EXHIBIT 10.4(5)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is dated as of June 16, 2003 (this "Agreement"),
by and between FOTOBALL USA, INC., a Delaware corporation (the "Company"), and
Xxxxx Xxxxxxx, a Louisiana resident ("Executive").
W I T N E S S E T H :
WHEREAS, the Company and Executive desires to enter into an employment
relationship upon the terms set forth in this Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties agree as follows:
1. Employment.
(a) The Company hereby employs (the "Employment") Executive as the Vice
President-Managing Director MHQ of the Company. Executive shall have authority
to manage all aspects of the premium and promotional business of the Company and
its MHQ division, subject to the general supervision, control and guidance of
the President and the Chief Executive Officer (the "CEO") of the Company.
Executive hereby accepts the Employment and agrees to (i) render such executive
services, (ii) perform such executive duties and (iii) exercise such executive
supervision and powers to, for and with respect to the Company, as may be
established by the President or the CEO, for the period and upon the terms set
forth in this Agreement.
(b) Executive shall devote substantially all of his business time and
attention during the normal business day to the business and affairs of the
Company consistent with his executive positions with the Company, except for
vacations permitted pursuant to Section 3.5 and Disability (as defined in
Section 6.2). This Agreement shall not be construed as preventing Executive from
engaging in charitable and community affairs, or giving attention to his passive
investments, provided that such activities do not interfere with the regular
performance of his duties and responsibilities under this Agreement.
2. Term. Except as otherwise specifically provided in Section 6 below, the
term of this Agreement (as may be extended, the "Term") shall commence on June
16, 2003 and shall continue until June 15, 2005, subject to the terms and
conditions of this Agreement.
3. Compensation.
3.1. Base Salary. Executive shall be paid a base salary (the "Base
Salary") at an annual rate of one hundred and fifteen thousand dollars
($115,000), during the first year of the Agreement and no less than one hundred
and forty five thousand dollars ($145,000) during the second year of the
Agreement, payable in equal payments at such intervals as the other executive
officers of the Company are paid, but in any event at least on a monthly basis.
3.2. Bonus. In addition to the Base Salary, Executive shall be entitled
to such bonus compensation ("Bonus Compensation") as may be determined on a
calendar basis from time to time by the Compensation Committee of the Board and
subject to a budget to be agreed upon by the Board; provided, however, that
Executive's bonus (a) for 2003 shall be two percent (2%) of gross profit
generated on product related revenue for the Company's MHQ division after the
date hereof, five percent (5%) of product gross profit for each program that
generates gross profit in excess of three hundred fifty thousand dollars
($350,000) after the date hereof and ten percent (10%) of MHQ marketing services
revenue less reasonable expenses to be determined by both parties relating to
such services after the date hereof, and (b) for 2004 shall not be less than two
percent (2%) of product gross profit and ten percent (10%) of MHQ marketing
services revenue less additional expenses relating to such services. In addition
to the 2% commission outlined above, the Company shall pay Executive an
incremental bonus of at least two percent (2%) of product gross profit for
"larger programs", as may be more specifically determined by the Compensation
Committee of the Board during the 2004 budget process. The Bonus Compensation
for each year shall be paid by the Company to Executive no later than the date
on which similar year-end bonuses are paid to other senior executive officers of
the Company.
3.3. Stock Options.
(a) (i) Subject to the receipt of stockholder approval for an amendment
(the "Amendment") to increase the size of the Plan (as defined below), the
Company shall issue to Executive as an inducement to enter into this Agreement
non-qualified options (the "Options") to purchase 20,000 shares of common stock,
$.01 par value (the "Common Stock"), of the Company at a per share exercise
price equal to the closing market price of the Common Stock on the date of the
receipt of stockholder approval for the Amendment. The issuance of the Options
to the Executive by the Company shall be subject to three-year vesting, and in
accordance with the terms of the 1998 Stock Option Plan of the Company or any
successor stock option plan (the "Plan"). On the first business day following
stockholder approval of the Amendment, the Company shall cause the issuance to
Executive of the Options, subject to and in accordance with the terms of the
Plan.
(b) (ii) If the Amendment is not approved by the stockholders, the
Company shall issue to Executive as an inducement to enter into this Agreement
Options to purchase 20,000 shares of Common Stock of the Company at a per share
exercise price equal to the closing market price of the Common Stock on the date
of the grant of the Options by the Compensation Committee of the Board. The
issuance of the Options to the Executive by the Company shall be subject to
three-year vesting, and in accordance with the terms approved by the
Compensation Committee of the Board, so long as such terms are not materially
dissimilar
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from the terms of the Plan. On the first business day following their grant by
the Compensation Committee of the Board, the Company shall cause the issuance to
Executive of the Options, subject to and in accordance with the terms of the
grant.
(c) Executive's vested Options shall be exercisable for a period of ten
years from the date of issuance. Upon the termination of this Agreement, any
unvested Options shall lapse, except as otherwise provided in Section 6 below,
and Executive shall have ninety (90) days from the date of termination in
accordance with the terms of this Agreement to exercise any vested Options (one
year in the case of termination by reason of death or Disability of Executive).
3.4. Employee Benefits. In addition to the Base Salary, the Bonus
Compensation and the Stock Options (if approved), Executive shall be entitled
(i) to receive the fringe benefits now or hereafter provided by the Company to
its officers of a similar level to Executive, including, but not limited to,
life, hospitalization, surgical, major medical and disability insurance and sick
leave, (ii) to be a full participant in all of the Company's other benefit
plans, pension plans, retirement plans and profit-sharing plans which may be in
effect from time to time or may hereafter be adopted by the Company which are
offered to officers of a similar level to Executive, (iii) to all costs and
expenses for the maintenance, including insurance, and operation of Executive's
automobile; provided, however, that such costs and expenses shall not exceed
$5,000 in any twelve-months period, (iv) to a relocation reimbursement equal to
the documented moving costs of moving to the San Diego area, as evidenced by a
written estimate provided to the Company prior to the move; provided, however,
that the move occurs within twelve (12) months of the date hereof, (v) to a
housing allowance not to exceed $1,000 per week, payable by the Company for a
period of four (4) weeks, and (vi) one round trip airfare for Executive and two
family members to relocate to San Diego from New Orleans.
3.5. Vacation. During the Term, Executive shall be entitled to such
vacation with pay during each calendar year of his Employment hereunder
consistent with his position as an officer of the Company, but in no event less
than three (3) weeks in any such calendar year (pro-rated as necessary for
partial calendar years during the Term). Such vacation may be taken, in
Executive's discretion, at such time or times as are not inconsistent with the
reasonable business needs of the Company. Executive shall not be entitled to any
additional compensation in the event that Executive, for whatever reason, fails
to take such vacation during any year of his Employment hereunder. Executive
shall also be entitled to all paid holidays given by the Company to its
executive officers.
4. Indemnification. Executive shall be entitled at all times to the benefit
of the maximum indemnification and advancement of expenses available from time
to time under the laws of the State of Delaware.
5. Expenses. During the Term, the Company shall reimburse Executive upon
presentation of appropriate vouchers or receipts in accordance with the
Company's expense reimbursement policies for executive officers, for all
out-of-pocket business travel and entertainment expenses incurred or expended by
Executive in connection with the performance
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of his duties under this Agreement.
6. Consequences of Termination of Employment.
6.1. Death. In the event of the death of Executive during the Term,
Executive's Employment hereunder shall be terminated as of the date of his death
and Executive's designated beneficiary, or, in the absence of such designation,
the estate or other legal representative of Executive (collectively, the
"Estate"), shall be paid Executive's unpaid Base Salary through the month in
which the death occurs.
6.2. Disability. In the event Executive shall be unable to render the
services or perform his duties hereunder by reason of illness, injury or
incapacity (whether physical, mental, emotional or psychological) (any of the
foregoing shall be referred to herein as a "Disability") for a period of either
(i) ninety (90) consecutive days or (ii) one hundred eighty (180) days in any
consecutive three hundred sixty-five (365) day period, the Company shall have
the right to terminate this Agreement by giving Executive ten (10) days prior
written notice. If Executive's Employment hereunder is so terminated, Executive
shall be paid, in addition to payments under any disability insurance policy in
effect, Executive's unpaid Base Salary through the month in which the
termination occurs.
6.3. Termination of Employment of Executive by the Company for Cause.
(a) Nothing herein shall prevent the Company from terminating
Executive's Employment for Cause (as defined below). From and after the date of
such termination, Executive shall no longer be entitled to receive Base Salary
and Bonus Compensation. Any rights and benefits which Executive may have in
respect of any other compensation or any employee benefit plans or programs of
the Company, whether pursuant to Section 3.4 or otherwise, shall be determined
in accordance with the terms of such other compensation arrangements or plans or
programs. The term "Cause," as used herein, shall mean that: (i) Executive shall
embezzle funds or misappropriate other property of the Company or any
subsidiary; or (ii) Executive shall willfully disobey a lawful directive of the
President, CEO or the Board, whether through commission or omission; or (iii)
Executive shall breach this Agreement in a material manner or engage in
fraudulent conduct as regards the Company.
(b) The Company shall provide Executive with written notice stating
that it intends to terminate Executive's Employment for Cause under this Section
6.3 and specifying the particular act or acts on the basis of which the Board
intends to so terminate Executive's Employment. Executive shall then be given
the opportunity, within fifteen (15) days of his receipt of such notice, to have
a meeting with the Board to discuss such act or acts (other than with respect to
an action described in Section 6.3(a)(i) above as to which the Board may
immediately terminate Executive's Employment for Cause). Other than with respect
to an action described in Section 6.3(a)(i) above, Executive shall be given
seven (7) days after his meeting with the Board to take reasonable steps to
cease or correct the performance (or nonperformance) giving rise to such written
notice. In the event the Board determines that Executive has failed within such
seven-day period to take reasonable steps to cease or correct such performance
(or nonperformance), Executive shall be given the opportunity, within ten (10)
days of his receipt of
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written notice to such effect, to have a meeting with the Board to discuss such
determination. Following that meeting, if the Board believes that Executive has
failed to take reasonable steps to cease or correct his performance (or
nonperformance) as above described, the Board may thereupon terminate the
Employment of Executive for Cause.
6.4. Termination of Employment Other than for Cause, Death or
Disability.
(a) Termination. This Agreement may be terminated by the Company (in
addition to termination pursuant to Sections 6.1, 6.2 or 6.3 above) upon the
expiration of the Term.
(b) Severance and Non-Competition Payments.
(1) If this Agreement is terminated by the Company, other than as
a result of death or Disability of Executive or for Cause, the Company shall pay
Executive a severance and non-competition payment equal to the Base Salary for
the remainder of the Term. Such severance and non-competition payment shall be
payable, in Executive's sole discretion, either (i) in a lump sum on the first
day of the month following the termination or (ii) in equal monthly installments
commencing on the first day of the month following termination and continuing
for the remainder of the Term. In addition, all unvested Options shall be deemed
to have vested on the date of such termination.
(2) Executive shall not be required to mitigate the amount of any
severance and non-competition payment provided for under this Agreement by
seeking other employment or otherwise.
7. Confidential Information.
7.1. Executive covenants and agrees that he will not at any time,
either during the Term or thereafter, use, disclose or make accessible to any
other person, firm, partnership, corporation or any other entity any
Confidential Information (as defined below) pertaining to the business of the
Company except (i) while employed by the Company, in the business of and for the
benefit of the Company or (ii) when required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory authority over the
business of the Company, or by any administrative body or legislative body
(including a committee thereof) with jurisdiction to order the Company to
divulge, disclose or make accessible such information. For purposes of this
Agreement, "Confidential Information" shall mean non-public information
concerning the Company's financial data, statistical data, strategic business
plans, product development (or other proprietary product data), customer and
supplier lists, customer and supplier information, information relating to
practices, processes, methods, trade secrets, marketing plans and other
non-public, proprietary and confidential information of the Company; provided,
however, that Confidential Information shall not include any information which
(x) is known generally to the public other than as a result of unauthorized
disclosure by Executive, (y) becomes available to the Executive on a
non-confidential basis from a source other than the Company or (z) was available
to Executive on a non-confidential basis prior to its disclosure to Executive by
the Company. It is specifically understood and agreed by Executive that any
Confidential
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Information received by Executive during his Employment by the Company is deemed
Confidential Information for purposes of this Agreement. In the event
Executive's Employment is terminated hereunder for any reason, he immediately
shall return to the Company all Confidential Information in his possession.
7.2. Executive and the Company agree that this covenant regarding
Confidential Information is a reasonable covenant under the circumstances, and
further agree that if, in the opinion of any court of competent jurisdiction,
such covenant is not reasonable in any respect, such court shall have the right,
power and authority to excise or modify such provision or provisions of this
covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. Executive agrees that any breach of the
covenant contained in this Section 7 would irreparably injure the Company.
Accordingly, Executive agrees that the Company, in addition to pursuing any
other remedies it may have in law or in equity, may obtain an injunction,
without the necessity of obtaining a bond or other security, against Executive
from any court having jurisdiction over the matter, restraining any further
violation of this Section 7.
8. Non-Competition; Non-Solicitation.
8.1. During the Term and for an additional period of one (1) year
following the nonrenewal or termination of this Agreement, Executive agrees
that, without the prior written consent of the Company: (i) he shall not be a
principal, manager, agent, consultant, officer, director or employee of, or,
directly or indirectly, own more than one (1%) percent of any class or series of
equity securities in, any partnership, corporation or other entity, which, now
or at such time, has material operations which are engaged in any business
activity competitive (directly or indirectly) with the business of the Company,
as it relates to sports or entertainment promotions utilizing a licensed premium
product, or (ii) directly or indirectly solicit or have any dealings or contact
or contact with any suppliers or customers of the Company.
8.2. During the Term and for an additional period of one (1) year
following the nonrenewal or termination of this Agreement, Executive agrees
that, without the prior written consent of the Company (and other than on behalf
of the Company), Executive shall not, on his own behalf or on behalf of any
person or entity, directly or indirectly hire or solicit the employment of any
employee who has been employed by the Company at any time during the six (6)
months immediately preceding such date of hiring or solicitation.
8.3. Executive and the Company agree that the covenants of
non-competition and non-solicitation are reasonable covenants under the
circumstances, and further agree that if, in the opinion of any court of
competent jurisdiction such covenants are not reasonable in any respect, such
court shall have the right, power and authority to excise or modify such
provision or provisions of these covenants as to the court shall appear not
reasonable and to enforce the remainder of these covenants as so amended.
Executive agrees that any breach of the covenants contained in this Section 8
would irreparably injure the Company. Accordingly, Executive agrees that the
Company, in addition to pursuing any other remedies it may have in law or in
equity, may obtain an injunction, without the necessity of obtaining a bond or
other security, against Executive from any court having jurisdiction over the
matter, restraining any further
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violation of this Section 8.
9. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered personally or sent
by facsimile transmission, overnight courier, or certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally or sent by facsimile transmission (provided that a
confirmation copy is sent by overnight courier), one day after deposit with an
overnight courier, or if mailed, five (5) days after the date of deposit in the
United States mails, as follows (or to an address subsequently provided in
writing to the other party):
If to the Company, to: Fotoball USA, Inc.
0000 Xxxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Chief Executive Officer
If to Executive, to: Xxxxx X. Xxxxxxx, Xx.
000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
10. Entire Agreement. This Agreement and the Plan (as amended by the
Amendment) contain the entire agreement between the parties hereto with respect
to the matters contemplated herein and supersede all prior agreements or
understandings among the parties related to such matters.
11. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Company and its successors
and assigns and upon Executive. "Successors and assigns" shall mean, in the case
of the Company, any successor pursuant to a merger, consolidation, or sale, or
other transfer of all or substantially all of the assets or Common Stock of the
Company.
12. No Assignment. Except as contemplated by Section 11 above, this
Agreement shall not be assignable or otherwise transferable by either party.
13. Amendment or Modification; Waiver. No provision of this Agreement may
be amended or waived unless such amendment or waiver is authorized by the Board
and is agreed to in writing, signed by Executive and by a duly authorized
officer of the Company (other than Executive). Except as otherwise specifically
provided in this Agreement, no waiver by either party hereto of any breach by
the other party hereto of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of a similar or
dissimilar provision or condition at the same or at any prior or subsequent
time.
14. Fees and Expenses. If either party institutes any action or proceedings
to enforce any rights the party has under this Agreement, or for damages by
reason of any alleged breach of any provision of this Agreement, or for a
declaration of each party's rights or obligations
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hereunder or to set aside any provision hereof, or for any other judicial
remedy, the prevailing party shall be entitled to reimbursement from the other
party for its costs and expenses incurred thereby, including but not limited to,
reasonable attorneys' fees and disbursements.
15. Governing Law; Arbitration. The validity, interpretation, construction,
performance and enforcement of this Agreement shall be governed by the internal
laws of the State of Delaware, without regard to its conflicts of law rules. Any
controversy between the parties hereto relating to this Agreement, or to the
meaning or performance thereof, shall be settled by arbitration in accordance
with the rules and regulations of the American Arbitration Association then in
force and effect. Judgment on any award rendered in such arbitration may be
entered in any court having jurisdiction.
16. Titles. Titles to the Sections in this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any Section.
17. Counterparts. This Agreement may be executed in one or more
counterparts, which together shall constitute one agreement. It shall not be
necessary for each party to sign each counterpart so long as each party has
signed at least one counterpart.
18. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms and
provisions of this Agreement in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
FOTOBALL USA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Operating Officer
/s/ Xxxxx X. Xxxxxxx, Xx.
-------------------------
Xxxxx X. Xxxxxxx, Xx.
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Fotoball USA, Inc.
0000 Xxxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
June 16, 2003
Xxxxx X. Xxxxxxx, Xx.
000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Dear Xxxxx:
Reference is hereby made to Section 1(b) of your employment agreement with
Fotoball USA, Inc., dated as of the date hereof. Fotoball hereby acknowledges
that you have a consulting agreement with Subway that expires in April 2004. In
the event that the consulting agreement with Subway is terminated prior to April
2004, the company agrees to pro-rate and increase your base salary to an
annualized rate of $145,000. You hereby acknowledge that your duties under the
Subway agreement will not interfere with the regular performance of your duties
and responsibilities under your employment agreement with Fotoball. So long as
your duties under the Subway agreement do not interfere with the regular
performance of your duties and responsibilities under your employment agreement
with Fotoball, your performance of duties under the Subway agreement through
April 2004 will not constitute a breach of your employment agreement with
Fotoball.
Sincerely,
/s/ Xxxxx X. Xxxxxx
Xxxxx Xxxxxx
