EMPLOYMENT AGREEMENT
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THIS Employment Agreement (the "Agreement"), effective this 28th day of
May, 1999, is made by and among XxxxXxxxxxx.xxx, Incorporated
("XxxxXxxxxxx.xxx"), a Nevada corporation, Xxxxxxxx Publications, Incorporated
("HPI"), an Indiana corporation, and Xxxxxx X.
Xxxxxxxx, (the "Employee").
WHEREAS, XxxxXxxxxxx.xxx, Xxxxxx X. Xxxxxxxx, and Xxxxxxxxxx X.
Xxxxxxxx have entered into that certain Plan and Agreement of Reorganization
effective May 28, 1999;
WHEREAS, pursuant to the closing of the Plan and Agreement of
Reorganization, HPI wishes to employ Employee as its President, with such other
duties and responsibilities as HPI may reasonably assign to Employee consistent
with the nature and character of such employment (the "Position");
WHEREAS, pursuant to the closing of the Plan and Agreement of
Reorganization, Employee wishes to accept such employment subject to the terms
and conditions of this Agreement;
NOW, THEREFORE, in consideration of such employment and other valuable
consideration, receipt of which is hereby acknowledged, XxxxXxxxxxx.xxx, HPI,
and Employee agree as follows:
SECTION 1. EMPLOYMENT.
Contingent on the closing of the Plan and Agreement of Reorganization,
HPI hereby employs Employee, and Employee hereby accepts employment, as
President of HPI. XxxxXxxxxxx.xxx shall cause HPI to honor all of HPI's
obligations arising out of this Agreement.
SECTION 2. TERM.
2.1 Term. The term of this Agreement shall be from the Closing Date, as
defined in the Plan and Agreement of Reorganization (the "Closing Date") through
June 30, 2003.
2.2 Termination by HPI for Cause. HPI shall have the right to discharge
Employee at any time for cause. For this purpose, "cause" shall mean the
occurrence of any of the following, for any reason whatsoever, while Employee is
employed by HPI:
(a) Employee willfully engages in any misconduct that
materially injures HPI, XxxxXxxxxxx.xxx or any
affiliate of HPI or XxxxXxxxxxx.xxx, monetarily or
otherwise;
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(b) Employee willfully performs any action which is
demonstrably and materially injurious to HPI,
XxxxXxxxxxx.xxx or any affiliate of HPI or
XxxxXxxxxxx.xxx, monetarily or otherwise;
(c) Employee fails to perform any lawful directive or
duty assigned to him by HPI's Board of Directors for
more than ten (10) days after being delivered a
written demand for performance that identifies such
failure;
(d) Employee is convicted of, or pleads nolo contendere
to, (i) any criminal violation involving dishonesty,
fraud, or breach of trust; or (ii) any felony;
(e) Employee commits any material act of dishonesty,
fraud, misrepresentation or other act of moral
turpitude;
(f) Employee willfully or habitually neglects any of the
Employee's duties that he is required to perform
under the terms of this Agreement;
(g) Employee engages in gross carelessness or gross
misconduct;
(h) Employee violates any fiduciary duty owed to HPI;
Employee's conduct will not be considered "willful" if he reasonably believes
that he was acting in the best interests of HPI and in accordance with the
directions of HPI's Board of Directors.
2.3 Termination by HPI upon Death or Disability. HPI shall have the
right to discharge Employee upon Employee's death or during any period in which
Employee is considered by HPI to be disabled. Employee shall be considered
disabled if, in the sole opinion of HPI, Employee is prevented, after reasonable
accommodation by HPI, from properly performing his duties due to a mental or
physical illness, sickness, or other condition for a period of forty-five (45)
days in any twelve (12) month period.
SECTION 3. COMPENSATION.
3.1 Base Salary. As compensation for services rendered under this
Agreement, Employee shall be entitled to receive a salary of one hundred and
twenty-five thousand dollars ($125,000) per year. Employee shall be eligible to
receive cost of living increases at the absolute discretion of the Board of
Directors.
3.2 Incentive Bonuses. Employee shall be entitled to receive an
incentive bonus of Three Hundred Seventy-Five Dollars ($375,000), payable in
XxxxXxxxxxx.xxx common stock, for each of the four years following the Closing
Date in which HPI's Net Income meets or exceeds the following goals:
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(a) Year one (period beginning on May 28, 1999 and ending
on June 30, 2000) -- $400,000;
(b) Year two (period beginning on July 1, 2000 and ending
on June 30, 2001) -- $500,000;
(c) Year three (period beginning on July 1, 2001 and
ending on June 30, 2002) -- $575,000; and
(d) Year four (period beginning on July 1, 2002 and
ending on June 30, 2003) -- $625,000.
If HPI's Net Income constitutes less than 100 percent of the foregoing goals for
the applicable year, Employee shall be entitled to receive a proportionately
reduced incentive bonus. If HPI's Net Income constitutes more than 100 percent
of the foregoing goals for the applicable year, Employee shall be entitled to
apply the excess (a) to unearned portions of prior years' bonuses and then (b)
if any excess remains, to the early receipt of a proportionately reduced
percentage of the following year's incentive bonus. Upon the completion of any
year in which a bonus is earned, HPI shall deliver to Employee the number of
shares (rounded to the nearest whole share) of common stock of XxxxXxxxxxx.xxx,
$.001 par value per share determined by dividing (a) the amount of the incentive
bonus earned by (b) the average closing sale price of a share of XxxxXxxxxxx.xxx
Common Stock as quoted on the Nasdaq Small Cap Stock Market or NASD's Over the
Counter Bulletin Board for the ten (10) consecutive trading days which precede
the third trading day immediately prior to the Closing Date Anniversary, as
reported (absent manifest error in the printing thereof) by The Wall Street
Journal (Western Edition).
The aggregate incentive bonus which may be earned by Employee hereunder is One
Million Five Hundred Thousand Dollars ($1,500,000).
For purposes of the incentive bonuses described herein, the term "Net Income"
includes all income received by HPI less all expenses of HPI. For this purpose,
income will include, but not be limited to, HPI's allocable share of any income
or gain recognized by any limited liability company in which HPI is a member and
any gain HPI recognizes on any sale of any asset or assets. The expenses of HPI
shall include all expenses incurred by HPI, including, but not limited to, the
following: employee and officer salaries and wages, supplies, equipment,
insurance, utilities, taxes, overhead of HPI, rent, legal services, accounting
services, brokerage fees related to the purchase or sale of securities, cash
reserves required to be recognized and set aside in accordance with generally
accepted accounting principles consistently applied (amounts estimated for costs
and expenses incident to the business of HPI and for which the cash to pay those
costs and expenses will not or may not, be expected to be available to HPI from
current operations of HPI at or about the time those amounts are required to be
paid and which therefore should be set aside periodically in accordance with
generally accepted accounting principles
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consistently applied), development costs which must be expensed under generally
accepted accounting principles, operating expenses, and losses sustained. HPI's
expenses will also include HPI's allocable share of any loss recognized by any
limited liability company in which HPI is a member and any loss HPI recognizes
on any sale of any asset or assets. However, for purposes of this section, the
expenses of HPI shall not include income tax owed by HPI or XxxxXxxxxxx.xxx. All
income and expenses shall be determined in accordance with generally accepted
accounting principles consistently applied. In addition, for purposes of this
section, the expenses of HPI shall not include any overhead of XxxxXxxxxxx.xxx
allocated to HPI related to services provided by HPI by XxxxXxxxxxx.xxx, such as
for example XxxxXxxxxxx.xxx overhead allocated to HPI related to accounting,
payroll or other services provided to HPI by XxxxXxxxxxx.xxx.
Subject to the direction and approval of the Chief Executive Officer of
XxxxXxxxxxx.xxx, HPI may market license and other arrangements with third
parties anywhere in the United States, pursuant to which license fees or other
amounts will be paid to HPI initially and on an on-going basis and will be
credited to HPI. These license and other arrangements may provide a variety of
benefits to third parties including, but not limited to the following: i) third
parties may reflect the "XxxxXxxxxxx.xxx" name on their print publications; ii)
third parties may list real estate data on XxxxXxxxxxx.xxx's Internet sites; and
iii) third parties may purchase Web page products which will be hosted by
XxxxXxxxxxx.xxx. All license fees and revenues noted in this Section 3.2 which
are received and earned by HPI will be treated as revenues of HPI and will add
to HPI's net income for purposes of computing Employee's incentive bonus
pursuant to this Section 3.2.
SECTION 4. INSURANCE.
4.1 Health Insurance. As further consideration for the covenants
contained herein, HPI will provide Employee with such health insurance and sick
leave as may be established by the Board of Directors of HPI from time to time
with respect to all HPI employees.
4.2 Disability Insurance. Commencing on the closing date, HPI will
either (a) purchase and maintain a disability insurance policy in favor of
Employee that will replace Employee's base salary under this Agreement for the
term of this Agreement in the event that Employee satisfies all conditions of
the disability insurance policy; or (b) give Employee an allowance sufficient to
permit him to purchase such a disability insurance policy. The choice between
options (a) and (b) above shall be at the sole discretion of HPI. If HPI elects
to purchase a disability insurance policy, Employee shall perform all acts and
provide all information necessary to assist HPI in obtaining such an insurance
policy.
4.3 Key Man Insurance. HPI may, at its sole discretion, purchase and
maintain a key man insurance policy to protect HPI in the event that Employee
suffers death or disability. In the event that HPI so elects, Employee shall
perform all acts and provide all information necessary to assist HPI in
obtaining such an insurance policy. If HPI purchases such a life
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insurance policy, the premiums HPI pays on the policy shall not be treated as an
expense reducing net income for purposes of Section 3.2 and the calculation of
the incentive bonus.
SECTION 5. EMPLOYEE OBLIGATION.
5.1 Duties of Employee. Employee, as President of HPI, shall manage the
affairs of HPI in accordance with its best interest, subject to the direction
and authority of the Board of Directors of HPI.
5.2 Services to HPI only. The Employee shall devote his entire
productive time, ability and attention to the business of HPI during the term of
this Agreement. The Employee shall not directly or indirectly render any
services of a business, commercial or professional nature to any other person or
organization, whether for compensation or otherwise, unless Employee first
obtains the written consent of XxxxXxxxxxx.xxx and HPI to such other employment
or activity, which consent may be withdrawn by XxxxXxxxxxx.xxx or HPI at any
time upon 30 days notice.
5.3 Company Policies. Employee agrees to abide by the policies, rules,
regulations or usages applicable to Employee as established by HPI from time to
time and provided to Employee in writing, and to perform the duties assigned to
him faithfully and loyally.
SECTION 6. ACCESS TO CONFIDENTIAL INFORMATION; NONCOMPETE.
6.1 Covenant Not to Compete.
(a) The Employee acknowledges that XxxxXxxxxxx.xxx has created
and maintains Internet web sites at URL XxxxXxxxxxx.xxx and at URL XxxxXxx.xxx
on which it displays multiple listing data, real estate agents, and related
services, and has accumulated valuable and confidential trade secrets, know-how
relating to technology, copyrights, trademarks, patents, software, products,
proprietary information, marketing plans, sources of supply, business
strategies, and other intellectual property and business records. The Employee
further acknowledges that, as a key management employee, the Employee will be
involved, on a high level, in the development, implementation and management of
the business strategies and plans of XxxxXxxxxxx.xxx. and HPI. By virtue of the
Employee's unique and sensitive position and special background, employment of
the Employee by a competitor of XxxxXxxxxxx.xxx or of HPI represents a serious
competitive danger to XxxxXxxxxxx.xxx and HPI, and the use of the Employee's
talent and knowledge and information about XxxxXxxxxxx.xxx's or HPI's business,
strategies and plans can and would constitute a valuable competitive advantage
over XxxxXxxxxxx.xxx and HPI.
(b) In view of the foregoing, Employee agrees to maintain as
secret and confidential all trade secrets and nonpublic information described in
Section 6.1(a) of this
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Agreement relating to XxxxXxxxxxx.xxx and HPI and the business of
XxxxXxxxxxx.xxx and HPI that is disclosed to or acquired or known by Employee
during Employee's employment with HPI. After the termination of Employee's
employment, Employee shall not, without prior written authorization of
XxxxXxxxxxx.xxx's Chief Executive Officer, or as may otherwise be required by
law or legal process, use or communicate or disclose any such trade secret or
confidential information to any third party other than XxxxXxxxxxx.xxx and HPI
and those whom XxxxXxxxxxx.xxx and HPI authorize to receive such information.
Employee's know-how regarding the print industry shall not be subject to the
restrictions set forth in this Section 6.1(b).
(c) In view of the foregoing, the Employee covenants and
agrees that, if the Employee's employment with HPI is terminated for any reason
at any time, for a period of two and one half years after the date of such
termination, the Employee will not engage or be engaged, in any capacity,
directly or indirectly, including but not limited as employee, agent,
consultant, manager, executive, owner or stockholder (except as a passive
investor holding less than a 1% equity interest in any enterprise the securities
of which are publicly traded) in any business entity engaged in competition with
any business conducted by XxxxXxxxxxx.xxx or HPI on the Closing Date. This
Section of the Agreement shall survive the termination or expiration of this
Agreement. The geographic scope of this covenant not to compete shall be any
market in which XxxxXxxxxxx.xxx or HPI displays real estate listings. If any
court determines that any provision of this Agreement, or any part hereof, is
unenforceable because of the duration or geographic scope of such provision,
such court shall have the power to reduce the duration or scope of such
provision, as the case may be, and, in its reduced form, such provision shall
then be enforceable.
6.2 Continuing Obligations. Employee agrees that, for two and one half
years following his termination of employment with HPI, Employee shall keep
XxxxXxxxxxx.xxx and HPI informed of the identification of Employee's employer
and the nature of such employment or of Employee's self-employment.
6.3 Injunctive Relief. Employee acknowledges that the violation of the
covenants contained in this Section of the Agreement would be detrimental and
cause irreparable injury to XxxxXxxxxxx.xxx and HPI which could not be
adequately compensated by money damages. Employee agrees that an injunction from
a court of competent jurisdiction is the appropriate remedy for these
provisions, and consents to the entry of an appropriate judgment enjoining
Employee from violating these provisions in the event there is a find of their
breach.
6.4 Other Remedies. The undertakings herein shall not be construed as
any limitation upon the remedies XxxxXxxxxxx.xxx or HPI might, in the absence of
this Agreement, have at law or in equity.
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SECTION 7. GENERAL PROVISIONS.
7.1 Entire Agreement. This Agreement contains the entire understanding
of the parties in respect of its subject matter and supersedes all prior
agreements and understandings (oral or written) between or among the parties
with respect to such subject matter.
7.2 Waiver. This Agreement may not be modified, amended, supplemented,
canceled or discharged, except by written instrument executed by all parties.
The failure of any party to enforce any of the provisions of this Agreement
shall not be deemed a waiver of any provisions or of the right of the party
thereafter to enforce any provisions.
7.3 Assignment. No party may assign, sublicense, or transfer its rights
or delegate its obligations under this Agreement without the other parties'
prior written consent. This Agreement shall be binding on the successors and
assigns of the parties to this Agreement.
7.4 Severability. In case any provision of this Agreement shall, for
any reason, be held to be invalid, unenforceable, or illegal, such provision
shall be severed from this Agreement, and such invalidity, unenforceability or
illegality shall not affect any other provisions of this Agreement.
7.5 Counterparts; Telefacsimile. 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 and the same instrument. Executed copies of
this Agreement may be delivered by telefacsimile, and delivery of executed
telefacsimile copies to the parties and their counsel shall be deemed to be a
delivery of a duplicate original and sufficient delivery to result in entry to
this Agreement by the transmitting party; provided, however, that within ten
(10) days thereafter a signed duplicate original shall be forwarded to the party
to whom a telefacsimile copy was forwarded.
7.6 Governing Law, Jurisdiction and Waiver of Venue. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Nevada regardless of the fact that any of the parties hereto may be or may
become a resident of a different country, state, or jurisdiction. Any suit or
action arising out of this Agreement shall be filed in a court of competent
jurisdiction within the County of Washoe, State of Nevada. The parties hereby
consent to the personal jurisdiction of such courts within Washoe County, State
of Nevada. The parties hereby waive any objections to venue in such courts
within Washoe County, State of Nevada.
7.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered (and shall
be deemed delivered) by certified or registered mail (first class postage
pre-paid), guaranteed overnight delivery, or facsimile trans mission if such
transmission is confirmed, to the following addresses and telecopy numbers (or
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to such other addresses or telecopy numbers which such party shall designate in
writing to the other party):
(a) if to HPI or XxxxXxxxxxx.xxx:
XxxxXxxxxxx.xxx, Incorporated
0000 Xxxx Xxxxx, Xxxxx X
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxx, Chairman/CEO
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxxxx
000 Xxxxxxx Xxxx
Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
(b) if to the Employee:
Xxxxxx X. Xxxxxxxx
0000 Xxxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
with a copy to:
Hall, Render, Killian, Health & Xxxxx, P.S.C.
ATTN: Xxxxxxx Xxxx, Esq.
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
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7.8 Attorneys' Fees. In the event of any dispute between the parties
arising out of this Agreement, the prevailing party shall be entitled, in
addition to any other rights and remedies it may have, to recover its reasonable
attorney fees and costs.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
XXXXXXXXXXX.XXX, INCORPORATED, a
Nevada corporation
By: /s/ Xxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx
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Title: Vice Chairman
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XXXXXXXX PUBLICATIONS,
INCORPORATED, an Indiana corporation
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
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Title: President
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/s/ Xxxxxx X. Xxxxxxxx
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XXXXXX X. XXXXXXXX
