EMPLOYMENT AGREEMENT
Exhibit
10.3
EMPLOYMENT
AGREEMENT (the “Agreement’), dated as of January 1, 2007, between PRO SPORTS
& ENTERTAINMENT, INC., with its principal place of business at 000 Xxxxxxxx
Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the “Company”), and Xxxx Xxxxxx whose
address is PU Box, 1450, Xxxxxxxxxx, XX 00000 (“Executive”).
WITNESSETH:
WHEREAS,
the Company is engaged in the business of sports and entertainment event
ownership, television broadcasting of events, product merchandising, marketing,
operations, sales, agent, venue and corporate representation and consultancy
(the “Business”); and
WHEREAS,
the Company wishes to employ Executive, and Executive wishes to accept such
employment, on the terms and conditions set forth in this
Agreement.
NOW
THEREFORE, for and in consideration of the mutual covenants contained herein
and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT.
The
Company shall employee the Executive and Executive hereby accepts such
employment with the Company, upon the terms and conditions hereinafter set
forth
for the period beginning on January 1 2002 (the “Effective Date”) and ending on
the Termination Date determined pursuant to Section 4 (the “Employment
Term”).
2. POSITION
AND DUTIES.
(a) During
the Employment Term, the executive shall serve as the Chief Executive Officer
of
the Company and shall report to the Board of Directors of the Company or a
committee thereof. Subject to the direction and control of the Board of
Directors of the Company, Executive’s duties shall include principal
responsibility for formulation and implementation of the business policies
and
direction of the Company, employment decisions, financial decisions and
management and oversight of the day-to-day operation of the Business. In
addition, Executive shall perform such other duties requested by or pursuant
to
the lawful direction and control of the Board of Directors of the Company (or
a
committee thereof) including such services and duties normally commensurate
with
the position of Chief Executive Officer. The Executive acknowledges and agrees
that he owes a fiduciary duty of loyalty to the Company to discharge his duties
and otherwise act in a manner consistent with the best interests of the
Company.
(b) During
the Employment Term, the Executive shall devote his reasonable efforts and
all
of his working time, attention and energies to the performance of his duties
and
responsibilities under this Agreement (except for vacations to which he is
entitled pursuant to the terms of this Agreement, illness or incapacity or
activities which do not, in the sole judgment of the Board of Directors (or
a
committee thereof), interfere or conflict with his duties and responsibilities
in any material respect). During the Employment Term, Executive shall not engage
in any business activity which, in the judgment of the Board of Directors
(excluding the Executive if he should be a member of the Board of Directors
at
the time of such determination), conflicts with the duties of Executive
hereunder, whether or not such activity is pursued for gain, profit or other
pecuniary, advantage. Any material outside business activities of Executive,
including, without limitation, serving on the board of directors of any other
entity, must be approved by the Board of Directors of the Company (excluding
any
vote of the Executive) in advance.
(c) Within
ten (10) business days following the Effective Date, Executive shall be
appointed to serve as a member of the Company’s Board of Directors until the
next meeting of the Company’s stockholders at which directors are elected. The
Company agrees that at each meeting of the Company’s stockholders during the
Employment Term at which directors are elected and, to the extent applicable,
in
any proxy statement delivered to stockholders in connection with such meeting,
the Executive shall be named as a nominee for election to the Board of
Directors.
(d) The
Company confirms and agrees that, subject to any requisite approvals of the
Board of Directors and the reasonable oversight of the Board of Directors,
(i)
the Company’s offices shall be relocated to the Boston, Massachusetts
metropolitan area at a time that is reasonably convenient to the Executive
and
(ii) Executive shall be responsible for the details of such relocation, which
is
presently contemplated to occur within the first six months following the
Effective Date.
3. COMPENSATION
AND BENEFITS.
As
compensation in full for the services to be rendered by Executive under this
Agreement, the Company agrees to compensate Executive as follows:
(a) During
the Employment Term (unless earlier terminated as provided herein), the Company
shall pay, and Executive shall accept an annualized salary of not less than
Two
Hundred and Forty Thousand Dollars ($240,000) (“Base Salary”) payable in
accordance with the Company’s normal payroll practices and subject to any and
all necessary and legal payroll and other deductions. The Base Salary and
Executive’s performance will be reviewed by the Board of Directors of the
Company or a compensation committee of the Board of Directors at the end of
the
first year of the Employment Term. Effective on each yearly anniversary of
the
Effective Date during the Employment Term, Executive’s Base Salary shall be
increased by the percentage increase in the national Consumer Price Index for
the 12-month period preceding such anniversary date. Notwithstanding anything
to
the contrary contained in this Section 3(a), the compensation committee of
the Board of Directors will review Executive’s Base Salary on an annual basis to
consider appropriate merit-based increases to the Base Salary in excess of
the
Consumer Price Index adjustment described above.
(b) Simultaneously
with the commencement of the Employment Term and subject to the provisions
of
Section 5 of this Agreement, the Company shall pay Executive a signing
bonus of $100,000. (“Signing Bonus”).
(c) During
the Employment Term, Executive shall be entitled to receive an automobile
allowance of up to $650 per month.
(d) Executive
shall be entitled to receive one-time bonuses as follows: (i) a $250,000 bonus
shall be paid to Executive in the event of a Valuing Event (as defined below)
that causes the Company to be valued in excess of$100,000,000; and (ii) an
additional bonus of $500,000 shall be paid in the event of a valuing event
that
causes the Company to be valued in excess of $500,000,000. For purposes hereof,
a “Valuing Event” shall mean any of the following: (1) in the event that there
is a public trading market for the Company’s common stock and the aggregate
market capitalization of the Company, calculated based upon the average closing
price of the Company’s common stock in the public market over any twenty (20)
consecutive trading day period during the Employment Term, exceeds the
applicable valuation threshold, (2) any sale of assets, sale of equity by the
Company, merger, reorganization, or other transaction which results in all
of
the outstanding common stock of the Company being valued in excess of the
applicable valuation threshold, or (3) any material equity investment in the
Company that values the outstanding capital stock of the Company (on a
pre-investment basis) at an amount in excess of the applicable valuation
threshold. In addition to one-time bonuses described above, the Board of
Directors (or the compensation committee thereof) may elect to grant Executive
a
discretionary, performance-based bonus and shall meet annually in order to
consider whether such discretionary bonus is appropriate.
(e) Executive
shall be eligible to participate in those non-salary benefits and programs
generally made available to executive employees of the Company, as are in effect
from time to time, including, but not limited to, any health, dental, life
or
disability insurance plan, 401(k) or other retirement savings plan, and any
other employee benefit plan, subject to any and all terms, conditions, and
eligibility requirements of said plans or benefits, as may from time to time
be
prescribed by the Company. Full family health and dental insurance coverage
shall be provided for Executive.
(f) Executive
shall be entitled to a vacation period or periods each year during the
Employment Term in accordance with the Company’s vacation policy for officers
per the policy outlined in the Company’s employee manual, as such manual may be
amended from time to time.
(g) Upon
submission of proper vouchers and evidence, the Company will pay or reimburse
Executive for reasonable transportation, hotel, travel and related expenses
incurred by Executive on business trips away from Executive’s principal office,
and for other business expenses reasonably incurred by Executive in connection
with the business of the Company during the Employment Term, all subject to
such
limitations and procedures as may from time to time be prescribed by the Board
of Directors of the Company.
(h) In
addition to the compensation described above, Executive shall be entitled to
receive. options to purchase shares of the Company’s common stock in accordance
with the terms set forth in Exhibit A attached hereto and incorporated herein
by
this reference.
4. TERMINATION.
(a) The
Executive’s employment under this Agreement shall terminate upon the earliest to
occur of (the date of such occurrence being the “Termination Date”) of(1) the
sixth yearly anniversary of the Effective Date, unless extended by mutual
written consent of the Company and the Executive (2) the effective date of
Executive’s resignation for Good Reason (as defined below) or without Good
Reason, (3) the Executive’s death or a Disability (an “Involuntary
Termination”), (4) the effective date of a termination of Executive’s employment
for Cause by the Board of Directors (a “Termination for Cause”), and (5) the
effective date of a termination of the Executive’s employment by the Board of
Directors for reasons that do not constitute cause (a “Termination Without
Cause”),
and (6) the effective date of a resignation of the Executive for Good Reason
(as
defined below).
The
effective date of a resignation shall be the date written resignation by the
Executive is received by the Company; the effective date of an Involuntary
Termination shall be the date of death or, in the event of a Disability, the
date specified in a notice delivered to the Executive by the Company; the
effective date of a Termination for Cause shall be the date specified in a
notice delivered to the Executive by the Company of such termination; and the
effective date of a Termination Without Cause shall be the date specified in
a
notice delivered to Executive by the Company of such termination which effective
date shall be no less than thirty (30) days following the date of such
notice.
(b) For
purposes of this Agreement, “Cause” shall mean those instances in which
Executive actually, or the Board of Directors (excluding the Executive if the
Executive is a member of the Board at such time) determines in good faith that
Executive has, (i) intentionally furnished materially false, misleading, or
omissive information to the Company’s Board of Directors that results or could
reasonably be expected to result in material detriment to the Company (ii)
willfully refused or failed to follow the lawful instructions of the Board
of
Directors with respect to any material matter, consistent with the terms of
this
Agreement, which refusal or failure shall not have been cured, if capable of
being cured, within 10 days following written notice thereof; provided, however,
that no notice or opportunity to cure shall be required with respect to repeated
refusal or failure to follow the lawful instructions of the Board of Directors,
consistent with the terms of this Agreement, (iii) committed or been formally
charged with any act involving moral turpitude (including those involving fraud,
theft or dishonesty by Executive) or any crime (whether felony or misdemeanor)
other than traffic violations or other minor offenses that could not reasonably
be expected to have an adverse effect on the Company’s business or reputation,
(iv) the continued use of alcohol or drugs by the Executive to an extent that,
in the good faith determination of the Board of Directors (excluding the
Executive if the Executive is a member of the Board at such time), such use
interferes with performance of the Executive’s duties and responsibilities, (v)
committed or engaged in any other act constituting or comprising a conflict
or
interest or cause under applicable law, or (vi) breached his obligations under
this Agreement in any material respect, which breach has materially damaged
the
Company and, if capable of being cured, shall not have been cured upon 15 days’
written notice thereof. “Cause” is not intended to include mere dissatisfaction
of the Company or its Board of Directors with the manner in which Executive
performs his duties nor the good faith failure of the Executive to perform
his
duties successfully.
(c) For
purposes of this Agreement, the term “Disability” shall mean the physical or
mental inability of the Executive (1) a good faith determination by the Board
of
Directors (excluding the Executive if the Executive is a member of the Board
at
such time) to substantially perform all of his duties under this Agreement
for a
period of ninety (90) consecutive days or longer or for any 90 days in any
consecutive 12 month period, or (2) that, in the opinion of a physician selected
by the Board of Directors (excluding the Executive if the Executive is a member
of the Board of Directors at such time), is likely to prevent the Executive
from
substantially performing all of his duties under this Agreement for more than
90
days in any period of 365 consecutive days.
(d) For
purposes of this Agreement, the term “Good Reason” shall mean any of the
following events which occur without the consent of Executive (i) a material
change in the scope or nature of Executive’s duties, (ii) the requirement that
Executive report to a person or entity other than the Board of Directors; (iii)
a required change in the city in which Executive’s office is located; (iv) a
sale or change of control of the Company; provided, however, that any change
in
control resulting from the Company’s pending merger with or into a public
“shell” corporation shall not be deemed to be a sale or change of control of the
Company for purposes of this Agreement); (v) a material change in the line
of
the Company’s business; (v) a fundamental and material disagreement between
Executive and the Board of Directors regarding the direction of the Company’s
business; (vi) the failure of Executive to be elected to the Board of Directors;
provided, however, that the Company shall have thirty (30) days following
receipt of written notice of such failure to elect to cure such failure through
appointment to fill a vacancy or other lawful means.
5. EFFECT
OF
TERMINATION; SEVERANCE.
(a) In
the
event of a Termination Without Cause or a resignation of Executive for Good
Reason, the Executive or his beneficiaries or estate shall have the right to
receive only the following:
(1) the
unpaid portion of the Base Salary, computed on a pro rata basis to the
Termination Date;
(2) the
Base
Salary from the Termination Date until the sixth yearly anniversary of the
Effective Date, payable in the same amounts and at the same intervals as the
Base Salary was paid immediately prior to the Termination Date; and
(3) reimbursement
for any expenses incurred prior to the Termination Date for which the Executive
shall not have been previously reimbursed in accordance with the provisions
of
Section 3(g) above.
(b) In
the
event of a Termination for Cause, an Involuntary Termination or a resignation
by
Executive that is not for Good Reason, the Executive or his beneficiaries or
estate shall have the right to receive the following:
(1) the
unpaid portion of the Base Salary, computed on a pro rata basis to the
Termination Date; and
(2) reimbursement
for any expenses incurred prior to the Termination Date for which the Executive
shall not have been previously reimbursed in accordance with the provisions
of
Section 3(g) above.
(c) Upon
any
termination, neither the Executive nor his beneficiaries or estate shall have
any further rights under this Agreement or any rights arising out of this
Agreement other than as provided in Section 5(a) and (b) above. The rights
of the Executive set forth in this Section 5 are intended to be the
Executive’s exclusive remedy for termination and to the greatest extent
permitted by applicable law, the Executive waives all other
remedies.
(d) Following
any termination, Executive shall fully cooperate with Company in all matters
relating to the winding up of the Executive’s work on behalf of Company and the
orderly transfer of any such pending work and of Executive’s duties and
responsibilities for Company to such other person or persons as may be
designated by Company in its sole discretion. Executive shall not be entitled
to
any additional pay or severance in connection with such
cooperation.
(e) Notwithstanding
anything to the contrary contained in this Agreement, in the event Executive
is
terminated with Cause or resigns without Good Reason prior to the first
anniversary of the Effective Date, Executive shall, upon demand by the Company,
immediately return the Signing Bonus in full and without deduction or
offset.
6. NONDISCLOSURE
AND NONUSE OF CONFIDENTIAL INFORMATION.
The
Executive will not disclose, disseminate or use at any time, either during
the
Employment Term or thereafter, any Confidential Information of which the
Executive is or becomes aware, whether or not such information is developed
by
him, except to the extent that such disclosure or use is directly related to
and
required by the Executive’s performance of duties assigned to the Executive by
the Company. For purposes of this Agreement, the term “Confidential Information”
shall mean: information that is not generally known to the public and that
is
used, developed or obtained by the Company in connection with the Business,
including, without limitation, (a) information, observations, procedures and
data obtained by the Executive while employed by the Company concerning the
business or affairs of the Company, (b) planned or actual products or services,
(c) costs and pricing structures, customer, supplier or employee lists, (d)
analyses, drawings, photographs and reports, (d) computer software and hardware,
including operating systems, applications and program listings, (e) data bases,
(f) accounting and business methods, and (g) research and development, (h)
inventions, devices, new developments, method and processes, technology and
trade secrets (including, without limitation all Work Product). Confidential
Information will not include (i) any information that has been published,
through no direct or indirect effort or action by the Executive, in a form
generally available to the public prior to the date the Executive proposes
to
disclose such information, and (ii) any general expertise, contacts or know-how
reflective of Executive’s experience as an executive in the sports management
and event field.
7. INVENTIONS
AND PATENTS.
The
Executive agrees that all Work Product belongs to the Company (including any
and
all Work Product developed by the Company prior to the date of this Agreement).
The Executive will promptly disclose such Work Product to the Board of Directors
and perform all actions reasonably requested by the Board (whether during or
after the Employment Term) to establish and confirm such ownership (including,
without limitation, the execution and delivery of assignments, consents, powers
of attorney and other instruments) and to provide reasonable assistance to
the
Company in connection with the prosecution of any application for patents,
trademarks, trade names, service marks or reissues thereof or in the prosecution
or defense of any claims by or against the Company relating in any way to Work
Product. For purposes of this Agreement, the term “Work Product” shall mean all
inventions, innovations, improvements, technical information, systems, software
or equipment developments, methods, designs, analyses, drawings, reports,
service marks, trademarks, trade names, logos and all similar or related
information (whether patentable or unpatentable) which relates to the Company’s
actual or anticipated business, research and development or existing or future
products or services and which are conceived, developed or made by the Executive
(whether or not during usual business hours and whether or not alone or in
conjunction with any other person, group or entity) while employed by the
Company, together with all patent applications, letters patent, trademark,
trade
name and service xxxx applications or registrations, copyrights and reissues
thereof that may be granted for or upon the foregoing.
8. NON-COMPETE.
NON-SOLICITATION, NON-DISPARAGEMENT.
The
Executive acknowledges and agrees with the Company that during the course of
the
Executive’s employment with the Company, the Executive will have the opportunity
to develop relationships with existing employees, customers and other business
associates of the Company which relationships constitute goodwill of the
Company, and the Company would be irreparably damaged if the Executive were
to
take actions that would damage or misappropriate such goodwill. Accordingly,
the
Executive agrees as follows:
(a) The
Executive acknowledges that the Business is operated in and markets for the
Company’s products and services are located throughout the world, including each
county or jurisdiction in each state of the United States and Canada
(collectively, the “Territory”). Accordingly, during the Employment Term and
until the (i) three month anniversary of the Termination Date if
termination is for Good Reason or without Cause, (ii) the one year anniversary
of the Termination Date if termination is the result of a resignation not for
Good Reason, and (iii) six month anniversary of the Termination Date if
termination is with Cause (in each case, the “Non-Compete Period”), the
Executive shall not, directly or indirectly, enter into, engage in, assist,
give
or lend funds to or otherwise finance, be employed by or consult with, or have
a
financial or other interest in, any business which is similar to or competitive
with the Business, whether for himself or as an independent contractor, agent,
stockholder, partner or joint venturer for any other person, group or entity.
To
the extent that the covenant provided for in this Section 8(a) may later be
deemed by a court to be too broad to be enforced with respect to its duration
or
with respect to any particular activity or geographic area, the court making
such determination shall have the power to reduce the duration or scope of
the
provision, and to add or delete specific words or phrases to or from the
provision. The provision, as modified, shall then be enforced.
(b) Notwithstanding
the foregoing, the aggregate ownership by the Executive of no more than two
percent (on a fully-diluted basis) of the outstanding equity securities of
any
person, group or entity, which securities are traded on a national securities
exchange, quoted on the NASDAQ Stock Market or other automated quotation system,
and which person, group or entity competes with the Company within the Territory
shall not be deemed to be a violation of Section 8(a).
(c) The
Executive covenants and agrees that during the term of his employment and for
six months following the Termination Date (one year in the event of a
termination for Cause or a resignation without Good Reason), the Executive
will
not, directly or indirectly, either for himself or for any other person, group
or entity (1) solicit any employee, independent contractor or service provider
of the Company to terminate or modify his, her or its employment or other
relationship with the Company or employ or retain any person or entity, (2)
solicit any customer, licensee or licensor, of the Company or any service
provider to the Company to purchase or provide products or services on behalf
of
the Executive or such other person, group or entity that are competitive with
the products or services provided by the Company, or (3) disparage the business
reputation of the Company or its management team.
(d) Executive
acknowledges that the restrictions placed upon Executive by this Section 8
are reasonable given the Executive’s position with the Company, the geographic
area in which the Company markets its products and services, and the
consideration furnished in this Agreement. Further, executive also agrees that
the provisions of this section are fair and necessary to protect the Company
and
its business interests and that such provisions do not preclude Executive from
utilizing unprotected information or from engaging in occupations in unrelated
fields or in a manner consistent with the requirements of this Agreement.
Finally, Executive understands that the foregoing restrictions may limit his
ability to earn a livelihood in a business similar to the Business but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits as an employee of the Company and as otherwise
provided hereunder or as described in the recitals hereto to clearly justify
such restrictions which, in any event (given his education, skills and ability),
the Executive does not believe would prevent him from otherwise earning a
living.
(e) In
addition to any other remedies available to Executive under this Agreement
or
applicable law, in the event that the Company fails to meet any of its ongoing
payment or severance obligations to Executive and such failure continues uncured
for five (5) business days following the delivery of written notice of such
failure to the Company, all of Executive’s post-term obligations under this
Section 8 shall terminate.
9. RETURN
OF COMPANY’S PROPERTY UPON TERMINATION.
The
Executive shall immediately deliver to the Company at the termination of the
Employment Term or at any time the Board of Directors may request, all Company
property (including but not limited to all documents, electronic files/records,
keys, records, computer disks, or other tangible or intangible things that
may
or may not relate to or otherwise constitute Confidential Information, Work
Product, or trade secrets (as defined by applicable law) that Executive created,
used, possessed, or maintained while in the employ of the Company, from whatever
source. This provision does not apply to purely personal documents of Executive,
but does apply to business calendars, Rolodexes, customer lists, contact sheets,
computer programs, disks, and their contents, and like information that may
contain some personal matters of Executive.
10. ENFORCEMENT.
Because
the Executive’s services are unique and because the Executive has access to
Confidential Information and Work Product, the parties hereto agree that money
damages would be an inadequate remedy for any breach of this Agreement.
Therefore, in the event of a breach or threatened breach of this agreement,
the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce,
or prevent any violation of, the provisions hereof (without posting a bond
or
other security).
11. MISCELLANEOUS.
(a) This
Agreement shall be binding upon and inure to the benefit of Executive and his
heirs and personal representatives, and the Company and its successors, assigns
and legal representatives. This Agreement and the responsibilities/benefits
hereunder are personal to Executive and are not assignable or transferable
by
Executive.
(b) The
Company shall have the right to offset against amounts due to Executive
hereunder, any amounts owed by Executive to Company, including any
advances.
(c) This
Agreement constitutes the entire agreement between the Company and Executive
with respect to the subject matter hereof and supersedes any and all previous
agreements or understandings between Executive and the Company concerning the
subject matter hereof. This Agreement may not be changed or amended without
the
prior written consent of both of the parties hereto.
(d) All
notices hereunder shall be in writing and shall be deemed given on the third
day
after mailing through the United States mail, certified mail, return receipt
requested, postage prepaid, or by overnight delivery to the persons listed
below
or to such other person(s) and/or addresses as may be designated from time
to
time in writing:
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if
to the Company:
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Pro
Sports & Entertainment, Inc.
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000
Xxxxxxxx Xxxx
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Xxx
Xxxxxxx, Xxxxxxxxxx 00000
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Attention:
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Fax: (000)000-0000
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if
to Executive:
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Xx.
Xxxx Xxxxxx
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PU
Box 1450
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Summerland,
CA
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Fax: (000)
000-0000
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(e) This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California.
(f) Any
waiver by either party of any breach of any of the terms of this Agreement
shall
not be considered a waiver of any subsequent breach.
(g) In
the
event that any provision of this Agreement is held to be unenforceable, then
such enforceability shall in no way affect the other terms and provisions of
this Agreement which shall remain in full force and effect.
(h) The
captions herein are for the convenience of the parties and are not to be
construed as part of the terms of this Agreement.
(i) This
Agreement may be amended, modified or supplemented only by written agreement
of
the parties hereto, which agreement shall have been duly authorized and approved
by the Board of Directors of the Company.
(j) The
failure of the Company at any time or from time to time to require performance
of any of Executive’s obligations under this Agreement shall in no manner affect
the Company’s right to enforce any provision of this Agreement at any subsequent
time, and the waiver by the Company of any right arising out of any breach
shall
not be construed as a waiver of any right arising out of any subsequent
breach.
(k) Executive
acknowledges that the consideration furnished by the Company in this Agreement,
the sufficiency and adequacy of which is hereby acknowledged, is in addition
to
anything of value, if any, to which Executive may already be
entitled.
(l) Except
as
otherwise provided herein, in the event of any dispute with respect to the
subject matter of this Agreement, the prevailing party shall be entitled to
all
of its costs and expenses, including reasonable attorneys’ fees and costs,
incurred in resolving or settling the dispute. These costs and expenses shall
be
in addition to any other damages to which the prevailing party may be
entitled.
IN
WITNESS WHEREOF,
the
parties hereto have signed and sealed this Agreement as of the day and year
first above written.
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COMPANY:
PRO
SPORTS & ENTERTAINMENT,
INC.
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By:
Xxxxxxxxxxx Xxxxxxx
Chairman
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EXECUTIVE:
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By:
Xxxx Xxxxxx
President
& CEO
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EXHIBIT
A
Options
Executive
shall be entitled to receive the following options:
1. An
initial non-qualified stock option to purchase 10% of the fully diluted shares
of capital stock of the Company issued and outstanding on the Effective Date.
The option shall have an exercise price of $.50 per share and shall vest in
full
immediately. The option shall have a term of five years; provided that such
option shall terminate forty-five (45) days after the Executive’s employment
with the Company is terminated if such termination is for Cause or is a the
result of a resignation by Executive for reasons other than Good. Such option
shall not be assignable by Executive.
2. In
addition to the initial option described above:
(a) Executive
shall receive options to purchase the number of shares equal to 20% of the
number of shares issued in connection with any acquisitions made by the Company
within one year of the Effective Date or initiated (as evidenced by the
submission of a terms sheet or other proposal to the proposed target or its
management) during such one year period and completed subsequent thereto;
and
(b) Executive
shall receive options to purchase the number of shares equal to 20% of the
number of shares issued by the Company in connection with any equity financing
or issuable upon conversion of any convertible debt financing completed by
the
Company within one year of the Effective Date or initiated (as evidenced by
submission of a terms sheet, letter of intent or other proposal by the proposed
financing source) by the Company within one year following the Effective Date
and completed subsequent thereto; provided, however, no options shall be issued
with respect to any equity or convertible debt financing in negotiation by
the
Company or Xxxx Xxxxxx prior to the Effective Date. Subject to the foregoing
exception for financings currently in negotiation, Executive shall be entitled
to receive the options described above regardless of whether he initiated or
was
involved in the negotiation of the financing.
The
option exercise
price
for the additional options described in (a) and (b) above shall equal eighty
percent (80%) of the per share value of Company’s common stock at the time of
the applicable acquisition or financing as determined by reference to the
Company’s public trading price, if any, or, if no public trading market exists,
the per share valuation of the Company made in connection with the acquisition
or financing or, if no such valuation exists, the per share value of the Company
as determined in good faith by the Company’s Board of Directors. Each of the
options granted pursuant to paragraphs (a) or (b) above shall have a term of
five years, shall vest in full upon grant; provided that such options shall
terminate forty-five (45) days after the Executive’s employment with the Company
is terminated if such termination is for Cause or is a the result of a
resignation by Executive for reasons other than Good Reason. Such options shall
not be assignable by Executive.
3. Each
option described above shall be subject to customary anti-dilution provision
with respect to any stock splits, mergers, reorganizations or other such
events.
