EXHIBIT 10.22
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of March
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11, 2002 between L90, Inc., a Delaware corporation (the "Company"), and Xxxxxxxx
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Cannold (the "Employee").
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R E C I T A L
The Company desires to employ the Employee, and the Employee desires to be
so employed by the Company, on the terms and subject to the conditions set forth
in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises
set forth in this Agreement, the Company and the Employee hereby agree as
follows:
1. Employment.
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(a) Subject to the terms and conditions contained herein, the Company
hereby agrees to employ the Employee, and the Employee accepts such
employment, from the date hereof until the earlier of (i) the date
which is one year from the date hereof, provided that such initial
term shall be automatically renewed for two successive one-year terms
unless either party hereto otherwise notifies the other in writing
within 90 days prior to the end of such initial term or any such
successive term, or (ii) the date such employment is terminated
pursuant to Section 4 of this Agreement. During the Employee's
employment under this Agreement, the Employee shall perform such
duties for the Company consistent with his position as President and
CEO as may from time to time be assigned to the Employee by the Board
of Directors of the Company (the "Board") and Employee shall report to
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the Board. The Employee shall have the title of President and Chief
Executive Officer and such other title or titles, if any, as from time
to time may be assigned to the Employee by the Board.
(b) The Employee will devote substantially all his business time, energy,
attention and skill to the services of the Company and its affiliates
and to the promotion of their interests. So long as the Employee is
employed by the Company, the Employee shall not, without the written
consent of the Company:
(i) engage in any other activity for compensation, profit or
other pecuniary advantage, whether received during or after the
term of this Agreement;
(ii) render or perform services of a business, professional,
or commercial nature other than to or for the Company, either
alone or as an employee, consultant, director, officer, or
partner of another business entity, whether or not for
compensation, and whether or not such activity, occupation or
endeavor is similar to, competitive with, or adverse to the
business or welfare of the Company; or
(iii) invest in or become a shareholder of another
corporation or other entity; provided, that the Employee's
investment solely as a shareholder in another corporation shall
not be prohibited hereby so long as such investment is not in
excess of one percent (1%) of any class of shares that are traded
on a national securities exchange;
provided, however, that the Employee shall not be precluded from (1)
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participating in, or rendering services to, family-owned enterprises, charitable
organizations or the like for which the Employee is not compensated on a
monetary basis (other than dividends generally paid to equity holders of such
entities) or (2) serving on the board(s) of directors of non-competitive
businesses.
(c) Prior to or concurrently with the execution of this Agreement, the
Employee has executed an Employee Proprietary Information, Trade
Secret and Confidentiality Agreement (the "Confidentiality
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Agreement").
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2. Location of Employment. The Employee's principal place of employment
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shall be at the executive offices of the Company located at New York, New York,
or, as may be requested by the Board, at any other office of the Company or any
of its affiliates currently or hereinafter located in the metropolitan New York
City area; provided, that at the direction of the Board, the Employee may from
time to time be required to travel to various domestic and foreign locations.
The Company shall provide the Employee with one full-time dedicated
administrative assistant during the term hereof.
3. Compensation.
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(a) In exchange for performance of the Employee's obligations and duties
under this Agreement, the Company shall pay the Employee a base salary
at an annual rate of $480,000.00, payable in accordance with the
Company's standard payroll practices, but not less frequently than
monthly. In any payment period in which the Employee shall be employed
for less than the entire number of days in such payment period, the
salary payable under Section 3(a) shall be prorated on the basis of
the number of days during which the Employee was actually employed
divided by the number of days in such payment period. The base salary
provided for in Section 3(a) shall be reviewed not less frequently
than
annually by the Board, or a committee thereof, and may be adjusted in
their discretion, provided, however, that in no event, without the
Employee's consent, shall such base salary be increased by an amount
that is lower than four (4%) per cent of the base salary of the
immediately preceding year during the term of Employee's employment
with the Company and in no event shall the Employee's base salary (as
increased from time to time) be decreased at any point during the term
of this Agreement. In the event the Employee's salary is decreased,
the Employee shall have the right to terminate this Agreement.
(b) Each year during the term of this Agreement, Employee shall receive a
bonus (the "Bonus") based on the comparison between (x) the
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projections of the Company's operating results, either net loss or net
income, as the case may be, contained in the Company's business plan
for such year as approved by the Board (the "Projections") and (y) the
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audited financial statements for that year, which shall be conclusive
(the "Financials"). The Bonus shall be equal to either: (i) if the
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Projections project a net loss for such fiscal year, $50,000.00 for
each full $1,000,000.00 in reduced net losses as reflected in the
Financials as compared to net losses contained in the Projections,
plus $50,000.00 for each full $1,000,000.00 in net income reflected in
the Financials, or (ii) if the Projections project net income for such
year, $50,000.00 for each full $1,000,000.00 in increased net income
contained in the Financials as compared to net income contained in the
Projections. In the event the Company acquires or disposes of any
business in any year during the term of this Agreement, the Company
and the employee shall negotiate in good faith to take into account
such acquisition or disposition and determine the appropriate
allocation for (i) the reduction in operating losses of any disposed
business that should be credited to the Employee under the Bonus
formula and (ii) the increase in earnings from any acquired business
which should be credited to the Employee under the Bonus formula in
determining if the Employee has met or surpassed the Projections. The
Bonus, if any, shall be paid to the Employee no later than 30 days
following completion by the Company of the Financials for each year.
(c) The base salary described in subsection (a) hereof and the bonus
described in subsection (b) hereof are gross amounts, and the Company
shall be required to withhold from such amounts deductions with
respect to Federal, state and local taxes, FICA, unemployment
compensation taxes and similar taxes, assessments or withholding
requirements.
(d) On or about the commencement of the Employee's employment pursuant to
this Agreement, and on each of the first and second anniversary
thereof, the Company shall grant the Employee a stock option pursuant
to the
Company's stock option plan to purchase 500,000 shares of the
Company's common stock with an exercise price equal to the fair market
value on the date of grant. Each such option shall vest in one-third
(1/3) increments on the first, second and third anniversaries of the
date of grant, so long as the Employee then remains a full-time
employee of the Company, provided, however, that in the event of a
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Change of Control (as defined below), the next annual increment of
unvested options shall immediately vest and become exercisable upon
the effective date of such Change of Control. Each such option shall
be an incentive stock option to the extent permitted by law, with the
balance being granted as a non-qualified stock option. Each such
option shall be subject to all terms of the Company's stock option
plan and the option agreements between the Employee and the Company
evidencing such option. The number of shares of the Company's common
stock to be purchased pursuant to each of the options to be granted on
the first and second anniversary of the date hereof shall be reviewed
by the Board, or a committee thereof, and may be adjusted in their
discretion, provided, however, that in no event shall such number be
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reduced below 500,0000. For purposes of this Agreement, a "Change of
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Control" shall mean: (i) the acquisition by any person, entity or
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group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) after the date
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hereof of the beneficial ownership of more than fifty percent (50%) of
the total combined voting power of all outstanding securities of the
Company; (ii) a merger or consolidation in which the Company is not
the surviving entity, except for a transaction in which the
stockholders of the Company immediately prior to such merger or
consolidation hold, in the aggregate, securities possessing more than
fifty percent (50%) of the total combined voting power of all
outstanding voting securities of the surviving entity immediately
after such merger or consolidation; (iii) a reverse merger in which
the Company is the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of
all outstanding voting securities of the Company are transferred to or
acquired by a person or entity different from the persons or entities
holding those securities immediately prior to such merger; (iv) the
sale, transfer or other disposition (in one transaction or a series of
related transactions) of all or substantially all of the assets of the
Company; or (v) a change in the composition of the Board which is the
direct result of a proxy solicitation and contest pursuant to the
Exchange Act such that the members of the Board immediately prior to
the commencement of such solicitation and contest no longer constitute
a majority of the Board after the conclusion of such solicitation and
contest.
(e) During the Employee's employment under this Agreement, the Employee
shall also be reimbursed by the Company for reasonable business
expenses, including entertainment, travel and parking, actually incurred or
paid by the Employee, consistent with the policies established by the
Board, in rendering to the Company the services provided for in this
Agreement, upon presentation of expense statements or such other supporting
information as is consistent with the policies of the Company. The Employee
at all times shall be entitled to travel in business class seating when the
Employee travels by air in connection with the Company's business and to
private car service when required to travel in connection with the
Company's business, including attending business meetings, or working or
attending functions outside of normal business hours or on weekends or
holidays.
(f) The Company shall reimburse to the Employee during the term of this
Agreement: (i) on a monthly basis, the gross amount of $780.00 in
connection with the Employee's acquisition and maintenance of an automobile
suitable for the Employee's use in connection with the Company's business;
(ii) on an annual basis, the gross amount of $2,500.00 in connection with
the Employee's membership, for his personal use, in one health club; (iii)
on a one time basis, $2,500.00 in connection with the Employee's purchase
of a personal computer, a dedicated phone line in the Employee's home for
the use of such personal computer, a cellular telephone and a Blackberry
personal digital assistant; and (iv) on a periodic basis, the reasonable
maintenance costs of the items set forth in subsection (iii) hereof.
(g) The Employee shall be entitled to 15 business days vacation for each full
year of employment under this Agreement, which vacation time will accrue in
accordance with the vacation policy of the Company.
(h) The Employee shall be entitled to participate in all benefit plans
(including deferred compensation plans and any medical, dental or life
insurance plans) which shall be available from time to time to the domestic
management employees of the Company generally, except to the extent such
participation in any plan would, in the opinion of the Board, alter the
intended tax treatment of such plan; provided, however, that the Employee
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shall have no right under this Agreement, except as set forth in Section
3(d) hereof, to participate in any stock option, stock purchase or other
plan relating to shares of capital stock of the Company or its affiliates,
which participation, if any, shall be governed by separate agreement. The
Employee acknowledges and agrees that the Board may in its discretion
terminate at any time or modify from time to time any such benefit plans.
(i) Other than as expressly set forth in this Section 3, the Employee
shall not receive any other compensation or benefits except to the
extent determined by the Board.
4. Termination.
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(a) The employment of the Employee under this Agreement may be terminated
by the Company upon giving the Employee notice if the Employee has
been unable to substantially discharge his essential job duties by
reason of illness or injury for either (A) a period of two consecutive
months or (B) twelve weeks in any twelve-month period. A termination
of the Employee's employment by the Company pursuant to this Section
4(a) shall be communicated to the Employee by written notice and shall
be effective on the tenth (10) day after receipt of such notice by the
Employee.
(b) The employment of the Employee under this Agreement shall terminate on
the date of the Employee's death.
(c) The employment of the Employee under this Agreement may be terminated
by the Company for cause. The Company may terminate the Employee for
cause only after a Cause Event (as hereinafter defined) has occurred.
If a Cause Event occurs, the Board of Directors shall have promptly
thereafter provided Employee, in writing and in reasonable detail, the
facts and circumstances giving rise to its determination that a Cause
Event has occurred (each, a "Cause Notice"), and, with respect to any
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Cause Event other than that specified in clauses (iv), (v) or (viii)
in the definition of Cause Event below, shall have provided Employee
in such Cause Notice a suggested course of action to cure such
default, and with a cure period (if capable of cure) of not less than
thirty (30) days. As used herein, a "Cause Event" shall mean the
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following circumstances: (i) repeated refusal or failure to perform
any duties assigned to the Employee by the Board as are appropriate to
be performed by CEO or President and are commensurate with such title
and position, (ii) committed a breach of the terms of this Agreement
or any other legal obligation to the Company, (iii) failed to perform
any of the Employee's material obligations under the Confidentiality
Agreement, (iv) demonstrated gross negligence or willful misconduct in
the execution of the Employee's assigned duties, (v) been convicted of
or pleaded nolo contendere to (a) a felony or (b) any other serious
crime involving fraud, dishonesty, theft, misappropriation or
embezzlement or which, in the reasonable business judgment of the
Board, results in a material adverse effect on the Company, (vi)
continual use of illegal drugs or of alcohol where such use of alcohol
interferes with the performance of Employee's
duties under this Agreement, (vii) engaged in business practices which, in
the opinion of the Board, are unethical or reflect materially adversely on
the Company, (viii) misappropriated assets of the Company or (ix) been
repeatedly absent from work during normal business hours for reasons other
than disability or vacation.
(d) The employment of the Employee under this Agreement shall terminate upon
receipt by the Board of a written notice of resignation signed by the
Employee or, if no notice is given, on the date on which the Employee
voluntarily terminates his employment relationship with the Company.
(e) Within six months following the effective date of a Change of Control, the
employment of the Employee under this Agreement may be terminated by the
Employee upon delivery by the Employee to the Board of a written notice of
termination signed by the Employee stating that Employee is terminating his
employment hereunder as a result of such Change of Control, if and only to
the extent that, following such Change of Control, any of the following
occurs without Employee's consent: (i) Employee's job title or
responsibilities are materially reduced, or (ii) Employee's base salary
then in effect is reduced.
(f) In addition to the circumstances described in subsections (a), (b), (c),
(d) and (e) above, the Company may terminate the Employee's employment for
any reason or no reason and with or without cause or prior notice. The
Employee understands that, subject to subsection (g)(iii) below, he is an
at-will employee and may be terminated by the Company without cause or
prior notice pursuant to this subsection (f) notwithstanding any other
provision contained in this Agreement. This at-will relationship will
remain in effect during the term of this Agreement and so long thereafter
provided that the Employee remains employed by the Company, unless such
at-will employment relationship is modified by a specific, express written
agreement signed by the Company.
(g) If the Employee's employment is terminated pursuant to this Section 4 or
for any other reason, the Employee shall not be entitled to any
compensation or benefits from the Company, under Section 3 of this
Agreement or otherwise, except for the following:
(i) base salary and vacation pay accrued, and reasonable business expenses
incurred, under Section 3 of this Agreement through the date of such
termination;
(ii) such benefits, if any, as may be required to be provided by the
Company under the Comprehensive Omnibus Budget Reconciliation Act
(COBRA) or as required by under the terms of
any death, insurance or retirement plan, program or agreement
provided by the Company and to which the Employee is a party or
in which the Employee is a participant, including, but not
limited to, any short-term or long-term disability plan or
program, if applicable; and
(iii) if the Employee's employment is terminated without cause
pursuant to subsection (f) above or by the Employee pursuant to
subsection (e) above, the Company shall continue to pay to the
Employee the base salary described in Section 3(a)(i)above until
the earlier to occur of (i) one (1) year from the date of
termination, or (ii) the third anniversary of the date of this
Agreement. In the event of termination of Employee's employment
hereunder, Employee shall be under no obligation to seek other
employment and there shall be no offset against any amounts due
to Employee under this Agreement on account of any renumeration
attributable to any subsequent employment that Employee may
obtain.
5. Employee's Representations.
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(a) The Employee represents that he has full authority to enter into this
Agreement and that he is free to enter into this Agreement and not
under any contractual restraint which would prohibit the Employee from
satisfactorily performing his duties to the Company under this
Agreement.
(b) The Employee acknowledges that he is free to seek advice from
independent counsel with respect to this Agreement. The Employee has
either obtained such advice or, after carefully reviewing this
Agreement, has decided to forego such advice. The Employee is not
relying on any representation or advice from the Company or any of its
officers, directors, attorneys or other representatives regarding this
Agreement, its content or effect.
6. Arbitration. Any controversy or claim arising out of or relating to
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this Agreement or any breach hereof or the Employee's employment by the Company
or termination thereof, shall be settled by arbitration by one arbitrator in
accordance with the rules of the American Arbitration Association, and judgment
upon such award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitration shall be held in the City of New York or
such other place as may be agreed upon at the time by the parties to the
arbitration.
7. Equitable Relief. The Employee acknowledges that the Company is
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relying for its protection upon the existence and validity of the provisions of
this Agreement, that the services to be rendered by the Employee are of a
special, unique and extraordinary character, and that irreparable injury will
result to the Company from any
violation or continuing violation of the provisions of this Agreement for which
damages may not be an adequate remedy. Accordingly, the Employee hereby agrees
that in addition to the remedies available to the Company by law or under this
Agreement, the Company shall be entitled to obtain such equitable relief as may
be permitted by law in a court of competent jurisdiction including, without
limitation, injunctive relief from any violation or continuing violation by the
Employee of any term or provision of this Agreement.
8. Governing Law. This Agreement shall be governed by and construed and
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enforced in accordance with the internal substantive laws (without regard to
choice of law principles) of the State of New York.
9. Entire Agreement. This Agreement constitutes the whole agreement of the
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parties hereto in reference to any employment of the Employee by the Company and
in reference to any of the matters or things herein provided for or hereinabove
discussed or mentioned in reference to such employment; all prior agreements,
promises, representations and understandings relative thereto being herein
merged.
10. Assignability.
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(a) In the event the Company shall merge or consolidate with any other
corporation, partnership or business entity, or all or substantially
all of the Company's business or assets shall be transferred in any
manner to any other corporation, partnership or business entity, then
such successor to the Company shall thereupon succeed to, and be
subject to, all rights, interests, duties and obligations of, and
shall thereafter be deemed for all purposes hereof to be, the
"Company" under this Agreement.
(b) This Agreement is personal in nature and the Employee shall not,
without the written consent of the Company, assign or transfer this
Agreement or any rights or obligations hereunder.
(c) Except as set forth in subsection (a) above, nothing expressed or
implied in this Agreement is intended or shall be construed to confer
upon or give to any person, other than the parties to this Agreement,
any right, remedy or claim under or by reason of this Agreement or of
any term, covenant or condition of this Agreement.
11. Amendments; Waivers. This Agreement may be amended, modified,
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superseded, canceled, renewed or extended and the terms or covenants of this
Agreement may be waived only by a written instrument executed by the parties to
this Agreement or, in the case of a waiver, by the party waiving compliance. Any
such written instrument must be approved by the Board to be effective as against
the Company. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right at a later time to enforce the same. No waiver by any
party of the breach of any term or provision contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
12. Notice. All notices, requests or consents required or permitted under
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this Agreement shall be made in writing and shall be given to the other party by
personal delivery, overnight air courier (with receipt signature) or facsimile
transmission (with "answerback" confirmation of transmission), if to the
Company, sent to such party's addresses or telecopy number as are set forth
below such party's signature to this Agreement, and if to the Employee, to his
address as set forth in the records of the Company, with a copy to Frankfurt,
Garbus, Kurnit, Xxxxx and Xxxx, A.P.C., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000
attn: Xxxx Xxxxxxxxx, Esq., or such other addresses or telecopy numbers of which
the parties have given notice pursuant to this Section 12. Each such notice,
request or consent shall be deemed effective upon the date of actual receipt,
receipt signature or confirmation of transmission, as applicable.
13. Severability. Any provision of this Agreement that is prohibited or
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unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
14. Survival. The representations and agreements of the Employee set forth
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in Sections 5, 6 and 7 of this Agreement shall survive the expiration or
termination of this Agreement (irrespective of the reason for such expiration of
termination).
15. Attorney's Fees. If any party to this Agreement seeks to enforce his
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or its rights under this Agreement, the prevailing party shall be entitled to
recover reasonable fees, costs and expenses incurred in connection therewith
including, without limitation, the fees, costs and expenses of attorneys,
accountants and experts, whether or not litigation is instituted, and including
such fees, costs and expenses of appeals.
[Signature Page Follows]
[Signature Page to Employment Agreement]
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Employment Agreement as of the date first above written.
L90, INC.,
a Delaware corporation
By /s/ Xxxxxxx Xxxxxxxxx
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An Authorized Officer
Address for Notices:
0000 Xxxxxxx Xxxxxx
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
Attention: Chairman of the Board
Telecopy: (000) 000-0000
EMPLOYEE:
/s/ Xxxxxxxx Xxxxxxx
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Xxxxxxxx Xxxxxxx
