EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into and is effective as of December 18, 2000 (the "Effective Date"), by and
between Brilliant Digital Entertainment, Inc., a Delaware corporation
("Company") and Xxxxxx Xxxxxx, an individual ("Executive") herein collectively
referred to as the Parties.
R E C I T A L
Whereas, the Company and Executive desire to assure that the Company
retains the services of Executive, whose experience, knowledge and abilities are
extremely valuable to the Company.
NOW, THEREFORE, in consideration of the terms, conditions, covenants,
representations, warranties and promises contained in this Agreement, the
Parties agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive and Executive hereby accepts
employment with the Company on the terms and conditions set forth herein.
2. DUTIES.
2.1. GENERAL. Throughout the Term (as defined below), Executive shall
faithfully and diligently perform Executive's duties in conformity with the
directions of Management ("Management") and serve the Company to the best of
Executive's ability. For purposes of this Agreement, "Management" shall mean the
Chairman, CEO, the President of the Company, and the Board of Directors, or
others that they may designate. Executive shall devote all of Executive's
working time, attention and energies to the business and affairs of the Company.
Executive shall have the title of Chief Operating Officer and Chief Financial
Officer and shall report directly to the Chairman, CEO, and President at all
times during the Term. Notwithstanding the foregoing, it is understood that
Executive may consult for the company, XXXXXXXX.XXX, on the condition that such
consultation shall not require Executive to travel to their offices, and that
such consultation shall merely involve review of a modest number of documents
and occasional telephone consultations.
2.2. DEFINED. During the term hereof, and under the guidance of Management,
Executive shall assume lead responsibility for the financial management of the
Company and the operational affairs of the Company. Executive shall prepare and
deliver to the CEO and President monthly accounts of the state of the Company's
affairs and finances together with appropriate observations and recommendations.
Executive also shall, working with the CEO and President, prepare appropriate
information for and communicate with the Board of Directors. Other duties and
responsibilities of Executive shall include, but not be limited to: raising
capital for working capital requirements; managing investor relations; working
with other Company executives and contractors to produce business plans and
financial models; coordinating the efforts of Company Management and staff to
achieve the goals expressed in the Company business plan; modifying the business
plan and communicating any such changes to Management; and coordinating all
efforts and working with Management to pursue and achieve the goals and
objectives of the Company.
Page 1
3. TERM. The initial term of this Agreement (the "Term") shall commence upon the
date hereof and shall terminate two years thereafter (the "Termination Date"),
unless sooner terminated as provided herein. The term may be extended by the
parties upon their mutual agreement to do so, and if so extended, shall be
subject to the same terms and conditions hereof.
4. COMPENSATION.
4.1. ANNUAL BASE SALARY. For Executive's services hereunder, the Company
shall initially pay Executive an annual salary of Two Hundred and Twenty
Thousand Dollars ($220,000) (the "Base Salary").
4.2. BASE SALARY INCREASES. The Base Salary may further be increased, at
the discretion of Management at such times as Management may choose to review
Executive's performance, such review to occur not less frequently than once each
year. The above notwithstanding, it is understood that determination of any base
salary increase rests in the absolute discretion of Management, and this
provision is not to be interpreted as any form of commitment to raise
Executive's Base Salary.
4.3. TAXES. All amounts paid to Executive hereunder shall be subject to the
applicable withholding of social security, federal, state, and other taxes and
deductions as required by law.
5. BENEFITS. Executive shall be entitled to participate in all benefits offered
to senior executives or similarly situated officers including, without
limitation, the following:
5.1. GROUP MEDICAL AND DISABILITY INSURANCE BENEFITS. During the Term,
Executive shall be eligible to participate, and the premiums shall be paid by
the Company on behalf of Executive, in any group medical and disability
insurance programs as provided generally to officers of the Company.
5.2. CELLULAR TELEPHONE. During the Term, Executive shall be entitled to
the use of a cellular telephone and the monthly access charge, but only
business-related call charges shall be paid by the Company.
5.3. VACATION. Executive shall be entitled to 15 days of annual vacation
leave during the Term accrued at the rate of 1.25 days per month.
5.4. RETIREMENT PLANS. During the Term, Executive shall be eligible to
participate in any retirement, pension, or other deferred or supplemental
compensation plans operated by the Company including, without limitation, BDE's
1996 Employee Stock Plan and the Company's Simple XXX Plan, and any subsequent
or additional retirement plans established by the Board. Executive may
contribute up to $6,000. per year to the Simple XXX Plan, and the BDE will match
said contribution, up to a limit of 3% of Executive's salary.
5.5. EXPENSE REIMBURSEMENT. Upon presentment of verifiable invoices and
other documentation, and subject to the Company's expense reimbursement policies
applicable to similarly situated executives, the Company shall reimburse
Executive for the reasonable costs and expenses which he incurs in connection
with the performance of his duties and obligations under this Agreement.
Page 2
5.6. TRAVEL. Executive may log automobile mileage on his personal
automobile for usage in Company's business; and Executive shall be reimbursed
for such Company-related automobile usage based on chargeable mileage rates as
approved by the Internal Revenue Service for such usage. Executive may be
required by management to travel to destinations for periods of up to 2 weeks.
5.7. LONG TRIPS. Executive may be required to fly on air flights of greater
than 2,400 miles. In these cases Executive may fly Business Class. Executive
shall always use best effort to schedule trips so as to minimize costs.
6. STOCK OPTIONS. Company agrees that, upon full execution of this Agreement,
and subject to the approval of BDE's Employee Compensation Committee and further
subject to executive being employed by Company on the date of the grant of the
options, Executive shall be granted options to purchase shares of the common
stock of BDE, all subject to the terms and conditions of BDE's 1996 Employee
Stock Plan, including any amendments thereto, as follows: options for one
hundred thousand shares (100,000) to be granted on signing this agreement, dated
as of December 18, 2000, with further grants of options upon each anniversary of
Executives employment hereunder; it being understood that such further grants
beyond the initial grant hereunder rest in the absolute discretion of
Management, and this provision is not to be interpreted as any form of
commitment to such further grants. All options shall be valued at the closing
price of the stock on the date on which options are issued, and shall vest in
accordance with the terms of the Employee Stock Plan, provided that Executive is
employed by the Company on any such vesting date. In the event that BDE
undergoes a change of control, then, on the occurrence of such event,
Executive's previously granted options and options granted hereunder shall
immediately accelerate and vest entirely; to qualify as a change of control, one
of the following must occur: i) a sale of BDE to a single entity of more than
50% of BDE's stock; ii) a merger in which shareholders of BDE's stock, as of the
date immediately prior to the merger, hold less than 50% of the surviving
entity; or iii) a sale of substantially all of the BDE's assets.
7. BONUSES. Executive will be engaged in several activities affecting the
production of revenue for the Company, including, but not limited to, a) the
sale of advertising campaigns to outside clients ("Brilliant Banner
Advertising"); and b) the raising of capital from outside investors into the
Company. To provide Executive with added incentive to maximize such
opportunities, Company agrees to pay Executive certain bonuses upon the
attainment of certain levels of achievement.
7.1. BONUSES FOR THE SALE OF BRILLIANT BANNER ADVERTISING CAMPAIGNS. For
the sale of qualifying Brilliant Banner Advertising campaigns that result from
transactions concluded by the Company which were initiated and substantially
supervised by Executive, Company agrees to pay Executive certain bonuses as
described below. In order be a qualifying Brilliant Banner Advertising campaign,
such campaign must produce revenue greater than thirty-five percent (35%) of the
total value of the campaign, calculated after deducting all production costs for
the campaign.
7.2. BONUSES FOR THE INTRODUCTION OF INVESTMENT CAPITAL. For the
introduction of investment capital resulting from transactions concluded by the
Company which were initiated and substantially supervised by Executive, Company
agrees to pay Executive certain bonuses as described below.
Page 3
7.3. BONUS SCHEDULE. The following revenue achievement levels are
established as the Initial Bonus Target levels for Executive's performance per
Sections 7.1 and 7.2, above:
7.3.1 For generating revenue between one million and two million dollars
per year - a bonus of fifty thousand dollars ($50,000).
7.3.2 For generating revenue between two million and three million dollars
per year - a bonus of one hundred thousand dollars ($100,000).
7.3.3 For generating revenue greater than three million dollars per year -
a bonus of one hundred and fifty thousand dollars ($150,000).
7.3.4 In the event that greater than five million dollars is raised during
the six month period following execution of this agreement, then Executive shall
be automatically qualified for a bonus of at least one hundred thousand dollars
($100,000) irrespective of the amount of revenue raised.
7.3.5 In the event that an Initial Bonus Target level greater than two
million dollars is met -- an additional bonus (above those stated in 7.3.1,
7.3.2, and 7.3.3) of fifty thousand dollars ($50,000).
7.3.6 The Bonus Target levels shall apply to the actual applicable level
attained, and are not cumulative.
7.3.7 The Initial Bonus Target levels shall apply for the first year of the
term hereof. After the first year, and for the remainder of the term hereof, the
Bonus Target levels shall be raised by the average of the (calendar)
quarter-by-quarter percentage increase achieved throughout the previous year.
8. TERMINATION.
8.1. TERMINATION AT WILL. The Company may terminate this Agreement at any
time, for any reason, or for no reason, either with or without Cause (as defined
below), and either with or without notice. Notwithstanding the foregoing, after
Executive has been employed by the Company for a period of not less than 180
days from the Effective Date hereof, then, in the event that such termination is
without Cause, the Company shall provide Executive with one hundred and eighty
(180) days prior written notice.
8.2. TERMINATION BY THE COMPANY FOR CAUSE. For purposes of this Section 8,
termination for "cause" shall include termination of Executive by the Company
for the following: (a) a breach by Executive of any provision of this Agreement;
(b) a failure or refusal to perform Executive's duties hereunder or gross
negligence in the performance by Executive of his duties hereunder; (c) any act
or omission knowingly undertaken or omitted by Employee which could reasonably
be expected to cause damage to the Company, its properties, assets, financial
condition or business or to their stockholders, officers, directors or
employees; (d) the failure by Employee to implement, follow or comply with the
policies and procedures of the Company or the directives of the Chief Executive
Officer or the President; (e) the commission by the Employee, whether or not
prosecuted, of any act of fraud, theft, misappropriation, embezzlement or
falsification, involving properties, assets, records or funds of the Company or
any of its subsidiaries; or (f) the commission
Page 4
of, whether or not prosecuted, or pleading NOLO CONTENDERE to, (i) any crime or
offense involving monies or other property of the Company, (ii) any felony
offense, (iii) any crime of moral turpitude; or (iv) the chronic or habitual use
of drugs or consumption of alcoholic beverages. If Executive is terminated by
the Company for "cause," then, in that event, the Company shall have no further
obligation to Executive beyond the date of such termination, and any and all
benefits on behalf of Executive pursuant to Paragraphs 4, 5, 6, and 7 hereof
shall terminate and cease thence.
9. CONFIDENTIALITY AND NON-SOLICITATION. During the Term, Executive will have
access to and become acquainted with what Executive and the Company acknowledge
are trade secrets and other confidential information (the "Confidential
Information") which are the exclusive property of the Company. . In light of the
sensitive and proprietary nature of the Confidential Information, Executive
agrees to be bound by the BDE's standard Confidential Information and
Non-Solicitation Agreement.
10. MISCELLANEOUS PROVISIONS.
10.1. NOTICES. Except as otherwise provided in this Agreement, all notices,
requests, demands, and other communications under this Agreement shall be given
in writing and shall be served either personally, by facsimile or delivered by
first class mail, registered or certified, postage prepaid, and properly
addressed as follows:
If to the Company:
Brilliant Digital Entertainment, Inc.
Attn : Vice President, Business Affairs
0000 Xxxxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
with a copy to:
Troop Xxxxxxx Xxxxxx Xxxxxxx & Xxxxx, LLP
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
If to Executive:
with a copy to:
Notices shall be deemed received at the earliest of actual receipt,
confirmed facsimile or three (3) days following mailing.
Page 5
10.2. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter contained herein and
supersedes all prior agreements, representations, and understandings of the
parties.
10.3. AMENDMENTS. This Agreement may not be amended, supplemented,
canceled, or discharged except by written instrument executed by the parties
hereto.
10.4. WAIVERS. All waivers hereunder shall be in writing. No waiver by any
party hereto of any breach or anticipated breach of any provision of this
Agreement by any other party shall be deemed a waiver of any other
contemporaneous, preceding, or succeeding breach or anticipated breach, whether
or not similar, on the part of the same or any other party.
10.5. SEVERABILITY. In the event that any provision of this Agreement shall
be unenforceable or inoperative as a matter of law, the remaining portions or
provisions shall remain in full force and effect.
10.6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, executors, administrators, successors, and assigns, provided,
however, that Executive may not assign any or all of his rights or duties
hereunder except following the prior written consent of the Company.
10.7. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same Agreement.
10.8. SECTION HEADINGS. The section headings used in this Agreement are
inserted for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
10.9. GOVERNING LAW. Except where otherwise indicated, this Agreement shall
be construed and enforced in accordance with the laws of the State of
California.
10.10. ADVICE OF COUNSEL. Executive acknowledges that he has been advised
to seek independent legal counsel for advice regarding the effect of the terms
and provisions hereof, and has either obtained such advice of independent legal
counsel, or has voluntarily and without compulsion elected to enter into and be
bound by the terms of this Agreement without such advice of independent legal
counsel.
Page 6
IN WITNESS WHEREOF, the parties hereto have duly executed this Employment
Agreement as of the date first above written.
BRILLIANT DIGITAL
ENTERTAINMENT, INC. EXECUTIVE
By: /S/ XXXXX XXXXXXXXXX /S/ X. XXXXXX
----------------------------- ------------------------------
Title: President Address:
-------------------------- ---------------------
------------------------------
