Exhibit 10.37
EXECUTIVE EMPLOYMENT AGREEMENT
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This Executive Employment Agreement (this "Agreement"), is entered into
by and between RAVISENT Technologies, Inc., a Delaware corporation with a place
of business at 000 Xxxxx Xxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxxxx (the "Company"
or "RAVISENT"), and Xxxx Xxxxxx, a resident of Mansfield, Massachusetts
("Executive"). The Company and Executive are collectively referred to herein as
the "Parties." The term "RAVISENT" as used herein shall include all of its
subsidiaries, affiliates, and businesses. The effective date of this Agreement
is the date of the Closing as defined in the Share Purchase Agreement referred
to below.
WHEREAS, under the terms of the Share Purchase Agreement dated as of
____________ ("Share Purchase Agreement"), RAVISENT has agreed to acquire all
of the issued and outstanding shares of capital stock of eMation, Ltd.
("eMation"); and
WHEREAS, the Company seeks to retain the services of Executive to serve
as President , and a member of the Board of Directors, of the Company under the
Share Purchase Agreement;
NOW, THEREFORE, Executive and the Company agree as follows:
SECTION I. POSITION AND RESPONSIBILITIES
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The Company agrees to employ Executive and Executive agrees to serve in
the employ of the Company as an executive, as follows:
(a) Executive agrees to serve the Company as President of the
Company during the term of this Agreement. Executive shall also
serve as a member of the Company's Board of Directors during the
term of this Agreement. Executive further agrees to use his best
efforts, and apply his skill and experience, to the proper
performance of his duties hereunder. Executive agrees to serve the
Company faithfully, diligently and to the best of his ability.
Executive will report to Xxxxxxx X. Xxxxx, Chief Executive Officer
of the Company, or his successor.
(b) The principal location from which Executive will serve the
Company and perform his duties hereunder shall be at the Company's
place of business in Mansfield, Massachusetts, although it is
understood and agreed that the performance of Executive's duties
will require him to travel extensively within and without the United
States of America.
The Company shall compensate Executive for his services as provided herein.
SECTION II. TERM OF EMPLOYMENT
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Executive's employment with the Company will commence as of the Effective
Date defined within the Share Purchase Agreement, and will continue for a
period of three (3) years immediately thereafter unless further extended or
sooner terminated as hereinafter provided. Unless either party notifies the
other at least three (3) month's prior to its expiration, the Agreement shall
extend automatically for an additional one (1) year period. The Agreement shall
continue to extend automatically for successive one (1) year periods until such
notice is given or until a new agreement is executed by the parties or until
otherwise terminated as provided herein.
SECTION III. COMPENSATION
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(a) Salary. During the period of the Executive's employment hereunder,
the Company shall pay to the Executive a minimum base salary at the rate
of not less than $220,000 per annum with the same frequency and on the
same basis that the Company normally makes salary payments to the other
executive personnel and in accordance with the Company's normal payroll
policies and procedures. This minimum base salary may be increased from
time to time in accordance with normal business practices of the Company.
If such increases take place, the Company shall not thereafter decrease
the Executive's salary without the Executive's consent during the term of
this Agreement.
(b) Bonus. In addition to his minimum base salary, Executive will be
entitled to an annual bonus of up to $100,000 based upon the Executive's
attainment of certain personal goals and objectives mutually agreed upon
by Executive and the Company (the "Personal Bonus"). Executive's
first-year Personal Bonus is, however, guaranteed. Executive will be
entitled to an additional annual bonus of $100,000 provided the Company
experiences revenue in year one in excess of $12,400,000 and the Company
achieves the earnings target (before interest, taxes, depreciation and
amortization) as defined in the Company's Street Plan. The Executive will
be entitled to an additional bonus in year one equal to 1% of any revenue
achieved by the Company in excess of $14,000,000. The corporate bonus
targets for subsequent years will be adjusted upon mutual agreement of
the Executive and the Company.
(c) Other Compensation. As an additional incentive for Executive to
remain employed by the Company for the term of this Agreement, the
Parties agree as follows:
(i) The Company shall pay to Executive a one-time, sign-on
bonus of $150,000 upon execution of this Agreement.
(ii) The Executive shall be granted, upon execution of this
Agreement, options to purchase 300,000 shares of common stock
of the Company of which twenty-five percent (25%) of these
options shall vest immediately upon execution of this
Agreement, with the
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remainder vesting proportionately each months over 24 months
of this Agreement. These options will have an exercise price
of $.01 per share. The term of such options shall be in
accordance with the Stock Option Plan, and related agreements,
that shall be assumed by the Company upon the closing under
the Share Purchase Agreement ("Assumed Plan"), subject to the
limitations of the Internal Revenue Code of 1986, as amended
("Internal Revenue Code"). Such agreements will contain terms
which provide for a ten year period during which Executive may
exercise vested options. These options will be subject to
other, additional terms and conditions to be addressed in the
Assumed Plan.
(iii) The Executive shall be granted, upon execution of this
Agreement, additional options to purchase 200,000 shares of
common stock of the Company, which the Company shall qualify
as incentive stock options as defined in Section 422 of the
Internal Revenue Code. These options will have an exercise
price equal to the fair market value of the shares as of the
date of this Agreement. The term of such options shall be in
accordance with the Stock Option Plan, and related agreements,
that shall be assumed by the Company upon the closing under
the Share Purchase Agreement ("Assumed Plan"), subject to the
limitations of the Internal Revenue Code. Such agreements will
contain terms which provide for a ten year period during which
Executive may exercise vested options subject to the Internal
Revenue Code's limitation on the exercise of vested incentive
options later than ninety (90) days after termination of
employment and the limitation on the granting of more than one
hundred thousand dollars ($100,000) of vested incentive
options in a calendar year. Such limitations do not cancel
incentive stock options granted but provide for a mechanism by
which such options convert into non-qualified stock options
thereby losing the tax benefit of incentive stock options
under the Internal Revenue Code. Twenty-five percent (25%) of
these options shall vest immediately upon execution of this
Agreement, with the remainder vesting proportionately each
month over 24 months of this Agreement. These options will
also be subject to other, additional terms and conditions to
be addressed in the Assumed Plan.
(iv) The Company shall pay Executive an amount sufficient to
offset any adverse tax consequence experienced by Executive as
a result of the Company's acquisition of eMation.
(d) Expenses. The Executive shall be entitled to receive prompt
reimbursement of all reasonable business expenses incurred by the
Executive in performing his services hereunder, including expenses
related to travel, housing and other
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business expenses while away from home on business. Such expenses shall
be accounted for under the policies and procedures presently established
by the Company.
(e) Other Benefits. The Company shall maintain and the Executive shall be
entitled to participate in all of the Company's employee benefit plans
and arrangements in effect on the date hereof including, without
limitation, all pension and retirement plans, life insurance, health,
accident, medical and disability insurance, and the Company's holiday and
vacation plans. Notwithstanding the foregoing, the Company may make
changes in any such arrangements provided that such changes are made
pursuant to a program which is applicable to all executives of the
Company and which changes do not result in a proportionately greater
reduction in the rights and benefits to the Executive as compared with
any other executive.
Without limiting the generality of the foregoing, during the term of this
Agreement, the Company shall
(i) maintain in force with Executive's designated beneficiary a
$2,000,000 ten-(10) year, decreasing term life insurance policy;
(ii) maintain in force one or more disability insurance policies
with a total benefit of $18,000 per month; and
(iii) provide Executive with a monthly car allowance of $833 per
month.
The Executive shall also be entitled to participate or receive benefits
under any future employee benefit plan or arrangement that the Company
establishes for its key executives consistent with the general terms of
any such future benefits plans.
Whenever the term "compensation" or "compensate" is used in this
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Agreement, it shall mean the annual amounts (including all salary, bonuses, and
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benefits) calculated for the respective calendar year in accordance with the
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provisions of this Section III. Whenever the Company is required to make
payments to Executive under this Section or Section VII below, which payments
include bonus payments for a period or periods of time, which have not yet
occurred, Executive will be paid his bonus portion at no less than 100% of the
targeted amount.
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SECTION IV. EXPENSES AND OTHER MATTERS
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Matters relating to expense accounts for Executive, and any additional
perquisites not already contained in this Agreement, shall be mutually agreed
upon from time to time. The Executive shall be entitled to a minimum of four
(4) weeks paid vacation during each calendar year, or, if a greater vacation
benefit shall be provided to the Company's senior executives, such greater
benefit shall be provided to Executive, in addition to all normal and customary
holidays observed by the Company.
The Company shall, to the fullest extent authorized under the laws of the
State of Delaware, as those laws may be amended and supplemented from time to
time, indemnify the Executive upon being made, or threatened to be made, a
party to any actions suit or proceeding by reason of the fact that he is or was
an officer of the Company. The Executive shall be covered by the Company's
Directors and Officers Insurance policy and the indemnification provisions
contained therein. The Company is required to maintain such policy, or a policy
with similar terms and condition, in full force throughout the term of this
Agreement.
SECTION V. MEDICAL EXPENSES BENEFITS.
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Executive, his spouse and dependents shall be covered under the Company's
Group Insurance Medical Plan. Coverage under such plan shall be continued
during Executive's active or disabled status with the Company. The rights of
the Executive, his spouse and dependents to benefits under the Company's Group
Insurance Medical Plan are vested hereunder, notwithstanding any subsequent
termination of, or reduction of benefits under, such Plan by the Company.
SECTION VI. TERMINATION
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The Executive's employment may be terminated only under the following
conditions.
(a) By Executive. The Executive may terminate his employment hereunder if
(i) the Board should fail to elect and appoint Executive as
President or to an executive office possessing comparable
duties and responsibilities;
(ii) there is a change in control (defined below) of the
Company;
(iii) there is a failure by the Company to comply with any
material provision of this Agreement and such failure has
continued for a period of thirty (30) days after notice of such
failure has been given by the Executive to the Company;
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(iv) there is a purported termination by the Company of the
Executive's employment which is not effected pursuant to the
provisions of this Agreement relating to termination of the
Executive's employment by the Company; or
(v) upon ninety (90) days written notice by Executive to the
Company of his voluntary resignation.
For purposes of this Agreement, a "change in control of the Company"
shall be deemed to have occurred if (i) as a result of a tender
offer, merger, consolidation, sale of assets or any combination of
the foregoing transactions, the persons who were directors of the
Company immediately before the transaction shall cease to constitute
a majority of the board of directors of the Company or any successor
to the Company; (ii) the Company shall be merged or consolidated
with another operation, and as a result of such merger or
consolidation, less than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the former shareholders of the Company; (iii) the
Company shall sell substantially all of the assets of the Company to
an unaffiliated corporation; or (iv) the acquisition by any
corporation or group of associated persons acting in concert of an
aggregate of more than 50% of the outstanding shares of voting stock
of the Company coupled with or followed by the election as directors
of the Company of persons who were not directors of the time of such
acquisition if such persons shall become a majority of the board of
directors of the Company.
(b) By the Company.
(i) The Company may terminate Executive's employment
immediately for cause. A termination or discharge for "cause"
is a termination by reason of the Board's good faith
determination that (A) the Executive engaged in willful
misconduct in the performance of his duties, (B) breached a
fiduciary duty to the Company for personal profit to himself,
(C) willfully violated any law, rule or regulation of a
governmental authority with jurisdiction over the Executive or
the Company at the time and place of such violation (other
than traffic violations or similar offenses) or any final
cease and desist order of a court or other tribunal of
competent jurisdiction, or (D) materially breached this
Agreement. No act, or failure to act, on the Executive's part
shall be considered "willful" unless he has acted, or failed
to act, with an absence of good faith and without a reasonable
belief that his action or failure to act was in the best
interests of the Company.
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(ii) The Company may terminate Executive's employment at any
time during the term of this Agreement for any reason other
than for cause or defined above, upon ninety (90) days written
notice to Executive.
SECTION VII. COMPENSATION UPON TERMINATION.
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If the Executive shall terminate his employment hereunder as provided in
Section VI(a)(i)-(iv) hereof, if the Company shall terminate the Executive's
employment for any reason other than for cause, or if the Company shall have
given the Executive written notice that the Employment Agreement shall not be
extended, the Executive shall be paid his full compensation through the date of
notice of termination and, in addition, shall be paid, in a lump sum, an amount
equal to the remaining compensation due under the Agreement, or else
Executive's total compensation for a period of twenty-four (24) months,
whichever is greater. Such lump sum payment shall not be reduced by any present
value calculation nor by any other amount and shall be paid to the Executive
within thirty (30) days of the Executive's date of termination. In addition,
all stock options previously granted to Executive shall become immediately and
fully vested, and subject to exercise according to and in compliance with the
Assumed Plan and Sections III(c)(ii) and (iii) set forth herein and the
Internal Revenue Code.
If the Executive's employment is terminated by the Company for cause, or
if Executive shall have voluntarily resigned his employment, or if Executive
notifies the Company of his intent not to extend this Agreement, or in the
event the Executive dies during his employment hereunder, or if by reason of
illness or other incapacity, Executive should be unable to perform the services
agreed upon herein, Executive shall be entitled to any and all compensation
payments previously agreed upon by Executive and the Company through the date
of termination, plus any and all other vested benefits under any profit sharing
or other plan of the company in accordance with the terms and conditions of
such plan, and no further payments.
If the Executive's employment is terminated because of any breach of this
Agreement by the Company, the Executive shall be entitled to any other damages
which he may sustain as a result of such breach including damages for loss of
benefits under any of the Company's benefit incentive compensation, retirement
income, or other plans that the Executive would have received had his
employment continued for the full term provided for in this Agreement. In
addition, the Executive shall also be entitled to recover from the Company any
legal fees or other expenses incurred by the Executive as a result of the
Company's improper termination hereof.
The Executive shall not be required to mitigate the amount of any payment
provided for by this Agreement by seeking other reemployment or otherwise.
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SECTION VIII. CONFIDENTIALITY
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Recognizing that the knowledge and information about, or relationship
with, the business associates, customers, clients and agents of the Company and
its affiliated companies and the business methods, systems, plans and policies
of the Company and of its affiliated companies which Executive has heretofore
and shall hereafter receive, obtain or established as an employee of the
Company or otherwise are available and unique assets of the Company, Executive
agrees that, during the continuance of this Agreement and thereafter, he shall
not (otherwise than pursuant to his duties hereunder) disclose without the
written consent of the Company, any material or substantial, confidential or
proprietary know-how, data or information pertaining to the Company, or its
business, personnel or plans, to any person, firm, corporation or other entity,
for any reason or purpose whatsoever. Executive acknowledges and agrees that
all memoranda, notes, records and other documents made or compiled by Executive
or made available to Executive concerning the Company's business shall be the
Company's exclusive property and shall be delivered by Executive to the Company
upon expiration or termination of this Agreement or at any other time upon the
request of the Company.
The obligations of the Executive specified in this paragraph shall not
apply and the Executive shall have no obligations with respect to any
information which (a) is disclosed in a printed publication available to the
public, is otherwise in the public domain at the time of disclosure, or becomes
publicly known through no wrongful act on the part of the Executive (b) is
obtained by the Executive lawfully from a third party who is not under an
obligation of secrecy of the Company, (c) is generally disclosed to third
parties by the Company without similar restrictions on such third parties, or
(d) is approved for release by written authorization of the Company.
The provisions of this Section VIII shall survive the expiration or
termination of this Agreement or any part thereof, without regard to the reason
therefore.
Executive hereby acknowledges that the services to be rendered by him are
of a special, unique and extraordinary character and, in connection with such
services, he will have access to confidential information concerning the
Company's business. By reason of this Executive consents and agrees that if he
violates any of the provisions of this Agreement with respect to
confidentiality, the Company would sustain irreparable harm and, therefore, in
addition to any other remedies which the Company may have under this Agreement
or otherwise, the Company will be entitled to seek an injunction restraining
Executive from committing or continuing any such violation of this Agreement.
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SECTION IX. COVENANT NOT TO COMPETE
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1. Executive acknowledges and agrees that by entering into this
Agreement with Company and engaging in the employment relationship contemplated
hereby, Executive will be performing significant duties on behalf of Company
and will be exposed to certain valuable know-how and information relating to a
highly competitive industry. Executive also acknowledges and agrees that the
covenants set forth in this section are a material part of the consideration
bargained for by Company, and without Executive's agreement to be bound by such
covenants, Company would not have agreed to enter into this Agreement or to
engage Executive's services.
2. Executive agrees that during the term of this Agreement, and
for one (1) year after any termination with or without Cause or by the
Executive, Executive will not, directly or indirectly, (i) solicit, divert,
recruit, induce, encourage or attempt to influence any client, customer,
employee, consultant, independent contractor, salesman or supplier of Company,
to cease to do business, decrease the level of business, or terminate his or
her employment or otherwise cease his, her or its relationship with Company, as
the case may be, or (ii) engage in (as a principal, agent, owner, consultant,
partner, director, officer, employee, stockholder, investor, lender or
otherwise), alone or in association with any person or entity, or be
financially interested in or otherwise connected with any business in any
activity similar to or in connection with the specific activities of Company,
and which such business activity is to produce, manufacture, import, market or
distribute in the United States or Europe or Asia any product or service (A)
which was produced, manufactured, imported, marketed or distributed by or for
Company at any time or (B) which Company as of the date of termination had a
specified marketing plan to produce, manufacture, import, market or distribute
within six (6) months of termination ; provided, however, that nothing
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contained in this Agreement shall prevent Executive from holding for investment
up to 5% of any class of equity securities of a company whose securities are
publicly traded (other than Company as to which there shall be no such
limitation).
SECTION X REMEDIES
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Executive acknowledges and agrees that: (a) the covenants set forth in
section IX are reasonable and are essential to the business interests and
operations of Company; (b) Company will not have any adequate remedy at law if
Executive violates the terms hereof or fails to perform any of Executive's
obligations hereunder; and (c) Company shall have the right, in addition to any
other rights it may have under applicable law, to obtain from any court of
competent jurisdiction preliminary and permanent injunctive relief to restrain
any breach or threatened breach of or otherwise to specifically enforce any
such covenant or any other of Executive's obligations under this Agreement, as
well as to obtain damages and an equitable accounting of all earnings, profits
and other benefits arising from such violation, which rights shall be
cumulative and in addition to any other rights or remedies to which Company may
be entitled.
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SECTION XI. DEDUCTIONS AND WITHHOLDING
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Executive agrees that the Company and its affiliated companies shall
withhold from any and all payments required to be made to Executive in
accordance with this Agreement all federal, state, local and other taxes that
the Company or any such affiliates determine are required to be withheld in
accordance with applicable statutes and regulations from time to time in effect.
SECTION XII. ASSIGNABILITY AND BINDING EFFECT
---------------------------------------------
The rights and obligations under this Agreement shall inure to the
benefit of and shall be binding upon the heirs, executors, administrators,
successors, and legal representatives of Executive, and shall inure to the
benefit and be binding upon the Company and its successors (including, without
limitation, any person, firm, corporation, partnership or entity who succeeds
to the business of the Company), but neither this Agreement nor the rights or
obligations of Executive hereunder may be assigned, pledged, hypothecated or
otherwise transferred by Executive to another, person, firm, corporation or
entity without Company's prior written consent, nor may the obligations of
Executive hereunder be delegated to any person, firm, corporation or entity.
SECTION XIII. NOTICES.
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All notices, requests, demands and other communications hereunder shall
be in writing and shall be delivered personally or sent by registered or
certified mail, prepaid and return receipt requested, to the other party hereto
at his or its mailing address as set forth on the signature page of this
Agreement, and in the case of the Company, marked to the attention of Xxxxxxx
X. Xxxxx, Chief Executive Officer, or his successor in interest. Either party
may change the address which such communications hereunder shall be sent by
sending notice of such change to the other party as herein provided.
SECTION XIV. SEVERABILITY
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If any provision of this Agreement of any part hereof is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all conditions and provisions of this Agreement which can be given
effect without such invalid, unlawful or unenforceable provisions shall,
nevertheless, remain in full force and effect.
SECTION XV. WARRANTY
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Executive warrants and represents that he is not and will not become a
party to any agreement, contract, arrangement or understanding, whether of
employment or otherwise, that would in any way restrict or prohibit him from
undertaking or performing his duties in accordance with this Agreement.
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SECTION XVI. BOARD APPROVAL
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By execution of this Agreement, the Company acknowledges that this
Agreement has been reviewed and adopted by a resolution approved by a majority
of their members of the Board.
SECTION XVII. COMPLETE UNDERSTANDING; PRIOR AGREEMENT
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This Agreement constitutes the complete understanding between the Parties
with respect to the undertaking of Executive hereunder, and no statement,
representation, warranty or covenant has been made by either party with respect
thereto except as expressly set forth herein. Unless otherwise specifically
referred to herein, this Agreement shall, from and after the Effective Date,
supersede, in all respects, all previous agreements in regard to employment
between Executive and the Company, and Executive shall, as of the Effective
date, unless otherwise specifically referred to herein, have no rights under
such agreement all of which merged herein and shall be governed hereby. This
Agreement shall not be altered, modified, amended or terminated expect by
written instrument signed by each of the Parties hereto.
SECTION XVIII. GOVERNING LAW
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This Employment Agreement shall be governed by, and construed and
enforced in accordance with, the law of the Commonwealth of Massachusetts. The
Courts of the Commonwealth of Massachusetts and the United States District
Court of the District of Massachusetts, shall have exclusive jurisdiction over
any dispute relating to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
this _____ day of May 2001.
6/27/01 \s\ Xxxx Xxxxxx
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Date: Xxxx Xxxxxx
RAVISENT Technologies Inc.
6/28/01 By:\s\ Xxxxxxx X. Xxxxx
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Date: Xxxxxxx X. Xxxxx
Chief Executive Officer and President
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