Exhibit 10.2
May 1, 2000
Xxxx X. Xxxxxxx
Portofino, Apt 000
Xxx Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Dear Xxxx:
The following constitutes the employment agreement (the "Agreement") between you
(the "Executive") and Xx0.xxx Inc. (the "Company"), a Colorado corporation. This
letter sets forth the terms of your employment as Executive Vice President and
Chief Financial Officer of Xx0.xxx Inc. (the "Company") effective May 1, 2000.
1. EMPLOYMENT; ACCEPTANCE OF EMPLOYMENT The Company hereby employs
the Executive during the Term (as defined below) on a full-time basis to render
exclusive services to the Company as executive vice president and chief
financial officer. The Executive hereby accepts this employment and will render
his services as required by the Company conscientiously, loyally, competently
and to the best of his talents and abilities throughout the Term in accordance
with the direction and control of his designated supervisor.
2. TERM OF AGREEMENT. The initial term of this Agreement shall
commence on the date hereof and terminate on May 1, 2002. This Agreement may be
renewed by the Company upon 90 days' written notice to the Executive prior to
the expiration of the initial term or any renewal term and acceptance of such
offer of renewal by the Executive. The initial term, as extended by any renewal
term, is referred to herein as the "Term".
3. EXECUTIVE'S DUTIES.
a. The Executive's duties include those services customarily rendered by a
chief financial officer of a publicly traded company of the size of the
Company in the Company's industry, with such other duties and services
as may reasonably be assigned to him from time to time in the conduct
of the business of the Company.
b. The Executive's services shall be rendered primarily at the Company's
offices in New York, New York and at such other locations as the
Company may request consistent with its business needs. Travel (and
related expenses) to such other locations will be at the Company's
expense.
4. EXCLUSIVITY, RESTRICTIVE AGREEMENTS.
a. During his employment, the Executive shall devote all of his business
time, skill and energies exclusively to the business of the Company.
b. The Executive acknowledges that the nature of the services, position
and expertise of the Executive are such that he is capable of competing
with the Company and seriously damaging its business and its prospects
to the detriment of its stockholders and employees. In consideration of
the Company's performance of its obligations under this Agreement,
during the Term and thereafter during the Restricted Period (as defined
below) the Executive shall not (i) directly or indirectly enter into
the employ of, or render any advice or services, whether or not for
compensation, to, any Person (as defined below) engaged in any
Competitive Business (as defined below); (ii) directly or indirectly
engage in any Competitive Business; and (iii) directly or indirectly
become interested, whether or not for compensation, in any Competitive
Business as an individual, partner, shareholder, creditor, director,
officer, principal, agent, employee, trustee, consultant, advisor or in
any other relationship or capacity or, in the case of any such company
whose securities are traded on a national securities exchange in the
United States or otherwise or in the over-the-counter market, acquire,
directly or indirectly, an interest in excess of one percent (1%) of
the outstanding capital stock of such company. The Company's business
is worldwide in scope; accordingly, the Executive agrees that this
covenant not to compete shall not be subject to any geographical limit.
c. For purposes of this Section, any "Competitive Business" shall mean any
business (including, for the avoidance of doubt, any division, unit,
subsidiary or affiliate of any other business whether or not such other
business is a Competitive Business unless the Executive can demonstrate
upon the Company's request that his employment by, engagement in, or
his interest in, such unit, division, subsidiary or affiliate does not
and will not require him to provide services, information, advice or
relevant knowledge, skill, know-how or contacts to the Competitive
Business during the Restricted Period) which is principally engaged in
the design or development of digital compression, decompression or
playback technologies in the computing, telecommunications or
entertainment industries.
d. For purposes of this Section, "Person" shall mean any corporation,
partnership, trust, individual or any other entity.
e. For all purposes of this Section 4, "Restricted Period" shall be the
180 days immediately following termination of employment whether such
termination is by resignation or termination by the Company with or
without Cause (as defined below) or upon the expiration of the Term.
5. COMPENSATION.
a. During the Term the Executive shall receive base compensation at the
rate of $185,000 per year, payable monthly. Such base salary as may be
increased from time to time and is hereinafter referred to as "Base
Salary".
b. The Company will reimburse the Executive for expenses related to its
business actually incurred or paid by the Executive in the performance
of his duties under this Agreement, including without limitation
parking expenses, upon presentation of accountings, expense statements,
vouchers or such other supporting information as may be required by the
Company's policies.
6. STOCK OPTION INCENTIVE
On the date of this agreement, the Company shall confirm the grant to
the Executive of Options to purchase 250,000 shares of Common Stock
under its 1999 Amended and Restated Incentive and Non-Qualified Stock
Option Plan (the "Stock Plan") with an exercise price of $10.750 per
share, which options shall vest and become exercisable in accordance
with the terms and conditions of a stock option award agreement (the
"Stock Option Award Agreement") substantially in the form of Exhibit A
attached to this Agreement.
7. EXECUTIVE BENEFITS.
b. During the Term, the Executive shall be entitled to participate in such
group health, retirement, profit sharing, 401(k) and other benefits
programs or plans, qualified or unqualified, including any future stock
option, bonus or other incentive program, which are or become available
to other senior executives of the Company, subject to the policies of
the Company with respect to all of such programs or plans. Nothing in
this clause 6a. shall be construed to create a contractual obligation
to provide the Executive with any particular form or type of benefit or
to limit the discretion of the Board of Directors or Compensation
Committee or any other duly authorized or appointed plan administrator
is permitted to exercise under any such benefit programs or plans.
c. During the Term the Executive shall be entitled to four weeks' paid
vacation per year of employment to be scheduled on reasonable notice to
the Company and to be taken, accrued and paid on the same basis as
other employees of the Company.
8. TERMINATION OF EMPLOYMENT FOR CAUSE.
d. The Company may terminate employment of Executive for any of the
following reasons, each of which is defined as "Cause:"
i. commission of a felony, any crime of moral turpitude or any act of
fraud
or dishonesty;
ii. repeated failure to satisfactorily perform material services
required under this Agreement in accordance with the requests of
the Board of Directors;
iii. willful misconduct or gross negligence in the performance of his
duties;
iv. disregard or violation of the legal rights of any employees of the
Company or of the Company's written policies regarding harassment
or discrimination; or
v. a breach of any material provisions of this Agreement (including,
but not limited to, any breach of Sections 3 or 9).
If the Company terminates the employment of the Executive for Cause, or if
the Executive resigns during the Term, the Company's obligations under this
Agreement to pay further compensation shall cease forthwith, except that the
Company will pay the Executive, within 30 days from the date of termination
of his employment, in full and complete satisfaction of all of the Company's
obligations under this Agreement, (i) the Base Salary and, subject to
submission of all required documentation, reimbursable expenses accrued (but
unpaid) to the date of termination and (ii) any accrued but unused vacation
days paid at the rate of the Executive's Base Salary and during the six
months after such termination will further provide all benefits as would
have been provided had employment continued including medical, disability
and life insurance; PROVIDED, that in the case of the death of the Executive
during such six-month period, medical insurance will be continued for the
Executive's wife for the duration of such period. Nothing contained in this
Section 7(a) shall be construed to alter the Executive's right under any
stock option plan pursuant to which options have been issued to Executive.
e. If the Executive dies during the Term, such death shall be deemed
termination for Cause and the Company's obligation to Executive's
estate shall be the same as those for termination for cause as defined
in Section 7.a above.
f. If, as a result of the Executive's disability or incapacity during the
Term due to physical illness or condition, or mental illness during his
employment with the Company, the Executive is unable to perform his
duties hereunder for a consecutive 6-calendar week period, or an
aggregate period of 12 calendar weeks during any 12 months (or such
longer period as may be required to comply with the Family Leave Act or
other applicable law), the Company shall have the right, upon written
notice to the Executive, to terminate the Executive's employment under
this Agreement. Such a termination shall be deemed termination for
Cause as defined in Section 7.a but shall in no case become effective
until the date at which the Company's long-term disability plan pays
benefits to him.
g. Any alleged breach of this Agreement by either party shall not be
deemed a
breach until such time as the breaching party shall have received
written notice from the non-breaching party setting forth the alleged
breach ("Alleged Breach Notice") and the breaching party shall not have
cured (if curable) the breach set forth in the Alleged Breach Notice in
the 15 days (10 days for defaults in payments) after receipt of such
Alleged Breach Notice. If the breach set forth in the Alleged Breach
Notice is not curable and has not resulted in a substantive and
material adverse effect on the party sending the Alleged Breach Notice,
the Company and the Executive shall, at the request of the other,
attempt to meet and discuss such alleged breach before resorting to
remedies or rights under this Agreement or otherwise. Notwithstanding
the foregoing, this Section shall not apply to, and the Executive shall
have no right to cure, a breach by him under clauses (i) and (iv) of
the definition "Cause" contained in Section 7.a, above.
9. TERMINATION OTHER THAN FOR CAUSE.
h. If the Company terminates the Executive's employment without Cause, or
if the Term (including, for the avoidance of doubt, any renewal term)
expires without being extended pursuant to Section 2, the Company's
obligations under this Agreement shall be as follows:
i. The Company will continue to pay to the Executive, or in the case
of death of the employee to his successors or legal
representatives or to his estate, during the 180 days immediately
following such termination of employment or expiration of the
Term, as the case may be (such period is hereinafter referred to
as the "Severance Period"), his Base Salary on a monthly basis as
would have been paid to the employee had his employment with the
Company continued;
ii. The Company shall pay to the Executive his proportionate share of
any bonus compensation to which he would have received had he
continued to be employed until the end of the relevant bonus
calculation period. Such bonus compensation shall be payable in a
lump sum within 30 days of determination of Executive's bonus
amount;
iii. The Company will continue to provide all benefits to the Executive
during the Severance Period as would have been provided had
employment continued, including medical, disability and life
insurance. In the case of the death of the employee, medical
insurance will be continued for Executive's spouse for the
duration of the Severance Period; and
iv. The Company will reimburse the Executive for all reimbursable
expenses accrued (but unpaid) to the date of termination or
expiration of the Term, as the case may be; and within 10 business
days after such termination, any accrued but unused vacation days
paid at Executive's Base Salary.
i. If a termination without Cause takes effect prior to the
expiration of the Term, all of the Executive's stock options which
would have vested and become exercisable had the Executive's
employment continued to the end of the Term in which such
termination without Cause has occurred shall vest and become
exercisable, and the Executive may exercise all options held by
him which have thereby vested and become exercisable during the
period ending on the last day on which the Executive may exercise
such options under the terms of the applicable option plan or 90
days from the date of termination, whichever is later.
j. The Company will incorporate the provision set forth on Exhibit A
to this Agreement in all plans to which all options which have
heretofore been granted to the Executive are subject. Until such
times as such provision is so incorporated, the following terms of
this Section 8(c) shall apply:
Notwithstanding Section 6(b), if the Company terminates the
Executive's employment without Cause following a business
combination (including sale of assets, merger, consolidation or
other transaction that results in the stockholders of the Company
receiving liquid consideration for a majority of the holdings in
the Company accompanied by a change in actual control of the
Company), all stock options theretofore granted to the Executive
shall vest and become exercisable, and the Executive may
thereafter exercise all options held by him during the period
ending on the last day on which the Executive may exercise such
options under the terms of the applicable option plan or 90 days
from the date of termination, whichever is later.
10. NONDISCLOSURE.
k. Except as required in order to perform his obligations under this
Agreement, the Executive shall not, without the express prior
written consent of the Company, directly or indirectly, disclose
or divulge to any other person or entity any of the Company's
Confidential Information or Trade Secrets at any time (during or
after the Executive's employment) during which such data or
information continues to constitute Confidential Information or a
Trade Secret. Except as required to be disclosed to his attorney,
accountant or financial advisor, the Executive shall not disclose
or divulge to any other person (particularly to any other
employee) any terms of the Executive's compensation under this
Agreement. Upon any termination or expiration of his employment,
the Executive will promptly deliver to the Company all data,
lists, information, memoranda, documents and all other property
belonging to the Company or containing Confidential Information or
Trade Secrets of the Company.
l. As used in this Agreement:
i. "Confidential Information" of the Company shall mean any
valuable, competitively sensitive data and information
related to the Company's
business other than Trade Secrets that are not generally
known by or readily available to the Company's competitors,
including, among other things, that which relates to services
performed by the Executive for the Company, or was created or
obtained by the Executive while performing services for the
Company or by virtue of the Executive's relationship with the
Company; and
ii. "Trade Secrets" shall mean information or data of the
Company, including but not limited to technical or
non-technical data, compilations, programs, devices, methods,
techniques, processes, financial data and financial plans,
that: (a) derive economic value, actual or potential, from
not being generally known to, and not being readily
ascertainable by proper means by, other persons who can
obtain economic value from their disclosure or use; and (b)
are the subject of efforts that are reasonable under the
circumstances to maintain their secrecy. To the extent that
the foregoing definition is inconsistent with a definition of
"trade secret" mandated under applicable law, the latter
definition shall govern for purposes of interpreting the
Executive's obligations under this Agreement.
iii. The obligations set forth in this Section shall not be
applicable to any information which: (i) the Company has
authorized the Executive in writing to publicly disclose,
copy or use, but only to the extent of such authorization;
(ii) is generally known or becomes part of the public domain
through no fault of the Executive; (iii) is disclosed to the
Company by third parties without restrictions on disclosure;
or (iv) is required to be disclosed in the context of any
administrative or judicial proceedings; PROVIDED that, if the
Executive is requested or becomes legally compelled to
disclose any Confidential Information or Trade Secrets, the
Executive will provide the Company with prompt written notice
so that the Company may seek a protective order or other
appropriate remedy and/or waive compliance with the
provisions of this Section and the Executive will cooperate
with the Company in any effort the Company undertakes to
obtain a protective order or other remedy. If such a
protective order or other remedy is not obtained or the
Company waives compliance with this Section, the Executive
will furnish only that portion of the Confidential
Information and Trade Secrets that is legally required and
will exercise all reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded the
Confidential Information to be disclosed. The Company hereby
agrees to indemnify and hold harmless Executive from all
costs and expenses, including attorneys' fees, he incurs in
carrying out his obligations under the proviso provisions of
this subsection 9.b.iii and further agrees upon the written
request of Executive to advance to Executive the anticipated
cost of complying with his obligations under such proviso
provisions.
11. REPRESENTATIONS AND WARRANTIES. The Executive hereby
represents and warrants that (a) he has the right to enter into this Agreement
with the Company and to grant the rights contained in this Agreement, and (b)
the provisions of this Agreement do not violate any other contracts or
agreements that the Executive has entered into with any other individual or
entity.
12. SERVICES OF THE EXECUTIVE. In the course of his employment under
this Agreement, the Executive will have access to Trade Secrets, the disclosure
or unauthorized use of which, the Company seeks to protect and the Executive has
agreed to protect. As a result of benefits accruing to the Executive from his
access to such Trade Secrets, and of the improvement in his knowledge, and
proficiency arising therefrom, the Executive acknowledges that (a) his services
are and will remain special and extraordinary, and have and will have a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in any action at law; (b) he is willing to comply with the restrictions
contained in Sections 4.b and 4.c; (c) the restrictions contained in those
Sections will not impair his ability to earn a living in any businesses other
than those businesses from which he is prohibited during the time of such
restriction; and (d) a material breach of his obligations under Sections 4.b,
4.c or 9 will cause the Company irreparable injury and damage. It is, therefore,
agreed that the Company, in addition to any other remedies, shall be entitled to
injunctive and other equitable relief to enforce its rights under, and to
prevent a breach of, Sections 4.b, 4.c and 9 of this Agreement by the Executive.
63. ASSIGNABILITY ETC. This Agreement shall be nondelegable and
nonassignable by the Executive, and shall inure to the benefit of heir and
assigns the Executive. This Agreement shall be binding upon and inure to the
benefit of the Company and any entity succeeding to all or substantially all of
the business assets of the Company by merger, consolidation, purchase of assets
or otherwise.
14. NOTICES. Any notice pertaining to this Agreement shall be in
writing and shall be served by delivering said notice (i) by hand, (ii) by
overnight mail by a internationally recognized carrier, (iii) by sending it by
certified mail, postage prepaid, return receipt requested, or (iv) by confirmed
telefax, with notice confirmed, to the Executive at the address first stated
above or his office at the Company, and to the Company at:
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: President
Fax: (000)000-0000
with a courtesy copy to:
Xxxxxxx X. Xxxxxx, Esq.
XxXxxxx Xxxxx Battle & Xxxxxx, LLP
0 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
The addresses for notice may be changed by notice given to the other party
pursuant to this Section.
15. MISCELLANEOUS.
a. This Agreement shall be governed by and construed under the laws
and decisions of the State of New York applicable without regard
to the principles of conflicts of laws. The parties to this
Agreement agree that the state or federal courts in the State of
New York shall have personal jurisdiction over them with respect
to, and shall be the exclusive forum for the resolution of, any
matter or controversy arising from or with respect to this
Agreement. Service of a summons and complaint concerning any such
matter or controversy may, in addition to any other lawful means,
be effected by sending a copy of such summons and complaint by
certified mail to the party to be served as specified in Section
13 of this Agreement or at such other address as the party to be
served shall have provided in writing to the other from time to
time in accordance with Section 13.
b. To the extent permitted by law, the Executive and the Company
irrevocably waive trial by jury and any objection which he or it
may now or hereafter have to the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in
the City of New York, and to the extent permitted by law, the
Executive and the Company hereby further irrevocably waive any
claim that any such suit, action or proceeding brought in the City
of New York has been brought in an inconvenient forum.
c. This Agreement contains the entire understanding of the parties to
this Agreement with respect to the subject matter of this
Agreement and supersedes all previous written and oral agreements
between the parties with respect to the subject matter set forth
in this Agreement.
d. This Agreement may not be modified or amended except by a writing
signed by the parties to this Agreement.
e. Any provision of this Agreement that is deemed invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction
and subject to this Section, be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in
any way the remaining provisions of this Agreement in such
jurisdiction or rendering that or any other provision of this
Agreement invalid, illegal or unenforceable in any other
jurisdiction. If the covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such
covenant shall be modified so that the scope of the covenant is
reduced only to the minimum extent necessary to render the
modified covenant valid, legal and enforceable.
f. The following provisions of this Agreement shall survive in
accordance with their
terms, the expiration or termination of this Agreement for any
reason: Sections 4, 5, 7, 8, 9 and 14.
g. A waiver by either party of any Section, term or condition of this
Agreement in any instance shall not be deemed or construed to be a
waiver of such Section, term or condition for the future or of any
subsequent breach thereof, and any such waiver must be in writing,
signed by the party to be charged. All rights and remedies
contained in this Agreement are cumulative, and none of them shall
be construed so as to limit any other right or remedy of either
party.
h. This Agreement may be executed in counterparts, all of which shall
constitute one and the same agreement.
i. The headings and titles to the Sections of this Agreement are
inserted for convenience only and shall not be deemed a part of or
affect the construction or interpretation of any provisions of
this Agreement.
j. All references to Sections shall be to sections and schedules of
this Agreement.
k. All references using male pronouns shall be deemed to include
female pronouns.
l. This Agreement maybe signed in multiple counterparts, each of
which shall be deemed an original. Any executed counterpart
returned by facsimile shall be deemed an original executed
counterpart.
If the foregoing accurately reflects the Executive's understanding, please
countersign and return one counterpart of this Agreement to the Company.
Sincerely yours,
XX0.XXX INC.
By: ----------------------------
Name: XXXXXXX X. XXXXXXXX
--------------------
Title: PRESIDENT/CEO
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Xxxx X. Xxxxxxx
