AGREEMENT
This Agreement between ESSENTIAL REALITY, INC., a Nevada corporation (the
"Company"), and XXX XXXXXX ("Executive") is hereby entered into on July 26, 2004
effective as of July 1, 2004.
In consideration of the mutual promises, terms, covenants and conditions set
forth herein and the performance of each, it is hereby agreed as follows:
1. Employment and Duties. During the period beginning effective as of July 1,
2004 and ending on June 30, 2006, the Company shall employ Executive on the
terms and conditions herein set forth. Executive's title shall be Chairman and
Chief Executive Officer. Executive shall perform such duties as are commensurate
with his titles, and shall have such other authority as shall from time to time
be designated by the Board of Directors of the Company. Executive accepts this
employment upon the terms and conditions herein contained and agrees to devote
his full time, attention and efforts to promote and further the business and
services of the Company.
2. Compensation and Other Benefits. For all services rendered by Executive to
the Company, the Company shall compensate the Executive as follows:
(a) Base Salary and Bonus. The base salary payable to Executive shall be
at the rate of $300,000 per year through June 30, 2005 and at the
rate of $350,000 per year thereafter, payable in periodic
installments in accordance with Company practice. The Board of
Directors may from time to time award bonuses to Executive in an
amount equal to Executive's salary. The payment of base salary and
bonuses shall be subject to all applicable federal, state and local
withholding taxes, social security deductions and similar
obligations.
(b) Vacation. Executive shall be entitled to four weeks of paid vacation
during each 12-month period of his employment hereunder at times
mutually acceptable to Executive and the Company. Unused vacations
will be carried forward and accumulate.
(c) Other Compensation and Benefits. Executive shall be entitled to
participate in the Company's group health insurance plan and shall
be awarded such other benefits and perquisites as the Company may
from time to time make available to him.
(d) Reimbursement. The Company shall reimburse Executive for properly
documented expenses which are incurred by Executive on behalf of the
Company.
(e) Car. Executive will receive a $750 per month car allowance and the
Company will also reimburse him for garage, fuel and maintenance
costs for this car.
(f) Grant of Options. Upon adoption of the Essential Reality 2004 Stock
Plan (the "Plan"), the Company will grant to Executive options under
the Plan in an amount and on terms to be determined by the Board of
Directors.
3. Termination; Rights of Termination.
(a) This Agreement and Executive's employment may terminate in any one
of the following ways:
(i) The death of Executive;
(ii) A notice of resignation by the Executive presented to the
Company;
(iii) The Board of Directors of the Company may terminate
Executive's employment after ten days' written notice to
Executive for Cause, which shall be defined to mean:
(A) The failure by Executive to substantially perform his
duties hereunder, other than (except as set forth in
Section (B)) any such failure resulting from Executive's
incapacity due to physical or mental illness, after
being notified in writing by the Company that he has
failed to perform his duties hereunder and has been
given 30 days to cure any such failure;
(B) If, because of illness or physical or mental disability
or other incapacity ("Disability") which continues for a
period in excess of four months in any consecutive
16-month period, Executive is unable to perform his
duties under this Agreement; or
(C) The conviction of Executive for any felony from which
all appeals have been exhausted.
(iv) It is understood, however, that no failure to achieve
financial or other business results shall be a basis for
termination of Executive for Cause.
(v) Executive may terminate his employment for Good Reason (as
hereinafter defined) at any time.
(b) For purposes of this Agreement, Good Reason shall mean:
(i) The assignment to Executive of any duties materially
inconsistent with Executive's positions, duties, authority,
responsibilities or reporting requirements as set forth in
Section 1; or
(ii) At any time during the term of this Agreement, a reduction or
material delay in payment of Executive's total cash, and (to
the extent in the Company's control) equity-based compensation
and benefits from those required to be provided in accordance
with the provisions of this Agreement, or the breach of any
other material provision of this Agreement;
(c) In the event of a termination of Executive's employment by the
Company other than for Cause, or by Executive for Good Reason,
Executive shall in addition to his other rights and remedies be
entitled to receive in a lump sum an amount equal to three times the
base salary (net of withholding and social security taxes) that
would be payable to him by the Company from the date of termination
through June 30, 2006 had his employment hereunder continued through
such date.
(d) Executive shall not be obligated to seek other employment in
mitigation of the amounts payable under any provision of this
Agreement. The obtaining of any such other employment shall in no
event effect any reduction of the Company's obligations to make the
payments and arrangements required to be made under this Agreement.
4. Non-Compete and Confidentiality
(a) Subject to the following sentence, Executive will not, while
employed by the Company and for a period of 12 months immediately
following the termination of his employment, directly or indirectly,
for himself or on behalf of or in conjunction with any other person,
persons, company, partnership, corporation or business of whatever
nature: establish, enter into, be employed by or for, advise,
consult with or become a part of, any company, partnership,
corporation or other business entity or venture, or in any way
engage in business for himself or for others, in competition with
the Company. If this Agreement is terminated by the Company other
than for Cause (excluding termination by Executive for Disability),
or by Executive for Good Reason, Executive shall not be subject to
any non-competition or similar restrictions whatsoever following
termination of this Agreement.
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(b) Executive shall not at any time, knowingly and without the prior
written consent of the Company which consent shall not be
unreasonably withheld, use for his own benefit or disclose to any
person, company, partnership, corporation or business for any reason
or purpose whatsoever, any confidential information of the Company.
For the purposes hereof, confidential information will not include
any information which is in the public domain or known to other
unrelated parties in the Company's industry other than as a result
of Executive's breach of this provision.
(c) If any provision contained in this Section 4 is determined to be
void, illegal or unenforceable, in whole or in part, then the other
provisions contained herein shall remain in full force and effect as
if the provision which was determined to be void, illegal, or
unenforceable had not been contained herein.
(d) The courts enforcing this Agreement shall be entitled to modify the
duration and scope of any restriction contained herein to the extent
such restriction would otherwise be unenforceable, and such
restriction as modified shall be enforced.
5. Indemnification.
(a) The Company shall indemnify Executive to the fullest extent
permitted by law.
6. Miscellaneous.
(a) Complete Agreement. This agreement sets forth in full all
understandings of the parties with respect to the subject matter
hereof, and it may be amended or terminated only in writing.
(b) Costs. In the event that the Executive shall prevail in any legal
proceedings between the Company and the Executive as to the
interpretation of this Agreement, including the defense by Executive
against legal proceedings instituted by the Company, the Company
shall reimburse Executive for his out of pocket costs and expenses
with respect thereto, including reasonable attorney's fees and
expenses.
(c) Notice. Whenever any notice is required hereunder, it shall be given
in writing addressed to the Company at 00-00 000xx Xxxxxx, Xxxxxxx
Xxxxx, XX 00000, and to Executive at 00 Xxxxxx Xxxxx Xxxx, Xxxxxxxx
XX 00000.
(d) Governing Law; Resolution of Disputes; Service of Process. This
Agreement shall in all respects be construed according to the laws
of the State of New York. Service of process shall be effective when
given in the manner provided for notices hereunder.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
aforesaid.
ESSENTIAL REALITY, INC.
BY: /s/ Xxxxx Xxxxxx,
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Xxxxx Xxxxxx, its President
EXECUTIVE:
/s/ Xxx Xxxxxx
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Xxx Xxxxxx
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