Exhibit 99(D)(18)
EXECUTION VERSION
EMPLOYMENT AND RETENTION AGREEMENT
This Agreement is made as of February 5, 2001 by and between Flipside,
Inc., a Delaware corporation (the "COMPANY" or "FLIPSIDE"), and Xxxxxx X.
Xxxxxxxxx (the "EXECUTIVE").
WHEREAS, the Company, Flipside Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of the Company ("MERGER SUB") and
Uproar Inc., a Delaware corporation ("UPROAR"), have entered into an Agreement
and Plan of Merger dated as of February 5, 2001 (the "MERGER AGREEMENT") which
provides for the merger of Merger Sub with and into Uproar with Uproar as the
surviving corporation (the "MERGER");
WHEREAS, it is a condition to the Company's willingness to enter into
the Merger Agreement that certain key employees, including the Executive, become
employed by the Company following the Merger;
WHEREAS, the Executive is willing to become employed by the Company
following the Merger under the terms and conditions contained herein; and
WHEREAS, the Executive and the Company desire to enter into this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged
and intending legally to be bound, the Company and the Executive hereby agree as
follows:
SECTION I
EMPLOYMENT
The Company agrees to employ the Executive and the Executive agrees to
be employed by the Company for the Period of Employment as provided in Section
III.A below and upon the terms and conditions provided in this Agreement.
SECTION II
POSITION AND RESPONSIBILITIES
During the Period of Employment, the Executive agrees to serve as
Executive Vice President and General Counsel of the Company reporting directly
on a day-to-day basis to the Chief Executive Officer of the Company and as
needed to the officers of Vivendi Universal Games or Vivendi Universal
Interactive Publishing, North America responsible for the various functions
performed by the Executive, and to be responsible for the typical
responsibilities expected of an executive holding such position.
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EXECUTION VERSION
SECTION III
TERM AND DUTIES
A. PERIOD OF EMPLOYMENT
The period of the Executive's employment under this Agreement
(the "PERIOD OF EMPLOYMENT") will commence as of the consummation of the Merger
(the "EFFECTIVE DATE") and shall continue for a period of one year thereafter,
subject to termination as provided in this Agreement. Executive's Period of
Employment may be extended beyond the date specified above by the written mutual
agreement of the parties. Executive's Period of Employment shall cease upon
termination of this Agreement, under the terms provided herein, including
Section VIII below.
B. DUTIES
During the Period of Employment and except for illness,
incapacity or any reasonable vacation periods in any calendar year, the
Executive shall devote all of his business time, attention and skill exclusively
to the business and affairs of the Company and its subsidiaries. The Executive
will not engage in any other business activity and will perform faithfully the
duties which may be assigned to him from time to time by the Chief Executive
Officer of the Company and by the officers of Vivendi Universal Games or Vivendi
Universal Interactive Publishing, North America responsible for the various
functions performed by the Executive consistent with Section II of this
Agreement. Nothing in this Agreement shall preclude the Executive from devoting
time during reasonable periods required for:
i. Serving, with the prior approval of the Chief Executive
Officer of Vivendi Universal Games, as a director or member of a committee or
organization involving no actual or potential conflict of interest with the
Company;
ii. Delivering lectures and fulfilling speaking
engagements;
iii. Engaging in charitable and community activities; and
iv. Investing his personal assets in such form or manner
that will not violate this Agreement or require services on the part of the
Executive in the operation or affairs of the companies in which those
investments are made.
The activities described in clauses i-iv, above will be
allowed as long as they do not materially affect or interfere with the
performance of the Executive's duties and obligations to the Company.
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EXECUTION VERSION
SECTION IV
COMPENSATION AND BENEFITS
A. COMPENSATION
For all services rendered by the Executive pursuant to this
Agreement during the Period of Employment, including services as an executive,
officer, director or committee member of the Company or any subsidiary of the
Company, the Executive shall be compensated as follows:
i. BASE SALARY
The Company shall pay the Executive base salary ("BASE
SALARY"). Base Salary shall be payable according to the customary payroll
practices of the Company but in no event less frequently than once each month.
The Executive's Base Salary for the Period of Employment shall be payable at a
twelve-month rate of $300,000.
ii. ANNUAL INCENTIVE AWARDS
The Executive will be eligible for annual incentive
compensation awards, to be awarded based upon the achievement of those
performance-based milestones set forth on SCHEDULE A hereto.
iii. SIGNING BONUS AND RETENTION PAYMENT
On the date prior to the Effective Date, the Company shall pay
to Executive $493,833 (the "SIGNING BONUS"). Except as otherwise provided
herein, upon the first anniversary of the Effective Date (the "RETENTION PAYMENT
DATE"), the Company shall pay to Executive $1,006,167 (the "RETENTION PAYMENT",
and collectively with the Signing Bonus, the "INDUCEMENT PAYMENTS").
Notwithstanding anything to the contrary contained in this Agreement, if the
Executive's employment is terminated prior to the Retention Payment Date due to
death or disability or by the Company other than for Cause (as defined below) or
is terminated by the Executive for Good Reason (as defined below), the Company
shall nevertheless pay the Executive the Retention Payment on the Retention
Payment Date. Any termination of the Executive's employment prior to the
Retention Payment Date other than as described in the preceding sentence will
result in a forfeiture of the Retention Payment.
iv. PARTICIPATION IN THE VIVENDI UNIVERSAL STOCK OPTION PLAN
Subject to the execution by the Executive of a Stock Option
Agreement, Executive will be granted options ("OPTIONS") pursuant to the Vivendi
Universal Stock Option Plan (the "VIVENDI UNIVERSAL PLAN") and in accordance
with the terms of a standard stock option agreement pursuant to the Vivendi
Universal Plan in amounts to be determined as follows:
a. As soon as practicable after the Effective Date, the
Executive shall be granted an option to purchase 25,000 shares of the ADS shares
of Vivendi Universal, Inc., par
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EXECUTION VERSION
value $0.01 per share (the "ADS SHARES") at a fair market value price
pursuant to the terms of the Vivendi Universal Plan. The Options shall vest
as follows: (1) 33 1/3% of the Options shall vest on the first anniversary of
the date of grant; (2) 33 1/3% of the Options shall vest on the second
anniversary of the date of grant and (3) 33 1/3% of the Options shall vest on
the third anniversary of the date of grant. The date of grant shall be the
first business day after the Effective Date.
B. ADDITIONAL BENEFITS
i. In addition, the Executive will be entitled to
participate in all compensation or employee benefit plans or programs and
receive all benefits and perquisites for which salaried employees of the
Company generally are eligible, under any plan or program now or established
later by the Company, on the same basis as similarly situated senior
executives of the Company. These plans and programs include any group
hospitalization, health, dental care, life or other insurance, savings,
thrift and profit sharing plans, termination or severance pay programs (but
only to the extent that such programs provide payments or benefits more
favorable than those provided for in this Agreement), paid time off and sick
leave plans, travel or accident insurance, disability insurance, and
contingent compensation plans, including capital accumulation programs and
stock option plans, which the Company may establish. Nothing in this
Agreement will preclude the Company from amending or terminating any of the
plans or programs referenced in this subparagraph applicable to salaried
employees or senior executives as long as such amendment or termination is
applicable to comparably situated salaried employees or senior executives, as
the case may be.
ii. Notwithstanding anything to the contrary contained in
the company's applicable paid time off policy in effect from time to time
during the Period of Employment, during the Period of Employment the
Executive will be entitled to accrue vacation time at the rate of 20 working
days per year of service with a maximum accrual of 20 working days (after
which Executive will cease to accrue vacation time until a sufficient number
of days of such accrued vacation time has been utilized in accordance with
the terms of the Company's paid time off policy such that Executive's accrued
vacation time does not exceed the maximum accrual of 20 working days).
SECTION V
BUSINESS EXPENSES
The Company will reimburse the Executive for all necessary travel and
other expenses incurred by the Executive in connection with the performance of
his duties and obligations under this Agreement in accordance with the Company's
travel and expense policy in effect from time to time. The Executive shall
comply with such limitations and reporting requirements with respect to expenses
as may be reasonably established from time to time.
SECTION VI
DISABILITY
A. i. If the Executive becomes Disabled during the Period of
Employment, the Period of Employment may be terminated at the option of the
Executive upon notice of
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EXECUTION VERSION
resignation to the Company or at the option of the Company, subject to
applicable legal requirements, upon notice of termination to the Executive.
"DISABLED" shall mean Executive's inability to substantially perform his
duties under this Agreement as a result of illness or injury for a period of
not less than ninety (90) consecutive days together with a determination by
an independent medical authority that executive is unable to perform such
duties and in all reasonable medical likelihood such inability will continue
for a period in excess of one hundred and eighty (180) consecutive days.
Unless otherwise agreed by the Executive and the Company, the independent
medical authority shall be selected by the Executive and the Company each
selecting a board-certified licensed physician and the two physicians
selected designating an independent medical authority, whose determination
that the Executive is Disabled shall be binding upon the Company and the
Executive. In such event, until the Executive reaches the age of sixty-five
(65) (or such earlier date on which he is no longer Disabled), the Company
shall continue to pay the Executive sixty percent (60%) of his Base Salary as
in effect at the time of the termination minus the amount of any disability
payments the Executive may receive under any long-term disability insurance
maintained by the Company or any governmental entity; PROVIDED, however, if
such disability is due to chemical dependence, alcoholism or mental illness,
the Company shall continue to make the payments described in this sentence
for a period not to exceed twenty-four (24) months. From the date hereof and
continuing for twelve (12) months thereafter, no payments under this Section
VI shall become due if the disability claimed by the Executive is a
pre-existing medical condition for which the Executive incurred expenses,
received medical treatment, care or services (including, without limitation,
diagnostic measures), was prescribed drugs or medicines or consulted a
physician. Any amounts payable pursuant to this Section VI shall be payable
as provided in Section IV.A.i hereof. Earned but unpaid Base Salary and
earned but unpaid incentive compensation awards will be paid in a lump sum at
the time of such termination.
ii. The Company will also continue the benefits and
perquisites described in Section IV.B of this Agreement for a period of
twelve (12) months subsequent to any such termination without cost to the
Executive.
iii. In the event of any such termination, all vested stock
options held by the Executive shall remain fully exercisable until the
applicable expiration dates contained in the applicable stock option
agreements pursuant to which such stock options were granted.
B. During the period the Executive is receiving payments of either
regular compensation or disability insurance described in this Agreement and as
long as he is physically and mentally able to do so without undue burden, the
Executive will furnish information and assistance to the Company as reasonably
requested and from time to time will make himself reasonably available to the
Company to undertake assignments consistent with his prior position with the
Company and his physical and mental health. If the Company fails to make a
payment or provide a benefit required as part of the Agreement, the
Executive's obligation to furnish information and assistance will end without
prejudice to any other rights or remedies the Executive may have.
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EXECUTION VERSION
SECTION VII
DEATH
In the event of the death of the Executive during the Period of
Employment, the Period of Employment shall end and the Company's obligation
to make payments under this Agreement shall cease as of the date of death,
except for earned but unpaid Base Salary, any earned but unpaid amounts due
under Section IV.A.iii and any earned but unpaid incentive compensation
awards, which will be paid to the Executive's surviving spouse, estate or
personal representative, as applicable, in a lump sum within sixty (60) days
after the date of the Executive's death. The Executive's designated
beneficiary will be entitled to receive the proceeds of any life or other
insurance or other death benefit programs provided in this Agreement. The
Company will also continue the benefits and perquisites described in this
Agreement for a period of thirty-six (36) months commencing on the
Executive's death. Any vested stock options held by the Executive will remain
exercisable upon his death, for the period applicable under the terms of the
stock option plan under which the options were granted.
SECTION VIII
EFFECT OF TERMINATION OF EMPLOYMENT
A. The Executive's employment may be terminated by the Company at any
time Without Cause or for Cause (each as defined in Paragraph F below) upon 60
days notice to the Executive. The Executive may terminate his employment with
the Company at any time upon 90 days notice with or without Good Reason. The
Company must provide the Executive with at least 90 days prior written notice if
the Company wishes to extend the Period of Employment.
B. If Executive's employment is terminated at any time during the
Period of Employment by the Company Without Cause (as defined in Paragraph F
below) or by Executive for Good Reason (as defined in Paragraph F below), the
Company shall pay the Executive (or his surviving spouse, estate or personal
representative, as applicable): (1) the greater of (x) a lump-sum amount equal
to one year of Executive's Base Salary and (y) the Base Salary which would have
been paid to the Executive for the remaining Period of Employment (without
giving effect to such termination), (2) a pro-rated incentive bonus based on
actual calculations for the year in which the Executive is terminated (such
pro-rated incentive bonus to be paid as soon as practicable after the financial
results for that year become available), (3) any earned but unpaid amounts due
under Section IV.A.iii, and (4) any earned but unpaid Base Salary and any earned
but unpaid incentive compensation awards, which shall be paid to the Executive
in a lump sum after the date of such termination within the period required by
law (but in no event later than 60 days after the date of termination). All
Options not vested as of the date of termination shall be cancelled on the date
of the termination. The benefits and perquisites described in this Agreement
will terminate as of the date of such termination.
C. If the Executive's employment terminates due to a Termination for
Cause (as defined in Paragraph F below), the Company shall pay the Executive (or
his surviving spouse, estate or personal representative, as applicable): (1) any
earned but unpaid amounts due under Section IV.A.iii and (2) any earned but
unpaid Base Salary and any earned but unpaid incentive compensation awards,
which shall be paid to the Executive in a lump sum after the date of such
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EXECUTION VERSION
termination within the period required by law (but in no event later than 60
days after the date of termination). No other payments will be made or benefits
or perquisites provided by the Company after the date of such termination.
D. Upon termination of the Executive's employment other than for
reasons due to death (as provided for in Section VII), disability (as provided
for in Section VI), or pursuant to Paragraph B or E of this Section, the Period
of Employment and the Company's obligation to make payments under this Agreement
will cease as of the date of the termination, except as expressly provided in
this Agreement; PROVIDED that the Company shall pay the Executive (or his
surviving spouse, estate or personal representative, as applicable): (1) any
earned but unpaid amounts due under Section IV.A.iii and (2) any earned but
unpaid Base Salary and any earned but unpaid incentive compensation awards,
which shall be paid to the Executive in a lump sum after the date of such
termination within the period required by law (but in no event later than 60
days after the date of termination).
E. If the Company terminates Executive's employment Without Cause or
Executive terminates his employment for Good Reason at the time during the
Period of Employment within six months of a Change in Control (as defined in
Paragraph F below), the Company shall pay the Executive (or his surviving
spouse, estate or personal representative, as applicable): (1) the greater of
(x) a lump-sum amount equal to one year of Executive's Base Salary and (y) the
Base Salary which would have been paid to the Executive for the remaining Period
of Employment (without giving effect to such termination), (2) a pro-rated
incentive bonus based on actual calculations for the year in which the Executive
is terminated (such pro-rated incentive bonus to be paid as soon as practicable
after the financial results for that year become available), (3) any earned but
unpaid amounts due under Section IV.A.iii, and (4) any earned but unpaid Base
Salary and any earned but unpaid incentive compensation awards, which shall be
paid to the Executive in a lump sum after the date of such termination within
the period required by law (but in no event later than 60 days after the date of
termination). All Options not vested as of the date of termination shall be
cancelled on the date of the termination. The benefits and perquisites described
in this Agreement will terminate as of the date of such termination, PROVIDED,
HOWEVER, that the Company shall continue to provide the Executive (and his
eligible dependents) with the medical coverage provided to him immediately prior
to such termination for a period of twelve (12) months after such termination.
F. For this Agreement, the following terms have the following
meanings:
i. "TERMINATION FOR CAUSE" or "TERMINATED FOR CAUSE" means
termination of the Executive's employment by the Company by written notice to
the Executive as provided in Paragraph A of this Section, specifying the event
relied upon for such termination, due to (a) the Executive's material breach of
any of his duties or covenants under this Agreement which, in any such case,
is not cured (if such breach is capable of being cured) within thirty (30)
days after written notice thereof to the Executive, (b) the Executive's
failure to perform his duties in a manner which is commensurate with
reasonable standards for employees in similar circumstances and with similar
duties to those of the Executive which, in any such case, is not cured (if
such breach is capable of being cured) within thirty (30) days after written
notice thereof to the Executive, (c) the Executive's willful misconduct with
respect to the Company or
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EXECUTION VERSION
any of its Affiliates which, in any such case, is not cured (if such breach
is capable of being cured) within thirty (30) days after written notice
thereof to the Executive or (d) the Executive's conviction of a felony,
perpetration of common law fraud or a misdemeanor involving moral turpitude.
ii. "WITHOUT CAUSE" or "TERMINATED WITHOUT CAUSE" means
termination of the Executive's employment by the Company other than due to
death, disability, or Termination for Cause.
iii. "GOOD REASON" shall be deemed to exist if, before the
end of the Period of Employment, one or more of the following events shall
occur:
(i) without the Executive's express written consent, the
assignment to the Executive of any duties or the reduction of
the Executive's duties, either of which effectively results in
the removal of the Executive from the position and
responsibilities described in Section II above;
(ii) a reduction by the Company in the Base Salary or annual
incentive awards of the Executive as in effect immediately
prior to such reduction;
(iii) a material reduction by the Company in the kind or level of
employee benefits to which the Executive is entitled
immediately prior to such reduction with the result that the
Executive's overall benefits package is significantly reduced;
(iv) the relocation of the Executive to a facility or a location
more than 25 miles from the Executive's present primary
residential location, without the Executive's express written
consent; or
(v) any material breach by the Company of any material provision
of this Agreement which is not cured (if such breach is
capable of being cured) within thirty (30) days after written
notice thereof by Executive to the Company.
iv. CHANGE OF CONTROL. "Change of Control" means the
occurrence of any of the following events:
(i) Any "person" (as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended) other than
an Affiliate of the Company becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company representing fifty percent
(50%) or more of the total voting power represented by such
company's then outstanding voting securities;
(ii) A change in the composition of the Board of the Directors of
the Company (the "BOARD")occurring within a twelve-month
period, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall
mean directors who either (A) are directors of the Company
as of the date hereof, or (B) are elected, or nominated for
election, to the Board with the affirmative
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EXECUTION VERSION
votes of at least a majority of the Incumbent Directors at
the time of such election or nomination (but shall not
include an individual whose election or nomination is in
connection with an actual or threatened proxy contest
relating to the election of directors to the Company) or (C)
are elected, or nominated for election, by an Affiliate of
the Company;
(iii) The consummation of merger or consolidation of the Company
with any other corporation which is not an Affiliate of the
Company, other than a merger or consolidation that would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or such surviving entity's
parent) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such
surviving entity or such surviving entity's parent outstanding
immediately after such merger or consolidation;
(iv) The consummation of the sale or disposition by the Company of
all or seventy-five percent (75%) or more of the Company's
assets to a person or entity which is not an Affiliate of the
Company.
v. "Affiliate" shall mean any person or entity controlling,
controlled by or under common control with the subject person or entity (as such
terms are used pursuant to the Securities Act of 1933, as amended).
SECTION IX
OTHER DUTIES OF THE EXECUTIVE
DURING THE RESTRICTED PERIOD
A. The Executive will, with reasonable notice during or after the
Period of Employment, furnish any information belonging or relating to the
Company, and will cooperate in good faith with the Company and its Affiliates as
may reasonably be requested in connection with any claims or legal actions in
which the Company or any of its Affiliates may become a party. Notwithstanding
the foregoing, the Executive is not required to cooperate with the Company
unless the Company pays in advance the Employee's reasonable costs of
cooperation. The Executive's duties hereunder shall be reasonably subject to,
among other things, the Executive's other commitments, including work
commitments.
B. The Executive recognizes and acknowledges that all information
pertaining to this Agreement or to the affairs, business, results of operations,
accounting methods, practices and procedures, members, acquisition candidates,
financial condition, clients, customers or other relationships of the Company or
any of its Affiliates ("INFORMATION") is confidential and is a unique and
valuable asset of the Company or any of its Affiliates. Access to and knowledge
of certain of the Information is essential to the performance of the Executive's
duties under this Agreement. The Executive will not, during the Period of
Employment or at any time thereafter, except to the extent reasonably necessary
in performance of his duties under this Agreement,
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EXECUTION VERSION
give to any person, firm, association, corporation, or governmental agency
any Information, except as may be required by law. The Executive will not
make use of the Information for his own purposes or for the benefit of any
person or organization other than the Company or any of its Affiliates. All
records, memoranda, etc. relating to the business of the Company or its
Affiliates, whether made by the Executive or otherwise coming into his
possession, are confidential and will remain the property of the Company or
its Affiliates. Notwithstanding the foregoing, Information shall not include
information which: (a) was generally publicly known at the time of disclosure
to the Executive, or subsequently became generally publicly known through no
act or omission attributable to the Executive; (b) was rightfully in the
possession of the Executive, without an obligation of confidentiality, prior
to disclosure by the Company or an Affiliate; (c) is hereafter rightfully
furnished to the Executive by a third party without an obligation of
confidentiality; or (d) is independently developed by the Executive without
use of any Information.
C. The Executive agrees that no later than five (5) days after his
employment is terminated with the Company he will deliver to the Company and
will not keep in his possession or deliver to anyone else, any and all drawings,
notes, memoranda, specifications, financial statements, customer lists, product
surveys, data, documents or other material containing or disclosing any of the
matters referred to in clause B above.
D. i. For one (1) year after any termination of employment (the
"RESTRICTED PERIOD"), irrespective of the cause, manner or time of any
termination, the Executive will not use his status with the Company or any of
its Affiliates to obtain loans, goods or services from another organization
on terms that would not be available to him in the absence of his
relationship to the Company or any of its Affiliates. Notwithstanding the
foregoing, the Restricted Period shall cease as of the date of any
termination of Executive's employment by the Company Without Cause or by
Executive for Good Reason.
ii. During the Restricted Period, the Executive will not make
any statements or perform any acts intended to or which may reasonably be
expected to have the effect of materially advancing the interest of any party
which engages in, or plans to engage in, any Competitive Business Activity (as
defined below) or injuring the interests of the Company's Business (as defined
below). The Executive acknowledges that engaging in any Competitive Business
Activity will inevitably require the use and/or disclosure of Information.
During the Restricted Period, the Executive, without prior express written
approval by the Board, will not engage in, or directly or indirectly (whether
for compensation or otherwise), own or hold proprietary interest in, manage,
operate, or control, or join or participate in the ownership, management,
operation or control of, or furnish any capital to, any party which engages
in or plans to engage in any Competitive Business Activity, either as a
general or limited partner, proprietor, common or preferred shareholder,
officer, director, agent, employee, consultant, trustee, Affiliate, or
otherwise. The Executive acknowledges that the Company's Business is
conducted nationally and internationally and agrees that the provisions in
the foregoing sentence shall operate throughout the United States and the
world.
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EXECUTION VERSION
iii. During the Restricted Period, Executive shall not
criticize, denigrate, or otherwise speak adversely of the Company or any of
its Affiliates in regard to any of their past or present activities with the
intent to cause any injury or damage to the Company or such Affiliate.
E. i. During the Restricted Period, the Executive, without
express prior written approval from the Board, will not persuade or attempt
to persuade any customer, supplier, contractor or any other person or party
to cease doing business with the Company's Business or to reduce the amount
of business it does with the Company's Business.
ii. During the Restricted Period, the Executive will not
solicit or induce any person who is an employee of the Company or any of
Vivendi Universal's online entertainment businesses to terminate any
relationship such person may have with the Company or any of Vivendi
Universal's online entertainment businesses. The Executive hereby represents
and warrants that the Executive has not entered into any agreement,
understanding or arrangement with any employee of the Company or any of
Vivendi Universal's online entertainment businesses pertaining to any
business in which the Executive has participated or plans to participate, or
to the employment, engagement or compensation of any such employee.
iii. For the purposes of this Section IX of this Agreement,
"PROPRIETARY INTEREST" means legal or equitable ownership, whether through
stock holding or otherwise, of an equity interest in a business, firm or
entity or ownership of more than 5% of any class of equity interest in a
publicly-held company and the term "AFFILIATE" shall include without
limitation all subsidiaries of the Company and Havas.
iv. For purposes of this Agreement, (x) the term "COMPANY'S
BUSINESS" shall mean the online entertainment business conducted (as of the
date of Executive's termination of employment) by the Company or any of its
subsidiaries or Affiliates, and (y) "COMPETITIVE BUSINESS ACTIVITY" means any
enterprise, person, firm, corporation or business that is similar in whole or
in part to the Company's Business, or competes in any manner with the
Company's Business.
F. The Executive hereby acknowledges that damages at law may be an
insufficient remedy to the Company if the Executive violates the terms of this
Section IX and that the Company shall be entitled, upon making the requisite
showing, to preliminary and/or permanent injunctive relief in any court of
competent jurisdiction to restrain the breach of or otherwise to specifically
enforce any of the covenants contained in this Agreement without the necessity
of showing any actual damage or that monetary damages would not provide an
adequate remedy. Such right to an injunction shall be in addition to, and not
in limitation of, any other rights or remedies the Company may have.
G. The Executive agrees that the restrictions contained in this Section
IX are an essential element of the compensation the Executive is granted
hereunder and but for the Executive's agreement to comply with such
restrictions, the Company would not have entered into this Agreement.
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EXECUTION VERSION
SECTION X
OTHER POST-TERMINATION OBLIGATIONS
Executive agrees to refrain from engaging in any Competitive Business
Activity for a period of twelve (12) months following any termination of his
employment (the "POST-TERMINATION PERIOD"), whether voluntary or involuntary.
The Executive acknowledges that engaging in any Competitive Business Activity
will inevitably require the use and/or disclosure of Information. In
consideration for Executive's agreement to refrain from Competitive Business
Activity for the Post-Termination Period, (i) any stock options granted to
Executive by the Company during the Period of Employment that were scheduled, as
of the date of Executive's termination, to vest during the Post-Termination
Period (the "STOCK OPTIONS") shall continue to vest and to otherwise be
exercisable during the Post-Termination Period as if Executive had continued to
be actively employed by the Company during the Post-Termination Period and (ii)
the Company shall pay to the Executive a lump sum equal to three months Base
Salary upon the date of the Executive's termination. The Executive understands
and agrees that should he engage in any Competitive Business Activity during the
Post-Termination Period, from and after the date he commences the activities
constituting Competitive Business Activity (the "COMPETITION DATE") the Stock
Options will cease to vest and the period of exercisability of the Stock Options
shall be determined as if the Executive's employment had terminated as of the
Competition Date. If, during the Post-Termination Period, the Executive notifies
the company that he intends to engage in an activity and requests a
determination by the Company as to whether such activity constitutes a
Competitive Business Activity, the Company shall, within a reasonable period of
time, inform the Executive as to whether it would consider such activity to be a
Competitive Business Activity, it being understood that, for purposes of such
determination, the Company shall be entitled to rely upon the Executive's
description of such activity.
SECTION XI
INDEMNIFICATION; LITIGATION
The Company, and any subsidiary for which Executive provides services,
will indemnify the Executive to the fullest extent permitted by the laws of the
state of the Company's (or applicable subsidiary's) incorporation in effect at
that time, or certificate of incorporation and by-laws of the Company, whichever
affords the greater protection to the Executive.
SECTION XII
WITHHOLDING TAXES
The Company may directly or indirectly withhold from any payments
(including payment of the Inducement Payments) under this Agreement all federal,
state, city or other taxes that shall be required pursuant to any law or
governmental regulation.
12
EXECUTION VERSION
SECTION XIII
EFFECT OF PRIOR AGREEMENT
This Agreement contains the entire understanding between the Company
and the Executive with respect to the subject matter hereof and supersedes any
prior employment agreement between the Company and the Executive.
SECTION XIV
CONSOLIDATION, MERGER OR SALE OF ASSETS
Nothing in this Agreement shall preclude the Company from consolidating
or merging into or with, or transferring all or substantially all of its assets
to, another corporation which assumes this Agreement and all obligations and
undertakings of the Company hereunder. Upon such a consolidation, merger or sale
of assets, the term "the Company" will mean the other corporation and this
Agreement shall continue in full force and effect.
SECTION XV
MODIFICATION
This Agreement may not be modified or amended except in writing signed
by the parties. No term or condition of this Agreement will be deemed to have
been waived except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and will not constitute
a waiver for the future or act on anything other than that which is specifically
waived.
SECTION XVI
GOVERNING LAW; CONSTRUCTION
This Agreement has been executed and delivered in the State of New York
and its validity, interpretation, performance and enforcement shall be governed
by the internal laws of the State of New York. The construction and
interpretation of this Agreement shall not be strictly construed against the
drafter.
SECTION XVII
SURVIVAL
Sections VI, VII, VIII, IX, X, XI, XV, XVI, XVII, XVIII and XIX shall
continue in full force in accordance with their respective terms notwithstanding
any termination of the Period of Employment.
13
EXECUTION VERSION
SECTION XVIII
ARBITRATION
A. WHEN ARBITRATION IS REQUIRED.
i. The parties hereto agree to submit to arbitration any and
all claims arising out of Executive's employment or cessation of employment
which could have been brought before an appropriate government agency or in
an appropriate court of law, including but not limited to: (1) breach of this
Agreement or any other employment agreement or contract, express or implied;
(2) breach of any other term or condition of employment, whether express or
implied; (3) breach of any covenant of good faith and fair dealing; (4)
employment discrimination or harassment in violation of Title VII of the
Civil Rights Act of 1964; (5) age discrimination or harassment in violation
of the Age Discrimination in Employment Act; (6) any other claim arising
under the common law of the State of New York or of the United States related
to Executive's employment or termination from employment; and (7) violation
of any other federal, state or local statute, ordinance or regulation related
to Executive's employment with the Company or the termination of that
employment. Notwithstanding the above waiver of the right to a jury trial,
Executive shall not be precluded from exercising any right provided by
statute to file a charge or complaint of discrimination with the appropriate
state or federal administrative agency.
ii. Executive and the Company further agree that this duty
to arbitrate extends not only to disputes between Executive and the Company,
but also to disputes between Executive and the Company's officers, directors,
employees and agents which arise out of Executive's employment with the
Company or the termination of that employment.
iii. The parties acknowledge and agree that under certain
circumstances a breach of the covenants set forth in this Agreement may cause
or threaten immediate irreparable harm to either party. Therefore,
notwithstanding the agreement to arbitrate any and all disputes arising out
of this Agreement as set forth in Paragraph A.i above, the parties that, in
emergency circumstances, they each shall have the right to seek provisional
equitable remedies in a court of competent jurisdiction.
B. TIME FOR DEMANDING ARBITRATION. Any demand for arbitration shall
be made in writing and served upon the other party to this Agreement. Such
demand shall be served no later than the applicable statute(s) of limitation
should the matter or dispute have been asserted in a court of law.
C. SELECTION OF ARBITRATORS. In the event of a demand for arbitration,
the parties shall first attempt to agree upon an arbitrator to hear the dispute.
If agreement is not reached within fourteen (14) calendar days of the demand for
arbitration, the party seeking arbitration shall, within the five day period
following such fourteen (14) day period, request from the American Arbitration
Association ("AAA") a list of five (5) arbitrators experienced in labor and
employment disputes or such other matters as may be the subject of the dispute.
Within five days following receipt of the list of arbitrators from AAA, the
party seeking arbitration shall forward a copy of the list to the other
party. Within fourteen (14) calendar days of receipt of the
14
EXECUTION VERSION
list by the party seeking arbitration, the parties shall confer and attempt
to agree upon one of the arbitrators appearing on the list. If such agreement
cannot be reached, then within the five day period following such fourteen
(14) day period the parties shall select the arbitrator by alternately
striking names from the list until a single name remains. The party seeking
arbitration shall be the first to strike.
D. TIME IS OF THE ESSENCE. The parties expressly recognize the
importance of resolving disputes under this Agreement in an expeditious and
timely manner. Therefore, time is of the essence. Failure of a party seeking
arbitration to abide by the time limits set forth herein in a manner which
prejudices the other party shall constitute a waiver by that party of the
dispute.
E. REMEDIES. The remedies which may be awarded by an arbitrator shall
be consistent with any remedies available under such theories of liability had
the claims been brought in a court of law.
F. FINAL AND BINDING ARBITRATION. The decision of the arbitrator shall
be final and binding on the parties.
G. NO DELETION, ADDITION OR MODIFICATION. The arbitrator shall have no
authority to add to, delete from, or modify in any way the provisions of this
Agreement.
H. COSTS OF ARBITRATION. Subject to a subsequent award by the
arbitrator, the cost of arbitration shall be borne equally by the parties. Each
party shall pay their respective attorney's fees, if any.
I. VENUE. The parties hereto agree that any arbitration or other legal
proceeding relating to this Agreement shall be conducted within the borough of
Manhattan of the City of New York.
SECTION XIX
SEVERABILITY
All provisions of this Agreement are intended to be severable. In the
event any provision or restriction contained herein is held to be invalid or
unenforceable in any respect, in whole or in part, such finding shall in no way
affect the validity or enforceability of any other provision of this Agreement.
The parties hereto further agree that any such invalid or unenforceable
provision shall be deemed modified so that it shall be enforced to the greatest
extent permissible under law, and to the extent that any court of competent
jurisdiction determines any restriction herein to be unreasonable in any
respect, such court may limit this Agreement to render it reasonable in the
light of the circumstances in which it was entered into and specifically enforce
this Agreement as limited.
15
EXECUTION VERSION
SECTION XX
BINDING AGREEMENT; SUCCESSORS
This Agreement shall inure to the benefit of, be enforceable by, and be
binding upon the parties and their respective heirs, executors, administrators,
successors and assigns.
[Signature Page Follows]
16
EXECUTION VERSION
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
FLIPSIDE, INC.
By: /s/ Xxxxxx Xxxx
-------------------------------------
Name: Xxxxxx Xxxx
Title: Chairman
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxxx
S-1
EXECUTION VERSION
SCHEDULE A
*PLEASE NOTE THAT, FOR THE PURPOSES OF THIS AGREEMENT, ALL FINANCIAL NUMBERS
LISTED BELOW ARE PRO FORMA.
I. BASE SALARY AND AWARD OF INCENTIVE BONUS.
A. The Executive's Base Salary for the Period of Employment shall be
$300,000.
B. A maximum of $150,000 shall be awarded to the Executive as a target
bonus (a "TARGET BONUS") and a maximum of an additional $150,000 as a super
target bonus (a "SUPER TARGET BONUS") based upon the Company achieving certain
performance milestones as follows:
------------------------------------------------------------------------------------------------------
GOALS(1) SYMBOL GOAL AMOUNT
------------------------------------------------------------------------------------------------------
TARGET GOALS
------------------------------------------------------------------------------------------------------
US pro-forma net revenue(2) for Calendar Year 2001 Rt 72,000,000
------------------------------------------------------------------------------------------------------
US pro-forma EBITDA(3) for Calendar Year 2001 Pt -6,000,000
------------------------------------------------------------------------------------------------------
REDUCED TARGET GOALS
------------------------------------------------------------------------------------------------------
US pro-forma net revenue for Calendar Year 2001 rt 64,000,000
------------------------------------------------------------------------------------------------------
US pro-forma EBITDA for Calendar Year 2001 pt -12,000,000
------------------------------------------------------------------------------------------------------
SUPER TARGET GOALS
------------------------------------------------------------------------------------------------------
US pro-forma net revenue for Calendar Year 2001 SRt 88,000,000
------------------------------------------------------------------------------------------------------
US pro-forma EBITDA for Calendar Year 2001 SPt 8,800,000
------------------------------------------------------------------------------------------------------
ACTUAL RESULTS
------------------------------------------------------------------------------------------------------
US pro-forma net revenue for Calendar Year 2001 Ra
------------------------------------------------------------------------------------------------------
US pro-forma EBITDA for Calendar Year 2001 Pa
------------------------------------------------------------------------------------------------------
1. These Goals will remain valid so long as Flipside meets its targets
for the first four months of 2001; otherwise, these Goals will be revised to
reflect only Uproar's performance for the whole of 2001 plus the performance of
Flipside beginning on May 1, 2001.
2. Net revenue includes barter revenue to a first fiscal year maximum
of $6,000,000.
3. All EBITDA Calculations are to be made in accordance with the
restructuring model attached hereto and are exclusive of the effect of any
further acquisitions made by the Company.
-------------------------
1. The maximum Target Bonus shall be awarded if the Company
shall have achieved Target Goals (as indicated in the above table). If the
Company shall not have achieved the Target Goals, a portion of the Target Bonus
shall be awarded according to the following weighted formula:
-- --
| / \ / \ |
||(Ra-rt) 1| |(Pa-pt) 2||
||------- x -| + |------- x -|| x $150,000 = Target Bonus
||(Rt-rt) 3| |(Pt-pt) 3||
| \ / \ / |
-- --
Notwithstanding the foregoing, if the above calculation yields
a result which is less than $50,000, the Executive shall receive a Target Bonus
of $50,000.
A-1
EXECUTION VERSION
2. If the Super Target Goals are achieved, the maximum Super
Target Bonus shall be awarded. If the Company shall not have achieved the Super
Target Goals, but shall have achieved the Target Goals, the Executive shall
receive the maximum Target Bonus and a portion of the Super Target Bonus,
calculated together as follows:
/ \
|-- -- |
|| // \ \ // \ \ | |
||||(Ra-Rt) | 1| ||(Pa-Pt) | 2|| |
||||--------| x -| + ||--------| x -|| x $150,000| + $150,000 = Total Bonus
||||(SRt-Rt)| 3| ||(SPt-Pt)| 3|| |
|| \\ / / \\ / / | |
|-- -- |
\ /
C. Notwithstanding the foregoing, if the Company shall not have
achieved (i) EBITDA (calculated on a pro forma basis in accordance with the
restructuring model attached hereto, and exclusive of the effect of any future
acquisitions by the Company) greater than 0 for the quarter ending December 31,
2001 and (ii) a milestone for revenues from European operations, to be mutually
agreed-upon by the Executive, Xxxxxxxx Xxxxxxx and Xxxxxx Xxxx, the Executive
shall only receive a bonus of $50,000.
A-2
