EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of December 29, 2004, by and between IMAGE
INNOVATIONS HOLDINGS INC., a Nevada corporation, having a principal place of
business at 000 Xxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and
Xxxxxx X Xxxxxxxx having a residence address at 0000 Xxxxxx Xxx, Xxxxx
Xxxxxxxxx, XX, Xxxxxx, X0X0X0 (the "Executive").
RECITALS
WHEREAS, the Company desires to employ the Executive to render services to
the Company as an executive officer, and the Executive desires to render such
services on behalf of the Company; and
WHEREAS, the Company and the Executive desire to set forth the terms and
conditions on which (i) the Company will employ the Executive, (ii) the
Executive will render services to the Company and any other corporation or
business entity controlling, controlled by or under common control with the
Company (each, an "Affiliate"), and (iii) the Company will compensate the
Executive for such services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Employment.
The Company hereby employs the Executive, and the Executive hereby accepts
such employment, upon the terms and conditions herein set forth.
2. Term.
Subject to the provisions for termination provided herein, the initial
term of employment of the Executive under this Agreement shall be for a period
of two (2) years commencing on January 1, 2005 and ending on December 31, 2007
(the "Initial Term"). The Executive's employment under this Agreement shall be
automatically extended thereafter for two additional one-year periods (each, an
"Extension Term") unless either party gives a notice of termination not earlier
than 180 days and not later than 90 days prior to the expiration of the Initial
Term or any Extension term. The Initial Term and all Extension Terms, if any,
are referred to herein as the "Term."
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3. Duties and Responsibilities.
3.1 During the Term of this Agreement, the Executive shall serve the
Company in an executive capacity and shall perform such duties as are reasonably
determined from time to time by the Company's Board of Directors. The Executive
shall devote his full attention and apply his reasonable efforts, energies and
skills, on a full-time basis, to the business of the Company and each Affiliate
(such corporations or other business entities being referred to herein
collectively as the "Image Group") and shall not during the Term of this
Agreement be engaged in any other business activity, whether or not such
business activity is pursued for gain, profit, or other pecuniary advantage. The
Company acknowledges that the Executive holds existing positions outside the
Image Group: Sole Officer and Director for Ribot Farms Ltd. Sole Officer and
Director of Natalma Industries Inc. Sole Officer and Director of Cosmah
Industries Inc. The Executive represents that his involvement with these
entities have no priority over the work he will perform for the Company and will
not interfere with the Executive's responsibilities and duties to the Company.
The Executive will provide notice to the Company, in writing, of any change in
the status of his positions outside the Image Group. Subject to the provisions
of Section 10 hereof, the foregoing restriction shall not be construed as
preventing the Executive from investing his assets in such form or manner as
will not require any services on his part in the operation of the affairs of the
companies in which such investments are made.
3.2 During the Term, the Executive shall serve as and perform the function
of Cheif Financial Officer and shall perform such other duties and functions as
the Board of Directors of the Company may determine consistent with the
Executive's experience and background. The Executive will be one of the
Company's principal operating officers and, as such, shall conduct and manage
the Company's business in accordance with the policies established by the Board
of Directors from time to time.
3.3 The Executive shall have a duty to act only in the best interest of
the Image Group and acknowledges that he owes the Image Group a high degree of
trust and loyalty. While he is employed by the Company, the Executive shall not
take any action that would harm or detrimentally impact upon the Image Group's
business.
3.4 At all times during the performance of this Agreement, the Executive
shall strictly adhere to all policies, rules and regulations that have now been,
or may hereafter be, established by the Image Group for his conduct, including,
but not limited to, all matters set forth in any employee handbook of the Image
Group, as adopted and modified from time to time. The Executive shall report
directly to, and shall be subject to the direction and control of, the Board of
Directors of the Company.
3.5. In order to induce the Company to enter into this Agreement, the
Executive represents and warrants to the Company that (a) the Executive is not a
party or subject to any employment agreement or arrangement with any other
person, firm, company, corporation or other business entity, and (b) the
Executive is subject to no restraint, limitation, or restriction by virtue of
any agreement or arrangement or by virtue of any law or rule or otherwise which
would impair the Executive's right or ability (i) to enter the employ of the
Company or any other member of the Image Group or (ii) to perform fully his
duties and obligations pursuant to this Agreement.
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4. Compensation.
4.1 For all services rendered by the Executive under this Agreement, the
Company shall pay the Executive, and the Executive shall accept, the following
compensation:
4.1.1 A salary of $156,000 per annum ("Salary");
4.1.2.100,000 options to purchase shares of the Company at the
closing price on January 1, 2005. All 100,000 options will
vest immediately.
4.1.3 Such additional compensation in the nature of bonus, incentive
compensation, profit sharing or other similar plan,
arrangement or program as the Board of Directors may determine
from time to time ("Additional Compensation"). The Additional
Compensation may be in the form of cash compensation or stock
grants and may be based on performance by the Executive.
4.2 Unless otherwise agreed by the Executive, the Company shall pay the
Executive's Salary in equal bi-weekly installments and shall pay the Executive's
Additional Compensation at such time as the Board of Directors may determine
from time to time. The Executive's Salary and Additional Compensation shall be
payable subject to such deductions as are then required by law and such further
deductions as may be agreed to by the Executive in accordance with the Company's
prevailing salary payroll practices.
4.3 On or about January 1, 2006, the Board of Directors of the Company and
the Executive shall review the Executive's compensation under this Agreement, at
which time such compensation may be adjusted upon mutual agreement of the
parties.
5. Benefits.
5.1 The Executive shall be entitled to four (4) weeks of paid vacation per
calendar year, provided that the Executive shall not take more than two
consecutive weeks of vacation during any year. No portion of any unused vacation
time shall be carried over to a subsequent period unless specifically authorized
by the Board of Directors of the Company.
5.2 The Executive shall also be entitled to participate in any pension or
profit sharing plan, stock purchase plan, stock option plan, group life, dental
or vision insurance plan, hospitalization insurance plan, medical services plan
and other similar plans, now or hereafter existing, afforded to the employees of
the Image Group. The company will make a contribution to the Executives
Registered Retirement Compensation Plan each year to the maximum permitted under
the Canadian Income Tax Act estimated to be $14,000 for 2005.
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5.3 The Company shall furnish the Executive with an office located in
Vancouver, British Columbia or the surrounding area, of a size and with the
furnishings and other appointments, and such other facilities, services and
staff, in each case at a level that is consistent with his position, duties and
responsibilities.
6. Expenses. The Executive shall be authorized to incur ordinary and
necessary business expenses in connection with the performance of his duties
hereunder, including travel expenses and entertainment expenses, as shall be
authorized by the Board of Directors of the Company. Such expenses shall be
reimbursed only upon presentation of paid receipts and/or original invoices and
such other information as shall be required for tax purposes.
7. Sick Leave. The Executive shall be entitled to annual sick leave in
length to conform with the Company's general employment practices.
8. Termination of Employment.
The Executive's employment under this Agreement may be terminated prior to the
expiration of the Term under any of the circumstances set forth in this Section
8.
8.1 The Executive's employment shall terminate upon Executive's death.
8.2 The Company may terminate the Executive's employment upon his becoming
"Totally Disabled." For purposes of this Agreement, the Executive shall be
"Totally Disabled" if the Executive is physically or mentally incapacitated so
as to render the Executive incapable of performing his usual and customary
duties under this Agreement without unreasonable accommodation. The Executive's
receipt of disability benefits under the Company's long-term disability benefits
plan (the "LTD Plan") or receipt of Social Security disability benefits shall be
deemed conclusive evidence of Total Disability for purpose of this Agreement;
provided, however, that in the absence of the Executive's receipt of such
long-term disability benefits or Social Security benefits, the Company's Board
of Directors may, in its reasonable discretion (but based upon appropriate
medical evidence), determine that the Executive is Totally Disabled.
8.3 The Company may terminate the Executive's employment for "Cause." Such
termination shall be effective as of the date specified in the written notice of
termination provided to Executive. For purposes of this Agreement, the term
"Cause" shall mean any of the following: (A) conviction (including conviction on
a nolo contendere plea) of (I) a crime involving the commission by Executive of
a felony or (II) a criminal act intended to result directly or indirectly in
substantial gain or personal enrichment to Executive at the expense of the
Company, but excluding any such conviction that results solely from Executive's
title or position with the Company and is not based on his personal conduct; or
(B) willful misconduct or gross negligence in connection with the business of
the Company or an Affiliate occurring after the Effective Date of this
Agreement; or (C) persistent failure to observe or perform Executive's duties
and responsibilities or to comply with Company policies as set forth in Section
3 hereof after written notice thereof by the Company; or (D) breach of any of
the covenants set forth in Section 10, 11 or 12 of this Agreement.
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8.4 The Company may terminate the Executive's employment under this
Agreement without Cause after providing ninety (90) days' prior written notice
of termination to the Executive.
8.5 Any termination by the Company under this Agreement shall be
communicated by notice of termination to the Executive. For purposes of this
Agreement, a Notice of Termination shall mean a notice in writing that shall
indicate the specific termination provision in this Agreement relied upon to
terminate the Executive's employment and, if applicable, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
9. Compensation and Benefits Payable Following Termination.
If the Executive's employment is terminated prior to the expiration of the
Term, the Executive (or his surviving spouse, beneficiary or estate, as the case
may be) shall receive the following compensation and benefits:
9.1 Upon termination of the Executive's employment under Section 8 hereof,
the Company shall pay the Executive (or his personal representative) any accrued
but unpaid Salary for services rendered to the date of termination, the amount
of any compensation previously earned and deferred by the Executive, any earned
but unpaid incentive compensation for any calendar year ended prior to the year
in which is employment terminates, any accrued but unpaid expenses required to
be reimbursed under this Agreement, and any vacation pay accrued to the date of
the termination. The Company shall pay all of the foregoing amounts, except for
earned but unpaid Additional Compensation, within 30 days after the date of
termination; earned but unpaid Additional Compensation for any calendar year
ended prior to the year in which the Executive's employment terminates shall be
paid at the same time as the Company pays Additional Compensation to its other
senior executives.
9.2 In the event that the Executive's employment is terminated by the
Company without Cause pursuant to Section 8.4 above:
(i) The Company shall continue to provide the Executive the Salary and
benefits set forth in Sections 4.1 and 5.2 above that would have
been payable to him if he had continued to perform his normal duties
and responsibilities on a full-time basis until the earlier of (i)
the expiration of the Term or (ii) his death.
(ii) Any amounts payable to the Executive under this Section 9.2 shall be
reduced by any employment or consulting compensation received by the
Executive from any source after the termination of this Agreement.
9.3 If the Executive's employment is terminated for any reason prior to
the last day of a calendar year, the Company shall pay the Executive (or his
personal representative) an amount equal to the pro rata portion (based on the
number of days of employment prior to the termination date) of the annual
Additional Compensation that would have been payable to the Executive if he had
continued in employment through the end of the calendar year. Such amount will
be paid at the same time and in the same manner as the annual Additional
Compensation for such year is paid to other senior executive officers.
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9.4 Except as may otherwise be provided under this Agreement,
(i) any benefits to which the Executive may be entitled pursuant to the
plans, policies and arrangements referred to in Section 5 above
shall be determined and paid in accordance with the terms of such
plans, policies and arrangements; and
(ii) the Executive shall have no right to receive any other compensation,
or to participate in any other plan, arrangement or benefit, with
respect to future periods after such termination or resignation.
10. Restrictive Covenants.
10.1 The Executive acknowledges that (i) the business activities of the
Image Group include and are expected to include the manufacture and sale of
celebrity image memorabilia and sports branded products ("Sports Memorabilia and
Branding Business"), (ii) he will have a major responsibility for the
development, management and operation of the business of the Company, (iii) the
Company's business is intended to be international in scope, (iv) his employment
by the Company will bring him into close contact with confidential information
of the Company, its Affiliates, its customers, and its suppliers, and (v) the
agreements and covenants contained in this Section 10 are essential to protect
the business interests of the Company and that the Company would not enter into
this Agreement but for such agreements and covenants. Accordingly, the Executive
agrees as follows:
10.1.1 Except as otherwise specifically provided for in this Agreement,
throughout the Employment Period and the Post-Termination Period (as such terms
are defined in Section 10.2) the Executive shall not, directly or indirectly,
(i) engage in any aspect of the Sports Memorabilia and Branding Business or (ii)
without limiting the generality of clause (i) above, be or become, or agree to
be or become, interested in or associated with, in any capacity (including,
without limitation, as a partner, shareholder, owner, officer, director,
employee, principal, agent, creditor, trustee, consultant, co-venturer or
otherwise), any individual, corporation, firm, association, partnership, joint
venture or other business entity, which is engaged in or which is planning to
engage in any aspect of the Sports Memorabilia and Branding Business; provided,
however, that the Executive may own, solely as an investment, securities of any
publicly held corporation traded on any national securities exchange in the
United States of America, if the Executive is not a controlling person of or
member of a group that controls, such corporation and does not, directly or
indirectly, own more than 1% of any class of securities of such corporation.
10.1.2 Throughout the Employment Period and the Post-Termination Period,
the Executive shall not, directly or indirectly (i) induce or attempt to
influence any executive of any member of the Image Group to leave its employ,
(ii) aid or agree to aid any competitor, customer or supplier of the Image Group
in any attempt to hire any person who shall have been employed by any member of
the Image Group within the one (1) year period preceding such requested aid, or
(iii) induce or attempt to influence any person or business entity who was a
customer or supplier of any member of the Image Group during any portion of such
period to transact business with a competitor of the Image Group in the Sports
Memorabilia and Branding Business.
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10.1.3 Throughout the Employment Period and thereafter, the Executive
shall not disclose to anyone any information about the affairs of any member of
the Image Group, including without limitation, trade secrets, trade "know-how",
inventions, customer lists, client lists, business plans, operational methods,
pricing policies, marketing plans, sales plans, identity of suppliers, trading
positions, sales, profits or other financial information, which is confidential
to any member of the Image Group or is not generally known in the relevant trade
(collectively, "Proprietary Information"), regardless of whether the Executive
developed such Proprietary Information, nor shall the Executive make use of any
such Proprietary Information for his own benefit.
10.2 For the purposes of this Agreement the following terms shall have
respective meanings ascribed to them below:
10.2.1 "Employment Period" means the period of the Executive's employment
by the Company, including such period of employment, if any, extending beyond
the Term.
10.2.2 "Post-Termination Period" means the two-year period commencing with
the end of the Employment Period.
10.3 If the Executive breaches, or threatens to commit a breach of, any of
the provisions of Subsection 10.1 (the "Restrictive Covenants"), the Company
shall have the following rights and remedies, each of which shall be independent
of the others and severally enforceable, and each of which is in addition to,
and not in lieu of, any other rights and remedies available to the Company at
law or in equity:
10.3.1 The Executive shall account for and pay over to the Company all
compensation, profits, monies, accruals and other benefits derived or received
by the Executive or any person or business entity affiliated with the Executive
as a result of any action or transactions constituting a breach of any of the
Restrictive Covenants.
10.3.2 Notwithstanding the provisions of Subsection 10.3.1 above, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the Restrictive Covenants, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each provision
by temporary or permanent injunctive or mandatory relief obtained in any court
of competent jurisdiction without the necessity of proving damages, posting any
bond or other security, and without prejudice to any other rights and remedies
which may be available at law or in equity.
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10.4 If any of the Restrictive Covenants, or any part thereof, is held to
be invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full force and effect, without
regard to the invalid or unenforceable portions.
10.5 If any of the Restrictive Covenants, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making such determination shall
have the power to reduce the duration and/or area of such provision and, in its
reduced from, such provision shall then be enforceable.
10.6 The parties hereto intend to and hereby confer jurisdiction to
enforce the Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Restrictive Covenants. In the event that the courts
of any one or more of such jurisdiction shall hold such Restrictive Covenants
wholly unenforceable by reason of the breadth of such scope or otherwise, it is
the intention of the parties hereto that such determination not bar or in any
way affect the Company's right to the relief provided above in the courts of any
other jurisdictions within the geographical scope of such Restrictive Covenants,
as to breaches of such covenants in such other respective jurisdictions, the
above covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
11. Inventions.
All inventions, discoveries, investigations, improvements, know-how, trade
secrets, and developments in technology ("Inventions") that directly relate to
the business carried on, or to be carried on, by any member the Image Group that
have been or shall be made of or reduced to practice by the Executive, either
alone or with others, whether the activity in question takes place within or
outside the usual working hours of the Executive or on or off the premises of
the Company, shall be held by the Executive for the exclusive benefit of the
Company, and the Executive shall assign in writing to the Company, without any
payment being required or the part of the Company, all of the right, title and
interest which he may have acquired in and to any Inventions. In addition, he
shall both during and at any time prior to two (2) years after the Employment
Period, assist the Company in every way reasonably requested by the Company, at
the expense of the Company without cost to the Executive (and with reasonable
compensation to the Executive in the event his employment has then ended), to
obtain for the Company in any and all countries, and to maintain and enforce
patents or the reissue or extension thereof on all Inventions which have been or
may be assigned.
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12. Documentation of Proprietary Information and Inventions.
All documents, records, models, prototypes or other tangible embodiments
or evidence of Proprietary Information or Inventions, and all copies of the
foregoing ("Materials"), which may at any time be acquired by or come into the
possession of the Executive are the sole and exclusive property of the Company.
All Materials shall be surrendered to the Company upon the request by the
Company at any time. In addition, upon the reasonable request by the Company at
any time, the Executive shall prepare materials accurately and adequately to
describe, set forth or embody any Proprietary Information or Inventions and
deliver the same to the Company in order to accomplish or complete the transfer
thereof to the Company, and the Executive shall be reimbursed by the Company for
all of his reasonable out-of-pocket expenses incurred in so doing. During or at
any time prior to two (2) years after the Employment Period, the Executive shall
execute all documents and take all such other action as the Company may
reasonably require (being reimbursed for all of his reasonable out-of-pocket
expenses in this connection) in order to assign the Company any and all
copyrights and reproduction rights to any Materials prepared by him during and
in connection with such employment.
13. Insurance.
The Company may, from time to time, apply for, purchase and maintain, in
its own name and at its own expense, life, health, accident, disability or other
insurance upon the Executive in any sum or sums that it may deem necessary to
protect its interests, and the Executive agrees to aid and cooperate in all
reasonable respects with the Company in procuring any and all such insurance,
including, without limitation, submitting to the usual and customary medical
examinations, and by filling out, executing and delivering such applications and
other instruments in writing as may be reasonably required by an insurance
company or companies to which an application or applications for such insurance
may be made by or for the Company. In order to induce the Company to enter into
this Agreement, the Executive represents and warrants to the Company that to the
best of his knowledge the Executive is insurable at standard (non-rated)
premiums. The Company acknowledges that the Executive has disclosed that he
suffers from hemochromatosis which may impact his insurability at standard
premiums.
14. Miscellaneous.
14.1 This Agreement is a personal contract, and the rights and interests
of the Executive hereunder may not be sold, transferred, assigned, pledged or
hypothecated by the Executive, except as otherwise expressly permitted by the
provisions of this Agreement. The Executive shall not under any circumstances
have any option or right to require payment hereunder otherwise than in
accordance with the terms hereof. Except as otherwise expressly provided herein,
the Executive shall not have any power of anticipation, alienation or assignment
of payments contemplated hereunder, and all rights and benefits of the Executive
shall be for the sole personal benefit of the Executive, and no other person
shall acquire any right, title or interest hereunder by reason of any sale,
assignment, transfer, claim or judgment or bankruptcy proceedings against the
Executive; provided, however, that (i) the Executive shall have the right to
assign his right to receive any payment previously due and owing, subject to all
claims and defenses of the Company, and (ii) in the event of the Executive's
death, the Executive's estate, legal representatives or beneficiaries (as the
case may be) shall have the right to receive all of the benefits that accrued to
the Executive pursuant to, and in accordance with, the terms of this Agreement.
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14.2 The Company shall have the right to assign this Agreement to any
successor to substantially all of its business or assets, and the Executive and
any such successor shall be bound by all provisions hereof.
14.3 Any notice required or permitted to be given pursuant to this
Agreement shall be in writing and sent to the party for whom or which intended,
at the address of such party set forth below, by registered or certified mail,
return receipt requested or at such other address as either party shall
designate by notice to the other in the manner provided herein for giving
notice:
(a) If to the Company to:
Image Innovations Holdings Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to Executive, to:
Xxxxxx X Xxxxxxxx
0000 Xxxxxx Xxx Xxxxx
Xxxxxxxxx, XX, X0X0X0 Xxxxxx
Facsimile: 000 000-0000
14.7 This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
14.8 If any provision of this Agreement, or any part thereof, is held to
be illegal or unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect.
14.9 Each of the parties hereto shall, at any time and from time to time
hereafter, upon the reasonable request of the other, take further action and
execute, acknowledge and deliver all such instruments of further assurance as
necessary to carry out the provisions of this Agreement.
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14.10 This Agreement contains the entire agreement and understanding
between the Company and the Executive with respect to the subject matter hereof.
No representations or warranties of any kind or nature relating to the Company
or its business, assets, liabilities, operations, future plans or prospects have
been made by or on behalf of the Company to the Executive.
14.11 All controversies or claims arising out of or relating to this
Agreement, or the breach hereof, shall be subject to the laws of the State of
New York and submitted to the Courts of the State and County of New York for
resolution.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
IMAGE INNOVATIONS
HOLDINGS INC.:
-------------------------
Xxxxxx Xxxxxxxx
Chairman, Compensation Committee
EXECUTIVE:
-------------------------
Xxxxxx Xxxxxxxx
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