EMPLOYMENT AGREEMENT
Exhibit
10.1
AGREEMENT
made as of the 19th day of June, 2007, by and between Interactive Systems
Worldwide Inc., a Delaware corporation (the “Corporation”), and Xxxxxxx Xxxxxxxx
(“Employee”).
W
I T N E
S S E T H:
WHEREAS,
the Corporation is in the business of developing, producing, marketing,
licensing and servicing computerized sports wagering and related software and
systems;
WHEREAS,
the Corporation desires to continue to employ Employee as its Chief Executive
Officer, President and Employee desires to serve the Corporation in such
capacity; and
WHEREAS,
the Corporation desires to provide certain benefits to the Employee upon
termination of this Agreement, as herein provided.
NOW,
THEREFORE, in consideration of the mutual promises herein contained, the parties
hereto agree as follows:
1. EMPLOYMENT.
Subject
to the terms and conditions herein contained, the Corporation hereby employs
Employee as its Chief Executive Officer and President and Employee hereby agrees
to serve the Corporation in such capacity.
2. DUTIES.
2.1. Employee
agrees, during the “Term” (as hereinafter defined), to devote his full business
attention and best efforts to the business of the Corporation and to perform
such duties of an executive and administrative nature as the Board or Board
of
Directors of the Corporation, acting reasonably, shall assign or direct (i)
consistent with his status and position as Chief Executive Officer and President
including, without limitation, such duties as would typically be performed
by
persons holding similar positions in other companies, and (ii) such other duties
of a managerial nature relating to operations, finance, personnel or
support.
2.2. Employee
shall conduct himself at all times in a manner consistent with his position
with
the Corporation.
3. TERM.
3.1. The
term
of Employee’s employment (the “Term”) pursuant to this Agreement shall commence
on July 1, 2007 and terminate on June 30, 2008; provided that this Agreement
shall be subject to earlier termination only (i) in the event of Employee’s
death; (ii) at the option of the Corporation, in the event of Employee’s
“disability” (as hereinafter defined) for 90 consecutive working days or an
aggregate of 120 working days during any consecutive six month period during
the
Term; (iii) for cause; or (vi) as provided in Sections 3.3, 5.2 or
7.
3.2. For
the
purpose of this Agreement, “disability” shall mean any injury or any physical or
mental condition or illness which shall render Employee unable to perform his
duties in accordance with this Agreement.
3.3. Notwithstanding
anything to the contrary herein provided, the Employee shall have the right
to
retire from his employment with the Corporation by giving the Corporation not
less than 60 days prior written notice. Upon the effective date of Employee’s
retirement, Employee shall be entitled to the benefits referred to in Article
6.
4. COMPENSATION
AND BENEFITS.
As
compensation for all services to be rendered by Employee to the Corporation
and
its subsidiaries in all capacities, the Corporation shall pay to Employee during
the Term, a minimum of the following, payable in accordance with the standard
payroll practice of the Corporation:
4.1. The
Employee shall receive a base salary of not less than $240,000 per annum (the
“Base Salary”).
4.2. In
addition to the Base Salary, during the Term the Employee shall be entitled
to
receive incentive compensation as follows: Provided that Employee’s employment
with the Corporation has not terminated pursuant to Section 3.1(i), (ii) or
(iii), or Sections 5.2 or 7, for each $1 million of revenue realized by the
Corporation and its subsidiaries on a consolidated basis, as determined in
accordance with generally accepted accounting principles applied on a consistent
basis (“Revenue”), the Employee shall be entitled to a bonus of $30,000 up to a
maximum bonus of $120,000 if the Corporation realized Revenue of $4,000,000
during the Term.
Commencing
with the Corporation’s quarter ending September 30, 2007 and with each of the
next three quarters through June 30, 2008, the Corporation will determine
whether the Corporation’s Revenue as of the end of such quarter meets or exceeds
the Revenue set forth above. If any such Revenue thresholds are met, the
Employee shall be paid the applicable Bonus promptly after the determination
that such Revenue threshold has been met.
4.3. In
addition, Employee shall be entitled to receive (a) such salary increases,
bonuses or other incentive compensation as may be approved by the Board of
Directors; (b) four weeks vacation during each year of the Term; (c) health
insurance and life insurance substantially similar to that provided to Employee
in the past and not less than those provided by the Corporation to its other
executive employees; (e) such other fringe benefits as the Corporation may
provide to its employees; and (f) at the Corporation’s expense, the use of a
leased automobile plus payment of all expenses of operating such automobile,
including but not limited to insurance and maintenance costs.
4.4. In
the
event that during the Term, the Employee’s employment is terminated without
cause or the Employee resigns for “Good Reason,” (as hereinafter defined), the
Corporation shall pay to the Employee (i) an amount equal to $300,000 less
the aggregate Base Salary and Bonus paid pursuant to Section 4.2 paid to the
Employee from July 1, 2007 through the date of termination, which amount shall
be payable in a lump sum on the date of such termination; (ii) continuation
of all benefits described in Sections 4.2 and 9 until the end of the Term;
and
(iii) the Severance Benefits described in Section 6.
5. REQUIRED
RELOCATION.
5.1. During
the Term, the Corporation shall not require the Employee to relocate outside
of
the New York City/New Jersey metropolitan area (the “Area”).
5.2. In
the
event that prior to the end of the Term, or after the Term of this Agreement
if
the Employee continues to be employed by the Corporation on an at will basis,
the Corporation requires the Employee to relocate outside the Area and the
Employee elects in his discretion, not to do so, the Employee may voluntarily
terminate his employment with the Corporation and in such event the Corporation
shall pay to the Employee (i) an amount equal to $300,000 less the
aggregate Base Salary and Bonus paid pursuant to Section 4.2 paid to the
Employee from July 1, 2007 through the date of termination, which amount shall
be payable in a lump sum on the date of such termination; (ii) continuation
of all benefits described in Sections 4.2 and 9 until the end of the Term;
and
(iii) the Severance Benefits described in Section 6.
5.3. Notwithstanding
the foregoing, the Employee may be required to travel away from his home for
reasonable periods of time in fulfillment of his responsibilities for the
Corporation.
6. SEVERANCE
BENEFITS.
6.1. Upon
(a)
expiration or termination of the Term of this Agreement as provided in Section
3.1, other than for cause, (b) retirement of the Employee as provided in Section
3.3, (c) if a new agreement is not entered into by Employee and the Corporation
on the terms and conditions described in Section 7.1, (d) a Change of Control
on
the terms and conditions described in Section 8.1, (e) resignation by the
Employee during the Term for “Good Reason” (as hereinafter defined) or (f)
pursuant to Section 5.2, the Corporation shall pay to the Employee (or the
Employee’s personal representative if the Agreement is terminated as a result of
the Employee’s death), the following severance benefits (collectively the
“Severance Benefits”) for a period of one year after such
termination:
(a) An
amount
equal to $300,000, payable in a lump sum on the date of such expiration,
retirement or termination; and
(b) Continuation
of the benefits provided in Section 4.3(c), (d) if applicable, (e) and (f),
and
Section 9, for a period of one year after the date of such expiration,
retirement or termination.
6.2. In
addition, the Corporation shall continue to provide the Employee with the
benefits described in Section 4.3(f) for the remainder of the term of the lease
of the leased automobile that was provided to the Employee on the date of
termination of this Agreement.
7. NON-RENEWAL
OF EMPLOYMENT AGREEMENT; DEATH OR DISABILITY.
7.1. In
the
event that at the end of the Term of this Agreement, a new employment agreement
is not entered into on terms and conditions at least as beneficial to the
Employee as each of the terms and conditions contained herein, and the
Employee’s employment with the Corporation is terminated by the Corporation,
other than for cause, or by the Employee, in his discretion, the Corporation
shall pay to the Employee the Severance Benefits described in Section
6.
7.2. In
the
event this Agreement is terminated as a result of the death or disability of
the
Employee during the Term or, after the end of the Term while the Employee is
still employed by the Corporation on an at-will basis, the Employee or his
personal representative, as the case may be, shall be paid the Severance
Benefits described in Section 6.
8. CHANGE
OF CONTROL.
8.1. Notwithstanding
any other provision of this Agreement, in the event of a “Change of Control” (as
hereafter defined) during the Term, the Employee shall be entitled, at his
option, which option shall be exercised by giving not less than 60 days’ prior
written notice to the Corporation, to terminate this Agreement. Whether the
Employee terminates this Agreement, or this Agreement is terminated by the
Corporation after a Change of Control, for any reason whatsoever other than
termination of this Agreement by the Corporation for cause, Employee shall
be
entitled to the following:
(a) If
the
termination is during the Term, the Employee shall be entitled to be paid
(i) an amount equal to $300,000 less the aggregate Base Salary and Bonus
paid to the Employee pursuant to Section 4.2, which amount shall be payable
in a
lump sum on the date of such termination, and (ii) continuation of all of
the benefits as provided in Sections 4.3 (c), (d), if applicable, (e) and (f),
and Section 9 until the end of the Term. In addition to the foregoing, the
Employee shall be entitled to the Severance Benefits described in Section
6.
(b) If
the
termination occurs after the Term, while the Employee is still employed by
the
Corporation on an at-will basis, the Employee shall be entitled to the Severance
Benefits described in Section 6.
8.2. “Change
of Control” shall mean, if any person, or any two or more persons acting a
“group” (as defined in the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), and all affiliates of such person or persons who prior to such
time “beneficially” owned (as defined in Rule 13d-3 under the Exchange Act) less
than a total of 50% of the number of shares of Common Stock outstanding plus
the
number of shares of Common Stock into which any outstanding shares of Preferred
Stock or other convertible securities of the Corporation are then convertible
at
the then conversion rate, shall acquire additional shares of Common Stock,
Preferred Stock or other convertible securities of the Corporation in one or
more transactions or series of transactions, such that following such
transaction or transactions, such person or group and affiliates beneficially
own 50% or more of the Common Stock outstanding and Common Stock into which
any
Preferred Stock or other convertible securities is convertible, or 50% or more
of the voting power of the Corporation.
8.3. “Good
Reason”, when used with reference to a voluntary termination by the Employee of
his employment with the Corporation, shall mean:
(a) the
assignment to the Employee of any duties inconsistent in a material way with,
or
the reduction of powers or functions associated with, his positions, duties,
responsibilities and status with the Corporation, Employee’s reporting
responsibilities or any removal of the Employee from, or any failure to reelect
the Employee to, any significant positions or offices the Employee held
immediately prior to the time of the Change in Control, except in connection
with the termination of the Employee’s employment by the Corporation for cause
or for death or disability;
(b) a
reduction by the Corporation in the Employee’s base salary or benefits that
existed immediately prior to the Change in Control; or
(c) a
change
in the Employee’s principal work location, except for required travel on the
Corporation’s business to an extent substantially consistent with the Employee’s
business travel obligations immediately prior to the Change of
Control;
provided,
however, that no event shall constitute a Good Reason unless the Employee
notifies the Corporation that it has committed an action or inaction specified
in clauses (a) through (c) (a “Covered Action”) and the Corporation does not
cure such Covered Action within 30 days after such notice, at which time such
Good Reason shall be deemed to have arisen. Notwithstanding the immediately
preceding sentence, no action by the Corporation shall give rise to Good Reason
if it results from the Employee’s termination for cause, or from the Employee’s
resignation for other than a Good Reason. If the Employee has Good Reason to
resign, he may in fact resign for Good Reason by notice of termination given
within 60 days after the Good Reason arises.
9. REIMBURSEMENT
OF EXPENSES.
The
Corporation shall reimburse the Employee for all reasonable business expenses
paid or incurred by him on behalf of the Corporation, including, but not limited
to, travel and entertainment expenses, that he shall incur during the Term
in
connection with the performance of his duties hereunder, provided that he
submits, in a timely manner, receipts or other expense records in such detail
as
may be required by the Corporation.
10. TERMINATION/STOCK
OPTIONS.
In the
event that Employee’s employment with the Corporation terminates for any reason
whatsoever, including death or disability of the Employee, other than (i) by
the
Corporation for cause, (ii) or voluntarily by the Employee (other than as
permitted herein), all stock options theretofore granted to the Employee which
have not vested and become exercisable on the date of such termination shall
automatically vest and become exercisable and remain exercisable in accordance
with the terms of the Corporation’s 1995, 1996 and 2006 Stock Option Plans and
the stock option agreements thereunder.
11. NO
CONFLICTING COMMITMENTS.
Employee represents and warrants that he has no commitments or obligations
of
any kind whatsoever inconsistent with this Agreement which would impair,
infringe upon or limit his ability to enter into this Agreement or to perform
the services required of him hereunder.
12. PROPRIETARY
INFORMATION; NON-COMPETITION.
12.1. Prior
to
the execution of this Employment Agreement, Employee signed a Proprietary
Information Agreement the terms of which shall continue in full force and
effect.
12.2. During
the Term of this Agreement and until one year following the termination or
nonrenewal of this Agreement, the Employee shall not in any way compete with
the
business of the Corporation. In furtherance thereof, during the period described
in the preceding sentence, the Employee shall not become a stockholder,
director, employee, consultant, agent or representative of any person, firm
or
entity whose business is competitive with the business of the Corporation;
provided that the foregoing shall not preclude the Employee from owning less
than 5% of the stock or other securities of any person, firm or entity whose
business is competitive with the business of the Corporation.
13. DIRECTORS’
AND OFFICERS’ LIABILITY INSURANCE.
During
the Term and for at least two years after (i) the end of the Term or
(ii) earlier termination or expiration of the Agreement or retirement of
the Employee, whichever of (i) or (ii) last occurs, the Company shall, at its
sole cost and expense, procure for the benefit of the Employee, directors’ and
officers’ liability in an amount of at least $5 million and with terms and
conditions substantially similar to the terms of such insurance in effect on
the
date hereof.
14. ENTIRE
AGREEMENT.
This
Agreement embodies the entire understanding and agreement of the parties hereto
in relation to the subject matter hereof, and no promise, condition,
representation or warranty, express or implied, not herein set forth shall
bind
any party hereto. None of the terms or conditions of this Agreement may be
changed, modified, waived or cancelled orally or otherwise except in a writing
signed by both the parties hereto, specifying such change, modification, waiver
or cancellation. A waiver at any time of compliance with any of the terms and
conditions of this Agreement shall not be considered a modification,
cancellation or waiver of such terms and conditions of any preceding or
succeeding breach thereof unless expressly so stated. The Employment Agreement
dated as of June 27, 2006, as amended, is terminated effective as of the
commencement of the term of this Agreement.
15. BINDING
EFFECT.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective legal representatives, successors and assigns.
16. GOVERNING
LAW; FEES.
This
Agreement shall be governed by the internal laws of the State of New Jersey
without regard to principles of conflicts of law. In the event of any litigation
relating to the terms of this Agreement, the prevailing party shall be awarded
all of its fees and expenses in pursuing or defending such litigation, including
all reasonable legal fees and expenses.
17. NOTICES.
Any
notice or other communication required or desired to be given shall be in
writing and shall be sent by registered or certified mail return receipt
requested or by express mail. Each such notice shall be deemed given at the
time
it is mailed in any post office maintained by the United States to the following
respective addresses, which either party may change as to such party upon ten
(10) days’ notice to the other.
| To the Corporation: | ||
|
Interactive
Systems Worldwide Inc.
0
Xxxxxxx Xxxxx, 0xx Xxxxx
Xxxx
Xxxxxxxx, XX 00000
Attn:
Chief Financial Officer
|
| With a copy to: | ||
|
Xxxxxxx
X. Xxxxxxx, Esq.
Xxxxxxxx
Xxxxxx
Xxxxxx & Xxxxxxx LLP
0000
Xxxxxxxx (00xx Xxxxx)
Xxx
Xxxx, XX 00000
|
||
|
To
Employee:
|
||
|
Xx.
Xxxxxxx Xxxxxxxx
00
Xxxxxxx Xxxxx
Xxxxxx,
XX 00000
|
18. EXTRAORDINARY
RELIEF.
Employee acknowledges and agrees that irreparable damage will result to the
Corporation in the event of a breach of the Proprietary Information Agreement
or
Section 12 of this Agreement. Accordingly, Employee agrees that the Corporation
shall be entitled to enforce its rights under said Proprietary Information
Agreement and Section 12 of this Agreement, in the event of a breach or
threatened breach thereof, in the court of equity, and shall be entitled to
a
decree of specific performance or appropriate injunctive relief. Such remedies
shall be cumulative and not exclusive and shall be in addition to any other
rights or remedies available to the Corporation.
19. INVALIDITY.
Any
provision of this Agreement found to be prohibited by law shall be ineffective
as written without invalidating the remainder of this Agreement and shall be
deemed amended to the fullest extent allowable by applicable law to effectuate
the purposes of said provision.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first above written.
| INTERACTIVE WORLDWIDE SYSTEMS INC. | ||
| |
|
|
| By: | /s/ Xxxxx Xxxxxxx | |
|
Xxxxx Xxxxxxx, Director |
||
| /s/ Xxxxxxx Xxxxxxxx | ||
|
Xxxxxxx
Xxxxxxxx
|
||
