EMPLOYMENT AGREEMENT
Exhibit 10.2
EMPLOYMENT AGREEMENT (this “Agreement”), dated as of June 7, 2011, by and between XXXXXX
INTERACTIVE INC., a Delaware corporation (the “Company”), and XX XXXXXXXXX (the “Executive”).
BACKGROUND
WHEREAS, the Company and Xxxxxxxxx Turnarounds LLC, a Delaware limited liability company
(“ATL”), entered into a services agreement (the “ATL Services Agreement”), under which, among other
things, ATL made available to the Company the services of the Executive during the Interim Period
(as hereinafter defined); and
WHEREAS, the Company and the Executive desire to enter into this Agreement to establish the
terms and conditions of the Executive’s employment by the Company during the Interim Period and,
upon mutual agreement of the Company and the Executive, during the Non-Interim Period (as
hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein
and intending to be legally bound hereby, the parties hereto agree as follows:
TERMS
1. CAPACITY AND DUTIES
1.1 Employment; Acceptance of Employment. The Company hereby employs the Executive and
the Executive hereby accepts employment by the Company for the period and upon the terms and
conditions hereinafter set forth.
1.2 Capacity and Duties; Employment Period.
(a) Interim Service. The Executive shall serve as the Interim Chief Executive Officer of the
Company commencing immediately and continuing through and including the earliest to occur of (i)
June 30, 2012, (ii) the date on which the Executive dies, and (iii) the date on which either the
Company or the Executive terminates the Executive’s employment for any reason pursuant to the terms
hereof (the “Interim Period”).
(b) Non-Interim Service. Subject to the execution by the Company and the Executive of the
“Agreement to Serve as President and Chief Executive Officer” annexed hereto as Exhibit A on or
prior to March 31, 2012, the Executive shall serve as the President and Chief Executive Officer of
the Company (the “Non-Interim Service”) for a period commencing July 1, 2012 (the “Non-Interim
Service Commencement Date”) and continuing through and including the earliest to occur of (i) June
30, 2013, (ii) the date on which the Executive dies, and (iii) the date on which either the Company
or the Executive terminates the Executive’s employment for any reason pursuant to the terms hereof
(the “Non-Interim Period” and, together with the Interim
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Period, the “Employment Period”).
(c) Duties. During the Interim Period, the Executive shall have the duties, authority, and
responsibilities commensurate with his position as Interim Chief Executive Officer of the Company
and, if applicable, during the Non-Interim Period, his position as the President and Chief
Executive Officer of the Company, and such other duties and responsibilities appropriate for such
position(s) as may from time to time be specified by the Board of Directors of the Company (the
“Board”). The Executive shall report directly to the Board. This Agreement does not guaranty the
Executive employment for any specified period of time. The Executive is an “employee-at-will” and
may be terminated by the Company at any time with or without Cause (as hereinafter defined);
provided, however, that any termination of this Agreement shall entitle the Executive to such
benefits and compensation as are provided in Section 3 hereof.
(d) Efforts. The Executive shall devote his full working time, energy, skill and best efforts
to the performance of the Executive’s duties hereunder, in a manner that will faithfully and
diligently further the business and interests of the Company and, without the prior written consent
of the Board, shall not during the Employment Period be employed or engaged in any other business
activity, whether or not such activity is pursued for gain, profit or other pecuniary advantage,
including, without limitation, serving on an advisory board or a board of directors of another
entity; provided, however, that, subject to Section 4 hereof, this shall not be construed as
preventing the Executive from investing his personal assets as a passive investor, managing as a
passive investor the current investments of ATL, engaging in speeches or media appearances, or
engaging in not-for-profit and civic activities, under the condition that such activities do not
interfere or present a conflict of interest with the Executive’s duties hereunder or are not likely
to have an adverse affect on the reputation or goodwill of the Company. The Executive will be based
and have his principal office in New York, New York or Princeton, New Jersey, but his position may
require substantial travel outside of such area (taking into consideration the nature and location
of the Company’s business operations, and existing and prospective clients).
(e) Non-Disparagement. The Executive acknowledges that the Company’s reputation is important
in the continued success of its business, and agrees that he will not discuss or comment in such a
manner as may adversely impact the reputation or public perception, or otherwise disparage, the
Company or its officers, employees, or directors in any manner; provided, however, that the
Executive may make such disclosures as may be required by law. The Company acknowledges that the
Executive’s reputation is important to his continued success. The Company agrees that it will not,
and that it will use all reasonable efforts to cause its officers, employees, and directors not to,
defame, disparage, or otherwise discuss or comment about the Executive in such a manner as may
adversely impact his reputation or public perception; provided, however, that the Company may make
such disclosures as may be required by law.
2. COMPENSATION
2.1 Base Compensation. The Executive shall not receive a base salary during the
Interim Period. During the Non-Interim Period, if applicable, the Company shall pay to the
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Executive an annual base salary of $1.00 (less required withholdings and other authorized
deductions).
2.2 Performance Bonus. The Executive shall be entitled to a performance bonus
(“Performance Bonus”) for each fiscal year commencing July 1, 2011, based on the attainment of
specific operating performance goals during each such fiscal year, as established by the
Compensation Committee of the Board after reasonable consultation with the Executive and as set
forth in a written document provided to the Executive by the Company as soon as practicable during
the relevant fiscal year (in the case of fiscal 2012, prior to the commencement of the fiscal
year). Upon attainment of the applicable operating performance goals, the Executive shall be
entitled to receive a Performance Bonus of $250,000 for fiscal 2012 and, if applicable, $400,000
for fiscal 2013 (subject to a cutback for attainment above a certain threshold but below 100% in
accordance with the applicable written document). If the Executive is terminated by the Company
without Cause or the Executive terminates his employment for Good Reason (as hereinafter defined)
prior to June 30, 2012, then the Executive shall be entitled to a pro-rata portion of the
Performance Bonus for fiscal 2012 based on the level of attainment of the applicable operating
performance goals at the time of termination. The Performance Bonus shall be paid to the Executive
at such times in accordance with the Company’s practices for its senior executives generally.
2.3 Employee Benefits. During the Employment Period, the Executive shall be entitled
to participate in such of the Company’s employee benefit plans and benefit programs as may from
time to time be provided by the Company for its senior executives generally in accordance with the
respective terms of such plans and programs. The Company shall have no obligation, however, to
maintain any particular program or level of benefits referred to in this Section 2.3.
2.4 Vacation. During the Employment Period, the Executive shall be entitled to the
normal and customary amount of paid vacation provided to senior executives generally, but in no
event less than twenty (20) days during each twelve (12) month period, beginning on the Effective
Date. The Executive may take such paid vacation at such times and for such periods as are
reasonable taking into account the best interests of the Company, after providing notice in
accordance with Company policy. The Executive may be granted leaves of absence with or without pay
for such valid and legitimate reasons as the Board in its sole and absolute discretion may
determine, and is entitled to the same sick leave and holidays provided to other senior executives
generally.
2.5 Expense Reimbursement.
(a) The Company shall reimburse the Executive for all reasonable and documented expenses
incurred by him in connection with the performance of his duties hereunder in accordance with its
budgets, guidelines, and regular reimbursement policies as in effect from time to time.
(b) The Company shall reimburse the Executive for reasonable attorney’s fees incurred prior to
the Effective Date in the negotiation of this Agreement, subject to a maximum
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reimbursement of $7,500, payable within thirty (30) days after receipt of the Executive’s
request therefor accompanied by a copy of the summary invoice for same.
2.6 Stock Options. As an inducement material to the Executive’s agreement to enter
into employment with the Company, subject to the approval of the Compensation Committee of the
Board, on the date hereof, the Company shall grant Executive (i) an incentive stock option to
purchase 100,000 shares of the Company’s common stock (“Shares”) pursuant to an Incentive Stock
Option Agreement in the form annexed hereto as Exhibit B (the “ISOs”) and (ii) a non-qualified
stock option to purchase 1,650,000 Shares pursuant to a Non-Qualified Stock Option Agreement in the
form annexed hereto as Exhibit C (“NQSOs” and, together with the ISOs, the “Options”). The exercise
price of the Options shall be the fair market value of the Shares as of the close of trading on the
date of the grant. The Options granted pursuant to (i) above shall vest on June 30, 2013, provided
that the Executive performs the Non-Interim Service and is employed by the Company on such date.
The Options granted pursuant to (ii) above shall vest upon the Company’s achievement of certain
performance requirements set forth in the Non-Qualified Stock Option Agreement, provided that the
Executive performs the Non-Interim Service and is employed by the Company on the date(s) that such
performance requirement(s) are achieved.
2.7 Restricted Stock. As a further inducement material to the Executive’s agreement to
enter into employment with the Company, subject to the approval of the Compensation Committee of
the Board, on the date hereof, the Company shall grant the Executive an equity award of 500,000
restricted Shares (the “Restricted Shares”) pursuant to a Restricted Stock Agreement in the form
annexed hereto as Exhibit D (the “Restricted Stock Agreement”). Subject to the terms of the
Restricted Stock Agreement, one-thirteenth of the Restricted Shares shall vest on the
30th day of each month commencing on June 30, 2011, under the condition that the
Executive is employed by the Company on each such date; provided, however, (a) if the Executive’s
employment is terminated by the Company without Cause or the Executive terminates his employment
for Good Reason on or prior to December 31, 2011, then one-half of the Restricted Shares shall vest
(inclusive of the Restricted Shares that vested previously) on the date of termination, or (b) if
the Executive’s employment is terminated by the Company without Cause or the Executive terminates
his employment for Good Reason after December 31, 2011, then all unvested Restricted Shares shall
vest on the date of termination.
2.8 Sale of Shares; 10b5-1 Program. The Executive agrees that he will not sell any
Shares during the Interim Period. If applicable, commencing with the first anniversary of the
Non-Interim Service Commencement Date, the Company will create, or allow Executive to participate
in, a program permitting Executive to sell Shares under SEC Regulation 10b5-1 in amounts sufficient
to pay taxes on the Restricted Shares and vested and exercised NQSOs.
2.9 Withholding. All payments and benefits under this Agreement shall be subject to
any required withholding of Federal, state and local taxes pursuant to any applicable law or
regulation.
2.10 Accounting Restatement
(a) In the event that the Company is required to prepare an accounting restatement due to
material non-compliance of the Company with any financial reporting
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requirement under the securities laws related to a period during the Employment Period
(“Restatement”) for any reason, including without limitation as a result of fraud, negligence, or
intentional misconduct, whether by the Executive or any other person(s), subject to Section
2.10(c), the Executive shall reimburse the Company for any Excess Payment (as hereinafter defined)
received for the first annual accounting period covered by any individual Restatement and related
later Restatements due to non-compliance with the same financial reporting requirement. The
Executive shall not be responsible for reimbursement for any Restatements that result from or are a
continuation of practices and policies prior to the Effective Date unless (i) during the first year
after the Effective Date the Executive has actual knowledge of the practices and policies including
actual knowledge that such policies and practices involve material non-compliance with any
financial reporting requirement, and (ii) thereafter the Executive has actual knowledge of the
practices and policies, and in the case of both (i) and (ii) has not reported such matter to the
Audit Committee of the Board within a reasonable period after acquiring such knowledge. For
purposes of this Section 2.10, “Excess Payment” shall mean the positive difference, if any, between
any Performance Bonus payment made to the Executive and the payment that would have been made had
the Performance Bonus been calculated based upon the Company’s financial statements as restated.
The portion of any Excess Payment retained by the Executive net after taxes shall be repaid within
ninety (90) days after the Executive has been notified in writing of a Board determination
described below, and the remainder of such Excess Payment, if any, shall be repaid within thirty
(30) days of the date on which the Executive is entitled to receive the benefit of a tax refund
claim.
(b) In addition and subject to Section 2.10(c), the Executive shall reimburse the Company for
the amount of the proceeds of sale by the Executive of any performance-based equity incentive
award, the vesting of which was determined in whole or in part upon meeting or exceeding specific
performance targets relating to the financial results of the Company (not including stock price
targets) for the period(s) covered by the Restatement, that would not have been met based upon the
financial results as restated, and any such award held by the Executive that has vested but remains
unsold shall be forfeited. The portion of any Excess Payment retained by the Executive net after
taxes shall be repaid within ninety (90) days after the Executive has been notified in writing of a
Board determination described below, and the remainder of such Excess Payment, if any, shall be
repaid within thirty (30) days of the date on which the Executive is entitled to receive the
benefit of a tax refund claim.
(c) The Executive shall have no reimbursement obligation under this Section 2.10 unless the
Board has considered the matter in a meeting (which may be telephonic) at which the Executive (with
counsel) is given the opportunity to appear and discuss the matter, and in its good faith
discretion has made a determination that reimbursement is appropriate under the circumstances. The
rights under this Agreement are in addition to, and do not replace, the rights of the Company, if
any, under Section 304 of the Xxxxxxxx-Xxxxx Act.
3. TERMINATION OF EMPLOYMENT
3.1 Termination of ATL Services Agreement During Interim Service or Failure to Mutually
Agree to Non-Interim Service. If (a) the Company or ATL terminates the ATL Services Agreement
during the Interim Period or (b) the Company and the Executive fail to execute the “Agreement to
Serve as President and Chief Executive Officer” annexed hereto as
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Exhibit A on or prior to March 31, 2012, then the Executive’s employment hereunder shall
automatically terminate (in the case of clause (a), concurrently with the termination of the ATL
Services Agreement and, in the case of clause (b), at the end of the Interim Period), and the
Company shall not thereafter be obligated to make any further payments hereunder and the Executive
shall not be entitled to any further benefits other than any Accrued Obligations (as hereinafter
defined).
3.2 Death of Executive. If the Executive dies during the Employment Period, the
Company shall not thereafter be obligated to make any further payments hereunder and the Executive
shall not be entitled to any further benefits other than amounts for any Performance Bonus under
Section 2.2 earned for a fiscal year ending before the date of death, expense reimbursement, and
other amounts which have accrued as of the date of the Executive’s death in accordance with
generally accepted accounting principles (the “Accrued Obligations”, which, for purposes of this
Agreement in situations other than death, shall reference the date of termination).
3.3 Disability of Executive. If the Executive is permanently disabled (as defined in
the Company’s long-term disability insurance policy then in effect), then the Board shall have the
right to terminate the Executive’s employment upon thirty (30) days’ prior written notice to the
Executive at any time during the continuation of such disability, provided that the Executive’s
employment shall immediately terminate for disability if, as of an earlier date, he incurs a
separation from service (within the meaning of Internal Revenue Code Section 409A) as a result of
physical or mental incapacity. In the event the Executive’s employment is terminated for disability
in accordance with this Section 3.3, the Company shall not thereafter be obligated to make any
further payments hereunder and the Executive shall not be entitled to any further benefits other
than any Accrued Obligations.
3.4 Termination for Cause. The Executive’s employment hereunder shall terminate
immediately upon notice that the Board is terminating the Executive for Cause (as hereinafter
defined), in which event the Company shall not thereafter be obligated to make any further payments
hereunder and the Executive shall not be entitled to any further benefits other than any Accrued
Obligations. “Cause” shall be limited to the following:
(a) willful failure to substantially perform the Executive’s duties as described in Section
1.2 hereof (other than such failure resulting from the Executive’s physical or mental illness),
after demand for substantial performance is delivered by the Company in writing that identifies in
reasonable specificity the manner in which the Company believes the Executive has not substantially
performed the Executive’s duties and the Executive’s failure to cure such non-performance within
ten (10) days after receipt of the Company’s written demand;
(b) willful misconduct that is injurious to the Company or any of its subsidiaries;
(c) conviction or plea of guilty or nolo contendere to a felony or to any other crime which
involves moral turpitude or, if not including moral turpitude, the act giving rise to such
conviction or plea is injurious to the Company or any of its subsidiaries;
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(d) material violation of (x) the Company’s policies relating to sexual harassment, substance
or alcohol abuse, or the disclosure or misuse of Confidential Information (as hereinafter defined),
or (y) other policies of the Company set forth in the Company manuals or written statements of
policy; provided, however in the case of this clause (y) that such violation is materially
injurious to the Company and continues for more than three (3) days after written notice thereof is
given to the Executive by the Board; provided further that no such notice need be given for
material violations of the Company policies regarding compliance with federal securities laws or
the requirements of any exchange upon which the Shares are then traded, or other violations
reasonably determined by the Board not to be curable; and
(e) material breach of any material provision of this Agreement by the Executive, which breach
continues for more than ten (10) days after written notice thereof is given by the Board to the
Executive.
Cause shall not exist under this Section 3.4 during the Non-Interim Period, if applicable, unless
and until the Company has delivered to the Executive a copy of a resolution duly adopted by a
majority of the Board at a meeting of the Board called and held for such purpose, or by written
consent (which meeting or written consent need not include the Executive if he is a member of the
Board), finding that such Cause exists in the good faith opinion of the Board. This Section 3.4
shall not prevent the Executive from challenging the Board’s determination that Cause exists or
that the Executive has failed to cure any act (or failure to act) that purportedly formed the basis
for the Board’s determination, as permitted by this Agreement.
3.5 Termination without Cause or by Executive for Good Reason.
(a) If (i) the Executive’s employment is terminated by the Company during the Non-Interim
Period, if applicable, for any reason (other than (x) Cause under Section 3.4, or (y) death or
disability of the Executive), or (ii) the Executive’s employment is terminated by the Executive
during the Non-Interim Period, if applicable, for Good Reason (as hereinafter defined), then,
subject to Section 3.5(d), the Company shall pay to the Executive an amount equal to $400,000 (the
“Severance Payment”) in twelve (12) equal monthly installments commencing thirty (30) days after
expiration of the Employment Period.
(b) “Good Reason” shall be limited to the following:
(i) material breach of the Company’s obligations hereunder, provided that the Executive shall
have given reasonably specific written notice thereof to the Company, and the Company shall have
failed to remedy the circumstances within sixty (60) days thereafter;
(ii) any material reduction in the general nature of the Executive’s duties or authority to a
level inconsistent with a president and chief executive officer, unless previously agreed to in
writing by the Executive;
(iii) the relocation of the Company’s principal executive offices to a location more than one
hundred (100) miles from the Company’s existing principal executive office in New York City;
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(iv) the appointment of a chief operating officer or chief financial officer of the Company
without the consent of the Executive; and
(v) the failure of any successor in interest of the Company to be bound by the terms of this
Agreement in accordance with Section 5.4 hereof.
The Executive must provide notice to the Company that he is intending to terminate his employment
for Good Reason (“Notice of Termination for Good Reason”) within forty-five (45) days after the
Executive has actual knowledge of the occurrence of an event he believes constitutes Good Reason.
Subject to compliance by the Executive with the notice provisions of this Section 3.5, the
Executive’s continued employment prior to terminating employment for Good Reason shall not
constitute consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason. In the event the Executive delivers to the Company a Notice of
Termination for Good Reason, the Executive agrees to appear in person before a meeting of the Board
called and held for such purpose (after reasonable notice) and specify to the Board the particulars
as to why the Executive believes adequate grounds for termination for Good Reason exist.
(c) If the Executive’s employment is terminated by the Executive without Good Reason, then the
Company shall not thereafter be obligated to make any further payments hereunder and the Executive
shall not be entitled to any further benefits other than any Accrued Obligations. During the
Non-Interim Period, if applicable, the Executive must give the Company at least ninety (90) days
prior written notice of his intention to terminate his employment without Good Reason.
(d) Any severance paid after the effective date of the termination of this Agreement shall be
subject to the Executive’s continued compliance in all material respects with Section 4 hereof and
the execution and delivery of a separation agreement and general release, in a form reasonably
acceptable to the Board, prior to the 52nd day after the termination date. The amounts
due prior to the expiration of the revocation period following delivery of the separation agreement
and general release that are conditioned on the delivery of the separation agreement and general
release shall be paid in a lump sum on the 60th day after the termination date.
3.6 Change in Control.
(a) Upon the occurrence of a Change of Control (as defined below) after the Non-Interim
Service Commencement Date, then notwithstanding anything above to the contrary, the Restricted
Shares if then unvested and the Options that are not then exercisable, i.e. unvested, shall
immediately vest and become exercisable by the Executive if the Executive’s date of termination has
not occurred prior to the Change of Control.
(b) A “Change of Control” shall be deemed to have occurred if:
(i) there shall occur (i) any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which the Shares would be converted into
cash, securities or other property, or (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of assets
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accounting for 66% or more of the total assets of the Company or 66% or more of the total
revenues of the Company, other than, in case of either (i) or (ii), a consolidation or merger with,
or transfer to, a corporation or other entity of which, or of the parent entity of which,
immediately following such consolidation, merger or transfer, (x) more than 50% of the combined
voting power of the then outstanding voting securities of such entity entitled to vote generally in
the election of directors (or other governing body) is then beneficially owned (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934) by the individuals and entities who were
such owners of Shares immediately prior to such consolidation, merger or transfer, or (y) a
majority of the directors (or other governing body) consists of members of the Board in office on
the date immediately prior to the effective date of such consolidation, merger or transfer); or
(ii) the stockholders of the Company approve a complete liquidation or dissolution of the
Company, except in connection with a recapitalization or other transaction which does not otherwise
constitute a Change of Control for purposes of Section 3.6(b)(i) above.
3.7 Termination Procedures. Any termination of the Executive’s employment by the
Company or by the Executive during the Employment Period (other than termination pursuant to death)
shall be communicated by written Notice of Termination (as hereinafter defined) 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 the
Executive’s employment under the provision so indicated.
3.8 Mitigation. The Executive shall not be required to mitigate amounts payable under
this Section 3 by seeking other employment or otherwise, and there shall be no offset against
amounts due the Executive under this Agreement on account of subsequent employment except as
specifically provided herein.
4. NON-COMPETITION AND CONFIDENTIALITY
4.1 Non-Competition
(a) During the Employment Period, including any unexpired portion thereof, and for a period of
one (1) year thereafter (the “Non-Competition Period”), the Executive shall not, directly or
indirectly, own, manage, operate, join, control, participate in, invest in or otherwise be
connected or associated with, in any manner, including, without limitation, as an officer,
director, employee, distributor, independent contractor, independent representative, partner,
consultant, advisor, agent, proprietor, trustee or investor, any Competing Business (as hereinafter
defined) located in any state or region (including foreign jurisdictions); provided, however, that
passive ownership of 5% or less of the stock or other securities of a corporation, the stock of
which is listed on a national securities exchange or is quoted on the NASDAQ Stock Market’s
National Market, shall not constitute a breach of this Section 4.1, so long as the Executive does
not in fact have the power to control, or direct the management of, or is not otherwise engaged in
activities with, such corporation.
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(b) For purposes hereof, the term “Competing Business” shall mean any business or venture, or
any part thereof, which is substantially similar to the whole or any significant part of the
business conducted by the Company at any time during the Employment Period.
(c) Notwithstanding the above, except as provided below, the non-competition obligation in
this Section 4.1 shall not apply after the Employment Period if the Executive’s employment is
terminated (i) pursuant to Section 3.1 hereof or (ii) by the Company without Cause or by the
Executive for Good Reason if the Executive waives his entitlement to the Severance Payment in
writing within thirty (30) days after expiration of the Employment Period.
4.2 No Solicitation. During the Employment Period, including any unexpired portion
thereof, and for a period of one (1) year thereafter, the Executive shall not, directly or
indirectly, including on behalf of, for the benefit of, or in conjunction with, any other person or
entity, (i) solicit, assist, advise, influence, induce or otherwise encourage in any way, any
employee of or service provider to the Company to terminate such relationship with the Company for
any reason, or assist any person or entity in doing so, or employ, engage or otherwise contract
with any employee or service provider or former employee of or former service provider to the
Company in a Competing Business or any other business unless such former employee or service
provider shall not have been employed by or providing services to the Company for a period of at
least one (1) year, (ii) interfere in any manner with the relationship between any employee and
service provider, on the one hand, and the Company on the other hand, or (iii) contact, service or
solicit any existing clients, customers or accounts of the Company on behalf of a Competing
Business, either as an individual, on the Executive’s own account, as an investor, or as an
officer, director, partner, joint venturer, consultant, employee, agent or salesman of any other
person or entity.
4.3 Confidential Information
(a) “Confidential Information” shall mean confidential records and information, including, but
not limited to, development, marketing, purchasing, organizational, strategic, financial,
managerial, administrative, manufacturing, production, distribution and sales information,
distribution methods, data, specifications and processes presently owned or at any time hereafter
developed by the Company or its subsidiaries, agents or consultants or used presently or at any
time hereafter in the course of the business of the Company or its subsidiaries, that are not
otherwise part of the public domain.
(b) All such Confidential Information is considered secret and will be disclosed to the
Executive in confidence, and the Executive acknowledges that, as a consequence of the Executive’s
employment and position with the Company, the Executive may have access to and become acquainted
with Confidential Information. Except in the performance of the Executive’s duties as an employee
of the Company, the Executive shall not, during the Employment Period and at all times thereafter,
directly or indirectly for any reason whatsoever, disclose or use any such Confidential
Information. All records, files, drawings, documents, equipment and other tangible items, wherever
located, relating in any way to or containing Confidential Information, which the Executive has
prepared, used or encountered or shall in the
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future prepare, use or encounter, shall be and remain the Company’s sole and exclusive
property and shall be included in the Confidential Information. Upon termination of this Agreement,
or whenever requested by the Company, the Executive shall promptly deliver to the Company any and
all of the Confidential Information and copies thereof, not previously delivered to the Company,
that may be in the possession or under the control of the Executive. The foregoing restrictions
shall not apply to the use, divulgence, disclosure or grant of access to Confidential Information
to the extent, but only to the extent, (i) expressly permitted or required pursuant to any other
written agreement between the Executive and the Company, (ii) such Confidential Information has
been publicly disclosed (not due to a breach by the Executive of the Executive’s obligations
hereunder, or by breach of any other person of a fiduciary or confidential obligation to the
Company), or (iii) the Executive is required to disclose Confidential Information by or to any
court of competent jurisdiction or any governmental or quasi-governmental agency, authority or
instrumentality of competent jurisdiction; provided, however, that the Executive shall, prior to
any such disclosure, immediately notify the Company of such requirements; and provided further,
however, that the Company shall have the right, at its expense, to object to such disclosures and
to seek confidential treatment of any Confidential Information to be so disclosed on such terms as
it shall determine. The confidentiality obligations of this Section 4.3 shall apply to any
Confidential Information given to the Executive prior to the date hereof.
4.4 Intellectual Property Rights
(a) The Executive agrees that all work, materials (tangible and intangible) and products
produced, developed, created or completed by the Executive on behalf of the Company or its
subsidiaries during the course of his affiliation with the Company shall be deemed “work made for
hire,” as such term is defined under the copyright laws of the United States, and are expressly
intended to be wholly owned, and all copyright rights therein to be held, by the Company. To the
extent that any such copyrightable works may not, by operation of law, be works for hire, the
Executive agrees to and hereby does assign to the Company or its designees ownership of all
copyright rights in those works. The Company shall have the right to obtain and hold in its own
name copyrights, registrations and similar protection which may be available for those works. The
Executive agrees to give the Company or its designees all assistance it may reasonably require to
secure or protect those rights.
(b) The Executive agrees that all discoveries, developments, ideas, improvements,
modifications, innovations, inventions, processes, programs, operating instructions, manuals,
documentation, discs, tapes, written materials, systems, techniques, hardware, software, test
procedures or other things, whether or not patentable (collectively, “Inventions”), that are made,
conceived or reduced to practice by the Executive, while affiliated with the Company, solely or
with others, whether or not during business hours or on the Company’s premises, and that (i) relate
to the Company’s business activities or actual or demonstrably anticipated research or development
or a reasonable or contemplated expansion thereof, (ii) result from any work performed by the
Executive for the Company, (iii) are developed on the Company’s time or using the Company’s
equipment, supplies, facilities or trade secret information, or (iv) are based upon or are related
to trade secrets and other Confidential Information shall be the property of, and shall promptly be
disclosed by the Executive to, the Company.
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(c) The Executive agrees that, at any time during or after his affiliation with the Company,
the Executive shall, without further compensation but at the Company’s sole expense, sign all
papers and cooperate in all other acts reasonably required to secure or protect the Company’s
rights in all such property identified in subsections (a) and (b) above, including without
limitation executing written assignments therefor and applying for, obtaining and enforcing
copyrights or patents thereon in any and all countries. In the event that the Executive is unable
or unavailable or shall refuse to sign any lawful or necessary documents required in order for the
Company to apply for and obtain any copyright or patent with respect to any work performed by the
Executive under this Agreement (including applications or renewals, extensions, divisions or
continuations), the Executive hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as the Executive’s agents and attorneys-in-fact to act for and in
his behalf, and in his place and stead, to execute and file any such applications or documents and
to do all other lawfully permitted acts to further the prosecution and issuance of copyrights and
patents with respect to such new developments with the same legal force and effect as if executed
by the Executive.
4.5 Acknowledgement; Remedies; Survival of this Agreement
(a) The Executive acknowledges that a violation of any of the covenants and provisions set
forth in this Agreement would cause the Company irreparable damage and agrees that the Company’s
remedies at law for a breach or threatened breach of any of the provisions of this Agreement would
be inadequate and, in recognition of this fact, in the event of a breach or threatened breach by
the Executive of any of the provisions of this Agreement, it is agreed that, in addition to the
remedies at law or in equity, the Company shall be entitled, without the posting of a bond or other
security, to equitable relief in the form of specific performance, a temporary restraining order,
temporary or permanent injunction, or any other equitable remedy which may then be available for
the purposes of restraining the Executive from any actual or threatened breach of such covenants.
Without limiting the generality of the foregoing, if the Executive breaches or threatens to breach
this Section 4, such breach or threatened breach will entitle the Company to enjoin the Executive
from disclosing any Confidential Information to any Competing Business, to enjoin any Competing
Business from retaining the Executive or using any such Confidential Information, and to enjoin
Employee from rendering personal services to or in connection with any Competing Business. The
rights and remedies of the parties hereto are cumulative and shall not be exclusive, and each such
party shall be entitled to pursue all legal and equitable rights and remedies and to secure
performance of the obligations and duties of the other under this Agreement, and the enforcement of
one or more of such rights and remedies by a party shall in no way preclude such party from
pursuing, at the same time or subsequently, any and all other rights and remedies available to it.
(b) The provisions of this Section 4 shall survive the termination of the Executive’s
employment with the Company.
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5. MISCELLANEOUS
5.1 Arbitration. Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in New York County, New York, in accordance
with the Commercial Arbitration Rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The parties
consent to the authority of the arbitrator, if the arbitrator so determines, to award fees and
expenses (including legal fees) to the prevailing party in the arbitration. Notwithstanding the
foregoing, the Company shall be entitled to enforce the provisions of Section 4 hereof through
proceedings brought in a court of competent jurisdiction as contemplated by Section 5.7 hereof.
5.2 Severability; Reasonableness of Agreement. If any term, provision or covenant of
this Agreement or part thereof, or the application thereof to any person, place or circumstance
shall be held to be invalid, unenforceable or void by a court of competent jurisdiction, the
remainder of this Agreement and such term, provision or covenant shall remain in full force and
effect, and the court shall have the power to modify, amend and limit any such term, provision or
covenant, to the extent necessary to render the same and the remainder of this Agreement valid,
enforceable and lawful. In this regard, the Executive understands that the provisions of Section 4
hereof may limit the Executive’s ability to earn a livelihood in a business similar or related to
the business of the Company, but nevertheless agrees and acknowledges that (i) the provisions of
Section 4 are reasonable and necessary for the protection of the Company, and do not impose a
greater restraint than necessary to protect the goodwill or other business interest of the Company
and (ii) such provisions contain reasonable limitations as to the time and the scope of activity to
be restrained. In consideration of the foregoing and in light of the Executive’s education, skills
and abilities, the Executive agrees that any and all defenses by the Executive to the strict
enforcement of such provisions are hereby waived by the Executive.
5.3
Key Employee Insurance. The Company in its sole discretion shall have the right at its
expense to purchase insurance on the life of the Executive, in such amounts as it shall from time
to time determine, of which the Company shall be the beneficiary. The Executive shall submit to
such physical examinations as may reasonably be required and shall otherwise cooperate with the
Company in obtaining such insurance.
5.4 Assignment; Benefit. This Agreement shall not be assignable by the Executive,
other than the Executive’s rights to payments or benefits hereunder, which may be transferred only
by will or the laws of descent and distribution. Upon the Executive’s death, this Agreement and all
rights of the Executive hereunder shall inure to the benefit of and be enforceable by the
Executive’s beneficiary or beneficiaries, personal or legal representatives, or estate, to the
extent any such person succeeds to the Executive’s interests under this Agreement. No rights or
obligations of the Company under this Agreement may be assigned or transferred except that the
Company (i) may assign its rights and obligations under this Agreement to an affiliate, and (ii)
will use commercially reasonable efforts to require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no such succession had
taken place. As used in this Agreement, “the Company” shall mean the Company as hereinbefore
defined and any successor to its business and/or assets (by merger, purchase or
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otherwise) which executes and delivers the agreement provided for in this Section 5.4 or which
otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.
5.5 Notices. All notices hereunder shall be in writing and shall be sufficiently given
if hand-delivered, sent by documented overnight delivery service or registered or certified mail,
postage prepaid, return receipt requested or by telegram or telefax (confirmed by U.S. mail),
receipt acknowledged, addressed as set forth below or at such other address for either party as may
be specified in a notice given as provided herein by such party to the other. Any such notice shall
be deemed to have been given as of the date received, in the case of personal delivery, or on the
date shown on the receipt or confirmation therefor, in all other cases. Any and all service of
process and any other notice in any such action, suit or proceeding shall be effective against any
party if given as provided in this Agreement; provided that nothing herein shall be deemed to
affect the right of any party to serve process in any other manner permitted by law.
| (a) | If to the Company: | ||
| Xxxxxx Interactive Inc. 000 Xxxxx Xxxxxx Xxxxx Xxxxx Xxx Xxxx, XX 00000 Attention: General Counsel |
|||
| With a copy to: | |||
| Xxxxxx Xxxxxxx Chairman of the Board Xxxxxx Interactive Inc. c/o ReedSmith LLP 0000 Xxxxxx Xxxxxx Xxxxxxxxxxxx, XX 00000 |
|||
| (b) | If to the Executive: | ||
| Xx Xxxxxxxxx | |||
| With a copy to: | |||
| Xxxxxx X. Xxxxxx, Esq. 0 Xxxxxx Xxxxxx Xxxxxxxxxx, XX 00000 |
5.6 Entire Agreement; Modification. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters contemplated herein and supersedes all prior
agreements and understandings with respect thereto. No amendment, modification, or waiver of this
Agreement shall be effective unless in writing. Neither the failure nor any delay on the part of
any party to exercise any right, remedy, power or privilege hereunder shall operate as
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a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or of any other right, remedy, power,
or privilege with respect to such occurrence or with respect to any other occurrence.
5.7 Governing Law. This Agreement is made pursuant to, and shall be construed and
enforced in accordance with, the laws of the State of New York and the federal laws of the United
States of America, to the extent applicable, without giving effect to otherwise applicable
principles of conflicts of law. The parties hereto expressly consent to the jurisdiction of any
state or federal court located in New York, and to venue therein, and consent to the service of
process in any such action or proceeding by certified or registered mailing of the summons and
complaint therein directed to the Executive or the Company, as the case may be, at its address as
provided in Section 5.5 hereof.
5.8 Indemnification. The Company shall indemnify the Executive to the maximum extent
permitted by law (including advancement of legal fees) against any claim with regard to any action
or inaction taken by the Executive in the good faith performance of his duties as an officer or
director of the Company or any affiliate of the Company or as a fiduciary of any benefit plan of
either, except with respect to any action or inaction by the Executive in breach of this Agreement.
The Company shall cover the Executive with directors and officers insurance at no lesser a level
than at which it covers any other current officer or director, including without limitation any
tail coverage after a Change in Control. This provision shall survive any termination of employment
while any potential of liability of the Executive exists.
5.9 Headings; Counterparts; Interpretation. The headings of paragraphs in this
Agreement are for convenience only and shall not affect its interpretation. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an original and all of
which, when taken together, shall be deemed to constitute the same Agreement. The Company and the
Executive each acknowledge that it has been represented by legal counsel in the negotiation and
drafting of this Agreement, that this Agreement has been drafted by mutual effort, and that no
ambiguity in this Agreement shall be construed against either party as draftsperson.
5.10 Further Assurances. Each of the parties hereto shall execute such further
instruments and take such other actions as the other party shall reasonably request in order to
effectuate the purposes of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date first above
written.
XXXXXX INTERACTIVE INC.
By:
|
/s/ Xxxxxx Xxxxxxx
|
|||
| Chairman of the Board | ||||
| /s/ Xx Xxxxxxxxx | ||||
| XX XXXXXXXXX | ||||
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EXHIBIT A
Agreement to Serve as President and Chief Executive Officer
Reference is made to the Employment Agreement (the “Agreement”), dated as of June 7, 2011, by and
between Xxxxxx Interactive Inc., a Delaware corporation (the “Company”), and Xx Xxxxxxxxx (the
“Executive”).
Pursuant to Section 1.2(b) of the Agreement, the Company and the Executive hereby agree that the
Executive will serve as the President and Chief Executive Officer of the Company during the
Non-Interim Period (as defined in the Agreement) in accordance with the terms of the Agreement.
| Accepted and agreed to: | ||||||
| Xxxxxx Interactive Inc. | Xx Xxxxxxxxx | |||||
By:
|
||||||
| Name: | ||||||
| Title: | ||||||
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EXHIBITS B, C AND D — Filed as Exhibits 10.3, 10.4 and 10.5 to Form 8-K as filed with the SEC on
June 9, 2011
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