EMPLOYMENT AGREEMENT
EXHIBIT 10.1
EMPLOYMENT AGREEMENT (“Agreement”) executed April 3, 2006 but effective as of February 20,
2006 (the “Effective Date”) between XXXXXX INTERACTIVE INC., a Delaware corporation (“Company”),
and XXXXX X. XXXXX (“Executive”).
This Agreement amends, restates, and replaces in its entirety the Employment Agreement between
the Company and Executive dated as of January 1, 2004 (the “Prior Agreement”); provided, however,
that all rights of Executive to payments and benefits under Section 3 of the Prior Agreement
accrued but unpaid as of the Effective Date shall survive execution of this Agreement. This
Agreement does not modify the terms of any stock option agreements between Company and Executive in
effect on the Effective Date, which stock option agreements shall remain unchanged and in full
force and effect according and subject to the terms contained therein.
1. CAPACITY AND DUTIES
1.1 Employment; Acceptance of Employment. Company hereby employs Executive and
Executive hereby accepts employment by Company for the period and upon the terms and conditions
hereinafter set forth.
1.2 Capacity and Duties.
(a) Executive shall serve as the Executive Vice President and Chief Operations Officer,
including among his responsibilities those of chief information officer. Executive shall perform
duties and shall have authority as may from time to time be specified by the Chief Executive
Officer and the Board of Directors of Company (the “Board”). Executive’s position and duties may
be changed from time to time by the Chief Executive Officer and the Board; provided, however, that
Executive’s position, authority, duties, and responsibilities shall be no less senior and executive
in nature than those of Executive Vice President and Chief Operations Officer. Executive shall
perform his duties for Company principally at Company’s executive offices, presently in Rochester,
New York, provided, however, that Executive acknowledges and agrees that travel to Company’s and
its affiliates’ various offices, and to other locations in furtherance of Company’s business, will
be required in connection with the performance of Executive’s duties hereunder. Executive will
report to the Chief Executive Officer of the Company. Notwithstanding the foregoing, for so long
as Xxxxxxx X. Xxxxx serves as Executive Vice President of the Company, Executive will report to Xx.
Xxxxx with respect to Executive’s responsibilities as chief information officer and to the Chief
Executive Officer with respect to all other of his responsibilities. Upon retirement of Xxxxxxx X.
Xxxxx, Executive will report exclusively to Chief Executive Officer.
(b) Executive shall devote full time efforts to the performance of Executive’s duties
hereunder, in a manner that will faithfully and diligently further the business and interests of
Company.
(c) Executive acknowledges that Company’s reputation is important in the continued success of
its business, and agrees that he will not discuss or comment in such a manner as may adversely
impact the reputation or public perception, or otherwise disparage,
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Company or its officers, employees, or directors in any manner; provided, however, that
Executive may make such disclosures as may be required by law. Company acknowledges that
Executive’s reputation is important to his continued success. Company agrees that it will not, and
that it will use all reasonable efforts to cause its officers, employees, and directors not to,
defame, disparage, or otherwise discuss or comment about Executive in such a manner as may
adversely impact his reputation or public perception; provided, however, that Company may make such
disclosures as may be required by law.
2. TERM OF EMPLOYMENT
2.1 Term. The term of Executive’s employment hereunder, for all purposes of this
Agreement, shall commence on the Effective Date (the “Commencement Date”) and continue through and
including the earliest to occur of (i) June 30, 2007, if and as further extended to subsequent June
30ths as provided in this Section 2.1, (ii) the date on which Executive dies, and (iii) the date on
which either the Company or Executive terminates Executive’s employment for any reason (the
"Termination Date”). Except as hereinafter provided, on June 30, 2007 this Agreement shall be
automatically extended for an additional one-year term, and if so extended shall be automatically
extended for successive additional one-year terms, unless either the Executive or Company shall
have given the other written notice of nonrenewal of this Agreement at least three (3) months prior
to June 30, 2007, or if applicable any one-year extension term then in effect. If written notice
of nonrenewal is given as provided above, Executive’s employment under this Agreement shall
terminate on June 30, 2007, or if the term of this Agreement has automatically renewed, on the June
30 immediately following the date of the non-renewal notice.
3. COMPENSATION
3.1 Base Compensation. As compensation for Executive’s services, Company shall pay to
Executive base compensation in the form of salary (“Base Compensation”) in the amount of $300,000
per annum. The salary shall be payable in periodic installments in accordance with Company’s
regular payroll practices for its executive personnel at the time of payment, but in no event less
frequently than monthly. The Compensation Committee of the Board shall review Base Compensation
periodically for the purpose of determining, in its sole discretion, whether Base Compensation
should be adjusted; provided, however, that Executive’s Base Compensation shall not be less than
$300,000.
3.2 Performance Bonus. As additional compensation for the services rendered by
Executive to Company Executive shall be paid a performance bonus (“Performance Bonus") payable in
full at the same time as payment of other executive bonuses by the Company (generally targeted for
payment within ninety (90) days after the end of the relevant fiscal year of the Company). The
Performance Bonus award criteria and amounts shall be those established on an annual basis by the
Compensation Committee of the Board of Directors of the Company based upon performance guidelines
established for executive officers of the Company; provided, however, that the target bonus for
Executive shall be a minimum of $100,000 for FY 2006 and FY 2007 provided that performance
guidelines are met. No bonus will be due in the event that award criteria established by the
Compensation Committee are not met.
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3.3 Employee Benefits. Executive shall be entitled to participate in such of
Company’s employee benefit plans and benefit programs, including medical, hospitalization, dental,
disability, accidental death and dismemberment and travel accident plans and programs, as may from
time to time be provided by Company for its senior executives generally. In addition, Executive
shall be eligible to participate in all pension, retirement, savings and other employee benefit
plans and programs maintained from time to time by Company for the benefit of its senior executives
generally. Company shall have no obligation, however, to maintain any particular program or level
of benefits referred to in this Section 3.3.
3.4 Life Insurance Benefit. During the Term, the Company shall provide Executive with
a term life insurance policy in the amount of $250,000 in addition to term life insurance benefits
provided for senior executives generally.
3.5 Vacation. Executive shall be entitled to the normal and customary amount of paid
vacation provided to senior executive officers of the Company, but in no event less than 20 days
during each 12-month period. Any vacation days that are not taken in a given 12-month period shall
accrue and carry over from year to year up to a maximum aggregate of 5 days. The Executive may be
granted leaves of absence with or without pay for such valid and legitimate reasons as the Board in
its sole and absolute discretion may determine, and is entitled to the same sick leave and holidays
provided to other executive officers of Company.
3.6 Expense Reimbursement. Company shall reimburse Executive for all reasonable and
documented expenses incurred by him in connection with the performance of Executive’s duties
hereunder in accordance with its regular reimbursement policies as in effect from time to time.
3.7 Withholding. All payments under this Agreement shall be subject to any required
withholding of Federal, state and local taxes pursuant to any applicable law or regulation.
4. TERMINATION OF EMPLOYMENT
4.1 Accrued Obligations. For purposes of this Agreement:
(a) “Accrued Base Obligations” shall mean amounts for Base Compensation, expense
reimbursement, and employee benefits which have accrued, vested, and are unpaid as of the
Termination Date.
(b) “Accrued Bonus Obligations” shall mean:
(i) any unpaid Performance Bonus earned for any fiscal year ending before the Termination
Date, and
(ii) for the year in which the Termination Date occurs, a prorated Performance Bonus for the
partial-year period ending before the Termination Date if the Termination Date occurs in the last
six months of the applicable fiscal year calculated by annualizing the short period before
termination, and no prorated Performance Bonus if the Termination Date occurs in the first six
months of the applicable fiscal year.
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(c) Accrued Base Obligations shall be paid within thirty (30) days after the Termination Date,
and Accrued Bonus Obligations shall be paid on the date on which they would have been paid under
this Agreement absent the occurrence of the Termination Date.
4.2 Termination Procedures. Except as otherwise provided in this Agreement, any
termination of Executive’s employment by the Company or by Executive (other than termination
pursuant to death) shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and, if applicable, shall
set forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated.
4.3 Death of Executive. If Executive dies prior to a Termination Date that otherwise
occurs, Company shall not thereafter be obligated to make any further payments hereunder other than
amounts for Accrued Base Obligations and Accrued Bonus Obligations.
4.4 Disability of Executive. If Executive is permanently disabled (as defined in
Company’s long-term disability insurance policy then in effect), then the Company shall have the
right to terminate Executive’s employment upon 30 days’ prior written notice to Executive at any
time during the continuation of such disability (“Disability”). In the event Executive’s
employment is terminated for Disability in accordance with this Section 4.4, Company shall
not be obligated to make any further payments hereunder except for Accrued Base Obligations
4.5 Termination for Cause.
(a) Executive’s employment hereunder shall terminate immediately upon a Notice of Termination
from the Company that Executive is being terminated for Cause (as defined herein), in which event
Company shall not thereafter be obligated to make any further payments hereunder other than Accrued
Base Obligations and Accrued Bonus Obligations.
(b) “Cause” shall be limited to the following:
(i) willful failure to substantially perform Executive’s duties as described in Section 1.2
after demand for substantial performance is delivered by Company in writing that specifically
identifies the manner in which Company believes Executive has not substantially performed
Executive’s duties and Executive’s failure to cure such non-performance within ten (10) days after
receipt of the Company’s written demand; provided, however, that a failure to perform such duties
during the remedy period set forth in subsection (i) of the definition of Good Reason set forth in
Section 4.7 hereof, following the issuance of a Notice of Termination (as herein defined) by
Executive for Good Reason, shall not be Cause unless an arbitrator acting pursuant to Section 6.1
hereof finds Executive to have acted in bad faith in issuing such Notice of Termination;
(ii) willful conduct that is materially and demonstrably injurious to Company or any of its
subsidiaries, but not including good faith conduct taken without intention to injure the Company or
its subsidiaries that, at the time engaged in, could not reasonably be expected to be more likely
than not to be materially injurious to the Company; or
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(iii) conviction or plea of guilty or nolo contendere to a felony or to any
other crime which involves moral turpitude or, if not including moral turpitude, provided the act
giving rise to such conviction or plea is materially and demonstrably injurious to the Company or
any of its subsidiaries;
(iv) material violation of Section 5 of this Agreement, or material violation of Company
polices set forth in Company manuals or written statements of policy provided in the case of
violation of policy that such violation is either materially and demonstrably injurious to Company
or, if curable, continues for more then three (3) days after written notice thereof is given to
Executive by the Company; and
(v) material breach of any material provision of this Agreement by Executive, which breach
continues for more than ten days after written notice thereof is given by the Company to Executive.
4.6 Termination Without Cause or by Executive for Good Reason.
(a) The Company reserves the right to terminate Executive’s employment at any time. If,
however, a Termination Date occurs due to Company terminating Executive without Cause or Executive
terminating for Good Reason, then Company shall have no further obligations under this Agreement
except that Company shall pay to Executive the amounts shown in Section 4.6(b). Section 4.6(b)
shall not apply to (i) termination in the ordinary course on any applicable June 30 if the term of
this Agreement is not automatically renewed, which circumstance is covered by Section 4.6(c)) (ii)
termination for Cause which circumstance is covered by Section 4.5, (iii) termination by Executive
without Good Reason which circumstance is covered by Section 4.7, (iv) termination by reason of
death which circumstance is covered by Section 4.3, or (v) termination by reason of Disability
which circumstance is covered by Section 4.4.
(b) If Company terminates Executive without Cause or Executive terminates with Good Reason,
then the Company shall pay to Executive:
(i) the Accrued Base Obligations through the Termination Date, payable promptly after the
Termination Date,
(ii) any unpaid Performance Bonus earned for any fiscal year ended before the Termination Date
payable the later of (A) the date on which such Performance Bonus would be paid absent termination
and (B) the date 30 days after the Termination Date,
(iii) the Performance Bonus, if any is earned, for the fiscal year in which the Termination
Date occurs, allocable to and prorated for the period prior to termination, calculated by
annualizing any short period before termination, calculated and payable when Performance Bonuses
for the applicable year are paid to all other Company senior executives,
(iv) Base Compensation through and including the date one year after the Termination Date,
payable at the same times as paid under Section 3.1; and
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(v) benefits as required by Section 3.3 of this Agreement during the same period that Base
Compensation is due under Section 4.6(b)(iv); provided, however, if Executive, Executive’s spouse
or Executive’s dependents are ineligible to participate in the Company benefit programs under
Section 3.3, the Company shall arrange to provide Executive, Executive’s spouse and Executive’s
dependents with the economic equivalent of such benefits which they otherwise would have been
entitled to receive, and further provided that such benefits become secondary to primary coverage
upon the date or dates Executive receives coverage and benefits which are substantially similar,
taken as a whole, without waiting period or pre-existing condition limitations, under the plans and
programs of a subsequent employer.
(c) If this Agreement is terminated in the ordinary course on any applicable June 30 because
of a non-renewal notice given by the Company under Section 2.1, then Company shall have no further
obligations under this Agreement except that Company shall pay to Executive the payments to which
the Executive would be entitled under Section 4.6(b)(i), (ii), (iii), (iv), and (v). If this
Agreement is terminated in the ordinary course on any applicable June 30 because of a non-renewal
notice given by the Executive under Section 2.1, then Company shall have no further obligations
under this Agreement except that Company shall pay to Executive the payments to which the Executive
would be entitled under Section 4.6(b)(i), (ii), and (iii).
4.7 Termination by Executive without Good Reason. In the event Executive’s employment
is voluntarily terminated by Executive without Good Reason (and Executive may terminate this
Agreement without Good Reason upon fifteen (15) days prior notice), Company shall not be obligated
to make any further payments to Executive hereunder other than Accrued Base Obligations and Accrued
Bonus Obligations through the Termination Date.
"Good Reason” shall mean the following:
(i) material breach of Company’s obligations hereunder, including any assignment of duties not
included within the Executive’s duties described in Section 1.2 unless previously agreed to in
writing by Executive, provided that Executive shall have given reasonably specific written notice
thereof to Company, and Company shall have failed to remedy the circumstances within sixty (60)
days thereafter;
(ii) any decrease in Executive’s salary as it may have increased during the term of this
Agreement, except for decreases that are in conjunction with decreases in executive salaries by the
Company generally and that do not result in a decrease in Executive’s annual salary below $300,000
per annum;
(iii) the failure of Executive to continue to be appointed to the position of Executive Vice
President and Chief Operations Officer; or
(iv) the failure of any successor in interest of the Company to be bound by the terms of this
Agreement in accordance with Section 6.4 hereof.
Notwithstanding subsections (i) and (iii) above, after a Change of Control , Good Reason shall not
include a change of title, reporting line, responsibilities, and duties so long as such changed
title, reporting line, and reassignment of executive duties are at a level commensurate with the
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level of participation of the Company in the controlling person (such as, for example, executive
duties at a divisional, subsidiary, or group level, if the Company becomes a division, subsidiary,
or group within the controlling person), or assignment of other duties not materially inconsistent
with duties appropriate for a past executive vice president and chief operations officer, provided
that following such Change in Control, Executive remains the highest ranking operations officer or
reports directly to the highest ranking employee of such division, subsidiary or group within the
controlling person.
Executive must provide a Notice of Termination to the Company that he is intending to
terminate his employment for Good Reason within one hundred and twenty (120) days after Executive
has actual knowledge of the occurrence of the latest event he believes constitutes Good Reason,
which termination notice shall specify a termination date within thirty (30) days after the date of
such notice except for termination under subsection (i) in which case the termination date shall be
as provided in such subsection. Executive’s right to terminate Executive’s employment hereunder
for Good Reason shall not be affected by Executive’s subsequent Disability provided that the notice
of intention to terminate is given prior to the onset of such Disability. Subject to compliance by
Executive with the notice provisions of this Section 4.7, Executive’s continued employment prior to
terminating employment for Good Reason shall not constitute consent to, or a waiver of rights with
respect to, any act or failure to act constituting Good Reason. In the event Executive delivers to
the Company a Notice of Termination for Good Reason, upon request of the Board Executive agrees to
appear before a meeting of the Board called and held for such purpose (after reasonable notice) and
specify to the Board the particulars as to why Executive believes adequate grounds for termination
for Good Reason exist. No action by the Board, other than the remedy of the circumstances within
the time periods specified in this Section 4.7, shall be binding on Executive.
4.8 Mitigation. Executive shall not be required to mitigate amounts payable under
this Section 4 by seeking other employment or otherwise, and there shall be no offset against
amounts due Executive under this Agreement on account of subsequent employment except as
specifically provided herein.
4.9 Change of Control.
(a) If Executive is terminated without Cause, a Termination Date occurs on a June 30 due to
non-renewal by the Company of the term of this Agreement under Section 2.1, or Executive terminates
his employment for Good Reason, in each such case during the one-year period following a Change of
Control (as defined below), then in addition to payments and benefits to which Executive is
entitled under Section 4.6, Executive also shall receive reimbursement for reasonable (in the
discretion of the Company) and actual expenses incurred by Executive for six months of
out-placement services.
(b) If a Change of Control shall have occurred:
(i) after such Change of Control Executive’s entitlement to Bonus under Section 3.2 may be
modified by the new controlling Person in a reasonable manner (not to
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be less favorable to the Executive than the manner in which bonus calculations are modified
for other executive officers) so that such Bonus is calculated with reference to a
performance-based bonus plan provided by the new controlling Person; and
(ii) after such Change of Control Executive’s entitlement to payments and benefits under
Sections 3.3 and 3.5 may be modified by the new controlling Person to entitlement to those benefits
generally provided to executives of the new controlling Person.
(c) A “Change of Control” shall be deemed to have occurred if:
(i) the following individuals cease for any reason to constitute a majority of the number of
directors then serving as directors of the Company: individuals who, on the date hereof,
constitute the Board of Directors of the Company and any new director (other than a director whose
initial assumption of office is in connection with the settlement of an actual or threatened
election contest, including but not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board of Directors of the Company or
nomination for election by the Company’s stockholders was approved or recommended by a vote of at
least a majority of the directors then still in office who either were directors on the date hereof
or whose appointment, election or nomination for election was previously so approved or
recommended;
(ii) the stockholders of the Company approve a complete liquidation or dissolution of the
Company, except in connection with a recapitalization or other transaction which does not otherwise
constitute a Change of Control for purposes of subsection (iii) or (iv) below;
(iii) any consolidation or merger of the Company occurs; or
(iv) any sale, lease, exchange or other transfer (in one transaction or a series of related
transactions) of assets accounting for fifty percent (50%) or more of total assets, fifty percent
(50%) or more of the total revenues, or stock accounting for fifty percent (50%) or more of voting
power, of the Company occurs;
other than, in case of either subsection (iii) or (iv), a transaction in which immediately
following such transaction, (x) more than fifty percent (50%) of the combined voting power of the
then outstanding voting securities of the surviving entity in the case of a merger or consolidation
or acquiring entity in the case of a transfer (in each case, the “Surviving Entity”) entitled to
vote generally in the election of directors (or other determination of governing body) is then
beneficially owned (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) by
all or substantially all of the individuals and entities who were the owners of Company common
stock immediately prior to such transaction in substantially the same proportion, as among
themselves, as their ownership of such common stock immediately prior to such transaction, or (y) a
majority of the directors (or other governing body) of the Surviving Entity consists of members of
the Board of Directors of the Company in office during the twelve months preceding the applicable
transaction
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(d) If all or any portion of the payments or other benefits paid or payable to Executive under
this Agreement and under any other plan, program or agreement of the Company or its affiliates, in
each case, however, in connection with or after a Change of Control, are determined to constitute
an excess parachute payment within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended, and as it may be amended on or after the date of this Agreement (the “Code”), and
results in the imposition on Executive of an excise tax under Section 4999 of the Code, then, in
addition to any other benefits to which Executive is entitled under this Agreement, Xxxxxx shall
pay to Executive an amount equal to the sum of (i) the excise taxes payable by Executive by reason
of receiving excess payments; and (ii) a gross-up amount necessary to offset any and all applicable
federal, state, and local excise, income, or other taxes incurred by Executive by reason of
Xxxxxx’x payment of the excise tax described in (i) above (but not including any additional amount
to offset any taxes on the gross-up amount paid pursuant to this sub clause (ii)).
5. NON-COMPETITION AND CONFIDENTIALITY
5.1 Non-Competition.
(a) During the period that Executive is employed by the Company, and for a period of one year
after the Termination Date (the “Non-Competition Period”), Executive shall not, directly or
indirectly, own, manage, operate, join, control, participate in, invest in or otherwise be
connected or associated with, in any manner, including, without limitation, as an officer,
director, employee, distributor, independent contractor, independent representative, partner,
consultant, advisor, agent, proprietor, trustee or investor, any Competing Business (defined
below); provided, however, that ownership of 4.9% or less of the stock or other securities of a
corporation, the stock of which is listed on a national securities exchange or is quoted on the
NASDAQ Stock Market’s National Market, shall not constitute a breach of this Section 5, so long as
the Executive does not in fact have the power to control, or direct the management of, or is not
otherwise engaged in activities with, such corporation.
5.2 No Solicitation. During the Non competition Period, the Executive shall not,
directly or indirectly, including on behalf of, for the benefit of, or in conjunction with, any
other person or entity, (i) solicit, assist, advise, influence, induce or otherwise encourage in
any way, any employee of Company to terminate such employee’s relationship with Company for any
reason, or assist any person or entity in doing so, or employ, engage or otherwise contract with
any employee or former employee of Company in a Competing Business or any other business unless
such former employee shall not have been employed by Company for a period of at least one year and
no solicitation prohibited hereby shall have occurred prior to the end of such one-year period,
(ii) interfere in any manner with the relationship between any employee and Company, or (iii)
contact, service or solicit any existing clients, customers or accounts of Company on behalf of a
Competing Business, either as an individual on Executive’s own account, as an investor, or as an
officer, director, partner, joint venturer, consultant, employee, agent or salesman of any other
person or entity.
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5.3 Confidential Information.
(a) “Confidential Information” shall mean all proprietary or confidential records and
information, including, but not limited to, development, marketing, purchasing, organizational,
strategic, financial, managerial, administrative, production, distribution and sales information,
distribution methods, data, specifications, technologies, methods, and processes (including the
Transferred Property as hereinafter defined) presently owned or at any time hereafter developed by
Company, or its agents, consultants, or otherwise on its behalf, or used presently or at any time
hereafter in the course of the business of Company, that are not otherwise part of the public
domain.
(b) Executive hereby sells, transfers and assigns to Company, or to any person or entity
designated by Company, all of Executive’s entire right, title and interest in and to all
inventions, ideas, methods, developments, disclosures and improvements (the “Inventions”), whether
patented or unpatented, and copyrightable material, and all trademarks, trade names, all goodwill
associated therewith and all federal and state registrations or applications thereof, made, adopted
or conceived by solely or jointly, in whole or in part prior to the Termination Date which (i)
relate to methods, apparatus, designs, products, processes or devices sold, leased, used or under
construction or development by Company or (ii) otherwise relate to or pertain to the business,
products, services, functions or operations of the Company (collectively, the “Transferred
Property”). Executive shall make adequate written records of all Inventions, which records shall
be Company’s property and shall communicate promptly and disclose to Company, in such forms Company
requests, all information, details and data pertaining to the aforementioned Inventions. Whether
during the term of this Agreement or thereafter, Executive shall execute and deliver to Company
such formal transfers and assignments and such other papers and documents as may be required of
Executive to permit Company, or any person or entity designated by Company, to file and prosecute
patent applications (including, but not limited to, records, memoranda or instruments deemed
necessary by Company for the prosecution of the patent application or the acquisition of letters
patent in the United states, foreign counties or otherwise) and, as to copyrightable material, to
obtain copyrights thereon, and as to trademarks, to record the transfer of ownership of any federal
or state registrations or applications.
(c) All Confidential Information is considered secret and will be disclosed to the Executive
in confidence, and Executive acknowledges that, as a consequence of Executive’s employment and
position with Company, Executive may have access to and become acquainted with Confidential
Information. Except in the performance of Executive’s duties as an employee of Company, Executive
shall not, during the term and at all times thereafter, directly or indirectly for any reason
whatsoever, disclose or use any such Confidential Information. All records, files, drawings,
documents, equipment and other tangible items (whether in electronic form or otherwise), wherever
located, relating in any way to or containing Confidential Information, which Executive has
prepared, used or encountered or shall in the future prepare, use or encounter, shall be and remain
Company’s sole and exclusive property and shall be included in the Confidential Information. Upon
termination of this Agreement, or whenever requested by Company, Executive shall promptly deliver
to Company any and all of the Confidential Information and copies thereof, not previously delivered
to Company, that may be in the possession or under the control of the Executive. The foregoing
restrictions shall not apply to
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the use, divulgence, disclosure or grant of access to Confidential Information to the extent,
but only to the extent, (i) expressly permitted or required pursuant to any other written agreement
between Executive and Company, (ii) such Confidential Information has been publicly disclosed (not
due to a breach by the Executive of Executive’s obligations hereunder, or by breach of any other
person, of a fiduciary or confidential obligation to Company) or (iii) the Executive is required to
disclose Confidential Information by or to any court of competent jurisdiction or any governmental
or quasi-governmental agency, authority or instrumentality of competent jurisdiction, provided,
however, that the Executive shall, prior to any such disclosure, immediately notify Company of such
requirements and provided further, however, that the Company shall have the right, at its expense,
to object to such disclosures and to seek confidential treatment of any Confidential Information to
be so disclosed on such terms as it shall determine.
5.4 Consideration for Section 5 Covenants. In consideration of the covenants
contained in this Section 5, the Company is willing to incur the payment and related obligations
under this Agreement, including in particular and without limitation those obligations under
Section 4.6(b)(iv). Executive acknowledges and agrees that the Company’s entry into this Agreement
and its incurrence of the related payment and other obligations hereunder are fair and adequate
consideration for the Executive’s obligations under this Section 5, and that the Company has
advised Executive that it would not bind itself in advance to the obligations hereunder but for
Executive’s agreement to this Section 5. In this regard, the Executive understands that the
provisions of this Section 5 may limit Executive’s ability to earn a livelihood in a business
similar or related to the business of Company, but nevertheless agrees and acknowledges that (i)
the provisions of Section 5 are reasonable and necessary for the protection of Company, and do not
impose a greater restraint than necessary to protect the goodwill or other business interest of
Company, (ii) such provisions contain reasonable limitations as to the time and the scope of
activity to be restrained, and (iii) the Company’s advance agreement to make payments under the
various circumstances set forth in this Agreement provide Executive with benefits adequate to fully
compensate Executive for any lost opportunity due to the operation of Section 5. In consideration
of the foregoing and in light of Executive’s education, skills and abilities, Executive agrees that
all defenses by Executive to the strict enforcement of such provisions are hereby waived by
Executive.
5.5 Acknowledgement; Remedies; Survival of this Agreement.
(a) Executive acknowledges that violation of any of the covenants and provisions set forth in
Section 5 of this Agreement would cause Company irreparable damage and agrees that Company’s
remedies at law for a breach or threatened breach of any of the provisions of this Section 5 would
be inadequate and, in recognition of this fact, in the event of a breach or threatened breach by
Executive of any of the provisions of this Agreement, it is agreed that, in addition to the
remedies at law or in equity, Company shall be entitled, without the posting of a bond, to
equitable relief in the form of specific performance, a temporary restraining order, temporary or
permanent injunction, or any other equitable remedy which may then be available for the purposes of
restraining Executive from any actual or threatened breach of such covenants. Without limiting the
generality of the foregoing, if Executive breaches or threatens to breach this Section 5 hereof,
such breach or threatened breach will entitle Company (i) to terminate its obligations to make
further payments otherwise required under this Agreement, and
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(ii) to enjoin Executive from disclosing any Confidential Information to any Competing
Business, to enjoin any Competing Business from retaining Executive or using any such Confidential
Information, and to enjoin Executive from rendering personal services to or in connection with any
Competing Business. The rights and remedies of the parties hereto are cumulative and shall not be
exclusive, and each such party shall be entitled to pursue all legal and equitable rights and
remedies and to secure performance of the obligations and duties of the other under this Agreement,
and the enforcement of one or more of such rights and remedies by a party shall in no way preclude
such party from pursuing, at the same time or subsequently, any and all other rights and remedies
available to it.
(b) The provisions of this Section 5 shall survive the termination of Executive’s employment
with Company.
6. MISCELLANEOUS
6.1 Arbitration. Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Rochester, New York, in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator’s award in any court having jurisdiction. The parties consent to
the authority of the arbitrator, if the arbitrator so determines, to award fees and expenses
(including legal fees) to the prevailing party in the arbitration. Notwithstanding the foregoing,
Company shall be entitled to enforce the provisions of Section 5 hereof through proceedings brought
in a court of competent jurisdiction as contemplated by Section 6.7 hereof.
6.2 Severability; Reasonableness of Agreement. If any term, provision or covenant of
this Agreement or part thereof, or the application thereof to any person, place or circumstance
shall be held to be invalid, unenforceable or void by an arbitrator or court of competent
jurisdiction, the remainder of this Agreement and such term, provision or covenant shall remain in
full force and effect, and any such invalid, unenforceable or void term, provision or covenant
shall be deemed, without further action on the part of the parties hereto, modified, amended and
limited, and the arbitrator or court shall have the power to modify, amend and limit any such term,
provision or covenant, to the extent necessary to render the same and the remainder of the
Agreement valid, enforceable and lawful.
6.3 Key Employee Insurance. Company in its sole discretion shall have the right at
its expense to purchase insurance on the life of Executive, in such amounts as it shall from time
to time determine, of which Company shall be the beneficiary. Executive shall submit to such
physical examinations as may reasonably be required and shall otherwise cooperate with Company in
obtaining such insurance.
6.4 Assignment; Benefit. This Agreement shall not be assignable by Executive, other
than Executive’s rights to payments or benefits hereunder, which may be transferred only by will or
the laws of descent and distribution. Upon Executive’s death, this Agreement and all rights of
Executive hereunder shall inure to the benefit of and be enforceable by Executive’s beneficiary or
beneficiaries, personal or legal representatives, or estate, to the extent any such person succeeds
to Executive’s interests under this Agreement. No rights or obligations of Company under this
Agreement may be assigned or transferred except to any successor to the Company’s
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business
and/or assets (by merger, purchase of stock or assets, or otherwise) which, to the extent not
otherwise automatically provided by operation of law, expressly assumes and agrees to perform this
Agreement in the same manner and to the same extent that Company would be required to perform if no
such succession had taken place.
6.5 Notices. All notices hereunder shall be in writing and shall be deemed
sufficiently given (i) if hand-delivered, on the date of delivery, (ii) if sent by documented
overnight delivery service, on the first business day after deposit with such service for overnight
delivery, and (iii) if sent by registered or certified mail, postage prepaid, return receipt
requested, on the third business day after deposit in the U.S. mail, in each case addressed as set
forth below or at such other address for either party as may be specified in a notice given as
provided herein by such party to the other. Any and all service of process and any other notice in
any such action, suit or proceeding shall be effective against any party if given as provided in
this Agreement; provided that nothing herein shall be deemed to affect the right of any party to
serve process in any other manner permitted by law.
| (i) | If to Company: |
| Xxxxxx Interactive Inc. | ||||
| 000 Xxxxxxxxx Xxxxx | ||||
| Xxxxxxxxx, Xxx Xxxx 00000 | ||||
| Attention: Chief Executive Officer |
With Copies To:
| Xxxx Xxx Xxxxxxx, Esq. | ||||
| Xxxxxx Beach PLLC | ||||
| 00 Xxxxxxx Xxxx | ||||
| Xxxxxxxxx, Xxx Xxxx 00000 |
| (ii) | If to Executive: |
| Xxxxx X. Xxxxx | ||||
| 000 Xxxxxxxx Xxxxx | ||||
| Xxxxxxx, Xxx Xxxx 00000 |
6.6 Entire Agreement; Modification. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters contemplated herein and supersedes all prior
agreements and understandings with respect thereto. No amendment, modification, or waiver of this
Agreement shall be effective unless in writing. Neither the failure nor any delay on the part of
any party to exercise any right, remedy, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or of any other right, remedy, power, or privilege with
respect to such occurrence or with respect to any other occurrence.
6.7 Governing Law. This Agreement is made pursuant to, and shall be construed and
enforced in accordance with, the laws of the State of Delaware and the federal laws of the United
13
States of America, to the extent applicable, without giving effect to otherwise applicable
principles of conflicts of law. Subject to Section 6.1 of this Agreement, the parties hereto
expressly consent to the jurisdiction of any state or federal court located in the State of New
York, and to venue therein, and consent to the service of process in any such action or proceeding
by certified or registered mailing of the summons and complaint therein directed to Executive or
Company, as the case may be, at its address as provided in Section 6. hereof.
6.8 Prevailing Party. Should either party breach the terms of this Agreement, the
prevailing party who seeks to enforce the terms and conditions of this Agreement shall be entitled
to recover its attorneys fee and disbursements.
6.9 Headings; Counterparts; Interpretation. The headings of paragraphs in this
Agreement are for convenience only and shall not affect its interpretation.
This Agreement may be executed in two or more counterparts, each of which shall be deemed to
be an original and all of which, when taken together, shall be deemed to constitute the same
Agreement.
The Company and the Executive each acknowledge that it has been represented by legal counsel
in the negotiation and drafting of this Agreement, that this Agreement has been drafted by mutual
effort, and that no ambiguity in this Agreement shall be construed against either party as
draftsperson.
6.10 Further Assurances. Each of the parties hereto shall execute such further
instruments and take such other actions as the other party shall reasonably request in order to
effectuate the purposes of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date first above
written.
[Signature Page Follows]
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| XXXXXX INTERACTIVE INC. | ||||
By: |
/s/ Xxxxxxx X. Xxxxx | |||
| Xxxxxxx X. Xxxxx | ||||
| Chief Executive Officer | ||||
| /s/ XXXXX X. XXXXX | ||||
| XXXXX X. XXXXX | ||||
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