EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
February 10, 2004 (the "Effective Date") by and between PowerChannel, Inc., a
Delaware corporation (the "Company") and Xxxxxx Xxxxxxx ("Xxxxxxx").
WHEREAS, the Company provides low cost access to the Internet through the use of
the consumer's television; and
WHEREAS, Xxxxxxx has had experience in the management of businesses marketing
and providing Internet access; and
WHEREAS, the Company desires to retain the services of Xxxxxxx; and
WHEREAS, Xxxxxxx is willing to be employed by the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1. Employment. Xxxxxxx is hereby employed and engaged to serve the Company as
the Chief Executive Officer of the Company, or such additional titles as the
Company shall specify from time to time, and Xxxxxxx does hereby accept, and
Xxxxxxx hereby agrees to such engagement and employment. At all times during the
term of Xxxxxxx'x employment, he shall remain a member of the Board of Directors
of the Company.
2. Duties. Xxxxxxx shall be responsible for the management of the Company. In
addition, Xxxxxxx'x duties shall be such duties and responsibilities as the
Company shall specify from time to time, and shall entail those duties
customarily performed by the Chief Executive Officer of a company with a sales
volume and number of employees commensurate with those of the Company. Xxxxxxx
shall have such authority, discretion, power and responsibility, and shall be
entitled to office, secretarial and other facilities and conditions of
employment, as are customary or appropriate to his position. Xxxxxxx shall
diligently and faithfully execute and perform such duties and responsibilities,
subject to the general supervision and control of the Company's board of
directors. Xxxxxxx shall be responsible and report only to the Company's board
of directors. The Company's board of directors, in its sole and absolute
discretion, shall determine Xxxxxxx'x duties and responsibilities and may assign
or reassign Xxxxxxx to such duties and responsibilities as it deems in the
Company's best interest. Xxxxxxx shall devote his full-time attention, energy,
and skill during normal business hours to the business and affairs of the
Company and shall not, during the Employment Term, as that term is defined
below, be actively engaged in any other business activity, except with the prior
written consent of the Company's board of directors.
Nothing in this Agreement shall preclude Xxxxxxx from devoting reasonable
periods required for:
(a) serving as a director or member of a committee of any organization or
corporation involving no conflict of interest with the interests of
the Company;
(b) serving as a consultant in his area of expertise (in areas other than
in connection with the business of the Company), to government,
industrial, and academic panels where it does not conflict with the
interests of the Company; and
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(c) managing his personal investments or engaging in any other
non-competing business; provided that such activities do not
materially interfere with the regular performance of his duties and
responsibilities under this Agreement as determined by the Company.
3. Best Efforts of Xxxxxxx. During his employment hereunder, Xxxxxxx shall,
subject to the direction and supervision of the Company's board of directors,
devote his full business time, best efforts, business judgment, skill, and
knowledge to the advancement of the Company's interests and to the discharge of
his duties and responsibilities hereunder. Notwithstanding the foregoing,
nothing herein shall be construed as preventing Xxxxxxx from investing his
assets in any business.
4. Employment Term. Unless terminated pursuant to Section 12 of this Agreement,
the term of this Agreement shall commence as of the Effective Date of this
Agreement and shall continue for a term of 12 months (the "Initial Term"), and
shall be automatically renewed for successive one (1) year terms (the "Renewal
Term") unless a party hereto delivers to the other party written notice of such
party's intention not to renew at least thirty (30) days prior to the end of the
Initial Term or the applicable Renewal Term, as the case may be. (The terms
"Initial Term" and "Renewal Term" will collectively hereinafter be referred to
as the "Employment Term").
5. Compensation of Xxxxxxx.
(a) Base Compensation. As compensation for the services provided by
Xxxxxxx under this Agreement, the Company shall pay Xxxxxxx an annual
salary of one hundred sixty thousand ($160,000) during the first year
of the Employment Term. Upon each subsequent one (1) year renewal of
Xxxxxxx'x employment in accordance with Section 4, the Company shall
increase Xxxxxxx'x annual salary. The compensation of Xxxxxxx under
this Section shall be paid in accordance with the Company's usual
payroll procedures.
(b) Bonus. In addition to the above base compensation, Xxxxxxx shall be
eligible to receive an annual bonus determined by the Board of
Directors based on the performance of the Company.
(c) Stock and Stock Options. Xxxxxxx shall also be eligible to receive
shares of the Company's authorized stock and options to purchase
shares of the Company's authorized stock from time to time as
determined by the Board of Directors.
6. Benefits. Xxxxxxx shall also be entitled to participate in any and all
Company benefit plans, from time to time, in effect for employees of the
Company. Such participation shall be subject to the terms of the applicable plan
documents and generally applicable Company policies.
7. Vacation, Sick Leave and Holidays. Xxxxxxx shall be entitled to four (4)
weeks of paid vacation, with such vacation to be scheduled and taken in
accordance with the Company's standard vacation policies. In addition, Xxxxxxx
shall be entitled to such sick leave and holidays at full pay in accordance with
the Company's policies established and in effect from time to time.
8. Business Expenses. The Company shall promptly reimburse Xxxxxxx for all
reasonable out-of-pocket business expenses incurred in performing Xxxxxxx'x
duties and responsibilities hereunder in accordance with the Company's policies,
provided Xxxxxxx promptly furnishes to the Company adequate records of each such
business expense.
9. Location of Xxxxxxx'x Activities. Xxxxxxx'x principal place of business in
the performance of his duties and obligations under this Agreement shall be at a
place to be determined by the Board of Directors. Notwithstanding the preceding
sentence, Xxxxxxx will engage in such travel and spend such time in other places
as may be necessary or appropriate in furtherance of his duties hereunder.
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10. Confidentiality. Xxxxxxx recognizes that the Company has and will have
business affairs, products, future plans, trade secrets, customer lists, and
other vital information (collectively "Confidential Information") that are
valuable assets of the Company. Xxxxxxx agrees that he shall not at any time or
in any manner, either directly or indirectly, divulge, disclose, or communicate
in any manner any Confidential Information to any third party without the prior
written consent of the Company's board of directors. Xxxxxxx will protect the
Confidential Information and treat it as strictly confidential.
11. Non-Competition. Xxxxxxx acknowledges that he has gained, and will gain
extensive knowledge in the business conducted by the Company and has had, and
will have, extensive contacts with customers of the Company. Accordingly,
Xxxxxxx agrees that he shall not compete directly or indirectly with the
Company, either during the Employment Term or during the one (1) year period
immediately after the termination of Xxxxxxx'x employment under Section 12 and
shall not, during such period, make public statements in derogation of the
Company. For the purposes of this Section 11, competing directly or indirectly
with the Company shall mean engaging, directly or indirectly, as principle
owner, officer, partner, consultant, advisor, or otherwise, either alone or in
association with others, in the operation of any entity engaged in a business
similar to that of the Company's.
12. Termination. Notwithstanding any other provisions hereof to the contrary,
Xxxxxxx'x employment hereunder shall terminate under the following
circumstances:
(a) Voluntary Termination by Xxxxxxx. Xxxxxxx shall have the right to
voluntarily terminate this Agreement and his employment hereunder at
any time during the Employment Term.
(b) Voluntary Termination by the Company. The Company shall have the right
to voluntarily terminate this Agreement and Xxxxxxx'x employment
hereunder at any time after the Initial Term. Termination of Xxxxxxx'x
employment pursuant to this Section 12(b) shall not be effective
unless the Company shall have first given Xxxxxxx a written notice
thereof at least thirty (30) days prior to the annual anniversary of
Xxxxxxx'x employment under this Agreement.
(c) Termination for Cause. The Company shall have the right to terminate
this Agreement and Xxxxxxx'x employment hereunder at any time for
cause. As used in this Agreement, "cause" shall mean refusal by
Xxxxxxx to implement or adhere to lawful policies or directives of the
Company's board of directors, breach of this Agreement, Xxxxxxx'x
conviction of a felony, other conduct of a criminal nature that may
have a material adverse impact on the Company's reputation, breach of
fiduciary duty or the criminal misappropriation by Xxxxxxx of funds
from or resources of the Company. Cause shall not be deemed to exist
unless the Company shall have first given Xxxxxxx a written notice
thereof specifying in reasonable detail the facts and circumstances
alleged to constitute "cause" and thirty (30) days after such notice
such conduct has, or such circumstances have, as the case may be, not
entirely ceased and not been entirely remedied.
(d) Termination Upon Death or for Disability. This Agreement and Xxxxxxx'x
employment hereunder, shall automatically terminate upon Xxxxxxx'x
death or upon written notice to Xxxxxxx and certification of Xxxxxxx'x
disability by a qualified physician or a panel of qualified physicians
if Xxxxxxx becomes disabled beyond a period of twelve (12) months and
is unable to perform the duties contain in this Agreement.
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(e) Effect of Termination. In the event that this Agreement and Xxxxxxx'x
employment is voluntarily terminated by Xxxxxxx pursuant to Section
12(a), or in the event the Company voluntarily terminates this
Agreement pursuant to Section 12(b) or for cause pursuant to Section
12(c), all obligations of the Company and all duties, responsibilities
and obligations of Xxxxxxx under this Agreement shall cease. Upon such
termination, the Company shall (i) pay Xxxxxxx a cash lump sum equal
to (x) all accrued base salary through the date of termination plus
all accrued vacation pay and bonuses, if any, plus (y) as severance
compensation, an amount equal to the greater of (A) twelve (12) months
of Xxxxxxx'x base salary (at the highest rate in effect during the
Employment Term of this Agreement), or (B) Xxxxxxx'x then base salary
for the remaining Employment Term of this Agreement; (ii) the Company
shall obtain the release of any assets that have been pledged by
Xxxxxxx as collateral (the "Xxxxxxx Collateral") on the Company's
behalf and if the Company is not able to obtain such release then the
Company shall replace such assets (the "Replacement Assets");
provided, however, in the event that the Xxxxxxx Collateral is
returned to Xxxxxxx, then the Replacement Assets shall be returned to
the Company; (iii) provide, at the Company's expense, coverage to
Xxxxxxx under the life, accident and disability insurance policies
available to the senior management executives of the Company and to
Xxxxxxx and his dependents under the health, dental and vision
insurance plans available to the Company's senior management
executives and their dependents or, in the event any of such life,
accident, disability, health, dental or vision insurance are not
continued or Xxxxxxx is not eligible for coverage thereunder due to
his termination of employment, the Company shall pay for the premiums
for equivalent coverage, in any event, for a period of twelve (12)
months after the date of termination; (iv) provide an office,
secretarial support and access to equipment and supplies for a period
of six (6) months after the date of termination; and (v) provide
Xxxxxxx reasonable outplacement services. In the event this Agreement
is terminated upon the death or disability of Xxxxxxx pursuant to
Section 12(d), Xxxxxxx shall be entitled to all compensation pursuant
to Section 5 for the period between the effective termination date to
the end of the Employment Term pursuant to Section 4. Payment will be
made to Xxxxxxx or Xxxxxxx'x appointed trustee. In the event of a
merger, consolidation, sale, or change of control, the Company's
rights hereunder shall be assigned to the surviving or resulting
company, which company shall then honor this Agreement with Xxxxxxx.
13. Resignation as Officer. In the event that Xxxxxxx'x employment with the
Company is terminated for any reason whatsoever, Xxxxxxx agrees to immediately
resign as an Officer and/or Director of the Company and any related entities.
For the purposes of this Section 13, the term the "Company" shall be deemed to
include subsidiaries, parents, and affiliates of the Company.
14. Governing Law, Jurisdiction and Venue. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to any applicable conflicts of law provisions.
15. Business Opportunities. During the Employment Term Xxxxxxx agrees to bring
to the attention of the Company's board of directors all written business
proposals that come to Xxxxxxx'x attention and all business or investment
opportunities of whatever nature that are created or devised by Xxxxxxx and that
relate to areas in which the Company conducts business and might reasonably be
expected to be of interest to the Company or any of its subsidiaries.
16. Employee's Representations and Warranties. Xxxxxxx hereby represents and
warrants that he is not under any contractual obligation to any other company,
entity or individual that would prohibit or impede Xxxxxxx from performing his
duties and responsibilities under this Agreement and that he is free to enter
into and perform the duties and responsibilities required by this Agreement.
Xxxxxxx hereby agrees to indemnify and hold the Company and its officers,
directors, employees, shareholders and agents harmless in connection with the
representations and warranties made by Xxxxxxx in this Section 16.
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17. Indemnification.
(a) The Company agrees that if Xxxxxxx is made a party, or is threatened
to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason
of the fact that he is or was a director, officer or employee of the
Company or is or was serving at the request of the Company as a
director, officer, member, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether or not the
basis of such Proceeding is Xxxxxxx'x alleged action in an official
capacity while serving as a director, officer, member, employee or
agent, Xxxxxxx shall be indemnified and held harmless by the Company
to the fullest extent permitted or authorized by the Company's
certificate of incorporation or bylaws or, if greater, by the laws of
the State of Delaware, against all cost, expense, liability and loss
(including, without limitation, attorney's fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by Xxxxxxx in connection
therewith, and such indemnification shall continue as to Xxxxxxx even
if he has ceased to be a director, member, employee or agent of the
Company or other entity and shall inure to the benefit of Xxxxxxx'x
heirs, executors and administrators. The Company shall advance to
Xxxxxxx to the extent permitted by law all reasonable costs and
expenses incurred by him in connection with a Proceeding within 20
days after receipt by the Company of a written request, with
appropriate documentation, for such advance. Such request shall
include an undertaking by Xxxxxxx to repay the amount of such advance
if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses.
(b) Neither the failure of the Company (including its board of directors,
independent legal counsel or stockholders) to have made a
determination prior to the commencement of any proceeding concerning
payment of amounts claimed by Xxxxxxx that indemnification of Xxxxxxx
is proper because he has met the applicable standard of conduct, nor a
determination by the Company (including its board of directors,
independent legal counsel or stockholders) that Xxxxxxx has not met
such applicable standard of conduct, shall create a presumption that
Xxxxxxx has not met the applicable standard of conduct.
(c) The ompany agrees to continue and maintain a directors' and officers'
liability insurance policy covering Xxxxxxx to the extent the Company
provides such coverage for its other executive officers.
(d) Promptly after receipt by Xxxxxxx of notice of any claim or the
commencement of any action or proceeding with respect to which Xxxxxxx
is entitled to indemnity hereunder, Xxxxxxx shall notify the Company
in writing of such claim or the commencement of such action or
proceeding, and the Company shall (i) assume the defense of such
action or proceeding, (ii) employ counsel reasonably satisfactory to
Xxxxxxx, and (iii) pay the reasonable fees and expenses of such
counsel. Notwithstanding the preceding sentence, Xxxxxxx shall be
entitled to employ counsel separate from counsel for the Company and
from any other party in such action if Xxxxxxx reasonably determines
that a conflict of interest exists which makes representation by
counsel chosen by the Company not advisable. In such event, the
reasonable fees and disbursements of such separate counsel for Xxxxxxx
shall be paid by the Company to the extent permitted by law.
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(e) After the termination of this Agreement and upon the request of
Xxxxxxx, the Company agrees to reimburse Xxxxxxx for all reasonable
travel, legal and other out-of-pocket expenses related to assisting
the Company to prepare for or defend against any action, suit,
proceeding or claim brought or threatened to be brought against the
Company or to prepare for or institute any action, suit, proceeding or
claim to be brought or threatened to be brought against a third party
arising out of or based upon the transactions contemplated herein and
in providing evidence, producing documents or otherwise participating
in any such action, suit, proceeding or claim. In the event Xxxxxxx is
required to appear after termination of this Agreement at a judicial
or regulatory hearing in connection with Xxxxxxx'x employment
hereunder, or Xxxxxxx'x role in connection therewith, the Company
agrees to pay Xxxxxxx a sum, to be mutually agreed upon by Xxxxxxx and
the Company, per diem for each day of his appearance and each day of
preparation therefor.
18. Notices. All demands, notices, and other communications to be given
hereunder, if any, shall be in writing and shall be sufficient for all purposes
if personally delivered, sent by facsimile or sent by United States mail to the
address below or such other address or addresses as such party may hereafter
designate in writing to the other party as herein provided.
Company: Xxxxxxx:
PowerChannel, Inc. c/o PowerChannel, Inc.
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000 00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 10956 Xxx Xxxx, Xxx Xxxx 00000
19. Entire Agreement. This Agreement contains the entire agreement of the
parties and there are no other promises or conditions in any other agreement,
whether oral or written. This Agreement supersedes any prior written or oral
agreements between the parties. This Agreement may be modified or amended, if
the amendment is made in writing and is signed by both parties. This Agreement
is for the unique personal services of Xxxxxxx and is not assignable or
delegable, in whole or in part, by Xxxxxxx. This Agreement may be assigned or
delegated, in whole or in part, by the Company and, in such case, shall be
assumed by and become binding upon the person, firm, company, corporation or
business organization or entity to which this Agreement is assigned. The
headings contained in this Agreement are for reference only and shall not in any
way affect the meaning or interpretation of this Agreement. If any provision of
this Agreement shall be held to be invalid or unenforceable for any reason, the
remaining provisions shall continue to be valid and enforceable. The failure of
either party to enforce any provision of this Agreement shall not be construed
as a waiver or limitation of that party's right to subsequently enforce and
compel strict compliance with every provision of this Agreement. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument
and, in pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
POWERCHANNEL, INC.: XXXXXX XXXXXXX:
By:______________ By:___________________
Name: Xxxxxx Xxxxxxx
Title:
