelve (12) months during any twenty-four
(24)-month period; provided that the Company shall provide Executive with its
written reasons which led the Board to believe that Executive had a Disability,
or if a physician selected by the Company and Executive, after examining the
Executive (and Executive agrees to submit to all such reasonable examinations),
shall determine that the Executive has suffered a physical or mental Disability
that will more likely than not prevent him from performing the services required
10
hereunder for a period of six (6) consecutive months or for a period of twelve
(12) months during any twenty-four (24)-month period. In the event that the
Board and the Executive cannot select an examining physician within ten (10)
days after the Board advises Executive in writing that it believes a Disability
has occurred, a physician shall be selected by the medical director of a
hospital designated by the Company which is not affiliated with the Company. The
determination of any physician hereunder shall be binding and conclusive on the
parties, and the Board may not require Executive to submit to an examination
within six (6) months after a previous examination wherein Executive was deemed
not to have a Disability.
"Executive" shall have the meaning set forth in the
preamble to this Agreement.
"Executive Medical Program" means the Company's
Executive Medical Program as in existence from time to time, whereby certain
executives (which may not necessarily include the Executive) are reimbursed for
the uninsured portion of substantially all of their medical expenses.
"Good Reason" shall mean, without Executive's express
written consent, the occurrence of any one (1) or more of the following:
(1) a reduction by the Company of
Executive's salary as in effect on the date hereof or as the same shall be
increased from time to time prior to the occurrence of a Change of Control;
(2) a material reduction by the Company
of Executive's protection under the Company-paid medical (including, if
applicable, the Company's Executive Medical Program) and group life insurance
plans;
(3) the Company requiring Executive to
be based at a location in excess of the larger territory of twenty-five (25)
miles from the location where Executive is based immediately prior to the
Effective Date;
(4) any violation by the Company of
paragraph 2(e)(1) hereof; or
(5) any violation of paragraph 10(b)
hereof.
Executive shall have the right to resign for Good Reason even if Executive is
then suffering from a Disability.
"Inventions" shall have the meaning set forth in
paragraph 8 of this Agreement.
"Notice of Termination" shall have the meaning set
forth in paragraph 2(d) of this Agreement.
11
"Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a governmental entity or any department or agency thereof.
"Subsidiary" shall mean any Person which the Company
has the direct or indirect right to control, direct or cause direction of
management and policies of, whether through the ownership of voting securities,
by contrast or otherwise.
"Trade Secrets" means any information, method,
program or compilation of information which is used in the Company's or any
Affiliate's business and which is confidential and proprietary, including, but
not limited to, all lists of past, present or prospective customers or suppliers
of the Company and its Affiliates.
22. Interpretation. Unless clearly expressed to the contrary,
the words "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole, including the exhibits and schedules hereto,
as the same from time to time may be amended or supplemented and not any
particular paragraph, subparagraph or clause contained in this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in masculine, feminine or neuter gender shall include the masculine,
feminine and the neuter.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
"Company"
---------------------------
By:
Its:_______________________
"Executive"
/s/Xxxxx Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxx Xxxxxx
EXHIBIT 8
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Subsidiaries of Registrant
--------------------------
Secure America, Inc., a Delaware Corporation-Inactive
Rway Corporation, a Delaware Corporation-Active
