EXHIBIT 10.23
EXECUTIVE CONSULTING AGREEMENT
EXECUTIVE CONSULTING AGREEMENT (this "Agreement") made as of
the 1ST day of May, 2000, by and among DIGITAL CREATIVE DEVELOPMENT CORP., a New
York corporation with its principal place of business located at 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), XXXXXX XXXXXXXX'X INC.,
a Utah corporation with its principal place of business located at 0000
Xxxxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxx 00000 ("Treachers"), RJS
CONSULTING CORP., a Delaware corporation (Executive") with offices at 000
Xxxxxxxx Xxxx, Xxxxx Xxxxx, Xxx Xxxx 00000, and for the limited purposes
described herein, Xxxxx X. Xxxxxxxxxx, residing at 000 Xxxxxxxx Xxxx, Xxxxx
Xxxxx, Xxx Xxxx 00000 ("RJS") (for convenience of reference only, this Agreement
shall refer to Executive in the masculine gender, but such reference shall not
imply that any person other than Xxxxx X. Xxxxxxxxxx Inc. is a party as
Executive hereto).
W I T N E S S E T H:
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WHEREAS, Executive has been providing services to
Treacher's since December, 1999; and
WHEREAS, the Company is a subsidiary of Treacher's; and
WHEREAS, the Company desires to engage for itself the
experience, abilities and service of Executive in principal executive
capacities, and Executive desires to be so engaged, upon the terms and
conditions specified herein; and
WHEREAS, RJS, as the sole stockholder of Executive, is willing
to confirm his agreement to cause Executive to perform this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, terms and conditions hereinafter set forth, and for other good
and valuable consideration, receipt of which is specifically acknowledged, the
parties hereto hereby agree as follows:
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1. Retention
The Company hereby retains Executive, and Executive hereby
accepts such retention from the Company, to serve, as Executive Consultant, as
the President and Chief Executive Officer of the Company in accordance with the
terms of this Agreement. Pending the Executive Transition Date, as defined
below, Executive shall not be identified as an officer of the Company in any
public announcements. The term "Executive
Document #: 9233v8
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Transition Date" means the earlier of (i) July 1, 2000 or (ii) the date on which
Executive notifies the Company that he no longer holds the position of Executive
Vice President and Chief Financial Officer of Liberty Digital, Inc.
2. Executive's Duties
(a) The Company hereby agrees to retain Executive, and
Executive agrees faithfully and to the best of his ability, in the position of
President and Chief Executive Officer, to have general and active management and
supervision of the business of the Company and to discharge the duties of said
office and perform such other duties and services of an executive,
administrative and managerial nature as shall be specified and designated from
time to time by the Board of Directors of the Company in connection with the
business and activities of the Company; provided that the Company acknowledges
that, as described in Section 8(c)(ii) of this Agreement, the assignment of any
duties inconsistent with Executive's positions, duties, responsibilities and
status with the Company or a change in Executive's reporting responsibilities,
titles or offices will constitute a constructive termination providing Executive
with the rights described in such Section 8(c)(ii) and elsewhere in this
Agreement.
(b) Commencing on the Executive Termination Date, Executive
agrees to devote his best efforts, energy and skill, and in no event less than a
majority of his time during regular business hours, to the performance of such
services; provided, however, that the Company acknowledges that Executive may
from time to time engage in consulting and related activities for other
entities. Without limiting the foregoing, Executive shall be permitted to serve
as a consultant with and to (i) Liberty Digital, Inc., (ii) Xxxxx.Xxx, Inc. and
(iii) Heavy Industry, Inc., their respective successors and assigns.
Notwithstanding the foregoing, Executive shall not, without the prior written
consent of the Chairman of the Company (the "Chairman"), serve as consultant to
any other entity or person if such entity or person is engaged in Competitive
Activities. As used herein, the term "Competitive Activities" means activities
and business operations that are competitive with any business operations then
conducted or definitively proposed to be conducted by the Company within the
same geographic market as that in which the business of the Company is or is
definitively proposed to be conducted. The parties acknowledge that, in
reviewing any request for consent hereunder, the Company shall cause the
Chairman to consult in good faith with Executive mindful that Executive's
consulting activities with competitors may benefit the Company through strategic
investment or other business opportunities and that Executive's analysis thereof
will be accorded significant weight.
(c) Executive agrees to observe and comply with all rules,
regulations, policies and practices adopted by the Company, either orally or in
writing, both as they now exist and as they may be adopted or modified from time
to time.
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3. Term
Executive's employment and the term of this Agreement shall be
for a period of thirty (30) months commencing on April 1, 2000 and ending on
October 1, 2002 (the "Initial Term") and shall automatically extend for
additional one-year periods (each, an "Extended Term") unless either party gives
the other party notice (the "Non-Renewal Notice"), not fewer than 180 days prior
to the end of the then current term, that the Agreement will not be so extended.
4. Compensation
(a) Fee. Upon the execution and delivery of this Agreement,
the Company shall pay to Executive the sum of $15,000 (representing a $7,500 per
month fee owing for February, 2000 and March, 2000) and the sum of $20,000 for
April, 2000. The Company shall pay to Executive a base annual fee in the amount
of $250,000 payable on the first day of each month in installments of $20,000
per month except that the installment due on each of March 1, 2001 and March 1,
2002 shall be $30,000 and the installment due on September 1, 2002 shall be
$25,000. The parties shall negotiate in good faith for a fee for any Extended
Term but in no event shall any such fee be less than 120% of the fee in effect
for the twelve-month period immediately preceding such Extended Term. All
amounts paid to Executive under this Agreement shall be paid without withholding
for income, social security or other taxes of any kind.
(b) Bonus. The Company shall pay Executive at the end of each
calendar year and at the end of the Initial Term and any Extended Term a bonus
in such form and amount as the Board of Directors of the Company shall deem
appropriate.
(c) Car Allowance. During the Initial Term and any
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Extended Term, the Company shall provide to Executive a car allowance in an
amount not to exceed $750 per month.
(d) Life Insurance. During the Initial Term and any Extended
Term, the Company shall cause to be issued a key man life insurance policy on
RJS in the amount of $3,000,000, the premiums for which shall be paid by the
Company. The beneficiaries of such life insurance shall be the Company (to the
extent of $2,500,000) and a beneficiary to be designated by Executive (as the
same may be changed by Executive from time to time) to the extent of $500,000.
Such policy shall include a customary waiver of premium in the event of
Executive's Disability.
5. Equity Participation. Simultaneously with the execution and
delivery of this Agreement, Treacher's and Executive shall execute and deliver
the Stock Option Agreement (the "Option Agreement") in the form attached hereto
as Exhibit A providing for the grant to Executive of options to acquire Five
Million (5,000,000) shares of Treacher's common stock (the "Shares"), at an
exercise price of $.37 per share, with such
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vesting and other terms as are set forth in such Option
Agreement.
6. Assumption of Indebtedness; Loan. (a) Upon the request of
Executive from time to time, the Company shall assume and be primarily liable
for and shall indemnify Executive against up to $2,500,000 of indebtedness
incurred by Executive for any legal purpose (the "Assumed Debt"). The Company
shall promptly execute and deliver such documents and instruments as Executive
may deem reasonably necessary to effect such assumption. Upon consummation of a
Qualified Financing, as defined below, the Company shall promptly loan to
Executive in cash (the "Loan") an amount equal to the difference between
$2,500,000 and the aggregate amount of the Assumed Debt. The Loan, which shall
be non-recourse to Executive, shall be evidenced by a Note bearing interest at
6% per annum in form satisfactory to the Company and Executive with a maturity
date for the payment of principal and interest of October 1, 2002 (the "Maturity
Date"). The Loan and the Assumed Debt shall be secured by a first priority
security interest in that number of Options and Shares issued upon exercise of
the Options which, at a valuation of $.50 per share, secures the aggregate
outstanding amount of the Loan and Assumed Debt, to secure performance by
Executive of his obligations under this Agreement through the Maturity Date. As
used herein, the term "Qualified Financing" means any transaction or series of
related transactions by which the Company obtains cash of at least $20,000,000
through the issuance of debt, equity or any combination of debt and equity.
(b) Upon the issuance of any Shares upon exercise of any
Options, Executive shall open a brokerage account at a broker-dealer selected by
Executive and reasonably satisfactory to the Company (the "Account") and deposit
the pledged Shares into the Account to be held as security, as described herein,
provided that, subject to such security interest, Executive may utilize such
Shares for margin or other investment activity to the extent acceptable to such
broker-dealer. Executive agrees to execute and deliver an account control
agreement with such broker-dealer in form satisfactory to the Company and
Executive and such other documents as reasonably requested by the Company to
cause the Shares to be sold in the event amounts under the Loan and Assumed Debt
are required to be repaid by Executive and Executive has failed to repay such
amounts.
(c) Notwithstanding the foregoing, the Company expressly
acknowledges that if Executive's performance under this Agreement has not given
rise to a right of termination for Cause, as defined herein, the Company shall
on the Maturity Date forgive all amounts (including interest) owing under the
Loan and the Assumed Debt if (i) the closing price of the Shares on the
Company's principal listed exchange on the Maturity Date is not
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less than $12.50 per share or (ii) the average of the closing prices of a board
lot of Shares traded on the Company's principal listed exchange for the sixty
(60) trading days immediately preceding the Maturity Date is not less than 12.50
per share. The Company further acknowledges that Executive is entering into this
Agreement in reliance on the foregoing undertaking of the Company. The Company
acknowledges that if Executive's performance during the Initial Term has been
satisfactory and the price of the Shares has performed generally consistent with
the performance of the market, then the Board of Directors of the Company may in
its discretion forgive all amounts (including interest) owing under the Loan and
the Assumed Debt notwithstanding that the foregoing formula is not satisfied by
reason of, by way of illustration, aberrational swings in the price of the
Shares during such sixty (60) day period.
7. Put Right. At any time after the Company terminates
Executive's employment other than for Cause and at any time after Executive
terminates his employment for Good Reason, Executive may require the Company to
repurchase any Options held by Executive which are not subject to forfeiture, as
provided for in the Option Agreement, and any Shares previously issued to
Executive upon exercise of any Options, upon five (5) days written notice (the
"Put Notice") to the Company of Executive's election to require the Company to
effect such repurchase. The purchase price (the "Purchase Price") for each such
Option and each such Share shall be the greater of (x) the average of the
closing prices of a board lot of Shares traded on the Company's principal listed
exchange for the thirty (30) trading days immediately preceding the purchase
date or (y) the closing price of Shares on such exchange on the date of the Put
Notice. The payment of the Purchase Price shall be effected as follows:
(i) If the Company has Available Cash, as defined
below, in excess of the amount of the Purchase Price, the
Company shall pay the entire Purchase Price in cash;
(ii) If the Company has Available Cash in an amount which is
less than the amount of the Purchase Price, then, if Executive is
legally able publicly to sell such Options or Shares, the Company shall
cooperate with Executive in effecting such sale and pay to Executive
the difference between (a) the average of the closing prices of a board
lot of Shares traded on the Company's principal listed exchange for the
thirty (30) trading days immediately preceding the date of sale and (b)
the price at which Executive was able to effect such sale. The payment
by the Company of such difference shall be made in cash, to the extent
of Available Cash, plus the balance in the form of either, at
Executive's election, (x) a Promissory Note with a term of thirty (30)
months bearing interest at the Prime Rate, as defined below, plus 300
basis points, and otherwise in form and substance satisfactory to
Executive or (y) additional Shares or (z) any combination of such a
Promissory Note and additional Shares.
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As used herein the term "Available Cash" means 17.5% of average cash
balances held by the Company over 90 days. As used herein the term "Prime Rate"
means the Prime Rate as published from time to time by The Wall Street Journal
(or any successor publication).
8. Termination.
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(a) The Company may terminate Executive's retention hereunder
for Cause, as defined in Section 8(c)(i) hereof. Executive's retention shall
terminate upon his death.
(b) Executive may terminate his retention for Good
Reason.
(c) For purposes of this Agreement, the following
terms shall be defined as follows:
(i) Cause: Termination by the Company of Executive's retention
for "Cause" shall mean termination upon (A) Executive's failure to cure
a material breach of a material term or provision of this Agreement
within thirty (30) days' after Executive's receipt of notice from the
Company of such breach, (b) Executive's conviction of a felony under
the laws of the United States or any State, (C) Executive's willful
violation of any applicable Federal or State law, rule or regulation
applicable to the Company's business or (D) circumstances under which
Executive's physical or mental condition renders him unable to perform
his duties under this Agreement and such inability shall continue for a
period in excess of ninety (90) consecutive or one-hundred eighty (180)
non-consecutive calendar days in any consecutive twelve-month period
(such circumstances referred to herein as "Disability").
(ii) Good Reason. Termination by Executive of
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Executive's employment for "Good Reason" shall mean termination upon
the occurrence of any of the following events without Executive's
consent:
(A) the assignment to Executive of any duties
inconsistent with Executive's positions, duties,
responsibilities and status with the Company or a change in
Executive's reporting responsibilities, titles or offices,
except in connection with the termination of Executive's
retention for Cause or as a result of Executive's death or
Disability;
(B) a reduction by the Company in Executive's
annual base fee as in effect on the date hereof or as
the same may be increased from time to time;
(C) the failure of Executive to hold a seat on
the Company's Board of Directors (except as a result of
Executive's voluntary resignation); or
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(D) any other breach by the Company of any material
provision of this Agreement, including, without limitation,
Section 16 of this Agreement.
(iii) Notice of Termination. Any purported termination by the
Company pursuant to paragraph (i) above or by Executive pursuant to
paragraph (ii) above shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's retention under the
provisions so indicated.
(iv) Date of Termination. "Date of Termination" shall mean (A)
if Executive's retention is terminated pursuant to paragraph (i) above,
the date specified in the Notice of Termination, (B) if Executive's
retention is terminated by reason of Executive's death, the date of
Executive's death, (C) if Executive's retention is terminated by
Executive for any reason other than Good Reason, upon the date which is
thirty (30) days after the Company's receipt of the Notice of
Termination and (D) if Executive's retention is terminated for Good
Reason, the date on which a Notice of Termination is given; provided
that if within thirty (30) days after any Notice of Termination is
given the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or by a
binding and final arbitration award and a judgment confirming such
award (the time for appeal therefrom having expired and no appeal
having been perfected), except that if the termination was by the
Company for Cause (and such termination is upheld by such award) then
the Date of Termination shall be the date specified in the Notice of
Termination.
9. Compensation Upon Termination or During
Disability.
(a) During any period that Executive fails to perform duties
hereunder as a result of Disability, Executive's benefits shall be determined in
accordance with the Company's long-term disability plan, if any, then in effect;
provided that in all events Executive shall continue to be provided all fees and
benefits hereunder during any elimination or waiting period under any such plan.
(b) If Executive's retention shall be terminated for Cause
(other than Disability) or by Executive other than for Good Reason, the Company
shall pay Executive's full base annual fee to Executive through the Date of
Termination at the rate in effect at the time Notice of Termination is given and
the Company shall have no further obligation to Executive under this Agreement
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except in respect of the Executive's rights to Options and Shares issued
pursuant hereto and the Option Agreement. If Executive's retention shall be
terminated by reason of Executive's death or Disability, the Company shall pay
Executive's full base annual fee to Executive through the period ending six (6)
months after the Date of Termination at the rate in effect at the time of
Executive's death or commencement of Disability, as the case may be, and the
Company shall have no further obligation to Executive under this Agreement
except in respect of the Executive's rights to Options and Shares issued
pursuant hereto and the Option Agreement, all of which may be transferred to the
Executive's heirs.
(c) If Executive's retention by the Company shall be
terminated (A) by the Company other than for Cause or other than by reason of
death or Disability or (B) by Executive for Good Reason, then Executive shall be
entitled to the benefits provided below:
(A) The Company shall pay Executive's full base
annual fee to Executive through the later of (i) the Date of
Termination or (ii) the end of the Initial Term or any
Extended Term, as the case may be, at the rate in effect at
the time Notice of Termination is given;
(B) in lieu of any further fees to Executive for
periods subsequent to the Date of Termination, Executive shall
receive as severance compensation a lump sum equal to the
product of Executive's base monthly fee at the highest rate in
effect during the twelve (12) months immediately preceding the
Date of Termination multiplied by the number twelve (12); and
(C) Without limiting Executive's rights under Section
7 of this Agreement and any and all rights under the Option
Agreement, Executive may at any time exercise all Options
issued to Executive at an exercise price of $.01 per share.
(d) In the event the Company delivers to Executive a
Non-Renewal Notice in accordance with Section 3 of this Agreement, then, in
addition to all other benefits owing to Executive, the Company shall pay to
Executive at the end of the then-current term (Initial Term or Extended Term, as
the case may be) am amount equal to fifty percent (50%) of the Executive's then
current annual fee.
(e) Executive shall not be required to mitigate the amount of
any payment provided for in this Section 9 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Section 9 be
reduced by any compensation earned by Executive as the result of employment or
retention by another employer after the Date of Termination, or otherwise.
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10. Executive's Rights Under Certain Plans;
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Reimbursement for Expenses
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The Company agrees that nothing contained herein is intended
to or shall be deemed to be granted to Executive in lieu of any rights and
privileges which Executive shall be entitled to as a consultant of the Company
under any retirement, pension, insurance, hospitalization, medical, disability
or other plan which may now or hereafter be in effect, it being understood that
Executive shall, if he so elects, have the right and privilege to participate in
such plan or benefits. The Company covenants to cause all such plans and
benefits to include Executive as an eligible participant and, if necessary, to
adopt new plans and benefits that include Executive as an eligible participant.
Executive shall be entitled to incur on behalf of the Company reasonable and
necessary expenses in connection with the performance of his duties, and the
Company shall pay for or reimburse Executive for all such expenses upon
presentation of proper receipts therefor.
11. Vacation
Executive shall be entitled to paid vacation time of six (6)
weeks during each year.
12. Board Seats
The Company shall take all necessary steps to cause the
nomination and election of RJS to the Board of Directors of the Company so long
as this Agreement is in effect and to carry Directors and Officers Liability
Insurance in an amount consented to by RJS, such consent not be unreasonably
withheld. RJS shall serve on the Boards of Directors of entities in which the
Company may invest so long as the terms and conditions of such service are
satisfactory to him in his discretion.
13. Protection of the Company's Interest; Non-Compete
(a) Proprietary and Confidential Information. Executive
acknowledges that while he performs services hereunder, he will receive, have
access to and become acquainted with documents setting forth the Company's
Confidential Information (as defined below). Executive hereby agrees that all
such confidential documents are the sole and exclusive property of the Company,
and that, during the term of this Agreement, Executive will not use any such
documents other than in the course of performing his duties under this
Agreement. Executive further agrees that upon expiration or termination of
Executive's retention, Executive shall not take or use any such documents of the
Company. Executive further agrees that, upon termination of his services with
the Company, all such documents then in Executive's possession, whether prepared
by him or others will be left with the Company. For purposes of this Section 13,
"Confidential Information" means information disclosed to Executive through such
documents, not generally known in the
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industry in which the Company is or may become engaged, about the Company's
products, processes, and services.
(b) Notwithstanding anything to the contrary set forth in this
Section 13, if any provision of this Section 13, or the application thereof to
any circumstance, is held invalid for any reason whatsoever, such invalid
provision shall be severable and such invalidity shall not affect any other
provision of this Section 13, or the application thereof to any other
circumstance, which can be given effect without such invalid provision or
application.
(c) With respect to all Inventions (as hereinafter defined)
made or conceived by Executive, whether or not during the hours of Executive's
services, or with the use of the Company's and/or its affiliates' facilities,
materials, or personnel, either solely or jointly with others, during the term
of this Agreement, and without royalty or any other consideration, the following
shall apply:
(i) Reports. Executive shall inform the Company promptly and
fully of such Inventions by a written report, setting forth in detail
the structures, procedures, and methodology employed and the results
achieved.
(ii) Assignment. Executive hereby assigns and agrees to assign
to the Company all of the right, title and interest to Executive's
Inventions and to all proprietary rights of every kind and nature
therein, based thereon or related thereto, including, but not limited
to, applications for United States and foreign letters patent and
resulting letters patent, trademarks and copyrights.
(iii) Patents. At the Company's request and expense, Executive
shall execute such documents as the Company deems necessary to vest in
the Company sole and exclusive title to or otherwise to secure and
protect the Company's rights in such Inventions and in all related
trademarks, copyrights and/or patent rights, and Executive shall
provide such assistance as may be deemed necessary by the Company to
apply for, defend or enforce any United States and foreign letters
patent, trademarks or copyrights based upon or related to such
Inventions, as well as all reissues, renewals and extensions thereof.
(iv) Inventions. As used herein, "Inventions" shall mean all
developments, discoveries, concepts, inventions, improvements, trade
secrets and ideas, whether or not patentable or otherwise protectable,
that are conceived or developed or reduced to practice, alone or
jointly with others, which relate to any present or prospective
activities of the Company and/or its affiliates, including, but not
limited to, devices, processes, methods, formulae, techniques,
modifications and any improvements to the foregoing.
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(v) Non-Exclusive License. In the event that the Company shall
terminate Executive's services other than for Cause, then Executive
shall have hereby a royalty free, transferable, non-exclusive,
perpetual license with respect to all Inventions assigned, licensed or
developed by Executive to the Company during the term of this Agreement
and Executive shall have the right to retain any Confidential
Information with respect to such Inventions.
(d) Executive acknowledges and agrees that a violation of this
Section 13 of this Agreement shall cause irreparable harm to the Company and
that the Company shall be entitled to specific performance of this Agreement or
an injunction without proof of special damages, together with the costs and
reasonable attorneys' fees incurred by the Company in enforcing its rights under
this Section 13. Further, Executive acknowledges that the restrictions and
agreements set forth in this Section 13 are in addition to, and are not intended
to limit or diminish in any way, any other restrictions of law or contract, and
that the Company shall be entitled, in addition to any other right and remedy
available to it at law or in equity, to an injunction enjoining or restraining
Executive from any violation or threatened violation of this Section 13, and
Executive hereby consents to the issuance of such injunction without bond or
other security.
(e) The provisions of this Section 13 of this Agreement shall
survive the termination of Executive's retention hereunder and continue to be
binding upon Executive.
14. Covenant Not to Compete. In the event that Executive
terminates this Agreement without Good Reason, Executive will not, at any time
through the end of the then current term (either Initial Term or Extended Term,
as the case may be), anywhere in the United States, either directly or
indirectly, engage in, with or for any enterprise, institution, whether or not
for profit, business, or company, competitive with the business (as identified
herein) of the Company as such business may be conducted on the date thereof, as
a creditor, guarantor or financial backer, stockholder, director, officer,
consultant, advisor, employee, member, inventor, producer, director, or
otherwise of or through any corporation, partnership, association, sole
proprietorship or other entity; provided, that an investment by Executive, his
spouse or his children or other affiliate of not more than five (5%) percent of
the total equity of such entity shall be permitted and provided further that
Executive may continue to perform any consulting activities permitted by or
consented to under this Agreement, as described in Section 2(b) of this
Agreement. For purposes of this Section 14, the business of the Company shall be
limited to providing content or services over the Internet and wireless
communications. In the event that Executive terminates this Agreement without
Good Reason, Executive agrees that through the end of the then current term
(either Initial Term or Extended Term, as the case may be) he will not solicit
or hire, either as an employee or independent contractor, any employee of the
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Company or its affiliates or any person who had been an employee of the Company
or its affiliates within one year prior to such solicitation or engagement. The
restriction of this Section 14 shall be effective if, but only if, and so long
as, the Company continues to pay the Executive his full annual base fee through
the end of the then-current term (either Initial Term or Extended Term, as the
case may be) and honors any other obligations owing to Executive hereunder or
under the Option Agreement.
15. Offering Allocation
In the event that the Company files a registration statement
under the Securities Act of 1933, as amended (the "Securities Act") for the sale
of shares of the Company's common stock to the public, then the Company shall,
if the Company has established a directed share or similar program to enable a
class of persons to purchase, on a pro rata basis, a portion of the common stock
so offered, include Executive or RJS (as designated by Executive) in such class
of persons.
16. Provision of Working Capital
The Company shall provide adequate working capital (directly
or through equity or debt placements with third parties) to sustain reasonable
growth of the Company's revenue and asset base. Without limiting the foregoing,
the Company acknowledges that the Company intends to invest in businesses of
which the Company may take majority positions and active control, minority
positions and active control and minority positions without such control, and
that adequate working capital is essential to fulfill such intention.
17. Preemptive Right
Executive shall, upon the issue or sale of shares by the
Company of stock of any class (whether now or hereafter authorized), have the
right simultaneously with any such issuance or sale to subscribe to and purchase
such shares in proportion to Executive's holdings (on a fully diluted basis), at
the issue or sale price. The Company shall give Executive not fewer than thirty
(30) days prior written notice of any such issuance or sale and shall cooperate
with Executive in his exercise of his preemptive right.
18. Stockholders Agreement
Executive may, in his discretion, elect to become a party to
any Stockholders Agreement among the principal stockholders of the Company and
the Company, and if Executive makes any such election, the Company shall take
such steps as are necessary to enable Executive to become a party thereto;
provided that in no event shall any such Stockholders Agreement adversely modify
or affect any rights of Executive under this Agreement or the Option Agreement.
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19. Arbitration
Any controversy or claim arising out of or relating this
Agreement, the breach thereof, or any other aspect of the relationship between
the parties, or relating to the scope of this arbitration provision, shall be
settled exclusively by private arbitration before JAMS Endispute, New York, New
York (or any successor thereto) or, if such entity is no longer operating, such
other dispute resolution agency as may be acceptable to the Company and
Executive. The arbitration of such issues, including the determination of the
amount of any damages suffered by either party hereto by reason of the acts or
omissions of the other, shall be to the exclusion of any court of law. The
decision of the arbitrators or a majority of them shall be final and binding on
both parties and their respective heirs, executors, administrators, successors
and assigns. There shall be three arbitrators, one to be chosen directly by each
party and the third arbitrator to be selected jointly by the Company and
Executive from a list of arbitrators provided by JAMS Endispute or such other
dispute resolution agency. In all events the arbitrators so chosen shall be
experienced in the valuations and business operations of closely-held businesses
which completed an initial public offering of equity securities under the
Securities Act of 1933, as amended. Each party shall pay the fees of the
arbitrator selected by him and of his own attorneys and the expenses of his
witnesses and all other expenses connected with the presentation of his case.
All other costs of the arbitration, including the cost of the record or
transcripts thereof, if any, administrative fees, and all other fees and costs
shall be borne equally by the parties.
20. Entire Agreement
This Agreement supersedes and cancels any and all prior
agreements between the parties hereto, express or implied, relating to the
subject matter hereof. This Agreement, together with the Stock Option Agreement,
sets forth the entire agreement between the parties hereto. It may not be
changed, altered, modified or amended except in a writing signed by both
parties.
21. Non-Waiver
The failure or refusal of either party to insist upon the
strict performance of any provision of this Agreement or to exercise any right
in any one or more instances or circumstances shall not be construed as a waiver
or relinquishment of such provision or right, nor shall such failure or refusal
be deemed a custom or practice contrary to such provision or right.
22. Non-Assignment
Executive shall have no right to delegate any of the duties
created by this Agreement, and any delegation or attempted delegation of
Executive duties, shall be null and void. In all other respects, this Agreement
shall be binding upon and shall
14
inure to the benefit of the parties hereto and their respective heirs,
beneficiaries, personal representatives, successors, permitted assigns, officers
and directors.
23. Severability
If any paragraph, term or provision of this Agreement shall be
held or determined to be unenforceable, the balance of this Agreement shall
nevertheless continue in full force and effect unaffected by such holding or
determination. In addition, in any such event, the parties agree that it is
their intention and agreement that any such paragraph, term or provision which
is held or determined to be unenforceable as written, shall nonetheless be
enforced and binding to the fullest extent permitted by law as though such
paragraph, term or provision has been written in such a manner and to such an
extent as to be enforceable under the circumstances. Without limitation of the
foregoing, with respect to any restrictive covenant contained herein, if it is
determined that any such provision is excessive as to duration or scope, it is
intended that it nonetheless be enforced for such shorter duration or with such
narrower scope as will render it enforceable.
24. Notices
All notices hereunder shall be in writing. Notices may be
delivered personally, or by mail, postage prepaid, to the respective addresses
noted above.
25. Governing Law
This Agreement shall be governed in all respects by the laws
of the State of New York without regard to principles of conflicts of laws.
26. Captions and Titles
Captions and titles have been used in this Agreement only for
convenience, and in no way define, limit or describe the meaning of this
Agreement or any part thereof.
27. Performance Undertaking
By signing below, RJS confirms his intention, as the sole
stockholder of Executive, to cause Executive to perform its obligations under
this Agreement.
15
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
DIGITAL CREATIVE DEVELOPMENT CORP.
By:/s/Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Chairman
XXXXXX XXXXXXXX'X INC.
By:/s/Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Chairman
RJS CONSULTING CORP.
BY:/s/Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: President
XXXXX X. XXXXXXXXXX (for purposes of
Section 2, 4, 5, 6, 7, 8, 9, 12,
13, 14, 15 and 27 only)
/s/Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
