Exhibit 10.7
EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") effected as of this day of
, 1998, by and between Directrix, Inc. (the "Company" or "Employer"),
a Delaware corporation, and J. Xxxxx Xxxxxxx (the "Executive") (collectively
the Company and the Executive are referred to as the "Parties").
INTRODUCTION
WHEREAS, the Parties desire to enter into an Agreement and to set forth
herein the terms and conditions of the Executive's employment by the Company.
Accordingly, in consideration of the mutual covenants and agreement set forth
herein and the mutual benefits to be derived herefrom, and intending to be
legally bound hereby, the Company and the Executive agree as follows:
1. Employment
1.1 Duties. The Company shall employ the Executive on the terms
and conditions set forth in this Agreement, as Chairman of the Board and Chief
Executive Officer. The Executive accepts such employment with the Company and
shall perform and fulfill such duties as are assigned to him hereunder
consistent with his status as a senior executive of the Company, devoting his
best efforts and all of his professional time and attention, to the performance
and fulfillment of his duties and to the advancement of the best interests of
the Company, subject only to the specific directives of the Board of Directors
of the Company. In addition, and without any additional consideration, the
Executive is and/or may be requested to serve as a director or as an employee
and officer of any or all subsidiaries of the Company. Unless otherwise
indicated by the context, the "Company" shall include the Company and all its
subsidiaries.
1.2 Place of Performance. In connection with his employment by
the Company, the Executive shall be based in the New York, New York metropolitan
area, except for required travel on Company business. The Executive may be
required to relocate on a permanent or temporary basis consistent with business
necessity.
2. Term.
The Executive's employment under this Agreement shall commence as
of ,1998 (the "Commencement Date") and shall continue uninterrupted up
to and including the hour of midnight of December 31, 2004 (the "Term"), unless
otherwise terminated as provided for in Sections 7.1 or 7.3. Unless prior to the
end of any calendar year, notice of non-renewal is given by either party, the
term of this Agreement shall automatically be extended for an additional period
of one year upon completion of each year. Therefore, upon each January 1 of a
year,
this Agreement shall be effective for a six-year term unless prior thereto such
notice of non-renewal has been given.
3. Compensation.
3.1 Base Salary. During the Term the Executive shall receive a
minimum annual salary (the "Base Salary") payable in installments at such times
as the Company customarily pays its other senior executive employees (but in any
event no less often than bi-monthly), and calculated as follows:
3.1.1 The Base Salary to be paid to the Executive during
the Term shall be $367,500; and
3.1.2 For each Year beginning after December 31, 1999,
the Company shall increase the Base Salary by an amount equal to five percent
(5%) of the prior year's Base Salary. Each such increase shall be cumulative so
that the Base Salary for each succeeding year shall include the prior year's
increase.
3.2 Health Insurance and Other Benefits. During the Term the
Executive shall be provided all employee benefits provided by the Company to its
management and all other Company salaried employees, including without
limitation, all medical insurance and life insurance plans or arrangements and
shall be entitled to participate in all pension, profit sharing, stock option
and any other employee benefit plan or arrangement established and maintained by
the Company for similarly situated employees, all subject, however, to the
Company rules and policies then in effect regarding participation therein.
During the Term, the benefits provided to the Executive, as described in the
preceding sentence, shall not be reduced except in accordance with the general
reduction of such benefits applicable to similarly situated employees generally,
but then only to the extent that such benefits are reduced for such other
similarly situated employees.
3.3 Automobile Allowance. During the Term, the Company shall
reimburse the Executive for lease payments or purchase installments for one
automobile comparable to the automobile currently used by the Executive as well
as automobile insurance with respect thereto.
3.4 Health Club Membership. During the Term, the Company shall
pay the costs of one health club membership for the Executive in each of the
Executive's two principal places of residence.
3.5 Life Insurance.
3.5.1 Purchase. Provided that the Executive is insurable
at rates that are comparable to those obtainable on other persons of similar age
and position in good health (if the Executive is classified in a higher risk
category he may elect to pay the excess premium cost
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to obtain the coverage), during the Term the Company shall procure and maintain
life insurance on the life of the Executive in the face amount of $1,000,000.
The Executive shall be the owner of such life insurance policy and shall have
the absolute right to designate the beneficiaries thereunder. The type of policy
(whether term, whole life, etc., or combination of types) shall be in the sole
discretion of the Company.
3.5.2 Payment of Premiums. The Company shall pay all
premiums for such life insurance.
3.5.3 Medical Examination. The Executive agrees to submit
to all medical examinations, supply all information and execute all documents
required by the insurance company in connection with the issuance of a policy
for such insurance as well as for any key man insurance the Company may desire
to maintain on the Executive's life.
4. Reimbursement of Expenses.
The Executive shall be reimbursed for all items of travel,
entertainment and miscellaneous expenses which the Executive reasonably incurs
in connection with the performance of his duties hereunder, provided that the
Executive submits to the Company on proper forms provided by the Company, such
statements and other evidence supporting such expenses as the Company may
require and provided such expenses meet the Company's policy concerning such
matters.
5. Stock Options.
The Executive may be entitled to participate in all Company employee
stock option programs as determined by the Compensation Committee of the
Company's Board of Directors and approved by the Company's shareholders.
6. Vacations.
The Executive shall be entitled to not less than four (4) weeks of paid
vacation in any calendar year (prorated in any Year during which the Executive
is employed hereunder for less than the entire Year). Such vacation shall be
taken at such times as are consistent with the reasonable business needs of the
Company. Any vacation not taken during the year may not be taken by the
Executive in subsequent years except to the extent approved by the Company. Upon
termination of the Executive's employment for any reason, any vacation earned by
the Executive but not taken shall be forfeited.
7. Termination of Employment.
7.1 Death or Disability. If the Executive dies during the Term,
the Term shall terminate as of the date of the Executive's death. If the
Executive becomes Totally
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Disabled (as that term is defined below) for one hundred eighty (180) days in
the aggregate during any consecutive twelve-month period during the Term, the
Company shall have the right to terminate the Term by giving the Executive
thirty (30) days' prior written notice thereof, and upon the expiration of such
thirty-day period, the Executive's employment under this Agreement shall
terminate. If the Executive resumes his duties within thirty (30) days after
receipt of a notice of termination and continues to perform such duties for four
(4) consecutive weeks thereafter, the Term shall continue and the notice of
termination shall be considered null and void and of no effect. Upon termination
of the Term under this Section 7.1, the Company shall have no further
obligations or liabilities under this Agreement, except to pay to the
Executive's estate or the Executive, as the case may be: (i) the portion, if
any, that remains unpaid of the Base Salary for periods worked by the Executive
plus the excess of one year's Base Salary over the amount payable to the
Executive under the Company's long-term disability plan during such time
(payable as if the Executive remained an employee of the Company); and (ii) the
amount of any expenses reimbursable in accordance with Section 4 above; and
(iii) any amounts due under any Company benefit, welfare or pension plan.
7.2 "Totally Disabled," as used herein, shall mean a mental or
physical condition which, in the reasonable opinion of an independent medical
doctor selected by the Company in its discretion, renders the Executive unable
or incompetent to carry out the material duties and responsibilities of the
Executive under this Agreement.
7.3 Discharge for Cause. The Company may discharge the Executive
for "Cause" upon written notice (as defined in Section 11.1), and thereby
immediately terminate his employment under this Agreement. For purposes of this
Agreement, the Company shall have "Cause" to terminate the Executive's
employment if the Executive, in the reasonable good faith judgment of the
Company, (i) materially breaches any of his agreements, duties or obligations
under this Agreement and has not cured such breach within ten (10) days after
Company's written notice, including, without limitation, the Executive's failure
to perform his duties hereunder, other than a failure resulting from his illness
or sickness; (ii) willfully fails to carry out a material lawful directive of
the Board of Directors; (iii) embezzles or converts to his own use any funds of
the Company or any client or customer of the Company; (iv) converts to his own
use or destroys any property of the Company having a significant value; (v) is
in material violation of any of the Company policies and/or procedures as
identified in the Company's Employee Manual; or (vi) is habitually drunk or
intoxicated. If the Executive is discharged for Cause, he shall receive only
those amounts earned but not distributed under the relevant plan, program or
practice of the Company. The Company and the Executive acknowledge that if the
Company engages in the Adult Business (as defined in Section 9), such business
could be considered controversial in some localities and could result in civil
or criminal litigation against the Company based upon obscenity and similar
laws. The Parties agree that, notwithstanding the other provisions of this
Section, the naming of the Executive in any such suit, and any conviction of the
Executive or plea bargain, settlement or other disposition of such litigation
relating to the Executive, shall not be considered Cause for the termination of
the Executive's employment, so long as the conduct of the Executive upon which
such claim was based consisted
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of the Executive carrying out his duties in good faith and in accordance with
directions of management of the Company.
7.4 Termination by Executive. The Executive may terminate the
Term of his employment:
7.4.1 upon failure by the Company to comply with the
material provisions of this Agreement, which failure is not cured within ten
(10) days after written notice (referred to herein as "Good Reason"); or
7.4.2 upon a "Change in Control of the Company" (as
defined in Section 7.6.1 below) upon thirty (30) days' prior written notice
given at any time within eighteen (18) months after a Change in Control; or
7.4.3 for any reason other than Good Reason or following
a Change in Control of the Company, which termination shall be considered a
"Voluntary Termination" by Executive.
7.5 Severance upon Termination. If, during the Term, the
Executive's employment is terminated by the Company without Cause, or the
Executive shall terminate employment for Good Reason prior to a Change in
Control of the Company (the date of termination is referred to as the
"Termination Date"), then the Company shall pay the Executive in lieu of other
damages, an amount (the "Severance Payments") equal to his then current Base
Salary payable in installments at the same time the Company pays salary to its
other senior executive employees payable over two years (the period over which
the Severance Payments are made is referred to as the "Severance Period"). The
Company shall have no liability to make any Severance Payments as provided for
in this paragraph unless (i) the Executive executes a General Release in a form
substantially as set forth in Exhibit A attached hereto and (ii) the Executive
complies with all provisions in Section 8 (Restrictive Covenants). Such amount
shall reduce the amount of any other severance payment that otherwise would have
been payable to the Executive under any other Company plan, program or
arrangement. In addition, the Company shall maintain during the lesser of the
balance of the Term immediately prior to such termination or the Severance
Period all employee benefit plans and programs which the Executive participated
in immediately prior to such termination other than bonus, incentive
compensation and similar plans based on performance, provided the Executive's
participation is permissible under the general terms and provisions of such
plans and applicable law. In the event of a Voluntary Termination, the Executive
shall receive only his earned but unpaid Base Salary as of the date of his
termination.
7.6 Change in Control.
7.6.1 Definitions. For purposes of this Section 7.6, a
"Change in Control" shall mean a change in control of a nature that would be
required to be reported in
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response to Item 6(e) of Schedule 14A of Regulation 14A, as in effect on the
date of this Agreement, promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); provided, that whether or not required to be
reported under such Item 6(e), without limitation, such a Change in Control
shall be deemed to have occurred if (i) any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities; (ii) during
any period of two consecutive years, individuals who, at the beginning of such
period, constitute the Board cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a vote of at least
three-fourths of the directors then still in office who were directors at the
beginning of the period; (iii) the Company's stockholders approve an agreement
to merge or consolidate the Company with another corporation (other than a
corporation 50% or more of which is controlled by, or is under common control
with, the Company); or (iv) any individual who is nominated by the Board of
Directors for election of the Board on any date fails to be so elected as a
direct or indirect result of any proxy fight or contested election for positions
on the Board of Directors; provided, however, that notwithstanding the
foregoing, no Change of Control shall be deemed to have occurred pursuant to
either clause (i) or (ii) above in the event of (and notwithstanding any
resultant change in the membership of the Board) an acquisition by any group
comprised of senior officers of the Company, including the Executive, of 25% or
more of the combined voting power of the Company's then outstanding securities.
7.6.2 Termination Payment. Notwithstanding any provision
of this Agreement, if, within eighteen (18) months following a Change in Control
of the Company, (a) the Executive's employment by the Company shall be
terminated by the Company other than as a result of the Executive becoming
Totally Disabled or for Cause or (b) the Executive terminates the Term pursuant
to Section 7.4.1, then the Executive shall be entitled to the benefits provided
below:
(1) The Company shall pay the Executive full Base
Salary through the Termination Date at the rate in effect at that time, and
shall pay the Executive for any vacation earned but not taken and the amount, if
any, of any bonus for a past Company fiscal year which has not yet been awarded
or paid;
(2) In lieu of any further salary payments to the
Executive for periods subsequent to the Termination Date, the Company, subject
to the limitation described below, shall pay to the Executive on the 60th day
following the Termination Date a lump sum amount equal to four times the sum of
(i) the Base Salary and (ii) cash bonuses and other cash compensation paid to
the Executive during the 12 months preceding the Termination Date ("Termination
Payment"); and
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(3) All stock options held by the Executive shall
be fully vested and remain outstanding for their full original term unless
sooner exercised.
7.6.3 Certain Additional Payments by the Company.
(1) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 7.6.3 (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(2) Subject to the provisions of Section 7.6.3(3),
all determinations required to be made under this Section 7.6.3, including
whether and when Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by Deloitte & Touche LLP (the "Accounting Firm"); provided,
however, that the Accounting Firm shall not determine that no Excise Tax is
payable by the Executive unless it delivers to the Executive a written opinion
(the "Accounting Opinion") that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. In the event that Deloitte &
Touche LLP has served, at any time during the two years immediately preceding a
Change in Control Date, as accountant or auditor for the individual, entity or
group that is involved in effecting or has any material interest in the Change
in Control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations and perform the other functions specified in
this Section 7.6.3 (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Within fifteen (15) business days of the receipt
of notice from the Executive that there has been a Payment, or such earlier time
as is requested by the Company, the Accounting Firm shall make all
determinations required under this Section 7.6.3, shall provide to the Company
and the Executive a written report setting forth such determinations, together
with detailed supporting calculations, and, if the Accounting Firm determines
that no Excise Tax is payable, shall deliver the Accounting Opinion to the
Executive. Any Gross-Up Payment, as determined pursuant to this Section 7.6.3,
shall be paid by the Company to the Executive within five (5) days of the
receipt of the Accounting Firm's determination. Subject to the remainder of this
Section 7.6.3, any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the
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uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that it is ultimately determined in accordance with the
procedures set forth in Section 7.6.3(3) that the Executive is required to make
a payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive.
(3) The Executive shall notify the Company in
writing of any claims by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty (30) days after
the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid; provided, however, that the failure of the Executive to
notify the Company of such claim (or to provide any required information with
respect thereto) shall not affect any rights granted to the Executive under this
Section 7.6.3 except to the extent that the Company is materially prejudiced in
the defense of such claim as a direct result of such failure. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such claim;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney selected by the Company and reasonably acceptable to the
Executive;
(iii) cooperate with the Company in good faith
in order effectively to contest such claim; and
(iv) if the Company elects not to assume and
control the defense of such claim, permit the Company to
participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a
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result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 7.6.3,
the Company shall have the right, at its sole option, to assume the
defense of and control all proceedings in connection with such contest,
in which case it may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim, and may either direct the Executive
to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs
the Executive to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided, that any extension of
the statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Company's right to assume the defense of and control
the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(4) If, after the receipt by the Executive of
an amount advanced by the Company pursuant to Section 7.6.3(3) the Executive
becomes entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of Section
7.6.3(3)) promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
Section 7.6.3(3) a determination is made that the Executive shall not be
entitled to any refund with respect to such claim, and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
8. Restrictive Covenants.
8.1 Non-Disclosure of Information. The Executive shall:
8.1.1 Never, directly or indirectly, disclose to any
person or entity for any reason, or use for his own personal benefit, any
"Confidential Information" as hereinafter defined; and
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8.1.2 At all times take all reasonable precautions
necessary to protect from loss or disclosure by Executive or his subordinates
any and all documents or other information containing, referring, or relating to
such Confidential Information. Upon termination of employment with the Company
for any reason, the Executive shall promptly return to the Company any and all
documents or other tangible property containing, referring, or relating to such
Confidential Information, whether prepared by him or others.
8.1.3 Notwithstanding any provision to the contrary in
Section 8, this paragraph shall not apply to information which the Executive is
called upon by legal process (including, without limitation, by subpoena or
discovery requirement) to disclose or any information which has become part of
the public domain or is otherwise publicly disclosed through no fault or action
of the Executive.
8.1.4 For purposes of this Agreement, "Confidential
Information" shall mean any information relating in any way to the business of
the Company disclosed to or known to the Executive as a consequence of, result
of, or through the Executive's employment by the Company which may consist of,
but not be limited to, technical and non-technical information about the
Company's proprietary products, processes, programs, concepts, forms, business
methods, data, any and all financial and accounting data, employees, marketing,
customers, customer lists, and services and information corresponding thereto
acquired by the Executive during the term of the Executive's employment by the
Company. Confidential Information shall not include any of such items which arc
published or are otherwise part of the public domain, or freely available from
trade sources or otherwise.
8.1.5 Upon termination of this Agreement for any reason,
the Executive shall return to a designated officer of the Company all equipment
and/or tangible property then in the Executive's possession or custody which
belongs or relates to the Company, including, without limitation, copies or
reproductions of correspondence, memoranda, reports, notebooks, drawings,
photographs, data base, or any other documents or electronically stored
information which constitutes Confidential Information.
8.2 Trade Secrets - Intellectual Property Rights. The Executive
shall provide the Company with any copyrightable work, trade secrets and other
protectable intellectual property developed or produced by the Executive while
in the employ of the Company pursuant to this Agreement (collectively, "Work
Product").
8.2.1 All Work Product shall be considered works made for
hire and shall be the exclusive property of the Company and the Company shall be
considered the author and/or creator of such work for worldwide copyright
purposes and renewals and extensions thereof. The Company may request, at its
own cost and expense, that the Executive assist the Company in obtaining
worldwide patent, copyright and other property rights for the Work Product.
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8.2.2 If the Executive's rights in the Work Product
cannot be assigned to the Company, the Executive waives enforcement of all such
rights against the Company. The Executive further agrees to join in any action,
at the Company's sole cost and expense, to enforce or to procure a waiver of
such rights.
8.2.3 If the rights of the Work Product cannot be waived
or the Work Product is not deemed a "work for hire", the Executive hereby grants
the Company and its assigns a worldwide royalty-free license to reproduce,
distribute, modify, publicly display, sublicense and assign such rights in all
media or distribution technologies now known and hereinafter developed or
devised.
8.2.4 The Executive hereby appoints the Company as his
attorney in fact to execute and file any patent, copyright or other lawful
application with respect to the Work Product.
8.3 Non-Solicitation. During the Term and during the Severance
Period, the Executive will not, directly or indirectly, individually or on
behalf of other persons, solicit, aid or induce (i) any employee of the Company
or any of its affiliates to leave their employment with the Company or its
affiliates to accept employment with or render services to or with any person,
firm, corporation or other entity or assist or aid any other person, firm,
corporation or other entity in identifying or hiring away such employee, (ii)
any customer or vendor of the Company to alter its business relationship with
the Company or to purchase products or services then sold by the Company or its
affiliates from another person, firm, corporation or other entity or assist or
aid any other person or entity in identifying or soliciting any such customer or
vendor or (iii) any other remaining employee of the Company or its affiliates to
leave such employee's employment with the Company or its affiliates.
8.4 Conflict of Interest. The Executive shall exercise good
judgment and maintain high ethical standards in the course of his dealings so as
to preclude the possibility of a conflict between the interest of the Company
and his own personal interest. The Executive, therefore, has an obligation to
avoid any activity, agreement, personal interest, or other relationship or
situation which: (i) conflicts with the Company's best interest; (ii) interferes
with the Executive's responsibility to serve the Company to the best of the
Executive's ability; or (iii) gives the appearance of self dealing.
8.4.1 This policy requires that the Executive shall
not have any relationship, nor engage in any activity that might impair the
independence or judgment in the execution of the Executive's duties. The
Executive shall not have any direct or direct personal financial interests in
suppliers of property, goods or services that would affect his decisions or
actions on the Company's behalf. The Executive shall not accept gifts, benefits,
or unusual hospitality that would be reasonably likely to influence the
Executive in the performance of his duties.
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8.4.2 If any possible conflict of interest situation
arises, the Executive is responsible to immediately disclose the facts to the
Board of Directors of the Company so that an evaluation may determine whether a
problem exists and, if so, to eliminate it.
8.5 Injunctive Relief/Legal Remedies. The Parties agree that the
remedy at law for any breach by the Executive of this Agreement and specifically
the provisions of Section 8 ("Restrictive Covenants"), will be inadequate and
that the Company or any of its subsidiaries or other successors or assigns shall
be entitled to injunctive relief without bond. Such injunctive relief shall not
be exclusive, but shall be in addition to any other rights and remedies Company
or any of its subsidiaries or their successors or assigns might have for such
breach.
8.5.1 The Executive acknowledges: (i) that compliance
with the restrictive provisions contained in Section 8 is necessary to protect
the business and goodwill of the Company and its subsidiaries, and (ii) that a
breach of this Agreement will result in irreparable and continuing damage to the
Company, for which monetary damages may not provide adequate relief.
Consequently, the Executive agrees that in the event of a breach or threatened
breach of any of the restrictive covenants described herein, the Company, at its
discretion, shall be entitled to seek both: (i) a preliminary and/or permanent
injunction in order to prevent such damage, or continuation of such damage, and
(ii) monetary damages as determinable. Nothing herein, however, shall be
construed to restrict and/or prohibit the Company from pursuing any and all
other remedies; the Executive acknowledges that all remedies are cumulative. The
Executive specifically acknowledges that the Executive shall account for and pay
over to the Company any profits, monies, accruals or other benefits derived or
received by the Executive as a result of any transaction constituting a breach
of the Restrictive Covenants in Section 8.
8.5.2 If any legal action arises to enforce the Company's
trade secrets, the prevailing party shall be entitled to recover any and all
damages, as well as all costs and expenses, including reasonable attorney's fees
incurred in enforcing or attempting to enforce the Company's trade secrets.
9. Nature of Company Business.
The Executive acknowledges that the Company, through one or more of its
affiliated companies, is currently involved in providing technical and creative
services to companies which produce and distribute television networks which
feature explicit and cable version adult movies and features and other
programming depicting sexual situations and/or nudity (the "Adult Business"). In
addition, the Executive acknowledges that the Company, through one or more of
its affiliated companies, may become involved in the Adult Business. The
Executive acknowledges that he will likely be exposed, from time to time, to one
or more aspects of the Adult Business during the course of his employment by the
Company. Furthermore, the
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Executive confirms that he is currently comfortable working in an environment
where some or all aspects of the Adult Business are present and would be
comfortable working for a company engaged in the Adult Business. If, at any
time, the Executive's view on the foregoing changes or the Executive otherwise
become uncomfortable with the nature of the Company's business, the Executive
agrees to promptly inform the Board of Directors of the Company. The Company
will work with the Executive to explore mutually acceptable means of
accommodating the Executive's concerns which, both parties acknowledge, may
result in the termination of the Executive's employment. Termination of the
Executive's employment occasioned by the Executive's desire not to be associated
with the Company as a result of the nature of its business shall be treated as a
Voluntary Termination by the Executive without Good Reason.
10. Arbitration.
10.1 Any and all disputes, controversies and claims arising out
of, or relating to, this Agreement, or with respect to the interpretation of
this Agreement, or the rights or obligations of the Parties and their successors
and permitted assigns, whether by operation of law or otherwise, shall be
settled and determined by arbitration in New York City, New York, pursuant to
the then existing rules of the American Arbitration Association ("AAA"), for
commercial arbitration. Each party shall pay their own legal fees. The losing
party shall pay the fees and costs imposed by the AAA; if neither party clearly
prevails in the arbitration, the parties shall request that the AAA appointed
arbitrator apportion the AAA's fees and costs between the parties.
10.2 The Parties covenant and agree that the decision of the AAA
shall be final and binding and hereby waive their right to appeal therefrom.
11. Miscellaneous.
11.1 Notices. Any notice, demand or communication required or
permitted under this Agreement shall be in writing and shall either be
hand-delivered to the other party or mailed to the addresses set forth below by
registered or certified mail, return receipt requested, or sent by overnight
express mail or courier or facsimile to such address, if a party has a facsimile
machine. Notice shall be deemed to have been given and received (i) when
hand-delivered or after three (3) business days when deposited in the U.S. Mail,
(ii) when transmitted and received by facsimile or sent by express mail properly
addressed to the other party. The addresses are:
To the Company:
Directrix, Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (212)
Attn: Board of Directors
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To the Executive:
J. Xxxxx Xxxxxxx
0000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
The foregoing addresses may be changed at any time by either party by
notice given in the manner herein provided.
11.2 Integration; Modification. This Agreement, the
Indemnification Agreement executed contemporaneously herewith in the form
attached hereto as Exhibit B and the Company's Employee Manual constitute the
entire understanding and agreement between the Company and the Executive
regarding its subject matter, and supersede all prior negotiations and
agreements or interpretations, whether oral or written. This Agreement may not
be modified except by written agreement signed by the Executive and a duly
authorized officer of the Company.
11.3 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties, including their respective heirs,
executors, successors and assigns, except that this Agreement may not be
assigned by the Executive.
11.4 Waiver of Breach. No waiver by either party of any condition
or of the breach by the other of any term or covenant contained in this
Agreement, whether conduct or otherwise, in any one (1) or more instances shall
be deemed or construed as a further or continuing waiver of any such condition
or breach or a waiver of any other condition, or the breach of any other term or
covenant set forth in this Agreement. Moreover, the failure of either party to
exercise any right hereunder shall not bar the later exercise thereof with
respect to other future breaches.
11.5 Governing Law. This Agreement shall be governed by the
internal laws of the State of New York, except that Section 10 shall be governed
by the Federal Arbitration Act, Title 9, U.S. Code.
11.6 Headings. The headings of the various sections and paragraphs
have been included herein for convenience only and shall not be considered in
interpreting this Agreement.
11.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one (1) and the same instrument.
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11.8 Due Authorization. The Company represents that all corporate
action required to authorize the execution, delivery and performance of this
Agreement has been duly taken.
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IN WITNESS WHEREOF, this Agreement has been executed by the Executive
and on behalf of the Company by its duly authorized officer on the day and year
first above written.
DIRECTRIX, INC.
By:
-----------------------------------
(Signature)
--------------------------------------
Date
EXECUTIVE:
--------------------------------------
J. Xxxxx Xxxxxxx
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Social Security No.
--------------------------------------
Date
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