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Exhibit 10.27
AGREEMENT
This Agreement is entered into this 2nd day of October, 1998,
by and between Stuart Entertainment, Inc., a Delaware corporation (the
"Company"), with its principal place of business at 0000 Xxxxxxxx Xxxxxx,
Xxxxxxx Xxxxxx, Xxxx 00000, and Xxxxxx X. Xxxxxx, an individual (the
"Employee"), with his address at 0 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxxxx 00000
WHEREAS, Employee desires to resign from his position as an
officer and director of the Company.
WHEREAS, the Company and Employee desire to enter into this
Agreement to set forth the terms of such resignation.
NOW, THEREFORE, in consideration of the covenants undertaken, and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Resignation. Employee's employment with the Company as its Chief
Executive Officer will terminate effective October 2, 1998 (the "Resignation
Date"). Effective on the Resignation Date, Employee will relinquish all
positions as a director or officer of the Company, as well as its subsidiaries
and affiliates. Employee acknowledges that upon receipt of the Employee's final
salary payment for the period ended October 2, 1998 that the Company will have
paid him for all work performed on or prior to the Resignation Date based on
Employee's base annual salary of Three Hundred Seventy-Five Thousand Dollars
($375,000) ("Base Salary"), and has provided Employee with all benefits to which
he was entitled through the Resignation Date. Employee hereby waives any right
to claim reinstatement as an officer and/or director of the Company following
the Resignation Date.
2. Final Termination Date. The Company shall employ Employee as a
salaried employee of the Company reporting to the Company's current Chief
Executive Officer to assist the Company in all matters relating to the winding-
up of pending work and the orderly transition of work to other employees from
the Resignation Date through October 31, 1998, at which time Employee's
employment with the Company will terminate ("Final Termination Date"). The
Company shall pay Employee his salary based on his Base Salary, and provide
Employee with benefits on substantially the same conditions and terms as
previously provided to Employee from the Resignation Date through the Final
Termination Date. Employee hereby waives any right to claim reinstatement as an
employee of the Company or its subsidiaries and affiliates after the Final
Termination Date. This Agreement terminates and supersedes all prior employment
and severance agreements between Employee and Company. Except for the payments
described herein, Employee will not receive or be entitled to receive any other
salary, benefits or payments.
3. Effective Date. The provisions of this Agreement, however, only
become effective on the eighth day following Employee's execution of this
Agreement ("Effective Date"), provided that Employee does not revoke the
Agreement in the seven days preceding the foregoing Effective Date.
4. Severance. The Company shall provide Employee with:
a) Severance Payments. The cash equivalent of eleven (11) months
of Employee's Base Salary, Three Hundred Forty-Three Thousand
Seven Hundred Fifty Dollars ($343,750.00), either (i) in a
lump-sum payment within ten (10) days of the Effective Date,
discounted on a present value basis at 10% interest ($327,340)
(the "Lump Sum Payment"), or (ii) in the form of salary
continuation in accordance with the Company's normal payroll
procedures, whichever Employee chooses in his sole discretion
("Severance Payment"). The Company shall deduct all applicable
tax withholdings for state and federal income taxes, FICA and
other deductions required by law and/or
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authorized by Employee from the Severance Payment, whether
provided in a Lump-Sum Payment or through salary continuation.
b) Severance Benefits. Health insurance coverage on the same
terms as the Company provided to Employee prior to the
Resignation Date for a period of eleven months from the Final
Termination Date. In the event that Employee elects to have
the Company pay the Severance Payments in a Lump-Sum Payment,
Employee agrees that at the Company's discretion, the Company
may withhold up to Eleven Thousand Dollars ($11,000) of the
Lump Sum Payment and pay such amount in eleven (11) equal
monthly installments in accordance with the Company's normal
payroll procedures. In addition, the Company will pay up to
Five Thousand Five Hundred Dollars ($5,500.00), to enable
Employee to secure additional life and disability insurance
for the eleven months following the Final Termination Date and
pay the premium payment for the 1999 premium year for
Employee's existing term life and split-dollar life insurance
policies. The benefits provided for in this Section 4(b) shall
constitute all of the Severance Benefits provided by the
Company to Employee after the Final Termination Date. The
Company will use its best efforts to cause such Severance
Benefits to be effective on or before the Final Termination
Date. Employee acknowledges that except as provided for in
this Agreement, Employee shall not otherwise be entitled to
any other payments or benefits from the Company.
5. Vacation. In exchange for the Severance Payments and Severance
Benefits provided for in Section 4, and the use of the Company Car and Office
provided for in Sections 6 and 7 respectively, Employee waives any right to
payment for all previously accrued yet unused vacation, if any, remaining as of
the Final Termination Date.
6. Company Car. The Company shall provide Employee with the use of the
car to which Employee had use prior to the Resignation Date (the "Company Car")
from the Resignation Date through June 30, 1999. During Employee's use of the
Company Car pursuant to the terms of this Agreement, the Company shall pay the
monthly lease payments, maintenance and insurance coverage for the Company Car.
Employee shall be responsible for all payment of gasoline and any fine or ticket
in connection with Employee's use of the Company Car. Employee shall make the
Company Car, keys, security devices, all registration or licensing documents or
other materials supplied to Employee in connection with Employee's use of the
Company Car available for pick-up by the Company promptly on June 30, 1999.
Employee shall be solely responsible for all expenses incurred if Employee does
not make the Company Car available for pick-up by the Company by June 30, 1999.
7. Office Space. The Company shall allow Employee to use its office
space, equipment and facilities at the Company's office at Two Stamford Landing,
Office No. 127 in Stamford, Connecticut from the Resignation Date through
December 31, 1998. The Company will pay all normal and reasonable costs for the
Stamford, Connecticut office space in accordance with prior practices and the
Company's policies. Employee shall vacate and remove all personal belongings
from the Company's existing office space at Stamford, Connecticut promptly on
December 31, 1998. Employee shall vacate and remove all personal belongings from
the Company's offices in Council Bluff, Iowa as soon as reasonable.
8. Stock Options. Employee has vested stock options to acquire 250,000
shares of the Company's common stock (the "Options"), with an exercise price of
$3.00 per share. Employee and Company agree that the Company will cancel the
Options and grant to Employee non-qualified stock options for 250,000 shares of
common stock with an exercise price of $3.00 per share, which must be exercised
within one year from the Resignation Date. Employee acknowledges that he has no
other stock options or ownership interests in the Company.
9. Company Property. Employee represents that with the exception of the
Company Car, he will turn over to the Company all files, memoranda, records,
other documents and all other physical property which Employee received from
Company and which are the property of the
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Company by the Final Termination Date, or sooner if requested by the Company.
Employee shall return to the Company all Company credit cards and calling cards
promptly upon request.
10. Tax Liability. Employee agrees that Employee is exclusively liable
for the payment of any federal, state, city or other taxes which may be due as a
result of any consideration received by Employee as provided by this Agreement;
provided, however, that Company shall pay all federal, state and local amounts
withheld from payments to Employee and all other employment taxes of the type
normally paid by Company on employee salaries in connection with the
consideration payable to Employee pursuant to Section 4 of this Agreement.
11. Non-Competition.
a) Employee acknowledges and recognizes the highly competitive
nature of the businesses of the Company and its affiliates and
subsidiaries, and accordingly agrees as follows:
i) For one year following the Resignation Date, Employee
will not directly or indirectly, for himself or as
agent of, or on behalf of, or in conjunction with,
any person, firm, corporation or association, enter
into competitive endeavors and will not undertake any
commercial activity which is contrary to the best
interests of the Company or its affiliates, including
becoming an employee, owner (except for passive
investments of not more than one percent of the
outstanding shares of, or any other equity interest
in, any company or entity listed or traded on a
national securities exchange or in an
over-the-counter securities exchange or in an
over-the-counter securities market), officer, agent
or director of any firm, person, corporation,
association or other entity in any geographic area in
which the Company conducts its business which either
directly competes with a line or lines of business of
the Company accounting for ten percent (10%) or more
of the Company's gross sales, revenues of earnings
before taxes or derives ten percent (10%) or more of
such firm's or person's gross sales, revenues or
earnings before taxes from a line or lines of
business which directly compete with the company as
of the Final Termination Date.
B) The Employee will not directly or indirectly induce any
employee of the Company or its affiliates or subsidiaries to
engage in any activity in which the Employee is prohibited
from engaging by Paragraph (a) above or to terminate his
employment with the company or its affiliates or subsidiaries,
and will not directly or indirectly employ or offer employment
to any person who was employed by the Company or its
affiliates or subsidiaries unless such person shall have
ceased to be employed by such entity or any of its affiliates
for a period of at least 12 months.
It is expressly understood and agreed that although the
Employee and the Company consider the restrictions contained
in this Section 11 to be reasonable, if a final judicial
determination is made by a court of
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competent jurisdiction that the time or territory or any other
restriction contained in this Agreement is an unenforceable
restriction against the Employee, the provisions of this
Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to
such maximum extent as such court may judicially determine or
indicate to be enforceable. Alternatively, if any court of
competent jurisdiction finds that any restriction contained in
this Agreement is unenforceable, and such restriction cannot
be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions
contained herein.
1. Releases by Employee. Except for obligations created by this
Agreement, Employee hereby covenants not to xxx and fully releases Company and
its subsidiaries and affiliates, past and present, and each of them, as well as
their directors, partners, officers, agents, attorneys, insurers, employees,
stockholders, representatives, assigns and successors, past and present, and
each of them (hereinafter together and collectively referred to as "Releasees")
with respect to and from all actions, and claims of any kind, known or unknown,
suspected or unsuspected, which Employee may now have or has ever had against
any of the Releasees, including all claims arising from Employee's employment as
a chief executive officer and/or in any other capacity as an officer and/or
director of the Company, and arising out of the termination of his employment as
the chief executive officer and/or in any other capacity as an officer and/or
director of the Company as of the Resignation Date (and specifically including
any and all claims related to prior promises or contracts of employment and any
and all claims for wages, benefits, vacation pay, and wrongful termination or
discrimination whether based on age, race, sex, disability or otherwise
including specifically and without limitation claims under the Federal Age
Discrimination in Employment Act, Americans with Disabilities Act, and any state
or local statute or law). Employee warrants and represents that Employee has not
assigned or transferred to any person or entity any of the claims released by
this Agreement and Employee agrees to defend, by counsel of Company's choosing,
and indemnify and hold harmless any of the Releasees from and against any claims
based on or in connection with or arising out of any such assignment or transfer
made.
2. Releases by Company. Except for obligations created by this
Agreement, Company hereby covenants not to xxx and fully releases Employee and
his successors and assigns (the "Employee Releasees"), with respect to and from
all actions, and claims of any kind, known or unknown, suspected or unsuspected,
which Company may now have or has ever had against any of the Employee
Releasees, including all claims arising from Employee's position as a chief
executive officer, officer and/or director of the Company and the termination of
that relationship (and specifically including any and all claims related to
prior promises or contracts of employment) provided, however, the Company does
not release the Employee Releases with respect to claims arising out of or
relating to the fraud, gross negligence or willful misconduct of the Employee.
The Company warrants and represents that Company has not assigned or transferred
to any person or entity any of the claims released by this Agreement and Company
agrees to defend, by counsel of Employee's choosing, and indemnify and hold
harmless any of the Employee Releasees from and against any claims based on or
in connection with or arising out of any such assignment or transfer made.
3. Indemnification and Defense by Company. Company shall indemnify and
defend Employee in any threatened, pending, or contemplated action, suit or
proceeding, whether civil or criminal, administrative or investigative, or
whether formal or informal which arises by reason of the fact that Employee was
a chief executive officer, other officer and/or director of the Company prior to
the Resignation Date, against expenses, including attorney's fees, judgments,
penalties, fines and amounts to be paid in settlement in connection with such
action, suit or proceeding if it is determined by Company that Employee
conducted himself in good faith and that Employee reasonably believed (i) in the
case of conduct in his official capacity with the Company, that his conduct was
in the Company's best interests, or (ii) in all other cases (except criminal
cases), that his conduct was at least not opposed to the Company's
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best interests, or (iii) in the case of any criminal proceeding, that he had no
reasonable cause to believe that his conduct was unlawful ("Indemnified
Claims"). The Company shall have the sole and exclusive right to select legal
counsel to represent the Company and Employee, and to control the defense and/or
settlement of any Indemnified Claims. Employee agrees to cooperate with the
Company in the defense of any Indemnified Claims, and make available to the
Company any and all documents in his possession and/or control that may be
necessary or useful to such defense and/or settlement.
No indemnification shall be made to Employee under this Section 14
with respect to any claim, issue or matter in connection with a proceeding by or
on behalf of the Company or any other entity in which Employee's actions giving
rise to the action, suit, proceeding or claim constituted fraud, gross
negligence and/or willful misconduct on the part of the Employee.
15. Confidentiality.
a) Employer will not at any time, disclose or use for his own
benefit or purposes of any other person, firm, partnership,
joint venture, association, corporation or other business
organization, entity or enterprise other than the Company or
its affiliates and subsidiaries, any trade secrets,
information, data, or other confidential information relating
to customers, development programs, costs, marketing, trading,
investment, sales activities, promotion, credit and financial
data, manufacturing processes, financing methods, plans, or
the business and affairs of the Company or its affiliates
and/or subsidiaries ("Proprietary Information"). The term
Proprietary Information shall not include information which is
not unique to the Company, its affiliates or subsidiaries, or
which is generally known to the industry or the public other
than as a result of the Employee's breach of this covenant.
The Employee agrees that all materials or articles of
information of any kind furnished to the Employee by the
Company or developed by the Employee in the course of his
employment are and shall remain the sole property of the
Company and that by the Final Termination Date, Employee will
return to the Company, all memoranda, books, papers, plans,
information, letters and other data, and all copies thereof,
in any way relating to the business of the Company and its
affiliates or subsidiaries, except that Employee may retain
personal notes, notebooks and diaries. The Employee further
agrees that he will not retain or use for his account at any
time any trade names, trademark or other proprietary business
designation used or owned in connection with the business of
the Company or its affiliates or subsidiaries. The Employee
agrees that all Proprietary Information shall be the sole
property of the Company and its assigns, and the Company and
its assigns shall be the sole owner of all licenses and other
rights in connection with such Proprietary Information.
b) Employee acknowledges that the Company from time to time
receives from third parties confidential or proprietary
information subject to a duty on the Company's part to
maintain the confidentiality of such information and to use it
only for certain limited purposes ("Third Party Information").
Employee agrees to hold Third Party Information in the
strictest confidence and will not disclose or use Third Party
Information except as permitted by any agreement between the
Company and such third party.
c) Employee acknowledges that the Company's customers and
suppliers constitute a valuable and unique asset of the
Company. Employee will not at any time (i) disclose such list
of customers and/or suppliers or any part thereof to any
person, firm, corporation, association or other entity for any
reason or purpose whatsoever, (ii) assist in obtaining
customers for any other similar business, or (iii) encourage
any customer or supplier to terminate their relationship with
the Company.
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d) Employee agrees to assign to the Company, without further
consideration, his entire right, title, and interest
(throughout the United States and in all foreign countries),
free and clear of all liens and encumbrances, in and to all
Inventions. The Inventions shall be the sole property of the
Company, whether or not copyrightable or patentable. In
addition, Employee agrees to maintain adequate and current
written records on the development of all Inventions, which
shall also remain the sole property of the Company. Employee
understands that "Inventions" means all ideas, processes,
inventions, technology, designs, formulas, discoveries,
patents, copyrights, and trademarks, and all improvements,
rights, and claims related to the foregoing, that are
conceived, developed, or reduced to practice by Employee alone
or with others using confidential and/or proprietary
information of the Company. If, in the course of Employee's
employment, with the Company, Employee incorporated into
Company property an invention owned by Employee or in which
Employee has an interest, the Company is granted a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide
license to make, modify, use and sell Employee's invention as
part of and in connection with the Company property.
16. Cooperation. Employee agrees to fully cooperate with Company in all
matters relating to the winding up of pending work on behalf of Company and the
orderly transfer of work to other employees of the Company following the Final
Termination Date and thereafter. Employee shall also cooperate in the resolution
of any dispute, including litigation of any action, involving the Company that
relates in any way to Employee's activities while employed by Company. In the
event that Employee performs services at the Company's request under this
Section 16, Company shall pay Employee for his services at an hourly rate of
$200.00 per hour, and shall pay Employee's out of pocket expenses incurred in
connection with his services. Unless otherwise agreed to by the parties,
Employee's services to the Company under this Section 16 shall not exceed a
total of forty (40) hours. The terms and conditions of this Section 16 shall not
apply to the Company's defense and/or indemnification of Employee with respect
to the Indemnified Claims under Section 14 of this Agreement.
17. Nondisruption. Employee agrees not to make any negative,
disparaging, disruptive or damaging statements, comments or remarks to any third
party concerning Company or its business, parents, subsidiaries, affiliates,
owners, partners, employees, or management. Company agrees to inform the current
members of its Board of Directors, executive officers and its newly appointed
Chief Executive Officer not to make any negative, disparaging disruptive or
damaging statements, comments or remarks to any third party concerning the
Employee. However, the Employee agrees that the Company is not responsible or
liable for comments made by other employees of the Company. In response to
inquiries about Employee from individuals outside of Company, Company's official
response shall be: Employee chose to resign for personal and family reasons. In
addition, the Company may refer inquiries about Employee to the Company's
official press release regarding Employee's resignation, a copy of which is
attached hereto as Exhibit A.
18. Nonadmission of Violation. This Agreement is not, and shall not be
construed as, an admission by Company of any violation of its policies or
procedures, or of any local, state or federal law or regulation.
19. Complete Agreement. This Agreement constitutes the full and entire
agreement and understanding of the parties. This Agreement supersedes and
replaces all prior negotiations and all agreements, proposed or otherwise,
between the parties, whether written or oral, concerning the subject matters
hereof. This Agreement also supersedes, replaces and terminates as null and void
all prior employment and severance agreements between Employee and the Company.
All such prior negotiations and agreements are merged into this Agreement. This
Agreement does not, however, affect or limit the parties' past or ongoing
respective rights and responsibilities under any applicable stock option
agreement which provides for disposition of stock which Employee may hold in the
Company. The terms and
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conditions contained herein shall inure to the benefit of, and be binding upon,
the heirs, representatives, assigns and successors-in-interest of the parties.
This is an integrated document.
20. Severability of Invalid Provisions. If any provision or portion of
this Agreement or the application thereof is held by a court of competent
jurisdiction or arbitrator to be invalid, unlawful or unenforceable, the
remaining provisions or portions of provisions of this Agreement shall remain in
full force and effect. Such invalidity shall not affect other provisions or
applications of the Agreement which can be given effect without the invalid
provisions or applications and to this end the provisions of this Agreement are
declared severable.
21. Choice of Law. Except for claims relating to trade secrets, any
dispute between the parties relating in any way to Employee's employment, the
termination of that employment or this Agreement, including, without limitation,
the formation, implementation, or termination thereof shall be resolved by
arbitration before a single arbitrator in New York, New York, according to the
commercial rules of the American Arbitration Association. The parties also agree
that prior to commencing any arbitration proceedings, as provided above, the
parties shall first attempt to resolve any dispute between or among them through
mediation with the assistance of a mediator selected by or agreeable to the
parties to the dispute. The costs and expense of arbitration and mediation shall
be shared equally by the parties to the arbitration and/or mediation, regardless
of which party prevails. The rights and obligations of the parties hereunder,
including any agreement to arbitrate and the law to be applied in the
arbitration shall be construed and enforced in accordance with and governed by
the law of the United States to the extent applicable and otherwise the laws of
the State of Delaware, without giving effect to principles of conflicts of law.
22. Joint Preparation of Agreement. This Agreement is deemed to have
been drafted jointly by the parties. Hence, in any construction to be made of
this Agreement, the provisions of the Agreement shall not be construed against
any party on the basis that the party was the drafter.
23. Waiver of Breach. No waiver, amendment or modification of this
Agreement shall be effective unless in writing and signed by the party against
whom the waiver, amendment or modification is sought to be enforced. No waiver
of any term, condition, breach or default of this Agreement shall be construed
as a waiver of any other term, condition, breach or default. Failure to enforce
any breach or default of this agreement shall not be a waiver of that breach or
default or any other breach or default of this Agreement.
24. Further Executions. All parties agree to cooperate fully and to
execute any and all supplementary documents and to take all additional actions
that may be necessary or appropriate to give full force to the basic terms and
intent of this Agreement and which are not inconsistent with its terms.
25. Headings. The use of headings in this Agreement is only for ease of
reference and the headings have no effect and are not to be considered a part or
term of this Agreement.
26. Each Party to Bear Own Costs. Except as provided herein, the
parties agree that each party shall be responsible for the payment of its own
costs, attorneys' fees, and all other expense in connection with the negotiation
of this Agreement.
27. Counterparts. This Agreement may be executed in counterparts,
provided, however, that this Agreement shall not be binding or effective to or
against any party hereto until the Effective date.
28. Further Acknowledgments. Employee further acknowledges that: (a)
Employee has read this Agreement; (b) Employee has been provided a full and
ample opportunity to study it; (c) Employee hereby is advised in writing to
consult with an attorney prior to signing this Agreement; (d) Employee has been
advised that Employee has twenty-one (21) days from the date
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this Agreement is presented to Employee in which to consider this Agreement and
whether Employee will enter into it, although Employee may, in the exercise of
Employee's discretion, sign or reject this Agreement at any time before the
twenty-one (21) day period expires; (e) Employee has seven (7) days following
execution of this Agreement to revoke the Agreement by delivering timely notice
of Employee's revocation to the President of Company; (f) this Agreement shall
not become effective or enforceable and no funds shall be exchanged until the
seven (7) day revocation period has expired; (g) Employee enters into this
agreement based upon Employee's own knowledge and judgment and not in reliance
on any representations or promises of Company other than those contained in this
Agreement; (h) Employee understands that if any facts or matters upon which
Employee has relied in entering into this Agreement shall hereinafter prove to
be otherwise, this Agreement shall nevertheless remain in full force and effect;
and (j) Employee is signing this Agreement voluntarily, without coercion, and
with full knowledge that it is intended, to the maximum extent permitted by law,
as a complete and final release and waiver of any and all claims.
In Witness Whereof, the parties have duly executed this Agreement as of
the date first written above.
Stuart Entertainment, Inc.. Employee
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx, President Xxxxxx X. Xxxxxx
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