EMPLOYMENT AGREEMENT
AGREEMENT made as of January 3, 2000, by and between
DigitalConvergence. com Inc., a corporation incorporated under the laws of the
state of Delaware, with its principal place of business at 0000 X. Xxxxxxx
Xxxxxxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxx, 00000 (the "Company"), and XXXXXX X.
XXXXX residing at the address set forth at the end of this Agreement (the
"Employee").
W I T N E S S E T H:
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WHEREAS, the Company and the Employee desire to set forth the terms
and conditions of the Employee's employment by the Company;
NOW, THEREFORE, the parties hereto agree as follows:
1. TERM OF EMPLOYMENT. The Employee's employment under this
Agreement shall be for a term commencing on January 3, 2000 and terminating on
December 31, 2002, subject to earlier termination as provided in Section 5
hereof (the "Term of Employment"). Each year of the Term of Employment is
referred to herein as a "Contract Year."
2. EMPLOYMENT.
2.1 During the Term of Employment, the Company shall employ
the Employee as its Director/Magazine Sales, and the Employee shall serve in
such position, perform such services and have such authority, functions,
duties, powers and responsibilities as ordinarily are associated with such
title and as shall be designated by the President/Media Group of the Company
or others to whom the Employee reports from time to time. The Employee shall
faithfully and diligently serve the Company and, other than as set forth
hereinafter in this Section 2.1, shall devote all of his business time,
attention, skill and efforts thereto; provided, that the Employee may manage
his passive investments and be involved in charitable interests so long as
they do not interfere or conflict with the performance of the Employee's
duties hereunder. The Company and the Employee acknowledge that the Employee
has executed a one-year
Employment Agreement with Newsweek Budget Travel, Inc. dated December 20, 1999
(the "Newsweek Agreement") which agreement requires by its terms that Employee
dedicate up to fifty percent (50%) of his professional time to the business
and affairs of Newsweek Budget Travel, Inc. and its affiliates during the year
2000. The Company acknowledges that the Employee may fulfill his obligations
under the Newsweek Agreement.
3. COMPENSATION AND OTHER REMUNERATION.
3.1 BASE SALARY. The Company shall pay to the Employee
during the first Contract Year of this Agreement base salary at the annual
rate of Seventy-Five Thousand Dollars ($75,000) and thereafter, during the
remainder of the Term of Employment, base salary at the annual rate of Two
Hundred Thousand Dollars ($200,000); provided that Employee's base salary may
be increased at such time as the Board of Directors of the Company deems
appropriate. Base salary will be paid in accordance with the customary payroll
practices of the Company and shall be subject to required payroll deductions
and withholdings.
3.2 BONUS. The Employee shall be eligible to receive a bonus
in respect of each Contract Year in such amount, if any, as may be determined
by the Company's Board of Directors.
3.3 VACATION. The Employee shall be entitled to a reasonable
number of days of vacation during each Contract Year (not to exceed fifteen
(15) days in the aggregate), scheduled in advance with the Company to avoid
excessive disruption of the Company's operations.
3.4 STOCK OPTIONS.
3.4.1 Pursuant to one or more stock option
agreements (hereinafter referred to as the "Stock Option Agreement") dated the
date hereof, the Company has granted to Employee stock options, under and
pursuant to the Company's 1999 Stock Option Plan, to purchase one hundred
twenty-five thousand (125,000) shares of the Company's common stock, $.01 par
value
("Common Stock"), at the price of Five Dollars ($5.00) per share. The Company
and the Employee recognize and acknowledge that the Company executed a split
of its Common Stock on the effective date hereof and that the shares of Common
Stock subject to the Stock Option Agreement are on a post-split basis.
One-third (33.33%) of these options will vest on each of the last day of the
first, second and third Contract Year, provided Employee is employed with the
Company on each such date, subject to and except as otherwise provided in
Section 5.5 hereof. The Stock Option Agreement will provide the following:
(a) the maximum number of options which may be issued in the form of
incentive stock options pursuant to Section 422 of the Internal Revenue Code
will be so issued, with the balance of the options granted pursuant to Section
3.4.1. to be issued as non-qualified options;
(b) all vested options will be exercisable for a period of ten (10)
years from the date of grant, regardless of whether this Agreement has
terminated. This provision shall apply to any options granted in the form of
incentive stock options notwithstanding that they will not be treated for
Federal income tax purposes as incentive stock options unless they are
exercised within the time limits provided by the Internal Revenue Code;
(c) notwithstanding any provision of the Company's 1999 Stock Option
Plan to the contrary, Employee shall not forfeit any rights to any vested
options for any reason unless this Agreement is terminated by the Company for
"Cause", as defined in Section 5.1 of this Agreement.
4. BENEFITS: REIMBURSEMENT OF BUSINESS EXPENSES.
4.1 BENEFITS. From and after the expiration of the first
Contract Year of this Agreement, the Employee shall participate in all benefit
plans of the Company generally available to its employees of the Company,
whether now existing or hereafter established (collectively, the "Benefit
Plans").
4.2 REIMBURSEMENT OF BUSINESS EXPENSES. Business expenses
incurred by the Employee in accordance with the Company's policies will be
reimbursed upon the presentation
of receipts. Business-related air travel shall be such class as is determined
by Employee in his reasonable discretion.
5. TERMINATION.
5.1 TERMINATION FOR CAUSE.
5.1.1 The Company may terminate this Agreement
and all of the Company's obligations hereunder, other than its obligations set
forth below in this Section 5.1, for "Cause." "Cause" shall mean that the
Employee (i) is convicted of a felony, or any misdemeanor involving fraud or
theft, (ii) engages in dishonest behavior which materially adversely affects
the Company, (iii) commits a willful and intentional act having the effect of
materially injuring the reputation or business of the Company, including,
without limitation, habitual use of illegal drugs or alcohol or (iv)
materially breaches this Agreement and, after having been given written notice
thereof by the Company, fails to correct such breach within ten (10) days
after receipt of such notice.
5.1.2 In the event of termination by the Company
for Cause, the Company shall have no further obligations to the Employee other
than to pay (i) base salary accrued through the effective date of termination;
and (ii) all other benefits and amounts which may be then due the Employee
under the general provisions then in effect of any Benefit Plan ((i) and (ii)
collectively, the "Termination Entitlements").
5.2 TERMINATION DUE TO DEATH. This Agreement shall terminate
upon the Employee's death, and in such event the Company shall have no further
obligations hereunder, other than to pay to the Employee's estate the
Termination Entitlements.
5.3 TERMINATION DUE TO DISABILITY. During the Term of
Employment, the Employee shall become physically or mentally disabled, whether
totally or partially, so that he is unable to perform the material functions
of his position for periods aggregating ninety (90) days in any twelve (12)
month period, the Company shall be entitled to terminate this Agreement upon
written notice to the Employee given at any time thereafter during which the
Employee is
still so disabled. Upon such termination, the Terms of Employment shall end,
and the Company shall have no further obligations hereunder other than to pay
to the Employee the Termination Entitlements.
5.4 TERMINATION FOR GOOD REASON. "Good Reason" shall mean
any of the following: (i) a material breach by the Company of this Agreement,
(ii) a material diminution of Employee's authority, duties or responsibilities
with the Company or (iii) the assignment to Employee of duties materially
inconsistent with Employee's position with the Company, unless otherwise
approved by the Employee. If there exists an event or condition that
constitutes Good Reason, and such event or condition is not cured within ten
(10) days following Employee's giving the Company notice thereof, Employee at
any time thereafter shall have the right to terminate this Agreement by giving
the Company written notice of such termination, and upon his doing so, the
provisions of Section 5.5 shall apply.
5.5 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. The
Company may terminate this Agreement without Cause (as defined in Section 5.1
hereof) upon giving written notice thereof to the Employee. If the Company
terminates this Agreement without Cause, or if the Employee terminates this
Agreement for Good Reason (as defined in Section 5.4 hereof), in addition to
the Termination Entitlements: (i) the Employee shall be entitled to receive
six months of his monthly base salary then in effect payable on ordinary
payroll dates over the ensuing six months following termination; and (ii) for
the purposes of determining the date upon which options shall vest pursuant to
Section 3.4.1 of this Agreement, the Employee shall be deemed to have been
employed continuously by the Company until the date which is six months after
the effective date of the termination of the Agreement pursuant to this
Section 5.5.
6. PROTECTION OF CONFIDENTIAL INFORMATION. The Employee
acknowledges that employment by the Company will bring the Employee into close
contact with the confidential affairs of the Company and its affiliates. In
recognition of the foregoing, the Employee covenants and agrees that the
Employee will keep secret all confidential matters of the Company
and its affiliates, including, without limitation, the terms and provisions of
this Agreement, and will not use for his own benefit or intentionally disclose
such matters to anyone outside of the Company, either during or after the Term
of Employment, except with the Company's consent, provided that (i) the
Employee shall have no such obligation to the extent such matters are or
become publicly known other than as a result of the Employee's breach of his
obligations hereunder; (ii) the Employee may disclose such matters to the
extent required by applicable laws or governmental regulations or judicial or
regulatory process; and (iii) the Employee may disclose the terms of this
Agreement to his attorney(s), accountant(s) and/or financial advisor(s).
7. OWNERSHIP OF WORK PRODUCT. The Employee acknowledges that in
the course of employment hereunder, he may conceive of, discover, or create
inventions or new contributions relating to the subject matter of his
employment (all of the foregoing being collectively referred to herein as
"Work Product"). The Employee acknowledges that, unless the Company otherwise
agrees, all of such Work Product shall be owned by and belong exclusively to
the Company. The Employee shall further, unless the Company otherwise agrees
in writing, (i) promptly disclose any such Work Product to the Company; (ii)
assign to the Company, upon request, the entire rights to such Work Product to
the extent not otherwise owned at law by the Company; and (iii) sign all
papers reasonably necessary to carry out the foregoing.
8. REPRESENTATIONS. Both Employee and Company represent and
warrant that each is not a party to any agreements or understandings which
would prevent the fulfillment by such party of the terms of this Agreement or
which would be violated by entering into this Agreement and performing such
party's obligations hereunder other than the Newsweek Agreement.
9. NOTICES. All notices, requests, consents and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally, by
overnight courier or three days after being mailed first-class, postage
prepaid, by registered or certified mail, to the address of the recipient
given herein (or such other address of which notice is given or, in the case
of notice to the Employee, to the most recent
address set forth on the records of the Company).
10. INDEMNIFICATION. The Company shall indemnify Employee
against any and all judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees incurred in connection with any
action or proceeding, whether civil, criminal, judicial, legislative,
administrative or investigative, or in connection with an appeal therein, by
reason of the fact that Employee is or was a director, officer, employee,
representative or agent of the Company; provided, however, that no such
indemnification shall be made to Employee if an adverse judgment or other
final adjudication establishes that the acts of Employee were committed in bad
faith or were the result of active and deliberate dishonesty and, in either
case, were material to the cause of action so adjudicated. Without limiting
the foregoing, Employee shall also be entitled to indemnification by the
Company against any liability or damage, including attorney's fees and
liabilities under federal and state securities laws, arising from any act or
omission by Employee provided such act or omission was reasonably believed to
be within the scope of Employee's authority or was taken upon advice of the
accountants or legal counsel for the Company. The indemnification of Employee
provided by this Section 10 shall continue after Employee has ceased to be a
director, officer, employee, representative or agent of the Company and shall
inure to the benefit of Employee's heirs, executors, administrators and legal
representatives.
11. GENERAL.
11.1 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the state of the State
of Texas applicable to agreements made and to be wholly performed therein.
11.2 CAPTIONS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
11.3 ENTIRE AGREEMENT; NO OTHER REPRESENTATIONS. The parties
expressly
acknowledge, represent and agree that this Agreement is fully integrated and
contains and constitutes the complete and entire agreement and understanding
of the parties with respect to the subject matter hereof and supersedes any
and all agreements, understandings and discussions, whether written or oral,
between the parties with respect to the subject matters hereof, other than the
Proprietary Rights and Information Agreement and the Stock Option Agreement
being entered into simultaneously herewith. The parties further acknowledge,
represent, and agree that neither has made any representations, promises or
statements to induce the other party to enter into this Agreement, and each
party specifically disclaims reliance, and represents that there has been no
reliance, on any such representations, promises or statements.
11.4 ASSIGNABILITY. This Agreement and the parties' rights
and obligations hereunder may not be assigned by Employee or the Company
without the other's prior written consent.
11.5 AMENDMENTS; WAIVERS. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and
covenants hereof may be waived, only by written instrument executed by both of
the parties hereto, or in the case of a waiver, by the party waiving
compliance. The failure of either party at any time or times to require
performance of any provisions hereof shall in no manner affect such party's
right at a later time to enforce the same. No waiver by either party of the
breach of any term or covenant 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.
11.6 CONSTRUCTION. No presumption will be made or inference
drawn because the attorneys for one of the parties drafted this Agreement or
because of its drafting history.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
XxxxxxxXxxxxxxxxxx.xxx Inc.
By: /s/ Xxxxxxx Xxxxx
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Its: President & COO
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XXXXXX X. XXXXX
Signature: /s/ Xxxxxx X. Xxxxx
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Address: 000 Xxxx 00xx Xxxxxx
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Xxx Xxxx, Xxx Xxxx 00000
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(000) 000-0000
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