EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of the 10th day of
January, 2000, is entered into between MegaMedia Networks, Inc., (the
"Company"), and Xxxxx X. Xxxx, (the "Executive").
RECITAL
WHEREAS, the Company desires to employ the Executive and the Executive desires
to be employed by the Company upon the terms and subject to the conditions set
forth in this Agreement.
NOW THEREFORE, in consideration of the Recital and of the mutual promises set
forth in this Agreement, the company and the Executive agree as follows:
AGREEMENT
1. EMPLOYMENT. The Company employs the Executive as the Chief Executive
Officer and as CEO he shall lead the Company in strategic business
development and brand building in alliance with world-class companies. He
shall identify and capitalize on business trends and market opportunities.
He shall determine profitable growth strategies and he shall be in charge
of the negotiation of strategic alliances and business relationships. He
will develop and implement successful marketing strategies and oversee
their day-to-day implementation as well as all company operations. He shall
be responsible for enhancement of shareholder value and will assemble and
lead superior staff teams to accomplish the Companies objectives as set out
above and as determined by the Board of Directors. Executive hereby accepts
such employment, upon the terms and subject to the conditions set forth in
this Agreement.
2. TERM. The term of this Agreement shall by one (1) year, commencing on
January 10, 2000, and ending on January 10, 2001. The initial term shall be
automatically extended by one (1) day on each day beginning on January 11,
2000, for twelve (12) months such that on any given day after January 10,
2000, the Term of this Agreement shall be twelve (12) months from such day.
The Term shall automatically extend past January 9, 2001, and shall be
automatically extended as described above for as long as the Executive is
employed by the Company. Nothing herein shall be construed as to limit in
any manner the rights of the parties hereto to terminate Executive's
employment with the company in accordance with the provisions for
termination and for compensation upon termination that are contained
herein.
3. DUTIES. During the term of this Agreement, subject to the direction of the
Board of Directors of the Company, the Executive shall serve in the
capacities set forth in Section 1 hereof. The Executive shall devote his
full business time and energies to the business and affairs of the Company
and shall use his best efforts, skills and abilities to promote the
interests of the Company and to diligently and competently perform his
duties. Executive may serve as a director of not more than two (2) other
companies, including public companies, as well as of philanthropic,
charitable or civic entities, as long as participation on such boards does
not interfere with the performance of the Executive's duties hereunder.
4. COMPENSATION, STOCK OPTIONS AND BENEFITS:
A. Executive Compensation. Commencing with the start of employment
pursuant to this Agreement, Executive shall receive an annual salary
of $190,000.00 (one hundred ninety thousand dollars). Executive shall
also be entitled to participate in the executive bonus program as that
Program may be in force and determined from time to time by the
Company's Board of Directors and its Compensation Committee.
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B. Stock Rights and Options.
i. Upon execution of this Agreement and payment by Executive of an
aggregate purchase price of Two Thousand Five Hundred Dollars
($2,500.00), Executive shall be issued 250,000 shares of the Company's
common stock, $0.01 par value, in his name, to be held by an Escrow
Agent, as provided in the Escrow Agreement of even date herewith, as
set forth in Exhibit A, which shares may not be sold, exchanged,
transferred, pledged, hypothecated, or otherwise disposed of and are
subject to forfeiture as described below ("Escrow Stock"). If
Executive voluntarily terminates his employment or his employment is
terminated "for cause" (as defined in paragraph 9D), prior to the
occurrence of the earliest event specified in subsections (a) through
(f) below, Executive shall forfeit all right, title and interest to
the Escrow Stock. Otherwise, complete ownership, subject to
restrictions set forth in the Securities Act of 1933 as amended, and
the rules and regulations promulgated from time to time by the
Securities and Exchange Commission, in all of the Escrow Stock shall
be delivered to Executive promptly on the earliest to occur of the
following:
a. January 9, 2001;
b. Executive's death;
c. Executive's permanent disability as defined in paragraph 9B;
d. Termination of the Executive's employment by the Company
without cause as defined in paragraph 9D;
e. Termination by the Executive of his employment as a result
of Constructive Discharge as defined in paragraph 9C;
f. A "change in control" of the Company which shall be defined
as (i) a sale, purchase, merger or other business
combination which results in transfer to a third party of an
ownership interest of greater that 50% of the company or any
successor entity to the Company, (ii) a sale or other
disposition of all or substantially all of the Company's
assets, or (iii) election by the shareholders of the Company
of persons to serve as directors of the Company, comprising
more that one-half (1/2) the total number of directors,
persons who were not nominated or recommended to the
shareholders for election as directors by the Board's
nominating committee.
Provided that Executive has not voluntarily terminated his
employment or his employment has not been terminated "for cause"
(as defined in paragraph 9D), prior to the occurrence of the
earliest event specified in subsections (a) through (f) above,
upon the occurrence of the earliest event specified in
subsections (a) through (f) above, the Company shall instruct its
Escrow Agent to deliver a certificate or certificates in
Executive's name for the 250,00 shares of the Company's common
stock, $0.01 par value, to Executive.
ii. Upon execution of this Agreement , the company shall issue to
Executive two Stock Option Agreements as set forth in Exhibits B
and C, attached hereto and incorporated herein by reference,
providing Executive conditional rights to purchase up to 200,000
& 200,000 shares of fully paid, non-assessable common stock of
the Company in each Stock Option Agreement, respectively.
iii. Promptly upon the vesting of stock option rights as provided in
the Stock Option Agreements, the Company shall provide Executive
with a Notice of Vesting confirming such vesting of
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iv. option rights. The Notice of Vesting shall set forth the date of
vesting, the number, exercise price and term of the option rights
that have vested in Executive.
v. The Escrow Stock and the Stock Options referenced herein shall
not be subject to any dilution as to percentage of ownership,
that differs from any dilution of percentage of ownership that
may be from time to time be appropriately approved and undertaken
by the Company and that is applicable to all issued and
outstanding stock of the Company. All shares acquired by
Executive under these provisions will be subject to statutory
restrictions, registration and to such lockup agreements as
Company may reasonably require of its executives. In the event
that the outstanding shares are changed into or exchanged for a
different number or kind of shares or securities of the Company,
or of any other corporation, by reason of reorganization, merger,
or other subdivision, consolidation. Recapitialization,
reclassification, stock split, stock divided or combination of
shares or similar event, the Company shall make an appropriate
and equitable adjustment to the Escrow Stock or Options so that
Executive's proportionate interest shall be maintained as before
the occurrence of such event to the maximum extent possible.
vi. At the Executive's request and at the Company's expense,
following the Company's next public offering, the Company shall
effect a registration on Form S-8, or if necessary on Form S-3,
with respect to his exercise of his options and, if necessary,
with respect to the resale of any of his shares of common stock.
vii. Executive shall also be entitled to participate in all other
compensation and benefit plans provided by the Company to its
executives, including any stock option, retirement and savings
programs (e.g. a 401(k) plan).
C. Benefits: During the term of this Agreement, the Executive shall be
entitled to participate in or benefit from, in accordance with the
eligibility and other provisions thereof such medical, insurance,
pension, retirement, life insurance, profit sharing and other fringe
benefit plans or policies as the company may make available to, or
have in effect for, its other senior executives and Executive's
participation shall not be less that that of any other executive
officer of the Company. The Company retains the right to terminate or
alter any such plans or policies from time to time. At this time, the
Company pays 30% of the cost of participation of Executive's family in
the Company medical insurance plan.
D. Reimbursement of Business Expenses: During the term of this Agreement,
upon submission of appropriate supporting documentation, the Executive
shall be reimbursed by the Company for all reasonable business
expenses actually and necessarily incurred by the Executive on behalf
of the Company in connection with the performance of services under
this Agreement.
E. Reimbursement of Other Expenses: During the term of this Agreement the
Executive shall receive an auto allowance of $500.00 per month and
shall participate in any other reimbursements (i.e. cellular phone,
pager, etc.) offered to other senior executives at a level that shall
not be less than that of any other executive officer of the Company.
F. Vacation: During the term of this Agreement Executive shall be
eligible for fifteen (15)-business days paid vacation per employment
year (i.e., January 10 through January 9). Vacation days are not
cumulative and will not carry over from year to year.
G. Sick Leave: Executive will be eligible for 5 (five) paid sick days per
year. Paid sick days can be used for any purpose during the employment
year. Sick days are not cumulative and will not carry over from year
to year.
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5. REPRESENTATION OF EXECUTIVE: The Executive represents and warrants that he
is not a party to, or bound by, any agreement or commitment, or subject to
any restriction, including but not limited to agreements related to
previous employment containing confidentiality or non-compete covenants,
which in the future may have a possibility of adversely affecting or
interfering with the business of the Company, the full performance by the
Executive of his duties under this Agreement or the exercise of his best
efforts hereunder.
6. CONFIDENTIALITY:
A. Confidential Information. The Executive acknowledges that as a result
of his employment with the Company, the Executive will have knowledge
of and access to, all proprietary and confidential information of the
company, including, without limitation, all "Confidential Information"
(as defined herein), and that such information, even though it may be
contributed, developed or acquired by the Executive, and whether or
not the foregoing information is actually novel or unique, constitute
valuable assets of the Company developed at great expense which are
the exclusive property of the company or its affiliates. Accordingly,
the Executive shall not, at any time, either during or subsequent to
the terms of this Agreement, use, revel, report, publish, transfer or
otherwise disclose to any person, corporation or other entity (a
"person"), any of the Confidential Information without the prior
written consent of the Company's Board of Director's, except to
appropriate officers and executives of the Company and other
appropriate persons who are in a contractual or fiduciary relationship
with the company and who have a need for such information for purposes
in the best interests of the company, and except for such information
which is or becomes generally available to the public other than as a
result of an unauthorized disclosure by the Executive. As used in this
Agreement, "Confidential Information" shall mean any and all studies,
plans, reports, surveys, analysis, sketches, drawings, specifications,
notes, records, memoranda, computer-generated data, computer programs,
algorithms, or documents, and all other non-public information
relating to the business activities of the Company, including, without
limitation, all methods, processes, techniques, equipment, research
data, experiments, marketing and sales information, personnel data,
customer lists, pricing data, executive lists, supplier lists,
merchandising systems, financial data, trade secrets, and the like
which presently or, in the future, are in the possession of the
Company. Said Confidential Information may be in either human or
computer readable form, including, but not limited to, software,
source code, hex code, or any other form. Confidential Information
shall not include any information that is available to the general
public or that is generally know or available in the industry.
B. Return of Confidential Information. Upon the termination of the
Executive's employment with the Company, the Executive shall promptly
deliver to the Company all manuals, letters, notes, notebooks, reports
and copies thereof and all other materials relating to the Company's
business, including without limitation any materials incorporating
Confidential Information, which are in the Executive's possession or
control.
7. NON-COMPETITION: The Executive acknowledges that his services to be
rendered hereunder are of a special and unusual character and have a unique
value to the Company, the loss of which cannot be adequately compensated by
damages in any court of law. In view of the unique value to the Company of
the services of the Executive, the Executive hereby covenants and agrees
that so long as he remains employed by the Company (whether under this
Agreement or any other written or oral agreement or arrangement) and for a
period of one (1) year after the termination or expiration of any such
employment for any reason, the Executive shall not directly or indirectly
engage in or have an active interest in, anywhere in the world, alone or in
association with others, as principal, officer, agent, executive,
consultant, independent contractor, director, partner or stockholder, or
through the investment of capital lending of money or property, rendering
of services or otherwise any business competitive with the business engaged
in by the Company, the Executive hereby acknowledging that the company
conducts business and distributes its products, or contemplates conducting
business and distributing its product(s), on a worldwide basis; provided,
however, that this paragraph 7 shall not prevent the Executive from
acquiring, solely as investment and through market purchases, up to ten
percent (10%) of the securities of any issuer that are registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended,
and that are listed or
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admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System. The business in which the Company is engaged and from
which the Executive shall refrain from engaging in following the
termination of his employment shall be specified in Exhibit E to this
Agreement. The description of the Company's business shall be revised as
often as necessary, (but not less than every six (6) months) to reflect the
scope and nature of the Company's business from time to time, and such
revisions to Exhibit E shall be the responsibility of the Executive and of
the Chief Executive Officer of the Company, as approved by the Board of
Directors. So long as Executive remains employed by the Company (whether
under this Agreement or any other written or oral agreement or arrangement)
and for a period of one (1) year after the termination or expiration of any
such employment for any reason, the Executive shall not, and shall not
permit, cause or authorize any of his executives, agents or others under
his control to, directly or indirectly, on behalf of himself or any other
person, to recruit or otherwise solicit or induce any person who is an
executive of; or otherwise engaged by, the Company or any successor to the
business of the company or any affiliate of the Company to terminate his or
her employment or other relationship with the Company or such successor or
affiliate. The Executive shall not at any time, directly or indirectly, use
or purport to authorize any person to use any name, xxxx, logo, trade dress
or other identifying words or images which are the same as or similar to
those used at any time by the Company or any affiliate in connection with
any product or service, whether or not such use would be in a business
competitive with that of the Company. This Restrictive Covenant on the part
of the Executive is given and made by the Executive to induce MegaMedia to
employ the Executive and to enter into this Employment Agreement with the
Executive, and the Executive hereby acknowledges the sufficiency of the
consideration for this Restrictive Covenant.
This Restrictive Covenant is not executory or otherwise subject to
rejection under the Bankruptcy Code. This Restrictive Covenant is a
reasonable an necessary restraint of trade and does not violate the Xxxxxxx
Antitrust Act, the Florida Antitrust Act, or the common law; it is
supported by valid business interests, including the protection of
MegaMedia trade secrets and confidential business information and the
protection of MegaMedia's relationships with its customers and prospective
customers, at the one (1) year restriction is essential to the full
protection of those valid business interests. If any portion of this
Restrictive Covenant is held by a court of competent jurisdiction to be
unreasonable, arbitrary, or against public policy for any reason, this
Restrictive Covenant shall be considered divisible as to line of business,
time, and geographic area; if a court of competent jurisdiction should
determine the specified lines of business, the specified period, or the
specified geographic area to be unreasonable, arbitrary, or against public
policy for any reason, a narrower line of business, a lesser period, or a
smaller geographic area that is determined to be reasonable, non-arbitrary,
and not against public policy for any reason, may be enforced by MegaMedia
against the Executive.
8. REMEDIES: The Executive acknowledges that the Company would not enter into
this Agreement without the covenants set forth in Paragraphs 6,7 and 8 of
this Agreement and that such covenants are given as an integral part of and
incident to this Agreement. MegaMedia and the Executive agree that, in the
event of a breach by the Executive of the Restrictive Covenants set forth
in Paragraphs 6 and 7, above, such a breach would irreparably injure
MegaMedia and would leave MegaMedia with no adequate remedy at law, and
MegaMedia and the Executive further agree that if legal proceedings
(including arbitration proceedings) should be brought by MegaMedia, against
the Executive to enforce the Restrictive Covenant, MegaMedia shall be
entitled to all civil remedies, including without limitation, preliminary
and permanent injunctive relief restraining the Executive from violating,
directly or indirectly, either as an individual on his own account or as a
partner, joint venture, employee, agent, salesman, contractor, officer,
director, or stockholder or otherwise, the restrictions of Paragraph 6 and
7, above.
Nothing in this Employment Agreement shall be construed as prohibiting
MegaMedia from pursuing any other legal or equitable remedies available to
it fro breach or threatened breach of the Restrictive Covenants. MegaMedia
agrees that it shall bring an appropriate action to enforce its rights
under Paragraphs 6 and 7, within 60 days of that date when facts material
to the right of action are known or reasonably should have been known to
MegaMedia.
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Should legal proceedings (including arbitration proceedings) be brought by
MegaMedia against the Executive to enforce the Restrictive Covenants, the
period of restriction shall be deemed to being running on the date of entry
of an order granting MegaMedia preliminary injunctive relief and shall
continue uninterrupted for the next succeeding one (1) year; the Executive
acknowledges that such purposes and effect would be frustrated by measuring
the period of restriction from the date of termination of employment where
the Executive failed to honor the Restrictive Covenant until directed to do
so by court order. MegaMedia and the Executive agree that, if MegaMedia is
granted preliminary injunctive relief under this Agreement, an injunction
bond of no more than $190,000.00 or an amount equal to the Executive's
latest annual salary level, whichever is greater, shall be sufficient to
indemnify the Executive for any costs or damages that he might incur if the
Court ultimately determines that the Executive was wrongfully enjoined. If
the Executive breaches any of the provisions of Paragraphs 6 or 7, in
addition to its other rights and remedies, the Company shall have the right
to require the Executive to account for and pay over to the Company all
compensation, profits, money, accruals, and other benefits derived or
received, directly or indirectly, by the Executive from the action
constituting such breach.
9. TERMINATION: This Agreement may be terminated prior to the expiration of
the term set forth in Paragraph 2 upon the occurrence of any of the events
set forth in, and subject to the terms of this Paragraph 9.
A. Death. This Agreement will terminate immediately and automatically
upon the death of the Executive. In the event of Executive's death,
Executive's estate or his designated beneficiary shall be paid by the
Company all of the compensation and benefits due to Executive through
the date of his death, including without limitation, the Escrow Stock
and stock option benefits to which Executive was entitled as of the
date of his death.
B. Disability. This Agreement may be terminated at the Company's option,
immediately upon written notice to the Executive, if the Executive
shall suffer a permanent disability. For the purposes of this
Agreement, the term "permanent disability" shall mean the Executive's
inability to perform his duties under this Agreement for a period of
120 consecutive days or for an aggregate of 180 days, whether or not
consecutive, in any twelve (12) month period, due to illness, accident
or any other physical or mental condition, as determined by the Board
of Directors of the Company. In the event of a permanent disability,
Executive shall be paid by the Company all of the compensation and
benefits due to Executive through the date of his permanent
disability, including without limitation, the Escrow Stock and stock
option benefits to which Executive was entitled as of the date of his
permanent disability. All stock options vested as of the date
Executive's employment is terminated due to permanent disability shall
remain exercisable for the full duration of the option exercise
period.
C. Voluntary termination by Executive.This Agreement may be terminated by
Executive upon the giving of 60 days written notice to the Board of
Directors. In the event that Executive voluntarily terminates this
Agreement, except for "Constructive Discharge" as hereinafter defined,
he shall be paid by the Company all of the compensation and benefits
due to Executive through the date of termination and all stock options
vested as of that date shall remain exercisable for the full duration
of the option exercise period. In the event that Employee is
Constructively Discharged, his termination shall be treated as if made
by Company without cause and Executive shall receive all the
compensation and benefits specified in paragraph 9E below. For
purposes of this Agreement, "Constructive Discharge" shall mean:
i. any reduction of compensation, stock options or other benefits
set forth in Paragraph 4 hereof;
ii. a material reduction in Executive's job function, duties or
responsibilities, or a similar change in Executive's reporting
relationships, it being agreed and understood that Executive's
failure to win re-election to the Board of Directors (after his
election to an initial term as provided in Paragraph 19 hereof)
shall not constitute "Constructive Discharge" so long as the
shareholders bound by the Voting Agreement attached hereto as
Exhibit D shall have voted in accordance with the terms of that
agreement;
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iii. a required relocation of Executive more than 35 miles from the
Company's offices at 00 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000;
or,
iv. any breach of any of the material terms of this Agreement by the
Company which is not fully cured within 15 (fifteen) days of
Company's receipt of written notice thereof from Executive.
D Cause. This Agreement may be terminated at the Company's option,
immediately upon written notice to the Executive, upon (i)
"Misconduct" which includes, but is not limited to, the following,
which shall not be construed in pari materia with each other: (a)
Conduct evincing such willful or wanton disregard of an employer's
interests as is found by the Company's Board of Directors to be in
deliberate violation or disregard of standards of behavior which the
employer has the right to expect of the Executive; or (b) Carelessness
or negligence of such a degree or recurrence as is found by the
Company's Board of Directors to manifest culpability, wrongful intent,
or evil design, or to show an intentional and substantial disregard of
an employer's interests or of the Executive's duties and obligations
to the employer, or (ii) fraud, criminal conduct (as evidenced by a
plea of no contest or guilty or upon conviction of the Executive for
any felony) or embezzlement by the Executive. In the event that
Executive is terminated for cause, he shall be paid by the Company all
compensation and benefits due through the date of written notice of
termination, including without limitation all stock option benefits
vested prior to the date of written notice of termination hereunder.
All stock options vested as of the date Executive's employment is
terminated for cause shall remain exercisable for the full duration of
the option exercise period.
E. Without Cause. This Agreement may be terminated at the Company's
option without cause immediately upon notice to the Executive. In the
event the Company elects to terminate this Agreement without cause
pursuant to this subsection, or the Executive is Constructively
Discharged as specified in Paragraph 9C above, the Company shall:
i. Pay to Executive as wages in lieu of notice the sum of
$190,000.00, or an amount equal to the Executive's latest annual
salary level, whichever is greater, to be paid in four equal
payments, with the first payment paid immediately upon
termination and subsequent payments being paid on the 30th, 60th
and 90th day after termination, until paid in full.
ii. Immediately vest all of Executive's Escrow Stock and stock option
rights as provided in the Stock Option Agreements as though he
remained employed for the initial three years of this Agreement.
iii. Simultaneous with delivery of the Executive's general release
referenced in paragraph 9F, Company shall deliver to Executive or
Executive's estate a general release, in form substantially
similar to Executive's Release, releasing the Executive and/or
his estate from any and all rights, claims, demands, judgments,
obligations, liabilities and damages, whether accrued or
unaccrued, asserted or unasserted, and whether known or unknown,
relating to the Company which ever existed, then existed, or may
thereafter exist, by reason of the termination of this Agreement
without cause except Executive's future performance of his duties
and obligations under Paragraphs 6 and 7 of this Agreement.
F. Upon the termination of Executive's employment by the Company without
cause, simultaneously with the receipt of the first installment of the
wages in lieu of notice, and as a condition to the receipt thereof,
the Executive or his estate, shall deliver to the Company a general
release form acceptable to the Company releasing the Company form any
and all rights, claims, demands, judgments, obligations, liabilities
and damages, whether accrued or unaccrued, asserted or unasserted, and
whether known or unknown, relating to the Company which ever existed,
then existed, or may thereafter exist, by reason of termination of
this Agreement without cause, except payment of $190,000.00 or an
amount equal to the Executive's latest annual salary level, whichever
is greater, in lieu of notice and the Escrow Stock and the vested
stock options.
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G. Effect of Termination. In the event of any termination under this
Paragraph 9, the Company shall have no further obligation under this
Agreement to make any payment to, or bestow any benefits on, the
Executive from and after the date of the termination other than
payments or benefits accrued and due and payable to Executive as
provided herein.
10. INVENTIONS, IDEAS, PROCESSES AND DESIGNS: All inventions, ideas, processes,
programs, software, and designs (including all improvements) (i) conceived
(whether or not actually conceived during regular business hours) or made
by the Executive during the course of his employment with MegaMedia and for
a period of six (6) month subsequent to the termination of such employment
with MegaMedia, and (ii) integrally related to the business of MegaMedia,
shall be disclosed in writing promptly to MegaMedia and shall be the sole
and exclusive property of MegaMedia. The Executive shall cooperate with
MegaMedia and its attorneys in the preparation of patent and copyright
applications for such developments and shall promptly assign all such
inventions, ideas, processes, and designs to MegaMedia. The decision to
file for patent or copyright protection or to maintain such development as
a trade secret shall be in the sole discretion of MegaMedia, and the
Executive shall be bound by such decision. The Executive shall provide, on
the back of this Employment Agreement, a complete list of all inventions,
ideas, processes, and designs, if any, patented or unpatented, copyrighted
or uncopyrighted, including a brief description, which he or she made or
conceived prior to his or her employment with MegaMedia and which therefore
are excluded from the scope of this Agreement.
11. CONSIDERATION. The Executive expressly acknowledges and agrees that the
execution by MegaMedia of this Employee Agreement constitutes full,
adequate, and sufficient consideration to the Executive from MegaMedia for
the duties, obligations, and covenants of the Executive under this
Agreement, including, by way of illustration and not by way of limitation,
the agreements, covenants, and obligations of the Executive under
Paragraphs 6 and 7 of this Agreement. MegaMedia expressly acknowledges and
agrees similarly with respect to the consideration received by it from the
Executive under this Agreement.
12. INDEBTEDNESS. If, during the course of the Executive's employment under
this Employment Agreement, the Executive becomes indebted to MegaMedia for
any reason, MegaMedia may, if it so elects, set off any sum due to
MegaMedia from the Executive and collect form the Executive any remaining
balance.
13. TRAINING EXPENSES. MegaMedia shall pay for all reasonable training expenses
incurred by the Executive while he is employed under this Employment
Agreement.
14. CONSENT TO PERSONAL JURISDICTION AND VENUE; WAIVER OF JURY TRIAL. The
Executive and Company hereby consent to personal jurisdiction and venue,
for any action brought by either party arising out of a breach or
threatened breach of this Employment Agreement, exclusively in the United
States District Court for the Middle District of Florida, Orlando Division,
or in the Circuit Court in and for Orange County, Florida; the Executive
and Company hereby agree that any action brought by either party, alone or
in combination with others, against the other party, whether arising out of
this Agreement or otherwise, shall be brought exclusively in the United
States District Court for the Middle District of Florida, Orlando Division,
or in the Circuit Court in and for Orange County, Florida. The Executive
and Company hereby agree that any controversy which may arise under this
Agreement would involve complicated and difficult factual and legal issues.
Therefore, if a court of law determines for any reason that the arbitration
clause of Paragraph 15 of the Agreement is unenforceable, then any action
brought by MegaMedia against the Executive, alone or in combination with
others, against MegaMedia, whether arising out of this Agreement or
otherwise, shall be determined by a Judge sitting without a jury.
15. ARBITRATION. All controversies, claims, disputes, and matters in question
arising out of, or related to, this Employment Agreement or the breach of
this Agreement, or the relations between the signatories to this Agreement,
shall be decided by arbitration in accordance with the commercial
Arbitration Rules of the American Arbitration Association. The signatories
agree that the arbitration shall take place exclusively in Orlando,
Florida, and shall be governed by the substantive law of the state of
Florida. Any award rendered by the arbitrator shall be final, and final
judgment may be entered upon it in accordance with applicable law in any
court having jurisdiction thereof, including a federal district court,
pursuant to the Federal Arbitration Act. The arbitrator may
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grant a party injunctive relief, including mandatory injunctive relief, to
protect the rights of such party, but the arbitrator shall not be limited
to such relief. This arbitration provision shall not preclude a party from
seeking temporary or preliminary injunctive relief in a court of law to
protect its rights, nor shall the filing of such an action constitute any
waiver by either party of its right to arbitrate. In connection with the
arbitration of any dispute between the signatories to this Agreement, each
signatory may utilize all methods of discovery authorized by the Federal
and Florida Rules of Civil Procedure.
16. SERVICE OF PROCESS - MEGAMEDIA. If the Executive institutes legal
proceedings (including arbitration proceedings) against MegaMedia, the
signatories to this Employment Agreement agree that service of process by
registered and certified U.S mail of the complaint and summons to the
national headquarters of MegaMedia, currently located at 00 Xxxx Xxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000, is reasonably calculated to apprise
MegaMedia of any legal proceedings (including arbitration proceedings)
instituted against it by the Executive. The above-described method for
service of process shall not constitute by MegaMedia to the exercise of
personal jurisdiction by any court except the United States District Court
for the Middle District of Florida, Orlando Division or the Circuit Court
for Orange County, Florida, in connection with any controversy or dispute
between the signatories to this Agreement.
17. SERVICE OF PROCESS - EXECUTIVE. If MegaMedia institutes legal proceedings
(including arbitration proceedings) against the Executive, the parties
agree that, except as provided below, MegaMedia shall server process by
process server upon the Executive at his last known residence address
located in the United States. The Executive shall notify MegaMedia in
writing of any change in his residence address within ten (10) calendar
days of the change. If the Executive changes his U.S. residence address and
fails to notify MegaMedia in writing within ten (10) calendar days of the
change, the signatories agree that the following specified method of
service of process is reasonably calculated to reach the Executive and to
apprise the Executive of the legal proceedings instituted by MegaMedia:
MegaMedia shall (i) serve copies of the summons and complaint by certified and
registered U.S. Mail to the Executive's last known residence located in the
United States and (ii) place a public notice in a newspaper of general
circulation in the geographic area of the Executive's last known residence
address for a period of two (2) consecutive weeks following commencement
(i.e., filing) of the proceedings. The Executive expressly acknowledges
that the above-described method for service of process is (i) reasonably
calculated to apprise him of any legal proceedings instituted against him
by MegaMedia and (ii) sufficient for the court issuing the summons or the
American Arbitration Association to exercise personal jurisdiction over
him.
18. ACKNOWLEDGEMENTS. The Executive hereby acknowledges that he has been
provided with a copy of this Employment Agreement for review prior to
signing it, that he has been given the opportunity to have this Agreement
reviewed by his own attorney prior to signing it, that he understands the
purposes and effects of this Agreement, and that he has been given a signed
copy of this Agreement for his own records. The parties hereto acknowledge
that this Agreement and all matters contemplated herein, have been
negotiated between both of the parties hereto and their respective legal
counsel and that both parties have participated in the drafting and
preparation of this Agreement from the commencement of negotiation at all
times through the executive hereof.
19. WAIVER. The waiver by either party of a breach or threatened breach of this
employment Agreement by the other party shall not be construed as a waiver
of any subsequent breach. The refusal or failure of MegaMedia to enforce
the Restrictive Covenants or prohibitions of this Agreement (or any similar
Agreement) against any other executive, agent, or independent contractor,
for any reason shall not constitute a defense to the enforcement by
MegaMedia of the Restrictive Covenants or the prohibitions of this
Agreement, nor shall it give rise to any claim or cause of action by such
executive, agent, or independent contractor or consulting against
MegaMedia.
20. BOARD OF DIRECTORS. MegaMedia agrees that the Board of Directors shall be
increased from the current number of two (2) directors and that one of the
new board positions shall be filled by the Executive pursuant to the Voting
Agreement attached hereto as Exhibit D and that the Executive shall be
elected to an initial term on the Board of Directors by June, 2000. This
section shall be deemed to be a material provision of this Agreement.
Page 9 of 27
21. INDEMNIFICATION. The Company shall indemnify Executive to the fullest
extent permitted by applicable law against damages and expenses (including
fees and disbursements of counsel) in connection with his status or arising
out of the ordinary and proper conduct of his duties as an employee,
officer and director of the Company.
22. MISCELLANEOUS.
A. Entire Agreement. This Employment Agreement, together with Exhibits A,
B, C, D & E constitutes the entire agreement between its signatories
pertaining to the subject matters of the Agreement, and it supersedes
all negotiations, preliminary agreements, and all prior and
contemporaneous discussions and understandings of the signatories in
connection with the subject matters of the Agreement. Except as
otherwise herein provided, no covenant, representation, or condition
not expressed in this Agreement, or in an amendment made and executed
in accordance with the provisions of subparagraph (b) of this
paragraph, shall be binding upon the signatories or shall affect or be
effective to interpret, change, or restrict the provisions of this
Agreement.
B. Amendments. No change, modification, or termination of any of the
terms, provisions, or conditions of this Agreement shall be effective
unless made in writing and signed or initialed by all signatories to
this Agreement.
C. Governing Law. This Agreement shall be governed and construed in
accordance with the statutory and decisional law of the State of
Florida governing contracts to be performed in their entirety in
Florida.
D. Separability. If any paragraph, subparagraph, or provision of this
Agreement, or the application of such paragraph, subparagraph or
provision, is held invalid by a court of competent jurisdiction, the
remainder of the Agreement, and the application of such paragraph,
subparagraph, or provision to persons or circumstances other than
those with respect to which is held invalid, shall not be affected.
E. Headings and Captions. The titles and captions of paragraphs and
subparagraphs contained in this Agreement are provided for convenience
of reference only, and they shall not be considered a part of this
Agreement for purposes of interpreting or applying this Agreement;
such titles or captions are not intended to define, limit, extend,
explain or describe the scope or extent of this Agreement or any of
its terms, provisions, representations, warranties, or conditions in
any manner or way whatsoever.
F. Attorney's Fees. In the event it shall be necessary for any party to
seek arbitration or court intervention in order to enforce or defend
its rights hereunder, the prevailing party in any such action shall
recover from the non-prevailing party or parties, all reasonable
attorneys' and paralegal fees in the trail and appellate courts and in
all arbitration, including expert witness fees, deposition costs
(appearance fees and transcript charges), injunction bond premiums,
travel and lodging expenses, arbitration fees and charges, and all
other reasonable costs and expenses.
G. Continuance of Agreement. The rights, responsibilities, and duties of
the signatories to this Agreement, and the covenants and agreements
contained in this Agreement, shall continue to bind the signatories,
shall continue in full force and effect until each and every
obligation of the signatories pursuant to this Agreement (and any
document or agreement incorporated hereby by reference) shall have
been fully performed, and shall be binding upon the successors and
assigns of the signatories.
H. Successors and Assigns. Neither party shall have the right to assign
this personal Agreement, or assign any rights or delegate any
obligations hereunder, without the consent of the other party;
provided, however, that upon the sale of all or substantially all of
the assets, business and goodwill of the Company to another company,
this Agreement shall inure to the benefit of; and be binding upon,
both Executive and the company purchasing such assets, business and
goodwill, or surviving such merger or consolidation, as the case may
be, in the same manner and to the same extent as though such other
company were the Company, subject to the Executive's rights hereunder.
Subject to the foregoing, this
Page 10 of 27
Agreement shall inure to the benefits of; and be binding upon, the
parties hereto and their legal representatives, heirs, successors and
assigns.
I. Additional Acts. The Executive and the Company each agrees to execute,
acknowledge and deliver and file, or cause to be executed,
acknowledged and delivered and filed, any and all further instruments,
agreements or documents as may be necessary or expedient in order to
consummate the transactions provided for in this Agreement and do any
and all further acts and things as may be necessary or expedient in
order to carry out the purposes and intent of this Agreement.
J. Notices. Any notice or other communication under this Agreement, other
than as provided above, shall be delivered personally or sent by
certified mail, return receipt requested, postage prepaid, or sent by
facsimile or prepaid overnight courier to the parties at the addresses
set forth below (or at such other addresses as shall be specified by
the parties by like notice). Such notices, demands, claims and other
communications shall be deemed given when actually received or (a) in
the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery, (b) in the
case of facsimile, the date upon which the transmitting party received
confirmation of receipt by facsimile, telephone or otherwise.
To the Company: To the Executive:
MegaMedia Networks, Inc. Xxxxx X. Xxxx
00 Xxxx Xxxx Xxxxxx 00000 Xxxxxx Xxx Xxxxx
Xxxxxxx, Xxxxxxx 00000 Xxxxxx Xxxxxx, Xxxxxxx 00000
Attn: Legal Department
Fax: 000-000-0000
K. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which, together, will
constitute one and the same agreement. Any facsimile version of a
manually executed signature page delivered by one party to the other
shall be deemed manually executed and delivered original.
L. Rights as Stockholder. Executive shall have no rights as a stockholder
for which options have not been exercised.
-------------------------------- ------------------------------
Witness Executive - Xxxxx X. Xxxx
-------------------------------- ------------------------------
Attest: By Xxxx X. Xxxxx, Secretary MegaMedia Networks, Inc.
By Xxxxxxx X. Xxxxxx, Xx., President
Page 11 of 27
ESCROW AGREEMENT
EXHIBIT A
THIS ESCROW AGREEMENT (the "Escrow Agreement") is dated as of January 10,
2000, by and among MegaMedia Networks, Inc., (the "Company"), Xxxxx X. Xxxx (the
"Executive"), and Xxxxxxxxxxx X. Xxxxxxxx, an attorney who practices law in the
Commonwealth of Pennsylvania, as Escrow Agent (the "Escrow Agent").
WHEREAS, the Stockholders of the Company have transferred shares of common
stock of the Company (the "Shares") to the Escrow Agent to support stock rights
granted or to be granted to current or new employees, including Xxxxx X. Xxxx as
the Company's Chief Executive Officer utilizing an escrow arrangement as
described in this Escrow Agreement; and,
WHEREAS, the terms and conditions of Executive's employment with the
Company are set forth in an employment agreement between them, dated as of
January 10, 2000, (the "Employment Agreement"), attached as described in this
Escrow Agreement; and,
WHEREAS, the Escrow Agent is willing to act hereunder on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth below, and intending to be legally bound, the parties hereto hereby
agree as follows:
1. ESCROW ACCOUNT
1.1 DEPOSIT. The Stockholders have delivered the Shares to the Escrow
Agent along with blank stock powers with Medallion guaranteed signatures (the
"Escrow") to be held by the Escrow Agent in a separate account (the "Escrow
Account") subject to the terms and provisions of this Escrow Agreement. The
Shares in the Escrow Account will be used to support stock rights granted or to
be granted to the Company's executives.
1.2 TRANSFER TO EXECUTIVE. Upon execution of the Employment Agreement
between Executive and the Company and payment to the Escrow Agent of Two
Thousand and Five Hundred Dollars ($2,500.00), 250,000 of the shares in the
Escrow Account shall be transferred on the books of the Company to Executive and
a certificate for those 250,000 shares shall be issued in Executive's name.
Executive shall thereupon be a stockholder in the Company with respect to those
shares and shall have the rights of a stockholder with respect to all such
shares, including the rights to vote such shares and to receive any dividend or
other distributions paid with respect to such shares, but shall not be able to
sell, exchange, transfer, pledge, hypothecate or otherwise dispose of the shares
until the conditions specified in paragraph 4(B)(i) of the Employment Agreement
have been met.
1.3 STOCK POWER. In aid of the restrictions on transfer of the Shares,
Executive's execution of the Employment Agreement shall acknowledge his
agreement to have the certificate evidencing his shares held by Escrow Agent as
security for Executive's performance of the Employment Agreement until the
conditions specified in paragraph 4(B)(i) of the Employment Agreement have been
met. Executive shall also execute a stock power agreement with a Medallion
guaranteed signature, endorse in blank, a copy of which is attached hereto as
Attachment A, and deposit it with the Escrow Agent until the conditions in
paragraph 4(B)(i) have been met or until the shares are forfeited a specified in
the Employment Agreement.
2. DISBURSEMENT OF ESCROW.
2.1 DELIVERY OF ESCROW STOCK TO EXECUTIVE. Provided that Executive has not
voluntarily terminated his employment or employment has not been terminated "for
cause" (as defined in paragraph 9D of the Employment Agreement) prior to the
occurrence of the earliest event specified in paragraphs 4(b)(i)(a) through (f)
of the Employment Agreement, upon the occurrence of the earliest event specified
in the paragraph 4(b)(i)(a) through (f), of the Employment
Page 12 of 27
Agreement the Escrow Agent shall promptly deliver to Executive, both the
certificate or certificates held by him in Executive's name and the executed
stock power agreement.
2.2 CANCELLATION OF ESCROW STOCK. In the event Executive has voluntarily
terminated his employment or his employment has been terminated "for cause" (as
defined in paragraph 9D of the Employment Agreement) prior to the occurrence of
the earliest event specified in paragraphs 4(b)(i)(a) through (f) of the
Employment Agreement, Escrow Agent is authorized and directed to send the
executed stock power agreement with Medallion guaranteed signature, endorsed in
blank, together with the stock certificate or certificates evidencing ownership
of the 250,000 shares of the Company's common stock, $0.01 par value, held by
Escrow Agent in Executive's name to the Transfer Agent and to direct the
Transfer Agent to cancel the Escrow Stock.
2.3 CONTROVERSIES. If any controversy arises between two or more of the
parties, or between any of the parties and any person not a party, as to whether
or not or to whom the Escrow Agent shall deliver the Escrow or any portion
thereof or as to any other matter arising out of or relating to this Escrow
Agreement, the Escrow Agent shall not be required to determine the same and need
not make any delivery of the Escrow concerned or any portion thereof but may
retain the same until the rights of the parities to the dispute shall have been
finally determined by agreement or by final judgment of a court of competent
jurisdiction after all appeals have been finally determined (or the time for
further appeals has expired without an appeal having been made). The Escrow
Agent shall deliver that portion of the Escrow concerned covered by such
agreement or final order within five (5) days after the Escrow Agent receives a
copy thereof. The Escrow Agent shall assume that no such controversy has arisen
unless and until it receives written notice from the Company or the Executive
that such controversy has arisen, which refers specifically to this Agreement
and identifies the adverse claimants to the controversy.
2.4 NO OTHER DISBURSEMENTS. No portion of the Escrow shall be disbursed or
otherwise transferred except in accordance with this Escrow Agreement.
3. ESCROW AGRENT. The acceptance by the Escrow Agent of his duties
hereunder is subject to the following terms and conditions, which the parties to
this Agreement hereby agree shall govern and control with respect to the rights,
duties, liabilities and immunities of the Escrow Agent:
3.1 The Escrow Agent shall not be responsible or liable in any manner
whatever for the sufficiency, correctness, genuineness or validity of any
property deposited with or held by him.
3.2 The Escrow Agent shall be protected in acting upon any written notice,
certificate, instruction, request or other paper or document believed by him to
genuine and to have been signed or presented by the proper party or parties.
3.3 The Escrow Agent shall not be liable for any act done hereunder except
in the case of its willful misconduct or bad faith.
3.4 The Escrow Agent shall not be obligated or permitted to investigate
the correctness or accuracy of any document or to determine whether or not the
signatures contained in said documents are genuine or to require documentation
or evidence substantiating any such document or signature.
3.5 The Escrow Agent shall have no duties as Escrow Agent except those
which are expressly set forth herein, and in any modification or amendment
hereof; provided, however, that no such modification or amendment hereof shall
affect its duties unless it shall have given its written consent thereto. The
Escrow Agent shall not be prohibited from owning an equity interest in the
Company or any third party that is in any way affiliated with or conduct
business with the Company.
Page 13 of 27
3.6 The company and the Executive acknowledge that the Escrow Agent is
practicing attorney and may have worked with the Company, the Stockholders, the
Executive or affiliates of them on other unrelated transactions, and that they
and each of them has specifically requested that the Escrow Agent draft the
documents for this transaction and act as Escrow Agent. Each party represents
that the Escrow Agent draft the documents for this transaction and act as Escrow
Agent. Each party represents that it has retained legal and other counsel of its
choosing with respect to the transactions contemplated herein and is satisfied
in its sole discretion with the form and content of the documentation drafted by
the Escrow Agent. The parties hereby waive any objection to the Escrow Agent so
acting based upon conflict of interest or lack of impartiality. The Escrow Agent
agrees to act impartially and in accordance with the terms of this Agreement and
with the parties' respective instructions, so long as they are not in conflict
with the terms of this Escrow Agreement.
4. TERMINATION. This Agreement shall terminate on the earlier of (a) the
date on which the certificate or certificates for the 250,000 shares shall have
been transferred to Executive, or (b) the next business day after the expiration
of Executive's stock rights under paragraph 4B(i) of the Employment Agreement.
5. MISCELLANEOUS.
5.1 INDEMNIFICATION OF ESCROW AGENT.
(a) The Company and the Executive each agree, jointly and severally, to
indemnify the Escrow Agent for, and to hold him harmless against, any loss
incurred without willful misconduct or bad faith on the Escrow Agent's part,
arising out of or in connection with the administration of this Agreement,
including the cost and expenses of defending himself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. The indemnification shall not apply to a party with respect to
a direct claim against the Escrow Agent by such party alleging in good faith a
breach of this Escrow Agreement by the Escrow Agent, which claim result in a
final non-appealable judgment against the Escrow Agent with respect to such
claim.
(b) In the event of any dispute as to the nature of the rights or
obligations of the Executive, the Company or the Escrow Agent hereunder, the
Escrow Agent may at any time or from time to time interplead, deposit and/or pay
all or any part of the Escrow Account with or to a court of competent
jurisdiction sitting in Philadelphia, Pennsylvania or in any appropriate federal
court, in accordance with the procedural rules thereof. The Escrow Agent shall
give notice of such action to the Company and the Executive. Upon such
interpleader, deposit or payment, the Escrow Agent shall immediately and
automatically be relieved and discharged from all further obligations and
responsibilities hereunder, including the decision to interplead, deposit or pay
such funds.
5.2 AMENDMENTS. This Escrow Agreement may be modified or amended only by a
written instrument executed by each of the parties hereto.
5.3 NOTICES. All communications required to be given under this agreement
to any party shall be sent by first class mail or facsimile to such party at the
address listed below or such other addresses as shall be specified by the
parties by like notice.
5.4 SUCCESSORS AND ASSIGNS. This Escrow Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however that the Escrow Agent shall not assign its duties under this
Escrow Agreement.
5.5 GOVERNING LAW. This Escrow Agreement shall be governed by and
construed and interpreted in accordance with the laws of the Commonwealth of
Pennsylvania.
5.6 COUNTERPARTS. This Escrow Agreement may be executed in two or more
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.
Page 14 of 27
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
_____________________________ ______________________________
Executive - Xxxxx X. Xxxx MegaMedia Networks, Inc.,
00000 Xxxxxx Xxx Xxxxx By Xxxxxxx X. Xxxxxx, Xx., President
Xxxxxx Xxxxxx, Xxxxxxx 00000 00 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
ESCROW AGENT:
Xxxxxxxxxxx X. Xxxxxxxx, Esq.
Astor Weiss, Kaplan, Xxxxxxx & Strong, LLP
The Belleveue, 6th Floor
Broad Street at Walnut
Xxxxxxxxxxxx, XX 00000
Page 15 of 27
STOCK POWER
ATTACHMENT A
For full and adequate consideration received, Xxxxx X. Xxxx, hereby sells,
assigns, and transfers to MEGAMEDIA NETWORKS, INC., Two Hundred and Fifty
Thousand (250,000) shares of legend restricted common stock of MegaMedia
Networks, Inc., now registered in the name of Xxxxx X. Xxxx, on the books of the
Corporation, Certificate # ________ and hereby irrevocably constitutes and
appoints Atlas Stock Transfer Company, or its successors, agent and attorney to
transfer the aforesaid stock on the books of the Corporation, with full power of
substitution in the premises.
Dated:___________________.
_________________________
Xxxxx X. Xxxx
_________________________
SIGNATURE MEDALLION GUARANTEED
Page 16 of 27
EXHIBIT B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT as of January 10, 2000, by and between MegaMedia
Networks, Inc. (the "Company"), and Xxxxx X. Xxxx, (the "Optionee").
-----------------------
In consideration for the Optionee signing an Employment Agreement of even
date herewith (the "Employment Agreement") with the Company and for other good
and valuable consideration, receipt of which is hereby acknowledged, the company
hereby grants the Optionee the option to acquire shares or the common stock of
the Company upon the following terms and conditions:
1. GRANT OF OPTION
A. The Company hereby grants to the Optionee the right and option (the
"Option") to purchase up to 200,000 fully paid and non-assessable
shares of Common Stock par value $.01 per share of the Company (the
"Shares"), subject to the vesting provisions described below.
B. This Option shall vest in Executive on the earliest to occur of the
following:
(i) On January 9, 2002, provided that Executive remains employed by
Company, a parent or subsidiary corporation of Company; or
(ii) Upon termination of Executive's employment by Company without
"Cause" as defined in paragraph 9D of the Employment Agreement
prior to January 9, 2002; or
(iii) Upon Executive's voluntary termination of his employment for
"Constructive Discharge" as defined paragraph 9C of the
Employment Agreement, prior to January 9, 2002; or
(iv) A "change in control" of the Company, prior to January 9, 2002.
A "change in control" of the Company shall be defined as (i) a
sale, purchase, merger or other business combination which
results in transfer to a third party of an ownership interest of
greater than 50% of the company or any successor entity to the
Company, (ii) a sale or other disposition of all or
substantially all of the Company's assets, or (iii) election by
the shareholders of the Company of persons to serve as directors
of the Company, comprising more than one-half (1/2) the total
number of directors, persons who were not nominated or
recommended to the shareholders for election as directors by the
Board's nominating committee.
C. The date on which the Option vest under this paragraph shall be know
as the "Vesting Date".
D. The Option once vested, may be exercised during the period ("Option
Period") commencing on the Vesting Date and expiring at 5:00 p.m.
Eastern Standard Time on the date that is exactly ten (10) years after
the Vesting Date. For example, if the Vesting Date is January 9, 2002,
the Option Period shall expire at 5:00 p.m. on January 9, 2012. Upon
expiration of the Option Period the Optionee shall have no further
right to purchase any shares not then purchased. The Company shall at
all times during the Option Period have available such number of
Shares as will be sufficient to satisfy the Option.
E. It is not intended that these Options qualify as Incentive Stock
Options within the meaning of Section 422A of the Internal Revenue
Code of 1986, as amended (the "Code").
2. EXERCISE PRICE
Page 17 of 27
The exercise price of the Option (the "Exercise Price") shall be Three
Dollars ($3.00) per Share, and shall be payable by certified or bank check
payable to the order of the Company at the time of the exercise. As an
alternative, Optionee may present Shares already owned by the Optionee with
a market value at least equal to the aggregate Exercise Price of the
Options which Optionee seeks to exercise.
3. EXERCISE OF OPTION
The Optionee may exercise this Option in whole or in part, by providing
notice to the Company, in the form attached as Exhibit A, by registered or
certified mail, return receipt requested, or by overnight mail or personal
delivery, addressed to its principal office, signed by Optionee, indicating
the number of Options which he desires to exercise. The notice shall be
accompanied by payment of the Exercise Price as specified in Paragraph 2
above. As soon as practicable after the receipt of such notice of exercise,
the Company shall cause the Company's transfer agent to issue to the
Optionee certificates issued in the Optionee's name evidencing the Shares
purchased by the Optionee.
4. DEATH OF OPTIONEE
In the event of the death of the Optionee, any unexercised portion of his
Option shall be exercisable (to the extent that such Option was exercisable
at the time of his death) for one hundred and twenty (120) days after the
Optionee's death only by his personal representative or such persons to
whom the deceased Optionee's rights shall pass under the Optionee's will or
by the laws of descent and distribution.
5. NON-TRANSFERABILITY OF OPTION
The Optionee may not give, grant, sell exchange, transfer legal title,
pledge, assign or otherwise encumber or dispose of the Option or any
interest therein, otherwise than by will or the laws of descent and
distribution and, except as provided in this paragraph and paragraph 4, the
Option shall be exercisable only by the Optionee. Upon any attempt to so
transfer the Option, or upon the levy or attachment or similar process of
the Option, the Option shall automatically become null and void.
6. RESTRICTION ON ISSUANCE OF SHARES - INVESTMENT REPRESENTATION
By accepting the Option, the Optionee agrees for himself, his heirs and
legatees that any and all Shares purchased upon the exercise of the Option
shall be acquired for investment and not for distribution. All shares
acquired by Executive under these provisions will be subject to statutory
restrictions, registration and to such lockup agreements as Company may
reasonably require of its executives. Upon the issuance of any or all of
the Shares subject to the Option, the Company, in its discretion, may
require the Optionee, or his heirs or legatees receiving such Shares to
deliver to the company a representation in writing, in a form satisfactory
to the Board of Directors, that such Shares are being acquired in good
faith for investment and not for distribution. The Company may place a
"stop transfer" order with respect to such Shares with its transfer agent
and will place and appropriate restrictive legend on the certificate(s)
evidencing such Shares. The Company agrees to register the Shares as part
of any Form S-8 registration by the Company for so long as any Shares
subject to Options remain outstanding.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
A. The Stock Option referenced herein shall not be subject to any
dilution as to percentage of ownership that may be from time to time
be appropriately approved und undertaken by the company and that is
applicable to all issued and outstanding stock of the Company. In the
event that the outstanding shares are changed into or exchanged for a
different number or kind of shares or securities of the Company, or of
any other corporation, by reason of reorganization, merger, or other
subdivision, consolidation. Recapitalization, reclassification, stock
split, stock divided or combination of shares or similar event, the
Company shall make an appropriate
Page 18 of 27
and equitable adjustment to the Stock Option or to the Purchase Price
so that Executive's Proportionate interest shall be maintained as
before the occurrence of such event to the maximum extent possible.
B. Any adjustment in the number of Shares shall apply proportionately to
only the then unexercised portion of the Option. If fractional Shares
would result from any such adjustment, the adjustment shall be revised
to the next higher whole number.
8. NO RIGHTS AS STOCKHOLDER
The Optionee shall have no rights as a stockholder in Shares as to which
the Option has not been exercised.
9. TAXES
The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with
the exercise of the Option granted hereby. The Company may further require
notification from the Optionee upon any disposition of Shares acquired
pursuant to the exercise of the Options granted hereunder.
10. BINDING EFFECT
Except as herein otherwise expressly provided, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, their
legal representatives and assigns.
11. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida applicable to agreement made and to be
performed wholly within the State of Florida
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
__________________________________ ______________________________
Witness:__________________________ MegaMedia Networks, Inc.
By Xxxxxxx X. Xxxxxx, Xx., President
__________________________________ ______________________________
Witness:__________________________ Optionee:_____________________
Page 19 of 27
EXERCISE FORM
(To be Executed If Optionee Desires to Exercise the Options)
TO: MegaMedia Networks, Inc.
The undersigned, being the Optionee of certain options ("Options") to
purchase shares of common stock of MegaMedia Networks, Inc. (the "Company" and
the "Shares"), under the conditions thereof, hereby exercises Options to
purchase Shares evidenced by the within Option Agreement, and Herewith makes
payment of the exercise price in full in cash or immediately available fund or
by delivery of shares already owned by the Optionee with a market value at least
equal to the aggregate exercise price due. Kindly issue all Shares to the
undersigned and deliver them to the undersigned at the address stated below. If
such number of Shares shall not be all of the Shares purchasable under the
within Option Agreement, please issue a new Option Agreement of like tenor for
the balance of the remaining Shares purchasable hereunder to be delivered to the
undersigned at the address stated below.
By signing below, the Undersigned acknowledges that he has received such
financial and other information to his satisfaction regarding the Company as he
requires to make an informed investment decision. The Undersigned has had the
opportunity to ask questions and receive answers from the Company regarding the
Shares and the Company. The Undersigned further acknowledges that he is aware
that the Shares issued pursuant to this exercise may be restricted from
transfer.
Name_________________________
(Please Print)
Address______________________
Signature____________________
Dated__________________
Page 20 of 27
EXHIBIT C
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT as of January 10, 2000, by and between MegaMedia
Networks, Inc. (the "Company"), and Xxxxx X. Xxxx, (the "Optionee").
-----------------------
In consideration for the Optionee signing an Employment Agreement of even
date herewith (the "Employment Agreement") with the Company and for other good
and valuable consideration, receipt of which is hereby acknowledged, the company
hereby grants the Optionee the option to acquire shares or the common stock of
the Company upon the following terms and conditions:
1. GRANT OF OPTION
F. The Company hereby grants to the Optionee the right and option (the
"Option") to purchase up to 200,000 fully paid and non-assessable
shares of Common Stock par value $.01 per share of the Company (the
"Shares"), subject to the vesting provisions described below.
G. This Option shall vest in Executive on the earliest to occur of the
following:
(i) On January 9, 2002, provided that Executive remains employed by
Company, a parent or subsidiary corporation of Company; or
(ii) Upon termination of Executive's employment by Company without
"Cause" as defined in paragraph 9D of the Employment Agreement
prior to January 9, 2002; or
(iii) Upon Executive's voluntary termination of his employment for
"Constructive Discharge" as defined paragraph 9C of the
Employment Agreement, prior to January 9, 2002; or
(iv) A "change in control" of the Company, prior to January 9, 2003.
A "change in control" of the Company shall be defined as (i) a
sale, purchase, merger or other business combination which
results in transfer to a third party of an ownership interest of
greater than 50% of the company or any successor entity to the
Company, (ii) a sale or other disposition of all or
substantially all of the Company's assets, or (iii) election by
the shareholders of the Company of persons to serve as directors
of the Company, comprising more than one-half (1/2) the total
number of directors, persons who were not nominated or
recommended to the shareholders for election as directors by the
Board's nominating committee.
H. The date on which the Option vest under this paragraph shall be know
as the "Vesting Date".
I. The Option once vested, may be exercised during the period ("Option
Period") commencing on the Vesting Date and expiring at 5:00 p.m.
Eastern Standard Time on the date that is exactly ten (10) years after
the Vesting Date. For example, if the Vesting Date is January 9, 2003,
the Option Period shall expire at 5:00 p.m. on January 9, 2013. Upon
expiration of the Option Period the Optionee shall have no further
right to purchase any shares not then purchased. The Company shall at
all times during the Option Period have available such number of
Shares as will be sufficient to satisfy the Option.
J. It is not intended that these Options qualify as Incentive Stock
Options within the meaning of Section 422A of the Internal Revenue
Code of 1986, as amended (the "Code").
2. EXERCISE PRICE
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The exercise price of the Option (the "Exercise Price") shall be Three
Dollars ($4.50) per Share, and shall be payable by certified or bank check
payable to the order of the Company at the time of the exercise. As an
alternative, Optionee may present Shares already owned by the Optionee with
a market value at least equal to the aggregate Exercise Price of the
Options which Optionee seeks to exercise.
3. EXERCISE OF OPTION
The Optionee may exercise this Option in whole or in part, by providing
notice to the Company, in the form attached as Exhibit A, by registered or
certified mail, return receipt requested, or by overnight mail or personal
delivery, addressed to its principal office, signed by Optionee, indicating
the number of Options which he desires to exercise. The notice shall be
accompanied by payment of the Exercise Price as specified in Paragraph 2
above. As soon as practicable after the receipt of such notice of exercise,
the Company shall cause the Company's transfer agent to issue to the
Optionee certificates issued in the Optionee's name evidencing the Shares
purchased by the Optionee.
4. DEATH OF OPTIONEE
In the event of the death of the Optionee, any unexercised portion of his
Option shall be exercisable (to the extent that such Option was exercisable
at the time of his death) for one hundred and twenty (120) days after the
Optionee's death only by his personal representative or such persons to
whom the deceased Optionee's rights shall pass under the Optionee's will or
by the laws of descent and distribution.
5. NON-TRANSFERABILITY OF OPTION
The Optionee may not give, grant, sell exchange, transfer legal title,
pledge, assign or otherwise encumber or dispose of the Option or any
interest therein, otherwise than by will or the laws of descent and
distribution and, except as provided in this paragraph and paragraph 4, the
Option shall be exercisable only by the Optionee. Upon any attempt to so
transfer the Option, or upon the levy or attachment or similar process of
the Option, the Option shall automatically become null and void.
6. RESTRICTION ON ISSUANCE OF SHARES - INVESTMENT REPRESENTATION
By accepting the Option, the Optionee agrees for himself, his heirs and
legatees that any and all Shares purchased upon the exercise of the Option
shall be acquired for investment and not for distribution. All shares
acquired by Executive under these provisions will be subject to statutory
restrictions, registration and to such lockup agreements as Company may
reasonably require of its executives. Upon the issuance of any or all of
the Shares subject to the Option, the Company, in its discretion, may
require the Optionee, or his heirs or legatees receiving such Shares to
deliver to the company a representation in writing, in a form satisfactory
to the Board of Directors, that such Shares are being acquired in good
faith for investment and not for distribution. The Company may place a
"stop transfer" order with respect to such Shares with its transfer agent
and will place and appropriate restrictive legend on the certificate(s)
evidencing such Shares. The Company agrees to register the Shares as part
of any Form S-8 registration by the Company for so long as any Shares
subject to Options remain outstanding.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
C. The Stock Option referenced herein shall not be subject to any
dilution as to percentage of ownership that may be from time to time
be appropriately approved und undertaken by the company and that is
applicable to all issued and outstanding stock of the Company. In the
event that the outstanding shares are changed into or exchanged for a
different number or kind of shares or securities of the Company, or of
any other corporation, by reason of reorganization, merger, or other
subdivision, consolidation. Recapitalization, reclassification, stock
split, stock divided or combination of shares or similar event, the
Company shall make an appropriate
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and equitable adjustment to the Stock Option or to the Purchase Price
so that Executive's Proportionate interest shall be maintained as
before the occurrence of such event to the maximum extent possible.
D. Any adjustment in the number of Shares shall apply proportionately to
only the then unexercised portion of the Option. If fractional Shares
would result from any such adjustment, the adjustment shall be revised
to the next higher whole number.
12. NO RIGHTS AS STOCKHOLDER
The Optionee shall have no rights as a stockholder in Shares as to which
the Option has not been exercised.
13. TAXES
The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with
the exercise of the Option granted hereby. The Company may further require
notification from the Optionee upon any disposition of Shares acquired
pursuant to the exercise of the Options granted hereunder.
14. BINDING EFFECT
Except as herein otherwise expressly provided, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, their
legal representatives and assigns.
15. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida applicable to agreement made and to be
performed wholly within the State of Florida
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
__________________________________ ______________________________
Witness:__________________________ MegaMedia Networks, Inc.
By Xxxxxxx X. Xxxxxx, Xx., President
__________________________________ ______________________________
Witness:__________________________ Optionee:_____________________
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EXERCISE FORM
(To be Executed If Optionee Desires to Exercise the Options)
TO: MegaMedia Networks, Inc.
The undersigned, being the Optionee of certain options ("Options") to
purchase shares of common stock of MegaMedia Networks, Inc. (the "Company" and
the "Shares"), under the conditions thereof, hereby exercises Options to
purchase Shares evidenced by the within Option Agreement, and Herewith makes
payment of the exercise price in full in cash or immediately available fund or
by delivery of shares already owned by the Optionee with a market value at least
equal to the aggregate exercise price due. Kindly issue all Shares to the
undersigned and deliver them to the undersigned at the address stated below. If
such number of Shares shall not be all of the Shares purchasable under the
within Option Agreement, please issue a new Option Agreement of like tenor for
the balance of the remaining Shares purchasable hereunder to be delivered to the
undersigned at the address stated below.
By signing below, the Undersigned acknowledges that he has received such
financial and other information to his satisfaction regarding the Company as he
requires to make an informed investment decision. The Undersigned has had the
opportunity to ask questions and receive answers from the Company regarding the
Shares and the Company. The Undersigned further acknowledges that he is aware
that the Shares issued pursuant to this exercise may be restricted from
transfer.
Name______________________
(Please Print)
Address___________________
Signature_________________
Dated______________
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VOTING AGREEMENT
EXHIBIT D
THIS VOTING AGREEMENT is made and entered into this_____ day of March,
2000, by and among Xxxxx X. Xxxx ("Executive"), Xxxxxxx X. Xxxxxx, Xx.
("Xxxxxx"), Xxxxx Xxxxxxx ("Xxxxxxx"), NextTraffic, Inc. ("NextTraffic"), Xxxxx
Xxxxxxxxx ("Marshlack") and Xxxx X. Xxxxx, Esq. ("Xxxxx") (Mobley, Timmons,
NextTraffic, Marshlack and Xxxxx are referred to collectively as the
"Stockholders").
BACKGROUND
The Stockholders collectively own over 50% of the outstanding common stock
of MegaMedia Networks, Inc. (the "Company"). In consideration for the Executive
agreeing to become an executive employee with the Company, and in order to
preserve stability and ensure competent management of the Company, the
Stockholders desire to enter into a voting agreement for the voting of their
shares of Common Stock of the Company (the "Voting Agreement").
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound, the parties agree as follows:
Section 1. Ownership of Shares. The Stockholders represent and warrant that they
beneficially own or control the voting of more than 50% of the outstanding
common stock of the company on the date of this Voting Agreement. Such shares,
including any and all additional shares of Common Stock of the Company acquired
by any of the Stockholders are referred to herein as the "Shares". In addition,
Xxxxxx and Xxxxxxx represent and warrant that they are members of the Board of
Directors of the Company.
Section 2. Additional Shares. The Stockholders may buy additional Shares or sell
Shares. Any additional Shares owned by any of the Stockholders during the term
of this Voting Agreement will become subject to this Voting Agreement. Shares
sold by any of the Stockholders in brokers' transactions or to persons owning
less than 1% of the outstanding common stock of the Company will no longer be
subject to this Voting Agreement.
Section 3. Agreement. The parties will file a copy of this Voting Agreement with
the corporate secretary of the Company.
Section 4. Voting of Shares. From the date of this Voting Agreement, the
Stockholders agree to vote for the Executive to have a seat on the Company's
Board of Directors for as long as Executive remains an employee of the Company.
Xxxxxx and Xxxxxxx agree to nominate Executive to fill a vacant position on the
Board of Directors effective the next scheduled meeting of the Company's Board
of Directors, and to nominate Executive for election by the Company's
stockholders at each annual meeting of stockholders for so long as Executive is
employed by Company.
Section 5. Reorganization of the Company. In case the Company is merged into or
consolidated with another corporation, or all or substantially all of the assets
of the Company are transferred to another corporation, or all of the Shares are
acquired by another corporation pursuant to a plan of exchange, then in
connection with such transfer the term "Company" for all purposes of this
Agreement shall be taken to include such successor corporation, and the term
"Shares" shall be taken to include the voting stock of such corporation issued
to the Stockholders pursuant to such merger, consolidation, sale or share
exchange. The term "Shares" shall also include the shares of capital of the
Company issued in connection with any stock split, stock dividend or other
recapitalization of the Company.
Section 6. Term. The term of this Agreement shall commence on March 1, 2000, and
shall continue for as long as Executive is an employee of the Company, unless
terminated sooner in writing signed by the Executive.
Section 7. Successors. The term of this Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the Stockholders, except for Shares sold in Broker's transactions to
persons owning less than 1% of the outstanding Common Stock of the Company.
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Section 8. Enforceability. The Stockholders agree that upon execution of this
voting Agreement, this voting Agreement shall be specifically enforceable by
Executive in a court of competent jurisdiction, which remedy shall be in
addition to and not exclusive to any other remedies that may be available to him
at law or in equity.
Section 9. Place of Performance. This Voting Agreement is made, executed, and
entered into at Orlando, Florida and it is mutually agreed that the performance
of all parts of this contract shall be in Orange County, Florida. This Agreement
shall be construed and enforced in accordance with the law of the State of
Florida. The appropriate state or federal courts located in Orange County,
Florida shall have venue over all matters arising under this Voting Agreement
and will be the proper forums in which to adjudicate such matters.
Section 10. Amendments. No change, modification, or termination of any of the
terms provisions or conditions of this Voting Agreement shall be effective
unless made in writing and signed by all signatories to this Voting Agreement.
Section 11. Counterparts. This Voting "Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument.
Section 12. Severability. If any term or provision of this Voting Agreement
shall be held to be invalid or unenforceable for any reason, such term or
provision shall be ineffective to the extent of such invalidity or
unenforceability without invalidating the other terms and provisions hereof, and
this Voting Agreement shall be construed as if such invalid or unenforceable
term or provision had not been contained herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this Voting Agreement
and duly delivered the same or caused the same to be duly delivered on their
behalf on the date first above written.
_______________________ _______________________
Executive Xxxxx Xxxxxxx
_______________________ _______________________
Xxxxxxx X. Xxxxxx, Xx. Xxxxx X. Xxxxxxxxx
_______________________ _______________________
NextTraffic, Inc. Xxxx X. Xxxxx
By:_______________________
Its:______________________
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DESCRIPTION OF BUSINESS
EXHIBIT E
MegaMedia Networks, Inc. is a global internet entertainment portal specializing
in commercial "on-demand" selection and delivery of high-quality programming
including, but not limited to: movies, music, television and sports. MegaMedia
Networks markets and distributes entertainment content to consumers on a per
view, subscription, membership, or free basis; builds one-to-one customer
intimacy marketing profiles to enhance revenues; offers targeted and general
merchandise, services and advertising to consumers; builds corporate
relationships in the form of sponsor and strategic alliance programs;
MegaMedia Networks engages in several critical areas of activity including:
content acquisition through purchase, partnerships, Licensing and production;
encoding of content into such form as may be transmitted through electronic of
wireless distribution networks; organization, development and presentation of a
compelling consumer-oriented site or sites incorporating marketing, advertising,
sales and merchandising targeted to individual and broad consumer preferences;
commercial fulfillment, packaging and shipping; and design, assemblage and
operation of technical hardware and software platforms suitable for the delivery
of all aspects of MegaMedia Networks content monetization program and consumer
monetization program briefly described above including hosting, serving and
distribution through global digital transmission networks.
____________________________ _____________________________
Executive - Xxxxx X. Xxxx MegaMedia Networks, Inc.,
00000 Xxxxxx Xxx Xxxxx By Xxxxxxx X. Xxxxxx, Xx., President
Xxxxxx Xxxxxx, Xxxxxxx 00000 00 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
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