1
Exhibit 10.9
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 12, (the "Agreement"), by and
between, Xxxxxxx.xxx, Inc., a Delaware corporation, with an address at 00 Xxxx
00xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and Xxxxxxx X.
Xxxxx, an executive with an address at 00-0 Xxxx Xxxxxx Xxxx, Xxx Xxxxx, Xxx
Xxxxxx 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive desires to be employed by the Company and Company
desires to employ Executive as its Executive Vice President and Chief Financial
Officer;
WHEREAS, the Company and the Executive desire to express the terms and
conditions of the employment by the Company of the Executive.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged by the parties hereto, the parties hereto hereby agree as
follows:
1. Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts and agrees to such employment, commencing as of the
date hereof, upon the terms and conditions hereinafter set forth.
2. Term. The term of the Executive's employment under this Agreement shall
commence as of the date hereof and shall continue for a period of three (3)
years from the date hereof, unless sooner terminated as provided elsewhere in
this Agreement (the "Initial Term"). The Initial Term hereof will be
automatically renewed for additional terms (each a "Renewal Term," and,
together, with the Initial Term, collectively the "Term") of one (1) year unless
either party hereto provides the other party hereto written notice of its
election not to renew this Agreement thirty (30) days prior to the expiration of
the Initial Term, or, if applicable, thirty (30) days prior to the expiration of
any Renewal Term.
3. Duties and Services.
(a) The Executive agrees, from and after the date hereof, to serve the
Company faithfully, diligently and to the best of his or her ability, as its
Executive Vice President and Chief Financial Officer with primary responsibility
for the Company. At all times during the Term, the Executive shall report
directly to the Chief Executive Officer of the Company. The Executive shall
devote his or her entire business time, energy and skill to such activities on
behalf of the Company; provided, however, that until December 31, 1999, the
Executive shall be entitled to devote not more than ten (10) hours per week to
perform consulting services for the Prudential Insurance Company of America.
2
(b) The Executive agrees to perform such other services as the Company
shall reasonably request, and to act in such capacities for the Company and its
Affiliates (as hereinafter defined), as may be designated by the Chief Executive
Officer of the Company, without further compensation other than that for which
provision is made in this Agreement. For purposes of this Agreement, the term
"Affiliate" shall refer to any entity which controls, is controlled by, or is
under common control with the Company.
4. The Company's Assistance to the Executive. The Company shall supply the
Executive with all materials, data and technical assistance which shall be
reasonably necessary to assist the Executive. Such materials and the contents
thereof and all intellectual property referenced or represented therein shall
remain the property of the Company.
5. Compensation.
(a) During the Term, the Company agrees to pay to the Executive, and the
Executive agrees to accept, a salary for all his services (the "Salary") of
$200,000 per year, payable in accordance with the Company's standard payroll
policies and subject to annual review by the Company's Board of Directors (the
"Base Compensation").
(b) During the Term, the Company agrees to pay to the Executive an
annual bonus in stock or cash, as determined by the Company's Board of
Directors.
(c) The Executive agrees that the Company shall withhold from any and
all payments required to be made to the Executive pursuant to this Agreement all
federal, state, local and/or other taxes which are required to be withheld in
accordance with applicable statutes and/or regulations from time to time in
effect.
(d) Stock Option. The Company shall grant Executive an option (the
"Option") to purchase 625,000 shares of the Company's Common Stock effective on
the date Executive begins employment (the "Employment Date"). The per share
exercise price for the Option shall be $5 per share. The term of the Option
shall be ten (10) years. The Option shall vest as to twenty percent (20%) of the
shares subject to the Option on each anniversary of the Employment Date;
provided, however, that upon a nonrenewal of this Agreement by the Company
during the first five (5) years from the date hereof, or upon a "Change in
Control" (as defined below) of the Company, the Option shall immediately vest as
to one hundred percent (100%) of the shares subject to the Option. Except as
otherwise provided herein, the Option shall be granted pursuant to, and shall be
governed by, the Company's Stock Option Plan and conform to the Company's
standard policies with respect to options. To the extent permitted under
applicable law, the Option shall be an incentive stock option. For this purpose,
"Change in Control" is defined as (i) the date of the consummation of a merger
or consolidation of the Company with any other corporation that has been
approved by the stockholders of the Company, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company; or (ii)
the date of the
-2-
3
consummation of the sale or disposition by the Company of all or substantially
all the Company's assets.
(e) Stock Purchase. Within thirty (30) days of signing this Agreement,
Executive (either personally or through an entity controlled by the Executive)
may purchase up to 100,000 shares of common stock of the Company at a price of
$5.00 per share.
6. Employee Benefits.
(a) In accordance with the policies of the Company, the Company shall
reimburse the Executive for pre approved business expenses incurred by him for
or on behalf of the Company in furtherance of the performance of his duties
hereunder including, but not limited to, reasonable cellular phone expenses.
Such reimbursement shall be subject to receipt by the Company from the Executive
of an itemized accounting therefor, together with such vouchers and other
reasonable verifications as the Company shall require to satisfactorily evidence
such expenses, and such policies as the Company shall establish from time to
time.
(b) The Executive shall be entitled to participate, in accordance with
the terms thereof, in employee benefit plans maintained for the executives of
the Company including, without limitation, any health, hospitalization and
medical insurance programs and in any pension or retirement or other similar
plans or policies. The foregoing shall not be construed to require the Company
to establish any such plans, or to prevent the Company from modifying or
terminating any such plans once established. The Executive shall be entitled to
the vacation, benefits and sick days set forth on Table A hereto.
7. Termination.
(a) Notwithstanding anything to the contrary contained herein, the
Company's employment of the Executive under this Agreement and the Executive's
right to any and all compensation to which the Executive would otherwise be
entitled hereunder, shall terminate upon the earliest to occur of the following
events:
(i) The death of the Executive.
(ii) The permanent disability (as hereinafter defined) of the
Executive.
(iii) The non-renewal and expiration of the Term of hereunder
pursuant to Section 2 hereof.
(iv) Upon written notice to the Executive from the Company for
Cause (as hereinafter defined).
(v) Upon 2 weeks' written notice to the Executive from the
Company without Cause.
(vi) Upon 2 weeks' written notice to the Company from the
Executive.
-3-
4
(b) "Cause" for purposes hereof shall mean: (i) the commission by the
Executive of theft, embezzlement, fraud, obtaining funds or property under false
pretenses, or similar acts of material misconduct with respect to the property
of the Company or any of its Affiliates or their respective employees or the
Company's customers or suppliers; (ii) the commission by the Executive of a
material act of malfeasance, dishonesty or breach of trust against the Company
or any of its Affiliates or their respective employees or the Company's
franchisees, customers or suppliers, including a breach by the Executive of his
covenants or obligations under Section 9 of this Agreement; (iii) the conviction
of the Executive of a felony or of a misdemeanor involving moral turpitude; or
(iv) the Executive's breach of any of his or her material obligations and
covenants hereunder.
(c) No waiver by the Company of any default by the Executive or any
breach by him or her of any of his or her covenants or obligations under any
provision of this Agreement shall be deemed a waiver of any future breach or
default, whether or not such breach or default is of the same nature.
(d) The Executive shall be deemed to be permanently disabled for
purposes hereof, at the option of the Company, in the event that the Executive
shall fail to render and perform the services required of the Executive under
this Agreement because of physical or mental incapacity or disability for a
continuous period of three (3) consecutive months, or for shorter periods
aggregating one hundred and twenty (120) days or more during any period of six
(6) successive months.
(e) Severance Payments upon Involuntary Termination. If the Executive's
employment is involuntarily terminated by the Company other than for Cause (not
including death or disability or nonrenewal of this Agreement) and the Executive
signs a Release of Claims, then (i) the Company shall pay Executive's Base
Compensation to the Executive for the longer of (A) the remaining term of this
Agreement or (B) a period of twelve (12) months, and (ii) any outstanding stock
options shall immediately become fully vested and exercisable. Such amount shall
be payable in installments in accordance with the Company's standard payroll
practices. Notwithstanding the foregoing, if (i) the Executive's employment is
involuntarily terminated by the Company other than for Cause (not including
death or disability) or (ii) Executive voluntarily resigns his employment either
within twelve (12) months following a Change in Control (as defined in Section
5(2) herein) and the Executive signs a Release of Claims, then the Company shall
pay Executive a lump-sum payment equal to twelve (12) months of Executive's Base
Compensation.
8. Effect of Termination. Upon the termination of this Agreement, for any
reason, or upon the termination of the Executive's employment hereunder, for any
reason, the Executive (i) shall immediately discontinue the use of any and all
trade names, trademarks, trade secrets, copyrights, or copyrighted materials,
and customer lists, offering circulars and materials and advertising media
belonging to or supplied to the Executive by the Company, and (ii) shall, at the
Executive's expense, return to the Company all such materials.
9. Non-Competition, Restrictive Covenants, Confidentiality and Injunctive
Relief.
-4-
5
(a) The Executive agrees that, commencing as of the date hereof and
during the term of the Executive's employment with the Company (including any
Period for which the Executive shall act as a consultant to the Company), and
for a period of one (1) year thereafter, the Executive shall not, without the
prior written approval of the Board of Directors of the Company, directly or
indirectly, through any other person, firm or corporation, whether for himself
or as agent on behalf of any other person or entity, and whether as employee,
consultant, agent, principal, lender, partner, officer, director, stockholder or
otherwise, with our without compensation:
(i) sell products or provide services which are competitive with
the businesses, products or services of the Company or the business, products or
services of the Company contemplated or under development (the "Businesses"), or
promote, market, sell, become or acquire an interest in, or associate in a
business relationship with, or aid or assist any other person, corporation,
firm, partnership or other entity whatsoever who is engaged in any line of
business competitive with the Businesses;
(ii) become an employee, consultant, agent, principal, lender,
partner, officer, director, stockholder or otherwise provide services to or on
behalf of any entity (A) which the Board reasonably determines is or could
become a competitor of the Company or the Businesses or (B) which as of the date
of this Agreement is a business partner or contractual party with the Company;
provided, however, that Executive may acquire not more than five percent (5%) of
the outstanding stock of publicly traded companies;
(iii) solicit or refer, directly or indirectly, any clients or
prospective clients of any services and/or products offered by the Company (or
which are competitive with those offered by the Company) to any other provider
of such services;
(iv) promote, market, assist or participate in the development,
sale, lease or licensing of any services and/or products competitive with those
provided by the Company to, for or with any person, corporation, firm,
partnership or other entity whatsoever; or
(v) solicit, raid, entice, induce or assist any person who
presently is, or any time during the Executive's employment with the Company
shall be or shall have been, an employee of the Company or any of its
Affiliates, during the twelve (12) months preceding such solicitation, raid,
enticement, inducement or assistance, to become employed or retained by any
other person or entity.
(b) Recognizing that the Executive's knowledge, information and
relationship with existing or prospective clients, licensees, customers,
suppliers, accounts, agents, brokers and representatives of the Company and its
Affiliates, and the knowledge of the business, methods, systems, plans and
policies of the Company and its Affiliates which the Executive has heretofore
and shall hereafter establish, receive or obtain as an employee of the Company
or in connection with services performed for the Company or any such Affiliates,
are valuable and unique assets of the Company and such Affiliates, the Executive
agrees that, at all times during and after the Executive's employment by the
Company, the Executive shall not (otherwise than pursuant to his duties
hereunder), directly or indirectly, use, divulge, furnish or make accessible to
anyone, without the prior written consent of the Board of Directors of the
Company, any such knowledge or information
-5-
6
pertaining to the Company or any of its Affiliates, or the business,
shareholders, personnel, methods, systems, plans or policies thereof, to any
person, firm or corporation or other entity, for any reason or purpose
whatsoever.
(c) The Company shall be deemed and entitled to own all of the results
and proceeds of the Executive's services, including all right, title and
interest in and to any and all franchises, products, processes, concepts,
methods, ideas, creations, designs and/or systems (including, without
limitation, all those of an advertising, marketing or promotional nature), and
any improvement thereon, which may be developed, created or devised by the
Executive during the term of his employment by the Company. The Executive will,
at the request of the Company, and without further compensation other than that
for which provision is made in this Agreement, execute such assignments,
certificates or other instruments as the Company may from time to time deem
necessary or desirable to evidence, establish, maintain, perfect, protect,
enforce or defend its right, title and interest in or to any of the foregoing.
Without limiting the generality of the previous sentences, the Executive
acknowledges and agrees that all memoranda, notes, records, customer lists and
other documents made or compiled by the Executive or made available to the
Executive during the term of his or her employment by the Company concerning the
business of the Company and/or any of its Affiliates shall be the Company's
property and shall be delivered by the Executive to the Company upon termination
of his or her employment by the Company or at any other time on the Company's
request.
(d) The Executive shall execute and deliver to and for the benefit of
the Company an agreement substantially in the form of Exhibit 9(d) hereto,
pertaining, among other matters, to Proprietary Information and Inventions (as
such terms are defined in said Exhibit 9(d)) and confidentiality obligations,
the provisions of which shall be deemed incorporated herein by reference as if
set forth herein (the "Proprietary Rights Agreement").
(e) The provisions of this Section 9 shall survive the termination or
expiration of this Agreement, irrespective of the reason therefore, including
under circumstances in which the Executive continues thereafter in the employ of
the Company.
(f) The Executive acknowledges that the services to be rendered by him
are of a special, unique and extraordinary character and, in connection with
such services, the Executive will have access to confidential information vital
to the business of the Company. By reason of the foregoing, the Executive
consents and agrees that, if he violates any of the provisions of this Section
9, the Company would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or otherwise, the
Company shall be entitled to apply (without the necessity of posting any bond)
to any court of competent jurisdiction for an injunction restraining the
Executive or any other party from committing or continuing any such violation
(or participating therein) of this Agreement, and the Executive shall not object
to any such application.
10. Warranty. The Executive warrants and represents that he is not a party
to any agreement, contract or understanding, whether of employment or otherwise,
which would in any way restrict or prohibit the Executive from undertaking his
position as an Executive of the Company and complying with his obligations in
accordance with the terms and conditions of this Agreement.
-6-
7
11. Notices. All notices shall be in writing and shall be deemed to have
been duly given to a party hereto on the date of such delivery, if delivered
personally, or on the third day after being deposited in the mail if mailed via
registered or certified mail, return receipt requested, postage prepaid, or on
the next business day after being sent by recognized national overnight courier
services, at the addresses of the parties as set forth the first paragraph of
this Agreement, or such other address as the parties may specify in writing from
time to time in accordance herewith.
12. Severability. In the event that any provisions of this Agreement would
be held to be invalid, prohibited or unenforceable in any jurisdiction for any
reason (including, but not limited to, any provisions which would be held to be
unenforceable because of the scope, duration or area of its applicability),
unless narrowed by construction, this Agreement shall, as to such jurisdiction
only, be construed as if such invalid, prohibited or unenforceable provision had
been more narrowly drawn so as not to be invalid, prohibited or unenforceable
(or if such Language cannot be drawn narrowly enough, the court making any such
determination shall have the power to modify such scope, duration or area or all
of them, but only to the extent necessary to make such provision or provisions
enforceable in such jurisdiction, and such provision shall then be applicable in
such modified form in such jurisdiction only). If, notwithstanding the
foregoing, any provision of this Agreement would be held to be invalid,
prohibited or unenforceable in any jurisdiction, such provision shall be
ineffective to the extent of such invalidity, prohibition or unenforceability,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
13. Assignment. Nothing in this Agreement shall be construed to permit the
assignment by Executive of any of the rights or obligations hereunder, and such
assignment is expressly prohibited without the prior written consent of the
Company.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without regard to
principles of conflict of laws and regardless of where actually executed,
delivered or performed.
15. Forum Selection. The parties agree that the exclusive remedy for
resolving any disputes arising under this Agreement shall be by submitting them
to the American Arbitration Association ("AAA") for adjudication in New York,
New York pursuant to the AAA's National Rules for the Resolution of Employment
Disputes, except to the extent there is no adequate remedy at law and injunctive
relief only is sought in which case the parties select state court in New York,
New York as the exclusive forum to resolve their disputes and both parties
submit to personal jurisdiction and consent to service of process at the
addresses contained in the first paragraph of this Agreement.
16. Waiver. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance, with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
17. Complete Understanding; Drafting; Counterparts. This Agreement and the
Stock Option Agreement dated August [12], 1999 constitute the complete
understanding and supersedes
-7-
8
any and all prior agreements and understandings between the parties with respect
to its subject matter and no statement, representation, warranty or covenant has
been made by either party with respect thereto except as expressly set forth
herein. This Agreement shall not be altered, modified, amended or terminated
except by written instrument signed by each of the parties hereto. The language
used in this Agreement will be deemed to be the language chosen by both of the
parties to express their mutual intent, and no rule of strict construction shall
be applied against either party. The Section and paragraph headings contained
herein are for convenience only, and are not part of and are not intended to
define or limit the contents of said Sections and paragraphs. This Agreement may
be executed in counterparts, each of which shall be deemed an original and all
of which, when taken together, shall constitute one and the same agreement.
-8-
9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE COMPANY:
XXXXXXX.XXX, INC.
By: /s/illegible
Name:
Title:
THE INDIVIDUAL:
By: /s/illegible
Name:
-9-
10
TABLE A
-------
VACATION DAYS:
20 Days
FLOATING HOLIDAYS:
3 Days
SICK DAYS:
5 Days
-10-
