EMPLOYMENT AGREEMENT
EXHIBIT
10.2
This
EMPLOYMENT AGREEMENT (this “Agreement”)
is
entered into as of September 11, 2007 by and between PROELITE, INC., a New
Jersey corporation, with its principal office at 00000 Xxxxxxxx Xxxxxxxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the “Company”),
and
XXXXX XXXXXXXXXX (“Employee,”
together with the Company, the “Parties”),
with
reference to the following facts:
WHEREAS,
concurrently herewith, the Company is acquiring all or substantially all of
the
outstanding shares of capital stock of King of the Cage, Inc. (“KOTC”)
pursuant to a Stock Purchase Agreement, dated as of September 11, 2007, by
and
among Xxxxxxxx Xxxxxxxxxx, Employee, KOTC and the Company (the “Purchase
Agreement”).
WHEREAS,
Employee was a principal shareholder and has been serving as Vice President
of
KOTC.
WHEREAS,
in connection with the Company’s acquisition of all of the outstanding shares of
capital stock of KOTC, and as a condition thereto, the Company desires that
Employee be employed by the Company.
WHEREAS,
to this end, the Company and Employee desire to enter into this Agreement
providing for Employee’s employment by the Company on the terms set forth
herein.
NOW,
THEREFORE, the Company and Employee desire to set forth in this Agreement the
terms and conditions of the Employee’s employment with the Company.
ARTICLE
I
EMPLOYMENT;
TERM; DUTIES
1.1 Employment.
Upon
the terms and conditions hereinafter set forth, the Company hereby employs
Employee, and Employee hereby accepts employment, to serve as President of
the
KOTC branch of EliteXC, a wholly-owned subsidiary of the Company, commencing
September 7, 2007 (the “Commencement
Date”)
and,
subject to Section 4.1, ending five years thereafter (the “Term”).
1.2 Duties.
Employee shall supervise the production of live mixed martial arts events under
the KOTC brand and such other or additional duties as may be assigned to him
from time to time by the Chief Executive Officer of EliteXC (the “CEO”)
pertaining to other activities of the Company provided that such other
activities shall not materially interfere with the ability of Employee to earn
the Incentive Payments and the Contingent Payments pursuant to the Purchase
Agreement. Employee shall report to the CEO.
1.2.1 Employee
shall use his best efforts and abilities faithfully and diligently to promote
the Company’s business interests. For so long as Employee is employed by the
Company, Employee shall not, directly or indirectly, either as an employee,
employer, consultant, agent, investor, principal, partner, stockholder (except
as the holder of less than 1% of the issued and outstanding stock of a publicly
held corporation), corporate officer or director, or in any other individual
or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of the Company Group,
which includes the Company, EliteXC Live and XxxXxxxx.xxx, and other entities
the Company may form in the future, as such businesses are now or hereafter
conducted. Subject to the foregoing prohibition and provided such services
or
investments do not violate any applicable law, regulation or order, or interfere
in any way with the faithful and diligent performance by Employee of the
services to the Company otherwise required or contemplated by this Agreement,
the Company expressly acknowledges that Employee may:
(a) make
and
manage personal business investments of Employee’s choice without consulting the
board of directors of the Company (the “Board”);
and
(b) serve
in
any capacity with any non-profit civic, educational or charitable organization
without consulting with the Board.
1.3 Covenants
of Employee
1.3.1 Reports.
Employee shall use his best efforts and skills to truthfully, accurately, and
promptly make, maintain, and preserve all records and reports that the Company
may, from time to time, request or require, fully account for all money,
records, equipment, materials, or other property belonging to the Company of
which he may have custody, and promptly pay and deliver the same whenever he
may
be directed to do so by the Board.
1.3.2 Rules
and Regulations.
Employee shall obey all rules, regulations and special instructions of the
Company, and all other rules, regulations, guides, handbooks, procedures,
policies and special instructions applicable to the Company’s business in
connection with his duties hereunder, including rules and regulations by state
and federal authorities, and shall endeavor to improve his ability and knowledge
of the Company’s business in an effort to increase the value of his services for
the mutual benefit of the Company and the Employee.
1.3.3 Opportunities.
Employee shall make all business opportunities of which he becomes aware that
are relevant to the Company Group’s business available to the Company Group, and
to no other person or entity or to himself individually.
ARTICLE
II
COMPENSATION
2.1 Salary.
During
the Term, for all services rendered by Employee hereunder and all covenants
and
conditions undertaken by both Parties pursuant to this Agreement, the Company
shall pay, and Employee shall accept, as compensation, an annual salary of
$150,000 (“Salary”),
which
shall be payable in accordance with the normal payroll practices of the Company.
2.1.1 For
a
period of 5 years and in connection with the Purchase Agreement, Employee shall
receive 20% of KOTC’s
earning before interest, taxes, depreciation and amortization (“EBITDA”) over:
(i) $850,000 for the 12-month period ending October, 2008;
(ii) $1,050,000 for the 12-month period ending October, 2009;
(iii) $1,150,000 for the 12-month period ending October, 2010;
(iv) $1,450,000 for the 12-month period ending October, 2011; and
(v) $1,650,000 for the 12-month period ending October, 2012, (the
“Incentive
Payments”).
The
Incentive Payments shall be paid the Employee within 180 days after the end
of
each 12-month period.
For
purposes of this Section 2.1.1, EBITDA
of
KOTC shall be determined in accordance with the provisions of the Purchase
Agreement.
2.2 Bonus.
At the
discretion of the Board, in addition to the Incentive Payments, Employee may
receive a bonus at the end of each calendar year, based on such criteria deemed
appropriate from time to time by the Board of Directors or the Company’s
Compensation Committee.
2.3 Withholding.
The
Company may deduct from any compensation payable to Employee (including payments
made pursuant to Section 2 of this Agreement in connection with or following
termination of employment) amounts sufficient to cover Employee’s share of
applicable federal, state and/or local income tax withholding, old-age and
survivors’ and other social security payments, state disability and other
insurance premiums and payments.
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2.4 Benefits.
Employee shall be entitled to participate on the same basis in all offered
benefits or programs as are generally available to the other executives of
the
Company.
2.5 E&O
Insurance.
Employee shall be covered by the Company’s Errors and Omissions insurance
policy.
ARTICLE
III
BUSINESS
EXPENSES
3.1 Business
Expenses.
Employee will be reimbursed for all reasonable, out-of-pocket business expenses
incurred in the performance of his duties on behalf of the Company consistent
with the Company’s policies and procedures, including prior approval
requirements and submission of appropriate supporting documentation. From time
to time, the Company and Employee shall determine a pre-approved budget for
automobiles, communications devices and rent.
ARTICLE
IV
TERMINATION
OF EMPLOYMENT
4.1 Termination
4.1.1 Employee’s
employment pursuant to this Agreement shall terminate on the earliest to occur
of the following:
(a) upon
the
death of Employee (“Death”);
(b) upon
the
delivery to Employee of written notice of termination by the Company if Employee
shall suffer a physical or mental disability or illness which renders Employee,
in the reasonable judgment of the Board, unable to perform his duties and
obligations under this Agreement, with or without reasonable accommodation,
for
either 60 consecutive days or 180 days in any 12-month period (“Disability”);
(c) upon
delivery to the Company of written notice of termination by the Employee for
Good Reason;
(d) upon
delivery to Employee of written notice of termination by the Company for
Cause;
(e) September
__, 2012.
4.2 Certain
Definitions.
For
purposes of this Agreement, the following terms shall have the following
meanings:
4.2.1 “Cause”
shall
mean, in the context of a basis for termination of Employee’s employment with
the Company, that:
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(a) Employee
is convicted
of, or pleas nolo
contendere
(no
contest) to, any crime (whether or not involving any of the Company Group)
constituting a felony in the jurisdiction involved relating to moral turpitude
or financial matters;
(b) Employee’s
willful misconduct in the performance of Employee’s duties
hereunder;
(c) Employee’s
gross negligence in the performance of his duties hereunder or willful and
repeated failure or refusal to perform such duties as may be delegated to
Employee the Company commensurate with his position; or
(d) Employee
is in material breach of any provision of this Agreement.
In
the
event of any of Sections 4.2.1 (b), (c) or (d), the Company shall have first
provided written notice to Employee of any such claimed willful misconduct,
gross negligence or material breach with exact details of the claimed Cause
and
the Employee shall have had thirty (30) days from the date of receipt of such
written notice to cure any such willful misconduct, gross negligence or material
breach; if curable, and in the event Employee does so cure such misconduct,
negligence or breach within said thirty (30) days, such claimed misconduct,
negligence or breach shall not constitute Cause or a breach of this Agreement.
4.2.2 “Good
Reason”
giving
rise to Employee’s right to terminate this Agreement means if
Employee claims that the Company has materially breached this Agreement,
Employee shall have first provided written notice to the Company of any such
claimed material breach with exact details of the claimed material breach and
the Company shall have had thirty (30) days from the date of receipt of such
written notice to cure any such breach; if curable, and in the event the Company
does so cure such breach within said thirty (30) days, such claimed breach
shall
not constitute good reason or a breach of this Agreement.
ARTICLE
V
INVENTIONS
AND TRADEMARK; CONFIDENTIAL INFORMATION; NON-DISCLOSURE; UNFAIR COMPETITION;
CONFLICT OF INTEREST
5.1 Inventions
and Trademark.
All
ideas, inventions, trademarks, proprietary information, know-how, processes
and
other developments or improvements developed by Employee, alone or with others,
during the Term, that are within the scope of the Company’s business operations
or that relate to the Company’s work or projects, are the exclusive property of
the Company. In that regard, Employee agrees to disclose promptly to the Company
any and all inventions, discoveries, trademarks, proprietary information,
know-how, processes or improvements, patentable or otherwise, that he may make
from the beginning of Employee’s employment until the termination thereof, that
relate to the business of the Company Group, whether such is made solely or
jointly with others. Employee further agrees that, during the Term, he will
provide the Company with a reasonable level of assistance, at the Company’s sole
option and expense, to obtain patents in the United States of America, or
elsewhere on any such ideas, inventions, trademarks and other developments,
and
agrees to execute all documents necessary to obtain such patents in the
Company’s name.
4
5.2 Confidential
Information.
Employee shall hold and keep confidential for the benefit of the Company all
secret or confidential information, files, documents other media in which
confidential information is contained, knowledge or data (collectively the
“Confidential
Information”)
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by Employee during his employment
by
the Company or any of its affiliated companies. Confidential Information does
not include information that is already public knowledge at the time of
disclosure (other than by acts by Employee or his representatives in violation
of this Agreement) or that is provided to Employee by a third party without
an
obligation with the Company to maintain the confidentiality of such information.
After termination of Employee’s employment with the Company, he shall not,
without the prior written consent of the Company, or as may otherwise be
required by law or legal process, communicate or divulge any Confidential
Information to anyone other than the Company and those designated by it.
Employee shall acknowledge that all confidential documents are and shall remain
the sole and exclusive property of the Company regardless of who originally
acquired the confidential documents. Employee agrees to return to the Company
promptly upon the expiration or termination of his employment or at any other
time when requested by the Company, any and all property of the Company,
including, but not limited to, all confidential documents and copies thereof
in
his possession or control. Any loss resulting from a breach of the foregoing
obligations by Employee to protect the Confidential Information could not be
reasonably or adequately compensated in damages in an action at law. Therefore,
in addition to other remedies provided by law or this Agreement, the Company
shall have the right to obtain injunctive relief, in the appropriate court,
at
any time, against the dissemination by Employee of the Confidential Information,
or the use of such information by Employee in violation hereof.
5.2.1 Restriction
on Use of Confidential/Trade Secret Information.
Employee agrees that his use of confidential/trade secret information is subject
to the following restrictions for an indefinite period of time so long as the
confidential/trade secret information has not become generally known to the
public:
(a) Non-Disclosure.
Employee agrees that he will not publish or disclose, or allow to be published
or disclosed, confidential/trade secret information to any person without the
prior written authorization of the Company unless pursuant to Employee’s job
duties to the Company under this Agreement.
(b) Non-Removal/Surrender.
Employee agrees that he will not remove any confidential/trade secret
information from the offices of the Company or the premises of any facility
in
which the Company is performing services, except pursuant to his duties under
this Agreement. Employee further agrees that he shall surrender to the Company
all documents and materials in his possession or control which contain
confidential/trade secret information and which are the property of the Company
upon the termination of this Agreement, and that he shall not thereafter retain
any copies of any such materials.
5.2.2 Non-Solicitation
of Customers/Prohibition Against Unfair Competition.
Employee agrees that at no time after his employment with the Company will
he
engage in competition with the Company while making any use of the Company’s
confidential/trade secret information. Employee agrees that he will not directly
or indirectly accept or solicit, whether as an employee, independent contractor
or in any other capacity, the business of any customer of the Company with
whom
Employee worked or otherwise had access to the Company’s confidential/trade
secret information pertaining to its business with that customer during the
last
year of his employment with the Company.
5.3 Non-Solicitation
During Employment.
Employee shall not during his employment inappropriately interfere with the
Company’s business relationship with its customers or suppliers or solicit any
of the employees of the Company to leave the employ of the Company.
5.4 Non-Solicitation
of Employees.
Employee agrees that, for one year following the termination of his employment,
he shall not, directly or indirectly, ask or encourage any of the Company’s
employees to leave their employment with the Company or solicit any of the
Company’s employees for employment.
5
5.5 Breach
of Provisions.
If the
Employee breaches any of the provisions of this Section 5, or in the event
that
any such breach is threatened by the Employee, in addition to and without
limiting or waiving any other remedies available to the Company at law or in
equity, the Company shall be entitled to immediate injunctive relief in any
court, domestic or foreign, having the capacity to grant such relief, to
restrain any such breach or threatened breach and to enforce the provisions
of
this Section 5.
5.6 Reasonable
Restrictions.
The
parties acknowledge that the foregoing restrictions, as well as the duration
and
the territorial scope thereof as set forth in this Section 5, are under all
of
the circumstances reasonable and necessary for the protection of the Company
and
its business.
ARTICLE
VI
MISCELLANEOUS
6.1 Binding
Effect; Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective legal representatives, heirs, distributees, successors and
assigns. Employee may not assign any of his rights and obligations under this
Agreement. the Company may assign its rights and obligations under this
Agreement to any successor entity or affiliate subject to the approval of
Employee not to be unreasonably withheld or delayed.
6.2 Notices.
Any
notice provided for herein shall be in writing and shall be deemed to have
been
given or made (a) when personally delivered or (b) when sent by telecopier
and
confirmed within 48 hours by letter mailed or delivered to the party to be
notified at its or his/hers address set forth herein; or three days after being
sent by registered or certified mail, return receipt requested, (or by
equivalent xxxxxxx with delivery documentation such as FEDEX or UPS) to the
address of the other party set forth or to such other address as may be
specified by notice given in accordance with this Section 6.2:
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If
to the Company:
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00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxxxxx
XxXxxx, Chief Executive Officer
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|
If
to Employee:
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Xxxxx
Xxxxxxxxxx
0000
Xxxxxxx Xxxxx
Xxxxxxx,
Xxxxxxxxxx 00000
Telephone: (000)
000 0000
Facsimile: (000)
000 0000
|
|
With
a Copy to:
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Xxxxxx
X. Xxxxxxx, Esq.
0000
Xxxxx Xxxxxx
Xxxxxxxx,
Xxxxxxxxxx 00000
Telephone: (000)
000 0000
Facsimile: (000)
000 0000
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6.3 Severability.
If any
provision of this Agreement, or portion thereof, shall be held invalid or
unenforceable by a court of competent jurisdiction, such invalidity or
unenforceability shall attach only to such provision or portion thereof, and
shall not in any manner affect or render invalid or unenforceable any other
provision of this Agreement or portion thereof, and this Agreement shall be
carried out as if any such invalid or unenforceable provision or portion thereof
were not contained herein. In addition, any such invalid or unenforceable
provision or portion thereof shall be deemed, without further action on the
part
of the parties hereto, modified, amended or limited to the extent necessary
to
render the same valid and enforceable.
6
6.4 Waiver.
No
waiver by a party hereto of a breach or default hereunder by the other party
shall be considered valid, unless expressed in a writing signed by such first
party, and no such waiver shall be deemed a waiver of any subsequent breach
or
default of the same or any other nature.
6.5 Entire
Agreement.
This
Agreement sets forth the entire agreement between the Parties with respect
to
the subject matter hereof, and supersedes any and all prior agreements between
the Company and Employee, whether written or oral, relating to any or all
matters covered by and contained or otherwise dealt with in this Agreement.
This
Agreement does not constitute a commitment of the Company with regard to
Employee’s employment, express or implied, other than to the extent expressly
provided for herein.
6.6 Amendment.
No
modification, change or amendment of this Agreement or any of its provisions
shall be valid, unless in writing and signed by the party against whom such
claimed modification, change or amendment is sought to be enforced.
6.7 Authority.
The
Parties each represent and warrant that it or he has the power, authority and
right to enter into this Agreement and to carry out and perform the terms,
covenants and conditions hereof.
6.8 Attorneys’
Fees.
If
either party hereto commences an arbitration or other action against the other
party to enforce any of the terms hereof or because of the breach by such other
party of any of the terms hereof, the prevailing party shall be entitled, in
addition to any other relief granted, to all actual out-of-pocket costs and
expenses incurred by such prevailing party in connection with such action,
including, without limitation, all reasonable attorneys’ fees, and a right to
such costs and expenses shall be deemed to have accrued upon the commencement
of
such action and shall be enforceable whether or not such action is prosecuted
to
judgment.
6.9 Titles.
The
titles of the sections of this Agreement are inserted merely for convenience
and
ease of reference and shall not affect or modify the meaning of any of the
terms, covenants or conditions of this Agreement.
6.10 Applicable
Law; Choice of Forum.
This
Agreement, and all of the rights and obligations of the parties in connection
with the employment relationship established hereby, shall be governed by and
construed in accordance with the substantive laws of the State of California
without giving effect to principles relating to conflicts of law.
6.11 Arbitration.
6.11.1 Scope.
To the
fullest extent permitted by law, Employee and the Company agree to the binding
arbitration of any and all controversies, claims or disputes between them
arising out of or in any way related to this Agreement, the employment
relationship between the Company and Employee and any disputes upon termination
of employment, including but not limited to breach of contract, tort,
discrimination, harassment, wrongful termination, demotion, discipline, failure
to accommodate, family and medical leave, compensation or benefits claims,
constitutional claims; and any claims for violation of any local, state or
federal law, statute, regulation or ordinance or common law. For the purpose
of
this agreement to arbitrate, references to “Company” include all parent,
subsidiary or related entities and their employees, supervisors, officers,
directors, agents, pension or benefit plans, pension or benefit plan sponsors,
fiduciaries, administrators, affiliates and all successors and assigns of any
of
them, and this agreement to arbitrate shall apply to them to the extent
Employee’s claims arise out of or relate to their actions on behalf of the
Company.
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6.11.2 Arbitration
Procedure.
To
commence any such arbitration proceeding, the party commencing the arbitration
must provide the other party with written notice of any and all claims forming
the basis of such right in sufficient detail to inform the other party of the
substance of such claims. In no event shall this notice for arbitration be
made
after the date when institution of legal or equitable proceedings based on
such
claims would be barred by the applicable statute of limitations. The arbitration
will be conducted in Los Angeles, California, by a single neutral arbitrator
and
in accordance with the then-current rules for resolution of employment disputes
of the American Arbitration Association (“AAA”).
The
Arbitrator is to be selected by the mutual agreement of the Parties. If the
Parties cannot agree, the Superior Court will select the arbitrator. The parties
are entitled to representation by an attorney or other representative of their
choosing. The arbitrator shall have the power to enter any award that could
be
entered by a judge of the trial court of the State of California, and only
such
power, and shall follow the law. The award shall be binding and the Parties
agree to abide by and perform any award rendered by the arbitrator. The
arbitrator shall issue the award in writing and therein state the essential
findings and conclusions on which the award is based. Judgment on the award
may
be entered in any court having jurisdiction thereof. The Company shall bear
the
costs of the arbitration filing and hearing fees and the cost of the
arbitrator.
6.12 This
Agreement shall not be terminated by any voluntary or involuntary dissolution
of
the Company resulting from either a merger or consolidation in which the Company
is not the consolidated or surviving corporation, or a transfer of all or
substantially all of the assets of the Company. In the event of any such merger
or consolidation or transfer of assets, Employee’s rights, benefits and
obligations hereunder shall be assigned to the surviving or resulting
corporation or the transferee of the Company’s assets.
6.13 To
the
extent not covered or defined herein, any applicable or defined terms of the
Purchase Agreement are hereby incorporated by reference herein.
IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as
of the day and year first above written.
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__________________________________
Xxxxx
Xxxxxxxxxx
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ProElite,
Inc., a New Jersey corporation
By:
___________________________________
Name:
____________________________
Title:
_____________________________
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