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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMeNT (the "Agreement") is entered into as of
December 30, 1997, by and between iMall, Inc., a Nevada corporation (the
Company), and Xxxxxxx X. Xxxxxxxxxx ("Employee").
RECITALS:
A. The Company seeks to retain Employee as Executive Vice
President and Chief Financial Officer of the Company, and intends for Employee
to become Chief Operating officer within the next 18 months.
B. Employee desires to accept such employment on the terms and
conditions set forth herein.
NOW, THEREFORE, based upon the following covenants, conditions and
promises, the parties hereto do hereby agree as follows:
1. Employment and Duties. Subject to the terms and conditions
met forth herein, the Company hereby employs employee, and Employee hereby
accepts such employment with the Company, as the Executive Vice President and
Chief Financial Officer of the Company, and his duties shall be consistent with
such positions. Employee shall report to the chief executive officer of the
Company. Employee is currently a member of the Board of Directors of the Company
(the "Board") and the Company shall continue to nominate and utilize its beat
efforts to retain Employee as a member of the Board for so long as Employee
remains employed by the Company and wishes to remain a member of the Board.
2. Term of Employment. The term of Employee's employment under
this Agreement shall commence on and as of January 15, 1998 and shall continue
thereafter for a period of 60 months, subject to early termination as provided
for elsewhere in this Agreement. The "term" of this Agreement shall mean and
refer to such 60-month period (or any earlier termination thereof pursuant to
this Agreement).
3. Extent of Service. During the hereof, Employee agrees to
devote his full time to the performance of his duties hereunder. Employee shall
devote such of his time and energy as he in his sole discretion deems necessary
timely to complete the services and duties contemplated under this Agreement. It
is understood by the parties that the particular amount of time which Employee
may devote to the Company may vary from day to day or week to week and nothing
set forth herein shall require Employee to commute a distance of more than
twenty-five miles from Santa Monica, California.
4. Compensation.
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(a) Minimum Annual Salary and Bonus. As compensation for
the services which Employee is to render to the Company hereunder, the Company
shall pay to Employee a salary at the annualized rate of $180,000 for and
through the calendar year ending December 31, 1998. Thereafter, the Company
shall provide Employee with annual salary increases as determined by the Board
but in no event shall any annual salary increase be less than sixteen percent of
the annual salary for the preceding year. Employee's salary during each of such
years shall be paid in accordance with the normal payroll practices of the
Company. Prior to the end of each year during the term hereof, the Board shall
review the compensation of Employee hereunder and shall pay to Employee a cash
bonus for and with respect to such year which in no event shall be less than
twenty percent of Employee salary for that year.
(b) Car Allowance and Fringe Benefits. The Company will
provide Employee with a reasonable automobile allowance in the amount of $750
per month and such other fringe benefits as are within the Company's policy as
approved by the Board of Directors of the Company. Included in such fringe
benefits to which Employee shall be entitled to participate are any
profit-sharing plan, employee stock plan, stock bonus plan, and pension plan
which may be adopted and/or implemented by the Company. The actual
participation, Employer contributions and restrictions respecting each such plan
or benefit shall be determined by the Board.
(c) Health Care Insurance Benefits . The Company shall
provide Employee with health insurance coverage for Employee and his dependents.
The Company shall have complete discretion in choosing the type of health
insurance plan provided to Employee and in choosing the insurance carrier,
provided that any such health insurance plan or plans shall include hospital,
maternity, major medical, and dental coverage for Employee and his dependents to
be applied to Employee or any of his dependents upon terms no less favorable
than those available to any other employee. The benefits provided to Employee
under this section shall end at the expiration of the term, subject to early
termination as provided for elsewhere in this Agreement.
(d) Employee Service as Director. Consistent with the
provisions set forth in Paragraph 1, Employee hereby consents to serve as (i) a
member of the Board, and (ii) as a member of the board of directors of any
subsidiary, or other corporation affiliated with the Company ("Affiliated
Board"), provided, however, that, in addition to the compensation to be paid to
Employee hereunder, Employee shall receive further emoluments for xxxxxxx.xx a
member of the Board or as a member of an Affiliated Board to the same extent as
may be received by other management personnel or employees of the Company who
may serve in such capacities.
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(e) Reimbursement of Expenses. The Company agrees to pay
all expenses incurred by Employee in furtherance of the business of Company,
including travel and entertainment expenses in excess of the expense amount set
forth in section 4(a) hereof. The Company will reimburse Employee for any such
expenses paid by him upon submission by him of a statement itemizing such
expenses, provided that Employee shall present appropriate vouchers evidencing
any such expenses to the Company.
(f) Stock Options. In addition to any options to purchase
securities of the Company which may be granted to Employee during the term,
whether pursuant to the 1997 Stock Option Plan of the Company or any other plan
which may be subsequently adopted by the Board, the Company hereby grants to
Employee options to purchase three million shares of common stock (the "CFO
Options") . One-third of the CFO Options shall be exercisable upon execution of
this Agreement. An additional one-third of the CFO Options shall vest and be
exercisable on January 15, 1999, and the remaining one-third of the CFO Options
shall vest and be exercisable on January 15, 2000. All CFO options or other
options granted to Employee shall vest immediately and may be exercised upon any
"Change of Control" or upon any "Company Termination" as defined in section 9.
The CFO options shall have a term of ton years and shall be exercisable at a
price per share of $0.50. The option exercise price of the CFO options shall be
adjusted as appropriate for forward or reverse stock splits, stock dividends,
recapitalizations, spin-offs, or divisions of the Company and other like events.
The Company shall register under the Securities Act of 1933, as amended, (the
"Act"), all of the shares of common stock underlying the CFO Options (the "CFO
Shares") at the same time as the Company registers shares of common stock (or
other securities) in any primary or secondary offering of securities which are
registered under the Act, provided that Employee shall agree to any reasonable
"lock-up* restricting sale of the CFO Shares only to the extent that other
principal shareholders, officers and directors are also required to execute
similar lock-up agreements provided that any such lock-up period shall not
extend beyond one hundred twenty days from the date the CFO Shares are
registered under the Act. Notwithstanding the foregoing Employee shall not sell
any CFO Shares during 1998 (the "1998 Lock-Up") unless (i) there is a "Change of
Control" or there is a "Company Termination" as defined in section 9 or (ii)
other members of management elect to sell or dispose of securities of the
Company during 1998 ("Management Sales"). The 1998 Lock-Up shall terminate and
have no further force or effect upon the occurrence of any event described in
clause (i) above. The Company shall provide written notice to Employee in
advance of any Management Sales setting forth the details thereof within not
more than two business days after the Company learns that such sales or
dispositions of securities may be permitted or may otherwise be scheduled.
During 1998 Employee may from time to time sell or dispose of that number of CFO
Shares which is not greater than the greatest number of Management Sales made
during 1998 by any other member of management.
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5. Termination of Employment for Good Cause. The Company may
terminate the employment of Employee for "good cause" by giving written notice
thereof to Employee. For the purposes of this Agreement, "good cause," shall
mean only Employee's (i) commission of a crime directly related to his
employment hereunder, (ii) conviction of a felony involving moral turpitude, or
(iii) willful misconduct in the management of the business and affairs of the
Company or habitual failure to perform such duties as may reasonably be directed
by the Board and as may be reasonably consistent with the duties and obligations
of Employee's office. in the event the employment of the Employee is terminated
pursuant to this Paragraph 5, the Company shall have no further liability to
Employee other than for compensation earned but not yet paid. In the event the
Company contends that it had good cause to terminate the employment of Employee
pursuant to clause (i), (ii) or (iii) of this Paragraph 5, the Company shall
specify in said written notice the effective date of termination of Employee's
employment.
6. Termination by Death or other Absence. The Company may
terminate the employment of Employee by written notice to Employee if, during
the term of this Agreement, Employee shall become incapable of fulfilling his
obligations hereunder because of injury or physical or mental illness which
shall exist for a period or an aggregate of periods in excess of twelve months
in any two years during the term of employment. In such event, the Company shall
have the right to terminate this Agreement on ninety days, notice to Employee.
The death of Employee shall automatically terminate the term of Employee's
employment. In the event the employment of Employee is terminated by Employee's
death or by the Company pursuant to this Paragraph 6 because of injury or
physical or mental illness, the Company shall pay Employee, or Employee's
heir(s) (in the event of death), all compensation of Employee earned but not yet
paid up to and through the day upon which Employee's death occurs or this
Agreement is terminated by the Company due to Employee's incapacity or other
absence, as applicable, or in accordance with any written policy applicable to
other executives of the Company in effect at the time of Employee's death or
incapacity, if more favorable.
7. Noncompetition; Nonsolicitation; Confidential Information.
(a) Employee covenants and agrees that, during the term of
this Agreement, he will not, directly or indirectly, whether individually or as
an officer, director, employee or consultant, become employed by, or become a
partner in or a stockholder owning more than five percent of, any business which
is engaged in the business of the Company.
(b) Employee acknowledges that it is the policy of the
Company to maintain an secret and confidential all valuable and unique
information heretofore or hereafter acquired, developed or used by the Company
relating to the business, operations, employees, tenants and/or clients of the
Company, which gives the
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Company a competitive advantage in its industry, including, without limitation,
information about net costs, profits, markets, suppliers, sales products, key
personnel, pricing policies, operational methods, technical processes and other
business affairs and methods and other information not readily available to the
public and plans for future developments, operating manuals, proprietary
computer software, financial statements, forecasts and operating data and
business plans (all such information is hereinafter referred to as "Confidential
Information"). Employee recognizes that the services to be performed by Employee
are special and unique, and that by reason of his duties, he will acquire
Confidential information. Employee recognizes that all such Confidential
Information is the property of the Company. in consideration of the Company's
entering into this Agreement, Employee agrees that: (i) Employee shall not use,
publish, disseminate or otherwise disclose any Confidential Information obtained
during his employment by the Company (whether obtained prior to, during or after
the term of this Agreement) without the prior written consent of the Board; and
(ii) during the term of this Agreement, he shall exercise all due and diligent
precautions to protect the integrity of the Company a mailing lists and sources
thereof, statistical data and compilations, agreements, contracts, manuals or
other documents embodying any Confidential information. Upon termination of
Employee's employment by the Company he shall return all such documents
embodying any Confidential Information in his possession or control. Employee
agrees that the provisions of this subparagraph (b) are reasonable and necessary
to protect the proprietary rights of the Company in the Confidential Information
and its trade secrets, goodwill and reputation. The provisions of this
subparagraph (b) shall not apply to Confidential information (i) which is known
generally to the public, (ii) which otherwise comes into the public domain or
(iii) which Employee obtains from sources other than the Company.
(c) For a period of six months after the termination of
this Agreement for any reason (or for such a lesser period of time as may be
determined by a court of law or equity to be a reasonable limitation on
Employee), Employee shall not solicit any director, officer or employee of the
Company to discontinue that individually status of employment with the Company,
nor to become employed in any activity similar to or competitive with the
business of the company being conducted at the time of termination of this
Agreement.
(d) If the covenants contained in this Paragraph 7 are
violated, Employee acknowledges and agrees that such violation will cause
irreparable damage to the company, that the remedy at law of the Company will be
inadequate and that the Company shall, in addition to, but not in limitation of,
any other rights or remedies available at law or in equity, be entitled to
temporary and permanent injunctive relief and/or specific performance without
the necessity of proving actual damage.
8. Directorships and Other Investments. The Company
acknowledges that Employee currently serves and in the future may serve as a
member of and as an
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advisor to the boards of directors of other companies in which Employee has an
investment interest. Nothing set forth herein shall prevent Employee from
continuing such activities or from actively managing his investments, provided
that any such activities shall not directly conflict with Employee's duties
hereunder.
9. Change in Control; Default by the Company. The term of and
amount payable to Employee under this Agreement may be terminated by Employee as
provided below in this section 9.
(a) Change in Control. For purposes of this Agreement, the
term "change in control" shall mean, (i) the acquisition by a single entity or
group of affiliated entities of more than thirty-five percent of the outstanding
capital stock of the Company and which is accompanied or followed by a change
either in a majority of the members of the Board or of these members of the
Board who are not full time employees of the C y, or (ii) the consummation of
any merger of the Company or any sale, transfer or other disposition of all or
substantially all of the Company's assets, directly of indirectly, if the
shareholders of the Company immediately before the consummation of such
transaction own, immediately following the consummation of such transaction on a
fully-diluted basis, equity securities (other than options, warrants or rights
to acquire equity securities) possessing less than sixty percent of the voting
power of the surviving or acquiring corporation (or any corporation in control
of the surviving or acquiring corporation whose equity securities are issued or
transferred in such transaction). Upon any change in control of the Company and
provided that he has given the Company written notice thereof not more than 120
days thereafter, Employee may deem this Agreement to be terminated and the
Company shall pay to Employee the amounts described in Paragraph 9 (b). Such
amounts shall be paid in full (x) immediately following the change in control if
the change in control results from a transaction or transactions described in
clause (i) above or (y) immediately prior to the consummation of the subject
merger, sale or other disposition, if the change in control results from a
transaction or transactions described in clause (ii) set forth above.
(b) Severance Pay. Upon any termination, other than an
expiration of the term, or a termination by Employee which is not permitted
under this Agreement or terminations described in sections 5 and 6 or paragraph
9(a) above ("Company Termination"), Employee shall be entitled to severance pay
in amount equal to (i) the compensation due to Employee under this Agreement for
the balance of the term, or (ii) two times Employee's then applicable annual
compensation under section 4 above, whichever is greater. Upon any termination
resulting from events described in paragraph 9(a), Employee shall be entitled to
severance pay in an amount equal to the compensation due to Employees under this
Agreement for the balance of the term less any salary which Employee may receive
from another employer during the balance of the term.
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(c) Default in Payment. In the event that the Company fails
to pay to Employee the compensation and benefits provided in this Agreement for
a period in excess of sixty days, or fails on more than three occasions to pay
Employee the compensation due to him hereunder for more than fifteen days past
any pay period, Employee shall have the right to cease providing services
hereunder and shall have the right immediately to receive the severance pay
described in Paragraph (b) with respect to Company Termination.
(d) Continuation of Payments. In the event of a dispute
between the parties for any reason whatsoever, the Company shall continue to pay
all compensation due to Employee hereunder and shall not have the right to
terminate such compensation except under adjudication of a court of competent
jurisdiction or pursuant to an award of arbitration. In the event of a dispute,
the Company agrees to pay reasonable legal fees of and for Employee on a current
basis, and in the event of a final adjudication by a court of competent
jurisdiction or an arbitration award in favor of the Company, which judgment or
award confirms that Employee is not entitled to retain such fees, Employee
agrees to reimburse the Company all such fees and legal expenses.
10. Employee's Rights and Benefits Personal. Except as may
herein otherwise be specifically provided, the rights, benefits and obligations
of Employee under this Agreement are personal to Employee, and no such rights or
benefits shall be subject to voluntary or involuntary alienation, assignment or
transfer.
11. Company's Insurance of Employee. Employee acknowledges that
the Company may, from time to time, apply for and take out in its own name and
at the Company's expense, life, health, accident and other insurance upon
Employee that the Company may deem necessary or advisable to protect its
interest hereunder, and Employee will submit to any medical or other examination
necessary for such purpose and assist and cooperate with the Company on
procuring such insurance; and Employee acknowledges that he shall have no right,
title or interest in or to such insurance (except to the extent that such
insurance is part of the fringe benefits to which Employee is entitled under
this Agreement).
12. Indemnity. The Company shall indemnify Employee and hold him
harmless from any cost, expense or liability arising out of or relating to any
acts, omissions or decisions made by him in the course of performing his
services under this Agreement to the fullest extent not prohibited under law.
This indemnity shall include but not be limited to all expenses incurred by
Employee in connection with or relating to defending any claim, action or suit
brought against him in respect of any matter whatsoever. In the event of any
request for indemnity, Employee shall promptly notify the Company in writing and
the Company shall have the right to assume and control the defense thereof by
counsel reasonably satisfactory to Employee. Without limiting rights which
Employee may have under or outside of
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this Agreement, this provision shall survive the termination or expiration of
this Agreement.
13. Entire Agreement; Modification; Waiver. This Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in it and supersedes all prior written or oral agreements,
representations, understandings and/or discussion between the parties relating
thereto. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the party making the waiver.
14. Notices. Any notice required or permitted hereunder shall be
given in writing and shall be conclusively deemed effectively given upon
personal delivery, or three (3) business days after deposit in the United States
mail, by registered or certified mail (or air mail, if notice shall be sent
outside the United States), return receipt requested, postage prepaid, or two
(2) days after delivery to a nationally known air courier or delivery company,
addressed to the applicable party hereto at its or his last known address (or as
otherwise directed in a notice given in accordance herewith).
15. Effect of Headings. The subject headings of this Agreement
are included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions.
16. Arbitration; Attorneys' Fees. Any controversy or claim
arising out of or to this Agreement, or the breach hereof, shall be resolved by
JAMS/ENDdispute in accord with its rules and regulations and judgment an the
award so rendered may be entered in any court having jurisdiction thereof. Any
such proceeding shall be had in the County of Los Angeles, State of California.
If any action or proceeding is brought to enforce any provisions of this
Agreement, the prevailing party shall be entitled to its costs and expenses in
connection therewith, including without limitation reasonable attorneys' fees.
17. Applicable Law. The validity, interpretation and enforcement
of this Agreement shall be governed by the laws of the State of California
except that the Federal Arbitration Act shall govern any arbitration proceeding.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same Agreement.
19. Severability. If any provision of this Agreement shall be
declared invalid, illegal and/or unenforceable, such provision shall be severed
and the remaining provisions shall continue in full force and effect.
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20. Successor and Assigns. The provisions hereof shall inure to
the benefit of, be binding upon, and be enforceable by the successors and
assigns of the Company.
21. Assignment; Successors; Affiliates. Subject to the
provisions of sections 9 and 10 above, the Company may assign this Agreement (or
the interest of the Company herein) to any affiliate of the Company or to any
entity which is a party to a merger, reorganization, or consolidation with the
Company or to a subsidiary of the Company or to an entity or entities acquiring
substantially all of the assets of the Company or of any division with respect
to which Employee is providing services (providing any such assignee assumes the
Company's obligation under the Agreement). Employee shall, if requested by the
Company, perform Employee's services and duties, as specified in this Agreement,
to or for the benefit of any affiliate of the Company, including, without
limitation, any parent or subsidiary of the Company or any other subsidiary of
any parent of the Company. Upon such assignment, acquisition, merger,
consolidation, or reorganization, the term "Company" as used herein shall be
deemed to refer to such assignee or such successor entity. Employee shall not
have the right to assign Employee's interest in this Agreement, any rights under
this Agreement or any duties imposed under this Agreement nor shall Employee (or
Employee's spouse, heirs, beneficiaries, administrators or executors) have the
right to pledge, hypothecate or otherwise encumber Employee's right to receive
compensation hereunder without the consent of the Company.
22. Further Assurances. The Company and Employee each agree to
execute and deliver any and all additional instruments and to perform any and
all additional acts by either party to be necessary or proper to carry into
affect the terms, conditions and provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
EMPLOYEE: THE COMPANY:
iMall, Inc.,
/s/ Xxxxxxx X. Xxxxxxxxxx a Nevada corporation
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Xxxxxxx X. Xxxxxxxxxx
By: /s/
Its Chief Executive
Officer
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