1
Exhibit 10.10
EMPLOYMENT AGREEMENT
AGREEMENT dated as of November 8, 1999 between Screaming Xxxxx.Xxx, Inc.,
a Delaware corporation (the "Company"), and Xxxxx Xxxxx (the "Executive").
WHEREAS the parties desire to enter into an employment agreement, on the
terms and conditions hereinafter set forth, providing for the employment of the
Executive by the Company for the term herein specified,
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT AND TERM.
The Company hereby employs the Executive, and the Executive hereby agrees
to serve, as an executive employee of the Company with the duties set forth in
Section 2, for a term (hereinafter called the "Term of Employment") beginning
November 8, 1999, and ending on November 8, 2002, unless sooner terminated as
provided herein.
SECTION 2. DUTIES.
(a) The Executive agrees that during the Term of Employment, he will hold
the office of Chief Executive Officer of the Company reporting to the Company's
Board of Directors. The Executive agrees that he will perform faithfully and to
the best of his ability such duties and assignments relating to the business of
the Company, as the Board of Directors of the Company shall direct and
consistent with the office of Chief Executive Officer, except that the Executive
shall not be required to perform any duty or assignment inconsistent with his
experience and qualifications or not customarily performed by a senior corporate
officer. The Company represents to the Executive that the Board of Directors
has authorized the making of this agreement and has approved the appointment of
Executive as Chief Executive Officer of the Company.
(b) If the Board of Directors of the Company so requests, the Executive
shall, in addition to his duties as Chief Executive Officer, serve as an officer
of one or more subsidiaries of the Company (if, but only if, the duties of such
position are not inconsistent with the Executive's experience and qualifications
and are duties customarily performed by a senior corporate officer). Part or
all of the compensation to which the Executive is entitled hereunder may be paid
by such subsidiary or subsidiaries. However, such
2
employment or payment of the Executive by a subsidiary or subsidiaries shall be
guaranteed by the Company and shall not relieve the Company from any of its
obligations under this agreement.
(c) During the Term of Employment, the Executive shall, except during
customary vacation periods and periods of illness, devote all of his business
time and attention to the performance of his duties hereunder and to the
business and affairs of the Company and to promoting the best interests of the
Company and he shall not, either during or outside of normal business hours,
engage in any activity inimical to such best interests. Notwithstanding the
foregoing, Executive may serve as a Director on Boards of organizations which
do not compete with the Company and may engage in charitable or civic pursuits
provided that such service or pursuits do not interfere with Executive's
obligations under the Agreement.
SECTION 3. COMPENSATION DURING TERM OF EMPLOYMENT.
(a) BASE SALARY. During the Term of Employment, the Company shall pay to
the Executive compensation (in addition to the compensation provided for
elsewhere in this agreement) in equal monthly installments at the rate of
$300,000 per Contract Year (such amount being herein called "Base Salary").
Executive's base salary shall be review at least annually during the term of the
Agreement with regard to potential increases as authorized by the Board of
Directors. The Base Salary shall be paid in such periodic installments as the
Company may determine, but not less often than monthly. In addition, Executive
shall be eligible to participate in bonus plans applicable to senior executives
of the Company to the extent such bonus plans are formed during the term of
this Agreement.
3
(b) STOCK OPTIONS. Effective as of the first day of the Term of
Employment, the Company shall grant to the Executive a seven-year non-qualified
stock option (the "Option") to purchase 450,000 shares of Common Stock of the
Company, par value $.01 per share, at an exercise price of $6.50 per share. The
form of the Option shall be in the form attached as Exhibit A. In the event it
is determined that any payment or distribution made, or benefit provided
(included, without limitation, the acceleration of any payment, distribution or
benefit and the acceleration of vesting of any stock option, restricted stock or
other award), by the Company to or for your benefit (whether paid or payable or
distributed or distributable pursuant to the terms of this letter or otherwise,
but determined without regard to any additional payments required under this
provision (a "payment") would be subject to the excise tax imposed by Section
4999 of the Code (or any similar excise tax) or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, collectively referred to as the
"Excise Tax"), then Executive will be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by Executive of all
taxes (including any Excise Tax, income tax or payroll tax) imposed upon the
Gross-Up Payment, and any interest or penalties imposed with respect to such
taxes caused by the Company's negligence, Executive will retain from the
Gross-Up Payment an amount equal to the Excise Tax imposed upon the Payments.
(c) FRINGE BENEFITS AND PERQUISITES. During the Term of Employment,
the Executive shall enjoy the customary perquisites of office, including but not
limited to office space and furnishings, secretarial services, expense
reimbursements and any similar emoluments customarily afforded to senior
executive officers of the Company as authorized or approved by the Board of
Directors. The Company shall provide Executive with a full-time Executive
Assistant and will reimburse him for car service to his residence in the event
that he works beyond 6 p.m. The Executive shall also be entitled to receive or
participate in the highest level of all "fringe benefits" and employee benefit
plans, if any, now or hereafter provided or made available by the Company to
its executives or management personnel generally, such as, but not limited to,
group hospitalization, medical, life and disability insurance, and pension,
retirement, profit-sharing and medical reimbursement plans, all as the Board of
Directors shall determine. In addition, the Company will reimburse Executive
for annual membership in the YPO.
(d) VACATIONS. The Executive shall be entitled each year to a paid
vacation of four weeks. The Company shall not pay the Executive any additional
compensation for any vacation time not used by the Executive.
(e) REIMBURSEMENT. The Company shall reimburse the Executive for up
to $10,000 for actual, out-of-pocket expenses incurred by the
4
Executive in connection with the closing of the Executive's office in Rowayton,
Connecticut.
SECTION 4. TERMINATION OF EMPLOYMENT.
(a) DEATH OR TOTAL DISABILITY. The employment of the Executive will
terminate upon his death or if, by reason of partial or total disability,
Executive is incapable of performing his principal duties hereunder for a period
of 90 consecutive working days or for more than 120 working days in any 12 month
period ("Disability"). If, during the Term of Employment, the employment of the
Executive is terminated due to death or Disability, the Executive or his estate
shall receive, within 30 days of such termination, Base Salary provided for in
Section 3 as then in effect, accrued through the date of termination of
Executive's employment ("Date of Termination"). Upon the Date of Termination all
unvested Stock Options and all other benefits under this Agreement shall lapse,
expire and be forfeited (other than the proceeds of any insurance or disability
policy or medical coverage provided by the Company which are or become payable
by reason of the Executive's death or Disability, as the case may be).
(b) FOR CAUSE OR FOR LACK OF GOOD REASON. The employment of the Executive
may be terminated by the Company at any time for Cause, as defined below. If,
during the Term of Employment, the employment of the Executive is terminated by
the Company for Cause or by the Executive without Good Reason, as defined
below, the Executive shall receive, within 30 days of such termination, Base
Salary provided for in Section 3 as then in effect, accrued through the Date of
Termination. Upon the Date of Termination (i) all unvested Stock Options and
all other benefits under this Agreement shall lapse, expire and be forfeited.
(c) WITHOUT CAUSE OR WITH GOOD REASON. (i) The employment of the Executive
may also be terminated by the Company at any time without Cause or by the
Executive at any time with Good Reason. If, during the Term of Employment, the
employment of the Executive is terminated by the Company without Cause, or by
the Executive with Good Reason, the Executive shall continue to receive Base
Salary provided for in Section 3 as then in effect and medical and other
insurance coverage in effect on the Date of Termination for the six months
following termination. Upon the Termination of Executive under this Section,
all options scheduled to vest within one year of the Date of Termination shall
accelerate and immediately vest and all vested options shall become exercisable
as provided in Executive's Option Agreement. Subject to the severance
arrangements described herein, all other benefits under this Agreement shall
lapse, expire and be forfeited.
5
(d) DEFINITION OF "CAUSE" AND "GOOD REASON". "Cause" means (i) willful
failure of the Executive to perform his duties with the Company which have been
duly assigned to the Executive and which duties are commensurate with the
position for which Executive is then employed, (ii) the engaging by the
Executive in willful conduct which is materially injurious to the Company,
(iii) the conviction of the Executive of any crime or offense constituting a
felony; or (iv) a failure by the Executive to comply with any material
provision of this Agreement, which failure is not cured (if capable of cure)
within 30 days after receipt of written notice of such non-compliance by the
Executive. Termination of the Executive for "cause" shall mean termination by
action of at least a majority of the Company's Board of Directors, at a meeting
duly called and held upon at least 30 days written notice to the Executive
specifying the particulars of the action or inaction alleged to constitute
"cause" and at which meeting the Executive and his counsel were entitled to be
present and given adequate opportunity to be heard. Action or inaction by the
Executive shall not be considered "willful" unless done or omitted by him
intentionally or not in good faith and without reasonable belief that his
action or inaction was in the best interest of the Company, and shall not
include failure to act by reason of total or partial incapacity due to physical
or mental illness.
"Good Reason" means (i) a material adverse alteration in the nature or
status of the Executive's position, duties or responsibilities from those in
effect as of the inception of the Term of Employment; (ii) a reduction in or
failure to pay or provide any of the compensation set forth in this Agreement
which is not cured within 30 days after receipt by the Company of written
notice thereof; or (iii) a change in the principal place of the Executive's
employment to a location more than 75 miles from the place of the Executive's
principal residence as of the date of this Agreement, excluding required travel
on the Company's business.
6
SECTION 5. COVENANT NOT TO COMPETE.
In the case of termination of the Executive's employment pursuant to
Section 4(b) above, for a period of six months after the Date of Termination,
the Executive shall not, in The City of New York, render services to any
corporation, individual or other entity engaged in any activity, or himself
engage directly or indirectly in any activity, which is competitive to any
material extent with the then business of the Company or any of its
subsidiaries. In the case of any termination of Executive's employment under
this Agreement, for a period of six months after the end of the Term of
Employment, the Executive shall not solicit for the purpose of diverting
business from the Company, for himself or a business competitive with that of
the Company or any of its then subsidiaries, business from any person, firm or
corporation which shall, at the time that the Term of Employment ends, be an
existing customer of the Company or any such subsidiary or solicit, raid or
entice or induce any employee of the Company or any of its subsidiaries to
become employed by any other business enterprise. It is understood that general
and trade advertising is not to be deemed a form of "solicitation" for purposes
of this agreement. As used herein, "existing customer" means any person, firm or
corporation which is on the list or lists maintained by the Company or any
subsidiary of its customers, as well as any person, firm or corporation which
has made a purchase from the Company or a subsidiary within the preceding year.
SECTION 6. COMPANY'S RIGHT TO INJUNCTIVE RELIEF.
The Executive acknowledges that his services to the Company consisting
of senior managerial executive, with an intimate knowledge of and day to day
dealing with the Company's customers, distributors, suppliers and the key
employees of the Company and its subsidiaries, as well as an intimate knowledge
of the plans and strategies of the Company and its subsidiaries for present and
future businesses and extensions thereof are of a unique character, which gives
them a peculiar value to the Company, the loss of which cannot be reasonably or
adequately compensated in damages in an action at law, and that therefore, in
addition to any other remedy which the Company may have at law or in equity, the
Company and each relevant subsidiary shall be entitled to injunctive relief for
a breach of this agreement by the Executive.
7
SECTION 7. TRADE SECRETS AND CONFIDENTIAL INFORMATION.
The Executive shall not, either directly or indirectly, except as
required in the course of his employment by the Company disclose or use at any
time, whether during or subsequent to the Term of Employment, any information
of a proprietary nature owned by the Company or any of its subsidiaries
including, but not limited to, (i) lists of customers, clients and contacts or
any of them, (ii) contracts with customers, programmers, developers, suppliers,
distributors and other dealers, marketing plans, financial condition and
results of operation, and (iii) records, data, formulae, documents,
specifications, inventions, processes, methods and intangible rights which are
acquired by him in the performance of his duties for the Company or any
subsidiary thereof and which are of a confidential information or trade secret
nature. All inventions, processes, methods and intangible rights, lists of
customers, clients and contacts or any of them, contracts with customers,
suppliers and distributors, records, files, drawings, documents, equipment and
the like, relating to the business of the Company or a subsidiary, which the
Executive shall invent, develop, conceive, produce, prepare, use, construct or
observe, shall be and remain the sole property of the Company or the relevant
subsidiary. Upon the termination of his employment (or earlier upon the request
of the Company), the Executive shall return to the possession of the Company
all materials (and all copies thereof) involving any and all confidential
information or trade secrets of, and shall not take any material or copies
thereof from the possession of, the Company or any subsidiary.
SECTION 8. MERGERS AND CONSOLIDATIONS; ASSIGNABILITY.
In the event that the Company, or any entity resulting from any
merger or consolidation referred to in this Section 8 or which shall be a
purchaser or transferee so referred to, shall at any time be merged or
consolidated into or with any other entity or entities, or in the event that
substantially all of the assets of the Company or any such entity shall be sold
or otherwise transferred to another entity, the provisions of this agreement
shall be binding upon and shall inure to the benefit of the continuing entity
in or the entity resulting from such merger or consolidation or the entity to
which such assets shall be sold or transferred. The Company will not enter into
any such transaction unless, as a condition thereof, all of the obligations of
the Company under this agreement are duly and validly assumed by the
continuing or resulting entity or the entity to which such assets shall be sold
or transferred. Except as provided in this Section 8, this agreement shall not
be assignable by the Company or by any entity referred to in this Section 8.
This agreement shall not be assignable by the Executive, but in the event of
his death it shall be binding upon and inure to the benefit of his legal
representatives to the extent required to effectuate the terms hereof.
924088-1
CATEMPW636152 V1 - XXXXX - EMPLOYMENT AGREEMENT.DOC
8
SECTION 9. MISCELLANEOUS.
(a) The captions in this agreement are not part of the provisions hereof,
are merely for the purpose of reference and shall have no force or effect for
any purpose whatsoever, including the construction of the provisions of this
agreement, and if any caption is inconsistent with any provisions of this
agreement, such provisions shall govern.
(b) This agreement is made in, and shall be governed by and construed in
accordance with the internal laws of, the State of New York.
(c) This agreement contains a complete statement of all of the
arrangements between the parties with respect to the subject matter hereof; and
there are no representations, agreements, arrangements or understandings, oral
or written, between the parties relating to the subject matter of this
agreement which are not fully expressed in this agreement. This agreement may
not be waived, changed, modified or discharged orally, but only by an agreement
in writing signed by the party against whom any waiver, change, modification or
discharge is sought.
(d) All notices given hereunder shall be in writing and shall be sent by
registered or certified mail, return receipt requested, and, if intended for
the Company, shall be addressed to it at its principal office at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 for the attention of Xxxxxxx X. Xxxxx, Esq.,
General Counsel of the Company with a copy to Xxxx X. Xxxxxx, President of the
Company, or at such other address and for the attention of such other person of
which the Company shall have given notice to the Executive in the manner herein
provided, and, if intended for the Executive, shall be addressed to him at his
then current residence address as shown by the employment records of the
Company, or at such other address or to such designee of which the Executive
shall have given notice to the Company in the manner herein provided. Each such
notice shall be deemed to be given on the date received at the address of the
addressee.
(e) The Company and the Executive will treat this agreement as
confidential, and neither of them will disclose the contents of this agreement
to any person, except as may be required by law and except as the Company may
need to do so in its dealings with banks or other lenders or otherwise in the
normal course of business.
(f) The Executive irrevocably (i) consents to the jurisdiction and venue
of the Southern District Federal court located in New York State (or, if
jurisdiction is not available in such forum, to the jurisdiction of the courts
of the State of New York located in New York City) in connection with any
9
action, suit or other proceeding arising out of or relating to this agreement
or any act taken or omitted hereunder, (ii) waives and agrees not to assert in
any such action, suit or other proceeding that he is not personally subject to
the jurisdiction of such courts, that the action, suit or other proceeding is
brought in an inconvenient forum or that the venue of the action, suit or other
proceeding is improper, (iii) waives personal service of any summons, complaint
or other process and (iv) agrees that the service thereof may be made by
certified or registered mail directed to the Executive at his address for
purposes of notices hereunder. Should the Executive fail to appear or answer
within the time prescribed by law, he shall be deemed in default and judgment
may be entered by the Company against him for the amount or other relief as
demanded in any summons, complaint or other process so served. Nothing
contained herein shall affect the rights of the Company to bring such an
action, suit or other proceeding in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the day and year first above written.
SCREAMING XXXXX.XXX, INC.
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: Chairman
Xxxxx Xxxxx
/s/ Xxxxx Xxxxx
