EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of March 16, 2001, by and between
Continental Sports Management, Inc., a Delaware corporation with its principal
office located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and
Xxxxx X. Xxxxxx, an individual residing at 0000 Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxx
00000 (the "Executive").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to secure the services of the Executive
upon the terms and conditions hereinafter set forth; and
WHEREAS, the Executive desires to render services to the Company upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties mutually agree as follows:
1. Employment. The Company hereby employs Executive and the
Executive hereby accepts such employment, as President, subject to the terms and
conditions set forth in this Agreement.
2. Duties. The Executive shall serve as President. During the
term of this Agreement, the Executive shall properly perform all duties incident
to the position of President and such duties as may be assigned to him from time
to time by the Board of the Directors (the "Board") or Chief Executive Officer,
and agrees to abide by all By-laws, policies, practices, procedures or rules of
the Company. The Executive agrees to devote his best efforts, energies and skill
to the discharge of the duties and responsibilities attributable to his
position, and to this end, he will devote his full business time and attention
exclusively to the business and affairs of the Company. The Executive also
agrees that he shall not take personal advantage of any business opportunities
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which arise during his employment and which may benefit the Company. All
material facts regarding such opportunities must be promptly reported to the
Board and/or the Chief Executive Officer for consideration by the Company.
Notwithstanding the foregoing, the Executive may donate his time and efforts to
charitable causes so long as such endeavors do not effect his ability to perform
his duties under this Agreement.
3. Term of Employment.
(a) The term of the Executive's employment shall be for a
period of three (3) years commencing on April 1, 2001 (the "Start Date"),
subject to earlier termination by the parties pursuant to Sections 5 and 6
hereof (the "Term").
4. Compensation of Executive.
4.1 Salary. The Company shall pay to Executive a base
salary of One Hundred Seventy Five Thousand Dollars ($175,000) per annum,
subject to increases in accordance with the terms of the last sentence of this
Section 4.1 (the "Base Salary"), less such deductions as shall be required to be
withheld by applicable law and regulations. The Base Salary payable to Executive
shall be paid at such regular weekly, biweekly or semi-monthly time or times as
the Company makes payment of its regular payroll in the regular course of
business. Commencing on the first anniversary of the date hereof, and on each
anniversary thereafter during the Term, the Base Salary shall be increased by
Twenty Five Thousand Dollars ($25,000) of the then Base Salary.
4.2 Expenses. During the Term, the Company shall promptly
reimburse the Executive for all reasonable and necessary travel expenses and
other disbursements (not including travel to and from the Company's office, if
any, located in the Washington, D.C. metropolitan area) incurred by the
Executive on behalf of the Company in the performance of the Executive's duties
hereunder, assuming Executive has received prior approval for such travel
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expenses and disbursements by the Company to the extent possible consistent with
corporate practices with respect to the reimbursement of expenses incurred by
the Company's Executives. The Executive shall present all appropriate vouchers
and receipts for such expenses. In addition, during the Term hereof, the Company
shall provide the Executive with a leased automobile and reimburse the Executive
for any business expenses incurred in connection with the leasing of the
automobile.
4.3 Benefits. The Company shall provide the Executive and
his family with full health insurance, and the Executive shall also be permitted
during the Term to participate in any other hospitalization or disability
insurance plans, health programs, pension plans, bonus plans or similar benefits
that may be available to other executives of the Company (including coverage
under any officers and directors liability insurance policy), subject to such
eligibility rules as are applied to senior managers generally.
4.4 Vacation. The Executive shall be entitled to four (4)
weeks paid vacation per year.
4.5 Issuance of Options. (a) Upon execution of this
Agreement, the Executive shall receive non-qualified stock options (or in lieu
thereof, at Executive's option, and to the extent available, incentive stock
options) exercisable for an aggregate of one million five hundred thousand
(1,500,000) shares at an exercise price equal to $.08 per share (the "Options")
The options shall vest in monthly installments on the first day of each month
during the Term of this Agreement; provided, however, that any and all
non-vested Options shall vest immediately upon a Change in Control. For purposes
of this Agreement, a "Change in Control" shall mean (i) the dissolution or
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liquidation of the Company or a merger, consolidation or reorganization of the
Company with one or more other entities in which the Company is not the
surviving entity, (ii) a sale of substantially all of the assets of the Company
to another person or entity, or (iii) any transaction (including without
limitation a merger or reorganization in which the Company is the surviving
entity) that results in any person or entity, which is not a shareholder on the
date of this Agreement, owning fifty percent (50%) or more of the combined
voting power of all classes of stock of the Company.
(b) If the Executive's employment under this Agreement is
terminated for any reason whatsoever (Cause, without cause, etc., other than in
connection with a Change in Control) prior to the expiration of the Term, then a
pro rata amount of the options shall be forfeited. Thus, for example, if the
date of termination is twelve (12) months after the Start Date, two-thirds (2/3)
of the options shall be cancelled.
4.6 Piggyback Registration Rights. Commencing twelve (12)
months from the Start Date, Executive shall have piggyback registration rights
for the Options or the shares underlying the Options, subject to underwriter
cut-back in the case of an underwritten offering. In the event the Company, on
behalf of any selling shareholder (other than selling shareholders who purchased
stock in a private placement offering who were granted registration rights)
proposes to file a registration statement for the registration of the sale of
common stock (other than a registration statement on Form S-4 or S-8), the
Company shall include the Options or the shares underlying the Options in such
registration statement.
4.7 Incentive Compensation. Executive shall be entitled
to receive a bonus and/or other incentive compensation in an amount to be
determined by the Company; provided, however, that the failure of the Company to
award any such bonus and/or other incentive compensation shall not give rise to
any claim against the Company. The amount, if any, and timing of such bonus
shall be determined by the Company in its discretion.
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5. Disability of the Executive. If the Executive is
incapacitated or disabled by accident, sickness or otherwise so as to render the
Executive mentally or physically incapable of performing the services required
to be performed under this Agreement for a period of five (5) consecutive months
or six (6) months in any period of 360 consecutive days (a "Disability"), the
Company may, at the time or during the period of such Disability, at its option,
terminate the employment of the Executive under this Agreement immediately upon
giving the Executive written notice to that effect.
6. Termination.
(a) The Company may terminate the employment of the
Executive and all of the Company's obligations under this Agreement at any time
for Company Termination For Cause (as hereinafter defined) by giving the
Executive written notice of such termination, with reasonable specificity of the
details thereof. "Company Termination For Cause" shall mean (i) the Executive's
willful misconduct which could reasonably be expected to have a material adverse
effect on the business and affairs of the Company, (ii) the Executive's willful
disregard of lawful instructions of the Company's Board of Directors consistent
with the Executive's responsibilities under this Agreement relating to the
business of the Company, (iii) the Executive's neglect of duties or failure to
act, which, in each case, could reasonably be expected to have a material
adverse effect on the business and affairs of the Company, (iv) the commission
by the Executive of an act constituting common law fraud, or a felony, or
criminal act against the Company or any affiliate thereof or any of the assets
of any of them, (v) the Executive's abuse of alcohol or other drugs or
controlled substances, or conviction of a crime involving moral turpitude, (vi)
the Executive's material breach of any of the agreements contained herein, or
(vii) the Executive's death or resignation without Executive Termination For
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Cause (as defined in Section 6(c) below) hereunder. A termination pursuant to
Section 6(a)(i), (ii), (iii), (iv), (v) (other than as a result of a conviction
of a crime involving moral turpitude) or (vi) shall take effect thirty (30) days
after the giving of the notice contemplated hereby unless the Executive shall,
during such 30-day period, remedy to the reasonable satisfaction of the Board of
Directors of the Company the misconduct, disregard, abuse or breach specified in
such notice; provided, however, that such termination shall take effect
immediately upon the giving of such notice if the Board of Directors of the
Company shall, in its reasonable discretion, have determined that such
misconduct, disregard, abuse or breach is not remediable (which determination
shall be stated in such notice). A termination pursuant to Section 6(a)(v) (as a
result of a conviction of a crime involving moral turpitude) or (vii) shall take
effect immediately upon the giving of the notice contemplated hereby.
(b) The Company may terminate Executive's employment at
any time without Company Termination for Cause, subject to the provisions of
Section 7(b) below.
(c) The Executive may terminate this Agreement and his
employment with the Company for Executive Termination For Cause (as hereinafter
defined) by giving written notice to the Chairman of the Board of Directors of
the Company, with reasonable specificity of the details thereof. "Executive
Termination For Cause" shall mean (i) the Company's material breach of any of
the agreements contained herein, (ii) a material reduction in the scope of the
Executive's responsibilities and duties, (iii) a Change in Control and (iv) a
failure by the Company to complete an initial public offering and/or other
equity financings of at least the gross aggregate amount of One Million Five
Hundred Thousand Dollars ($1,500,000) by October 15, 2001. A termination
pursuant to Section 6(c)(i), (ii) or (iii) shall take effect thirty (30) days
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after the giving of the notice contemplated hereby unless the Company shall,
during such thirty (30) day period, remedy to the reasonable satisfaction of the
Executive the misconduct, disregard, abuse, or breach specific in such notice. A
termination pursuant to Section 6(c)(iv) shall take effect immediately upon the
giving of the notice contemplated hereby.
7. Effect of Termination of Employment.
(a) Upon the termination of the Executive's employment by
the Company for Company Termination For Cause or a Disability, neither the
Executive nor the Executive's beneficiaries or estate shall have any further
rights to compensation under this Agreement or any claims against the Company
arising out of this Agreement, except the right to receive (i) the unpaid
portion of the then Base Salary provided for in Section 4.1, earned through the
date of termination (the "Unpaid Salary Amount") and (ii) reimbursement for any
expenses for which the Executive shall not have theretofore been reimbursed, as
provided in Section 4.2 (the "Expense Reimbursement Amount").
(b) Upon the termination of the Executive's employment by
(i) the Company for other than Company Termination For Cause or a Disability or
(ii) the Executive for Executive Termination For Cause (other than under Section
6(c)(iv)), neither the Executive nor the Executive's beneficiaries or estate
shall have any further rights to compensation under this Agreement or any claims
against the Company arising out of this Agreement, except that the Company shall
pay as severance pay to the Executive, an amount equal to the sum of (i) the
Unpaid Salary Amount, (ii) the Expense Reimbursement Amount, (iii) severance
compensation equal to the then Base Salary for six (6) months and (iv) the right
and option to sell to the Company any vested Options on the terms and subject to
the conditions set forth in Section 7(d) below. Upon the termination of the
Executive's employment by the Executive for Executive Termination For Cause
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under Section 6(c)(iv), neither the Executive nor the Executive's beneficiaries
or estate shall have any further rights to compensation under this Agreement or
any claims against the Company arising out of this Agreement, except that the
Company shall pay as severance pay to the Executive, an amount equal to the sum
of (i) the Unpaid Salary Amount, (ii) the Expense Reimbursement Amount and (iii)
severance compensation equal to the then Base Salary for two (2) months.
(c) The forfeiture of the Options shall be subject to the
provisions of Section 4.5(b) above.
(d) Upon the termination of this Agreement by (i) the
Company for Company Termination For Cause or a Disability or (ii) the Executive
for Executive Termination For Cause (other than under Section 6(c)(iv)), the
Company shall have the right and option to buy from the Executive upon a Company
Termination For Cause, or the Executive shall have the right and option to sell
to the Company upon an Executive Termination For Cause, as the case may be, any
vested Options and/or shares underlying the Options (collectively, the
"Restricted Shares") at the lesser of four dollars ($4.00) per Restricted Share
or, if applicable, the public share price of the Shares as of the date the party
terminating this Agreement provides notice of said termination. The amount
payable by the Company hereunder shall be offset against any amount required to
be paid by the Executive (e.g., the option strike price) for the Restricted
Shares to be acquired or sold hereunder, provided, however, that such net amount
shall never fall below zero. Each party shall exercise its rights under this
Section 7(d) by stating its desire to exercise such rights in the notice of
termination required under Section 6 above. Any amount to be paid to the
Executive hereunder shall be paid by the Company in cash within thirty (30) days
of the effective date of the Executive's termination.
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8. Disclosure of Confidential Information. Executive
recognizes that he has had and will continue to have access to secret and
confidential information regarding the Company, including but not limited to its
customer list, products, know-how, and business plans. Executive acknowledges
that such information is of great value to the Company, is the sole property of
the Company, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Company herein, Executive
will not during the term of this Agreement and for the twenty-four (24) month
period following his employment hereunder, reveal, divulge or make known to any
person (except counsel or as may be required by law or, if necessary, in a
litigation), any information acquired by Executive during the course of his
employment (including employment prior to the date hereof), which is treated as
confidential by the Company, including but not limited to its customer list, not
otherwise in the public domain, other than in the ordinary of business during
his employment hereunder. The provisions of this Section 8 shall survive
Executive's employment hereunder.
9. Covenant Not To Compete.
(a) Executive recognizes that the services to be
performed by him hereunder are special, unique and extraordinary. The parties
confirm that it is reasonably necessary for the protection of Company that
Executive agree, and accordingly, Executive does hereby agree, that he shall
not, directly or indirectly, at any time during the term of the Agreement and
the "Restricted Period" (as defined in Section 9(e) below):
(i) except as provided in Subsection (b) and (d)
below, be engaged in the representation of professional soccer athletes in their
negotiation of player and endorsement contracts as well as representation of
soccer clubs to procure players, either on his own behalf or as an officer,
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director, stockholder, partner, consultant, associate, Executive, owner, agent,
creditor, independent contractor, or co-venturer of any third party; or
(ii) employ or engage, or cause or authorize,
directly or indirectly, to be employed or engaged, for or on behalf of himself
or any third party, any Executive or agent of Company or any affiliate thereof.
(b) Executive hereby agrees that he will not, directly or
indirectly, for or on behalf of himself or any third party, at any time during
the term of the Agreement and during the Restricted Period solicit any customers
of the Company or any affiliate thereof (including those procured or indirectly
by the Executive) in a manner which directly or indirectly competes with the
Company. This Section 9(b) shall not apply to the professional soccer players
listed on Schedule A attached hereto.
(c) If any of the restrictions contained in this Section
9 shall be deemed to be unenforceable by reason of the extent, duration or
geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, and in its reduced form this Section shall
then be enforceable in the manner contemplated hereby.
(d) This Section 9 shall not be construed to prevent
Executive from owning, directly or indirectly, in the aggregate, an amount not
exceeding two percent (2%) of the issued and outstanding voting securities of
any class of any company whose voting capital stock is traded on a national
securities exchange or on the over-the-counter market other than securities of
the Company.
(e) The term "Restricted Period," as used in this Section
9, shall mean the period of Executive's actual employment hereunder plus in the
event the Executive's employment is terminated for Company Termination for Cause
for a period of twelve (12) months thereafter.
(f) The provisions of this Section 9 shall survive the
end of the Term as provided in Section 9(e) hereof.
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10. Miscellaneous.
10.1 Injunctive Relief. Executive acknowledges that the
services to be rendered under the provisions of this Agreement are of a special,
unique and extraordinary character and that it would be difficult or impossible
to replace such services. Accordingly, Executive agrees that any breach or
threatened breach by him of Section 8 or 9 of this Agreement shall entitle
Company, in addition to all other legal remedies available to it, to apply to
any court of competent jurisdiction to seek to enjoin such breach or threatened
breach. The parties understand and intend that each restriction agreed to by
Executive hereinabove shall be construed as separable and divisible from every
other restriction, that the unenforceability of any restriction shall not limit
the enforceability, in whole or in part, of any other restriction, and that one
or more or all of such restrictions may be enforced in whole or in part as the
circumstances warrant. In the event that any restriction in this Agreement is
more restrictive than permitted by law in the jurisdiction in which Company
seeks enforcement thereof, such restriction shall be limited to the extent
permitted by law.
10.2 Assignments. Neither Executive nor the Company may
assign or delegate any of their rights or duties under this Agreement without
the express written consent of the other.
10.3 Entire Agreement. This Agreement constitutes and
embodies the full and complete understanding and agreement of the parties with
respect to Executive's employment by Company, supersedes all prior
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understandings and agreements, whether oral or written, between Executive and
Company, and shall not be amended, modified or changed except by an instrument
in writing executed by the party to be charged. The invalidity or partial
invalidity of one or more provisions of this Agreement shall not invalidate any
other provision of this Agreement. No waiver by either party of any provision or
condition to be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or any prior or subsequent time.
10.4 Binding Effect. This Agreement shall inure to the
benefit of, be binding upon and enforceable against, the parties hereto and
their respective successors, heirs, beneficiaries and permitted assigns.
10.5 Headings. The headings contained in this Agreement
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.6 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when personally delivered, sent by
registered or certified mail, return receipt requested, postage prepaid, or by
private overnight mail service (e.g. Federal Express) to the party at the
address set forth above or to such other address as either party may hereafter
give notice of in accordance with the provisions hereof. Notices shall be deemed
given on the sooner of the date actually received or the third business day
after sending.
10.7 Governing Law and Arbitration. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York without giving effect to such State's conflicts of laws provisions. Except
as provided for in Section 10.1 above, any controversy or claim arising out of
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or relating to this Agreement shall be settled by binding arbitration in
accordance with the then-current Commercial Arbitration Rules (the "Rules") of
the American Arbitration Association (the "Association") to the extent that such
Rules do not conflict with any provision of this Section 10.7. The arbitration
shall be held at a mutually acceptable location in New York and shall be held
before one (1) arbitrator (unless otherwise agreed by the parties) who shall be
either a retired judge or an attorney with greater than ten (10) years of
relevant practice. Neither party shall institute an arbitration proceeding
hereunder unless, at least thirty (30) days prior thereto, such party shall have
furnished to the other written notice of its intent to do so and the basis
thereof in detail. Any award, order or judgment pursuant to such arbitration
shall be deemed final and may be entered and enforced in any state or federal
court in New York.
10.8 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
10.9 Separability. If any of the restrictions contained in
this Agreement shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, and in its reduced form this Agreement shall
then be enforceable in the manner contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
CONTINENTAL SPORTS MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
/s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
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SCHEDULE A
Xxxxx Beach
Xxxx Xxxxx
Xxx Xxxxxx
Xxxx Xxxxxx
Xxxxxxx Xxxxxx
Xxxx Xxxx
Xxxxx Xxxxxxxxx
Xxxxx Xxxxxx
