Exhibit 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of July 7, 2003, between Xxxxxxxx X.
Xxxxxxx, an individual residing at 0000 Xxxxx Xxxxxx #000, Xxx Xxxxxxxxx, XX
00000 ("EMPLOYEE"), and SPATIALIGHT, INC., a New York corporation, whose
principal place of business is located at 0 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxxxx 00000 (the "COMPANY").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Employee has represented that Employee has considerable
experience and expertise in areas of investor corporate development, including
the structuring of management, seeking and implementing corporate strategies and
managing investor relations, which skills may be used to enhance the long term
objectives of the Company in developing a strategy for the growth of the
business and increasing the revenues and net income of the Company;
WHEREAS, Employee shall render services to the Company in the corporate
development field and provide other executive services to the Company; and
WHEREAS, the Company desires to confirm the employment of Employee as
its Executive Vice President of Strategic Planning, to serve and assist
management of the Company in the areas described in Section 1 hereof, on the
terms and conditions hereinafter set forth, and Employee desires to be so
employed upon such terms and conditions.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and conditions hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT; DUTIES. The Company hereby confirms its employment of
Employee, and Employee hereby confirms his acceptance of employment, as the
Executive Vice President of Strategic Planning of the Company, on the terms and
subject to the conditions hereinafter set forth. In such capacity, Employee
shall continue, subject to the ultimate authority of the Company's Board of
Directors (the "BOARD") and his obligation to report to the Company's Chief
Executive Officer or such other principal officers of the Company as the Board
may designate, to perform duties in the following areas:
(a) Employee shall review and undertake a study of the current
business operations, financial condition, management and business
prospects of the Company so as to enable him to render the services
called for hereby;
(b) Employee shall assist the Board in locating and hiring
qualified senior employees to administer the Company's future
operations;
(c) Employee shall assist the management of the Company with
the development and implementation of a strategy for the growth of its
business which is focused on increasing shareholder value through the
increase in the Company's revenues and net income; and
(d) Employee will seek out, examine and propose to the Board
suitable strategic alliances for the Company involving joint ventures
or other suitable arrangements with other suitable business partners
and/or appropriate contractual arrangements with manufacturing entities
and other parties;
(e) Employee shall render services to enhance the value of the
Company and its outstanding equity securities for the benefit of its
shareholders by:
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(i) Assisting the Board in improving and expanding communications
to and with shareholders and representatives of the financial
community; and
(ii) Using Employee's best efforts to develop the
interest of potential investment in the Common Shares, $.01
par value per share (the "COMMON SHARES") or other securities
of the Company by institutional investors.
(f) In rendering all of the services that are described in the
foregoing provisions of this Section 1, Employee shall at all times
comply with all legal requirements, including all relevant disclosure
and other requirements under federal and state securities laws and
regulations.
(g) Notwithstanding any other provision of this Agreement,
Employee shall not have or represent or hold himself out to any third
party as having the express or implied power or authority, beyond that
which shall be expressly conferred upon him by the Board, to bind the
Company or any of its Affiliates (as hereinafter defined) to any
agreement, commitments or obligations.
2. TERM; TERMINATION.
(a) Employee's employment pursuant to this Agreement shall
become effective as of July 7, 2003 (the "EFFECTIVE DATE") and shall
continue, unless earlier terminated pursuant to any of the provisions
of section 2 (b) hereof through the second anniversary of the Effective
Date (the "EMPLOYMENT TERM") and this Agreement shall terminate
automatically, without further act of the parties, on the last day of
the Employment Term; PROVIDED, HOWEVER, that the Company may, in its
sole discretion, terminate this Agreement at any time during the
Employment Term, for any reason except for termination for Cause as
defined in 2(b)(iii) hereof) upon sixty (60) days prior written notice
from the Company to Employee, except that the Company may not terminate
this Agreement without Cause before June 7, 2004.
(b) In addition to the expiration of the Employment Term as
hereinabove provided, this Agreement and Employee's employment by the
Company shall terminate sooner on the Date of Termination (as
hereinafter defined) by reason of the following events:
(i) automatically upon Employee's death;
(ii) at the Company's option if, as a result of Employee's
incapacity due to physical or mental illness, he is unable to
perform the duties of his employment hereunder for a continuous
period of thirty (30) days, after giving effect to vacation
periods or an aggregate of sixty (60) days in any one hundred
eighty (180) day period (each such period being hereinafter
referred to as a "DISABILITY PERIOD");
(iii) at the Company's option, at any time for Cause.
"CAUSE" shall mean:
(1) theft, dishonesty, or falsification of any
employment or Company records;
(2) conviction of a felony or any act involving
moral turpitude;
(3) consistent poor performance, as determined
in the sole discretion of the Board, which,
if not cured, again in the sole discretion
of the Board, within thirty (30) days
following written notice of such consistent
poor performance from the Company;
(4) improper disclosure of Company Information
(as defined in Section 8 hereof);
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(5) any intentional act by Employee that has a
material detrimental effect on the Company's
reputation or business, as determined in the
sole discretion of the Board;
(6) any breach of this Agreement, which breach,
if curable, is not cured within thirty (30)
days following written notice of such breach
from the Company; and
(7) any violation of Section 1(g) of this
Agreement.
(iv) as provided in Section 2(a) hereof, at the Company's
option at any time on or after June 7, 2004 without Cause; and
(v) upon Employee's voluntary termination of employment.
(c) Any termination of this Agreement pursuant to Section 2(b)
shall be communicated by a written notice indicating the provision of
this Agreement upon which such termination is based (a "NOTICE OF
TERMINATION").
(d) As appropriate under the circumstances, "DATE OF
TERMINATION" shall mean, as applicable: (A) the date of Employee's
death; (B) thirty (30) days after a Notice of Termination is given to
Employee, if Employee's employment is terminated pursuant to Section
2(b)(ii) above; or (C) the date specified in the Notice of Termination
if Employee's employment is terminated by the Company pursuant to
Section 2(b)(iii) or 2(b)(iv) above.
3. COMPENSATION. In order to induce Employee to be employed as the
Company's Executive Vice President of Strategic Planning:
(a) The Company shall pay Employee annual compensation ("SALARY") equal to
US$240,000 during the Employment, subject to any increases in compensation which
the Board, in its sole discretion, may approve and award to Employee. The Salary
shall be payable to Employee in equal semi-monthly or monthly installments of US
Dollars. All such compensation payments shall be subject to deduction for
federal, state and local withholding taxes and other charges required under
federal or state laws or regulations; and
(b) The Company agrees to grant Employee equity incentive compensation in
the form of Stock Options to purchase an aggregate of 800,000 Common Shares,
$.01 par value, of the Company pursuant to the provisions of a Time Accelerated
Restricted Stock Award Agreement in the form annexed hereto as EXHIBIT "1" (the
"TARSAP").
4. COMPENSATION UPON TERMINATION AND DURING DISABILITY.
(a) If Employee's employment shall be terminated by his death, the Company
shall pay to his estate Employee's unpaid Salary for the period through the end
of the calendar month in which Employee's death occurs.
(b) In the event of Employee's physical or mental disability, the Company
shall continue to pay Employee his Salary during the Disability Period. If the
Company terminates Employee's employment following the Disability Period, the
Company shall continue to pay Employee his Salary for the period from the
Company's regular payroll through the Date of Termination. In addition, Employee
shall continue to participate in the employee benefit, retirement and
compensation plans and receive other benefits, including the Stock Options
referenced in Section 3(b) hereof through the Date of Termination.
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(c) If Employee's employment shall be terminated for Cause by the Company
or shall be voluntarily terminated by Employee, the Company shall continue to
pay Employee his Salary through the Date of Termination. Notwithstanding the
immediately preceding sentence or any other provision of this Agreement, nothing
set forth herein will preclude or adversely restrict the Company from seeking
full redress or reimbursement for any losses which it may have sustained by
reason of those actions of Employee which shall have resulted in his termination
of employment for Cause.
(d) If Employee's employment is terminated by the Company without Cause
pursuant to Section 2(b)(iv) hereof, the Company shall continue to pay Employee
his Salary for a period equal to the lesser of the remaining portion of the
Employment Term or ninety (90) days following the Date of Termination.
(e) If Employee shall terminate his employment with the Company
voluntarily, the Company shall pay his Salary through the Date of Termination
and Employee shall not be entitled to any further compensation from the
Corporation or to participate in any benefits made available by the Company to
its employees from and after such Date.
(f) Unless otherwise agreed by the Company and Employee, all payments made
to Employee (or his estate, as applicable) pursuant to this Section 4, whether
during a Disability Period or after the Date of Termination, shall be made in
the amounts, at the times and subject to the terms and conditions otherwise
applicable to payments to Employee pursuant to Section 3 hereof, as if such
payments were made to Employee during the Employment Term.
5. BENEFITS; REIMBURSEMENT OF EXPENSES.
(a) Employee shall be entitled to receive medical and other health related
benefits to the same extent available to other employees of the Company,
provided that such medical and health benefits shall only be made available by
the Company for Employee and not for his spouse or any other member of his
family.
(b) In addition to the compensation and benefits provided to Employee
pursuant to other provisions of this Agreement, the Company will reimburse
Employee in a manner consistent with established policies of the Company for
reasonable out-of-pocket expenses actually incurred or paid by his in the
performance of his services hereunder, subject to presentation of such
reasonably detailed expense statements, receipts, vouchers or other supporting
information as the Company may reasonably require and subject further to the
requirement of prior Company approval for expenses exceeding US$1,000 proposed
to be expended by Employee for any one or series of related purposes.
6. OTHER AGREEMENTS. Employee represents and warrants to the Company that
Employee is not a party to any agreement, written or oral, and is not bound by
the terms of any written or oral agreement to which he is not a party, which
prohibits him from performing his duties under this Agreement or of serving the
Company in any other capacity.
7. INTELLECTUAL PROPERTY AGREEMENT. Employee agrees promptly to disclose in
writing to the Company all ideas, programs, systems, processes, business
concepts and developments (hereinafter referred to collectively as "CONCEPTS"),
whether or not protected by copyright or trademark laws of any relevant
jurisdiction, which Employee, while employed hereunder, conceives, develops,
acquires or reduces to practice, whether alone or with others and whether during
or after usual working hours, and which are related to the Company's business or
interests, or are used or usable by the Company, or arise out of or in
connection with the duties performed by Employee hereunder. Employee hereby
transfers and assigns to the Company all right, title and interest in and to all
Concepts including any and all domestic or foreign patents, copyrights or
trademarks resulting therefrom. On request of the Company, Employee shall from
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time to time during or after the expiration or termination of his employment by
the Company, execute such further instruments (including, without limitation,
assignments thereof) and do all such other reasonable and legal acts and things
as may be deemed necessary or desirable by the Company to protect and/or enforce
its rights in respect of the Concepts. All expenses of filing or prosecuting any
copyright or trademark documents or application or assignment thereof shall be
borne by the Company, but Employee shall cooperate in filing and/or prosecuting
any such documents. Employee shall receive no additional compensation for the
performance of his obligations under this Section 7, except as may be agreed to
by the Company.
8. COVENANT REGARDING CONFIDENTIALITY.
(a) All information, data, records, and materials furnished (irrespective
of the form of communication) by the Company to Employee and all notes,
analyses, compilations, data, studies, other documents prepared by any officer,
employee, agent or representative (collectively, the "Representatives") of the
Company for internal use or otherwise, containing or based in whole or in part
on any such furnished information are hereinafter referred to as the "Company
Information". The term "Company Information" does not include information or
records which (i) was or becomes generally available to the public other than as
a result of disclosure by the Company's Representatives, (ii) was or becomes
available to Employee on a non-confidential basis prior to its disclosure by the
Representatives or by the Company or (iii) was or becomes available to Employee
on a non-confidential basis from a source (other than the Company) which has
represented to Employee that it is not bound by a confidentiality agreement with
the Company or otherwise prohibited from transmitting any portion of the
information by a contractual, legal or fiduciary obligation. Upon the
termination of Employee's employment for any reason whatsoever, Employee or
Employee's estate shall return all Company Information to the Company as
promptly as practicable.
(b) Employee hereby further acknowledges his understanding that trading in
any of the securities of the Company while Employee has Company Information in
his possession that has not been appropriately disclosed or disseminated to the
public constitutes a violation of the federal and/or state securities laws and
could cause irreparable harm to the Company and would constitute "Cause" for
terminating Employee's employment hereunder. Employee hereby covenants and
agrees not to engage in any such trading in the securities of the Company.
9. COVENANT NOT TO COMPETE.
(a) During the Restricted Period (as hereinafter defined), Employee shall
not, directly or indirectly, engage in any business anywhere in the Restricted
Territory (as hereinafter defined) either as a stockholder, officer, manager,
employee, agent, representative, consultant, partner, member, proprietor or
principal in any other capacity, in any business engaged in the assembly,
distribution and sale of liquid crystals and similar products used for high
definition television and such other uses and applications as the Company or any
of its Affiliates implements during the Restricted Period and all business
activities related thereto (the "RESTRICTED ACTIVITIES"), or directly or
indirectly, own any interest in, manage, operate, join, control, lend money or
render financial or other assistance to or participate in or be connected with,
as a partner, stockholder, member, proprietor, other principal, employee, agent,
representative, consultant or otherwise, any person that otherwise competes with
respect to the Restricted Activities with the Company or such Affiliates.
(b) As a separate and independent covenant, Employee further agrees with
the Company that, during the Employment Term and for a period of one year
thereafter, Employee will not, without the express written consent of the
Company, in any way, directly or indirectly, for the purpose of conducting or
engaging in the Restricted Activities, solicit, advise or otherwise do, or
attempt to do, business with any customers of the Company or its Affiliates with
whom the Company or its Affiliates has had or had any dealings during the two
(2) year period immediately preceding such solicitation or take away or
interfere, influence or attempt to interfere with or influence any employee (or
person who was an employee during
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the one (1) year period preceding the date of attempted hiring or recruitment),
customer, trade, business or patronage of the Company or its Affiliates, or
induce or attempt to induce any of them to leave the employ of the Company or
its Affiliates, or violate the terms of their contracts, or any employment
arrangements, with the Company or its Affiliates. Notwithstanding anything
herein to the contrary, the ownership by Employee of not more than three percent
(3%) of any class of outstanding securities of an issuer listed on a national
securities exchange or regularly traded on either of the two NASDAQ markets
shall not constitute a violation of Sections 9(a) or 9(b) hereof.
(c) Employee agrees that remedies at law for any breach by Employee of the
covenants contained in Section 8 and this Section 9 will be inadequate, and
that, in the event of a violation of the covenants therein, in addition to any
and all legal and equitable remedies which may be available to the Company and
its Affiliates, such covenants may be enforced by an injunction in a suit in
equity, without the necessity of proving actual damage and without posting bond
or other undertaking therefor. If any other provision of Section 8 and/or this
Section 9 shall be deemed by an appropriate court to be unenforceable for any
reason, then such court shall be empowered to substitute, to the extent
enforceable, provisions similar thereto or other provisions so as to provide the
Company and its Affiliates to the fullest extent permitted by applicable law,
the benefits intended by Section 8 and this Section 9. Employee acknowledges
that the covenants contained in this Section 9 are intended by the parties to be
in addition to, and not in lieu or in limitation of, any other agreement or
covenant between Employee and the Company. Each of the provisions of Sections 8
and 9 hereof shall survive the termination of this Agreement and the termination
of Employee's employment by the Company.
10. DEFINITIONS. Except as otherwise defined in this Agreement, the following
terms shall have the following meanings:
(a) "RESTRICTED PERIOD" shall mean the Employment Term and for a period of
six (6) months thereafter whether Employee's employment shall have been
terminated by reason of the expiration of this Agreement or otherwise; PROVIDED,
HOWEVER, that, in the event Employee's employment shall have been terminated
without Cause, the "Restricted Period" shall be for a period of ninety (90) days
after such termination of his employment; PROVIDED, FURTHER, HOWEVER, that such
term shall mean the Employment Term and for a period of two (2) years thereafter
in the event that Employee's employment shall be terminated for Cause.
(b) "RESTRICTED TERRITORY" shall mean any location in the United States of
America, and in any other country, state, region, county, city or locality
thereof where the Company or any of its Affiliates is transacting business
during the Restricted Period or during a period of three (3) years prior thereto
has been transacting business. The parties agree and intend that the covenants
contained in Section 9 shall be construed as a series of separate covenants, one
for each applicable region, county, city, state or country. Except for
geographic coverage, each such separate covenant shall be deemed identical in
terms.
(c) "AFFILIATES" shall mean any person directly or indirectly controlling
the Company, and other entities (including its majority owned subsidiaries)
controlled by, or under common control with, the Company.
11. NOTICES. All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered or refused if delivered personally or by facsimile (with
confirmation), or when delivered or refused if mailed by U.S. first class
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice, except that notice of changes of address
shall be effective upon the date of receipt or refusal):
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If to the Company:
SpatiaLight, Inc.
Xxxx Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Xxxxx Xxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxx, Esq.
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to Employee:
Xxxxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxx , #000 Xxx Xxxxxxxxx, XX 00000
Telephone No.: 000-000-0000
12. GENERAL.
(a) The Section headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
(b) This Agreement together with EXHIBIT "1" (the TARSAP) sets forth the
entire agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, between the parties.
(c) This Agreement and the benefits hereunder are personal to the Company
and Employee, and are not assignable or transferable, nor may the services to be
performed hereunder be assigned by the Company to any person, firm or
corporation; PROVIDED, HOWEVER, that this Agreement and the benefits hereunder
may be assigned by the Company to any of its Affiliates and/or will be assigned
(by operation of law) to any person, firm or corporation acquiring all or
substantially all of the assets or more than (50%) percent of the outstanding
voting capital stock of the Company or to any corporation into which the Company
may be merged or consolidated, as long as no such assignment operates to expand
the Restricted Territory without the consent of Employee.
(d) All references in this Agreement to amounts to be paid or benefits to
be provided to or on behalf of Employee are to the gross amounts thereof which
are due hereunder. Except as otherwise provided herein, the Company shall have
the right to deduct therefrom or collect from Employee all sums which may be
required to be deducted or withheld under any provision of law, including, but
not limited to, social security or similar payments, income tax withholding, any
other deduction required by law and any interest, penalties or additions to tax
imposed with respect thereto.
(e) This Agreement may be amended, modified, superseded, canceled, renewed
or extended, and the terms or covenants hereof may be waived, only by a written
instrument executed by both parties hereto, or in the case of a waiver, by the
party waiving compliance. The failure of either party at any time to require
performance of any provision hereof shall in no manner affect the right of such
party at a later
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time to enforce the same. No waiver by either party of the breach of any term or
covenant contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
(f) This Agreement may be executed in counterparts, each of which shall be
an original and all of which taken together shall constitute one and the same
instrument.
(g) Subject to the provisions of Section 9 hereof, if any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to either party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as practicable in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
(h) THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE (WITHOUT GIVING EFFECT TO ITS STATUTES OR DOCTRINES
OF CONFLICTS OF LAW (EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW) OF SUCH STATE OR OF ANY OTHER JURISDICTION.
(i) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT
SITTING IN THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, INCLUDING ANY APPEAL AND ANY ACTION FOR ENFORCEMENT
OR RECOGNITION OF ANY JUDGMENT RELATING THERETO, AND EACH PARTY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
NOT BE HEARD OR DETERMINED IN ANY COURT OR BEFORE ANY PANEL OTHER THAN SUCH NEW
YORK STATE OR FEDERAL COURT.
(j) BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE PERSONAL JURISDICTION OF EACH SUCH
COURT, AND IRREVOCABLY AND UNCONDITIONALLY WAIVE (i) ANY OBJECTION TO THE
PROPRIETY OF JURISDICTION, SERVICE OF PROCESS OR VENUE IN ANY OF SUCH COURTS,
(ii) ANY RIGHT TO A JURY TRIAL, AND (iii) ANY CLAIM THAT ANY ACTION OR
PROCEEDING BROUGHT IN ANY OF SUCH COURTS HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(k) EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN ANY SUCH ACTION IN THE MANNER PROVIDED FOR THE DELIVERY OF NOTICES IN SECTION
11; PROVIDED THAT NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY SUCH PARTY TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
* * * * *
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IN WITNESS WHEREOF, the parties have duly executed this Employment
Agreement as of the date first above written.
SPATIALIGHT, INC.
By: _____________________________________
Name: Xxxxxx X. Xxxxx
Title: Acting Chief Executive Officer
_____________________________________
Xxxxxxxx X. Xxxxxxx
Employee
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EXHIBIT 1
Attached hereto is the Time Accelerated Restricted Stock Award Plan
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