Exhibit 10.12
EMPLOYMENT AGREEMENT
Agreement made as of May 1, 2006 by and between SoftWave Media
Exchange, Inc., a Delaware corporation (the "Company"), and Xxxxx Xxxx (the
"Executive").
WHEREAS, the Company desires to employ the Executive, and the Executive
desires to accept employment with the Company, all on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Company and the Executive hereby agree as follows:
1. The Company shall employ the Executive, and the Executive
shall serve the Company, for the two-year (2 year) period beginning May 1, 2006
and ending on May 1, 2008, unless earlier terminated in accordance with the
terms hereof or extended by written agreement of the parties (this term, as it
may be so modified from time to time, the "Term").
2. The Executive shall serve the Company as its Chief Financial
Officer during the Term. Subject to the terms hereof, during the Term, the
Executive shall diligently perform such duties and exercise such powers as may
be from time to time assigned to or vested in him by the Company's Chief
Executive Officer, and shall report to the Chief Executive Officer; and use his
best efforts to promote the interests of the Company. Executive agrees to devote
his best efforts and full professional time to performing services on behalf of
the Company and its subsidiaries and affiliates, but this shall not be construed
as preventing Executive from investing his assets in such form or manner as will
not require any services on the part of the Executive in the operation of the
affairs of the companies in which such investments are made. The Executive shall
adhere to all policies of the Company as may be in effect from time to time.
3. a. During the initial two-year term of this Agreement, the
Company shall pay the Executive a salary at an annual rate of $240,000, which
shall be payable periodically in accordance with the Company's then prevailing
payroll practices (as it may be increased, but not decreased, from time to time,
the "Base Salary"). The Executive's Base Salary shall be reviewed annually by
the Compensation Committee of the Board of Directors of Directors of the Company
(the "Board"), with the first review to occur after twelve months from the date
hereof, and shall be subject to increase from time to time as determined in the
sole discretion of the Compensation Committee of the Board. The Board shall
consider adjustments in the cost of living in determining any such increases.
b. The Executive shall be entitled to such vacation time,
sick leave, perquisites of office, fringe benefits, incentive, retirement,
profit-sharing, life, medical, disability and other benefit plans and programs
and other terms and conditions of employment as the Company generally provides
to its Executives having rank and seniority at the Company comparable to the
Executive (collectively, the "Benefits").
c. During the Term, the Company shall reimburse Executive
for reasonable expenses incurred on behalf of the Company in accordance with the
Company's policies.
d. The Executive shall receive 10-year non-qualified stock
options to purchase 410,000 shares of common stock of the Company (the "Stock
Options") at an exercise price of $1.00 per share. 160,000 of the Stock Options
shall vest on November 1, 2006, 125,000 of the Stock Options shall vest on May
1, 2007, and 125,000 options shall vest on November 1, 2007. The Stock Options
shall contain a provision which provides for vesting upon a Change of Control
(as defined herein).
e. The Executive shall receive a full communications
package comparable to that which the Company provides to its other Executives,
as determined by the Company.
4. Unless terminated in accordance with the following provisions
of this paragraph 4 or an earlier resignation by Executive, the Company shall
continue to employ the Executive and the Executive shall continue to work for
the Company, during the Term.
a. This Agreement shall terminate automatically upon the
death of the Executive ("Termination on Death").
b. The Company may terminate the Executive's employment if
the Executive suffers from a physical or mental disability to an extent that
renders it impractical for the Executive to continue performing his duties
hereunder. The Executive shall be deemed to be so disabled if (i) a physician
selected by the Company advises the Company that the Executive's physical or
mental condition will render the Executive unable to perform his duties for a
period exceeding three consecutive months, or (ii) due to a physical or mental
condition, the Executive has not substantially performed his duties hereunder
for a period of three consecutive months. Any termination pursuant to this
paragraph 4 b. shall hereinafter be defined as a "Disability Termination."
c. The Company may terminate the Executive's employment at
any time for Cause (as hereinafter defined, and any such termination, a
"Termination for Cause"). "Cause" shall mean (i) Executive's conviction of a
felony involving fraud or dishonesty; (ii) conduct of the Executive determined
by a court of law to constitute theft or intentional misappropriation of funds,
trade secrets or other proprietary property of the Company, and which materially
injures the Company; (iii) willful misconduct on the part of the Executive
determined by a court of law to constitute illegal, fraudulent, dishonest or
unethical dealings with the Company, clients, customers and/or vendors, and
which materially injures the Company; (iv) conduct that causes substantial harm
to the reputation of the Company among any of the general public or the
Company's customer or supplier base; or (v) refusal to be examined by a
physician selected by the Company after Executive has been unable to perform his
duties for a period exceeding three consecutive months. Any Termination for
Cause shall require that all of the following occur prior to termination: (i)
written notice be provided to Executive detailing the grounds for such
Termination for Cause and providing specific facts underlying such grounds; (ii)
the Executive be provided an opportunity to be heard by the Board, with or
without presence of counsel for the parties (at Executive's discretion), and
shall be given a reasonable time, but in no case less than 10 days, to cure the
situation (if curable); and (iii) the Board thereafter issues its findings in
writing to the Executive.
d. The Company may terminate the Executive's employment at
any time without Cause (a "Termination Without Cause" or Executive being
"Terminated Without Cause"). In the event that the Executive is Terminated
Without Cause, the Company shall continue to pay the Executive's compensation
equivalent to his Base Salary and Bonuses that would have been payable (as
measured by the Threshold for the highest paid Executive of equivalent rank who
remains or becomes employed with the Company during the Term) for a period of
three months from the date of Termination Without Cause upon the execution by
Executive of a release in a form reasonably satisfactory to the Company. Such
pro-rata Bonus shall be at such time as other Executives of the Company are paid
their respective Bonuses in respect of that fiscal year. The Company shall
provide all Benefits and keep in place and maintain all premiums for health
insurance policies as if the Executive were still employed in such capacity with
the Company until the earlier to occur of three months following such
termination, or the end of the Term. In addition, all Stock Options that have
not yet vested on the date of such termination shall expire. In addition,
Executive will receive all other vested benefits, retirement plans, accrued
vacation pay and other amounts due by law. Such payments and consideration to
the Executive by the Company will be in full and complete satisfaction (except
as provided in subsection e below) of any and all obligations owing to the
Executive pursuant to this Agreement.
e. The Executive may resign or retire by providing the
Company with at least 30 days written notice. If the Executive resigns his
position with the Company or retires, the Company shall only be obligated to pay
the Executive's compensation through the last day of the Executive's employment
with the Company.
f. Upon a Termination on Death or a Disability Termination
or for a Termination With Cause, the Company shall pay the Executive or his
estate the Base Salary and Bonuses earned and unpaid to the date of termination,
accrued vacation, vested benefits and other amounts due by law. Any such
payments to Executive may (at the Board's discretion) be subject to offset for
any unpaid advances, amounts receivable, and loans, including accrued interest,
outstanding on the effective date of the employment termination. Except as
otherwise provided herein as to a Termination Without Cause, the Executive's
benefits and rights under any benefit plan, other than any basic health and
medical benefit plan, shall be paid, retained or forfeited in accordance with
the terms of such plan; provided, however, that the Company shall have no
obligation to make any payments toward these benefits for the Executive from and
after termination. Executive shall be entitled to assume any life insurance or
disability policies as are in effect at the time of termination, at his sole
cost and expense.
g. Upon a Termination Without Cause or a Material
Diminution (as defined below) following a Change of Control, the Company shall
pay the Executive a lump-sum cash payment equivalent to the lesser of (i) the
Executive's Base Salary for one year or (ii) the Executive's Base Salary for the
Executive's remaining Term. "Material Diminution" shall only mean a situation in
which the Executive is no longer employed as the Chief Financial Officer of the
Company, or substantially equivalent position, regardless of what, if any,
additional positions Executive may from time to time hold or not hold with the
Company or its subsidiaries or affiliates, or the material diminution of the
duties or responsibilities commensurate with the position of Chief Financial
Officer of the Company, or reduction of the Executive's base salary compensation
below the amount set forth herein.
5. a. The Executive shall execute and deliver the
confidentiality agreement as in use from time to time by the Company for its
executives (the "Confidentiality Agreement").
b. The Executive also agrees that during his employment at
the Company, he will not knowingly be actively engaged in any business directly
competing with the Company in any business that the Company is engaged in at
that time (a "Competing Company"). For purposes of this Agreement, the Executive
shall be deemed to be engaged in or to have a financial interest in a Competing
Company if he is an employee, officer, director, or partner of any Competing
Company, or if he or any member of his immediate family beneficially owns (as
defined in the Securities Act of 1934, as amended (the "Exchange Act")) an
equity interest, or interest convertible into equity, in any such entity;
provided, however, that the foregoing shall not prohibit the Executive or a
member of his immediate family from owning, for the purpose of passive
investment, less than 5% of any class of securities of a publicly-held Competing
Company.
c. Unless the Executive is Terminated Without Cause or
there is a Change of Control, during the Non-Competition Period described below,
the Executive shall not, directly or indirectly, without the prior written
consent of the Company, (i) own, manage, operate, join, control, be employed by,
consult with or participate in the ownership, management, operation or control
of, or be connected with (as a stockholder, partner, or otherwise) the media
marketplace software industry in the geographic areas where the Company is
operating or has plans to operate as of the beginning of the Non-Competition
Period; PROVIDED, HOWEVER, that the "beneficial ownership" (as that term is
defined in Rule 13d-3 under the Exchange Act ) by the Executive after his
termination of employment with the Company, either individually or as a member
of a "group" for purposes of Section 13(d)(3) under the Exchange Act and the
regulations promulgated thereunder, of not more than two percent (2%) of the
voting stock of any of these corporations which are publicly held shall not be a
violation of this Agreement or (ii) directly or indirectly, as an employee,
employer, consultant, agent, principal, partner, manager, principal, manager,
stockholder, officer, director or in any other capacity, solicit for employment
or employ any person who was employed by the Company (or any of its affiliates)
in the prior 12 months of Executive's employment with the Company.
d. Unless the Executive is Terminated Without Cause or
there is a Change of Control, during the Non-Competition Period described below,
the Executive shall not, either directly or indirectly, alone or in conjunction
with another person, interfere with or harm, or attempt to interfere with or
harm, the relationship of the Company, its subsidiaries and/or affiliates, with
any person who at any time was an employee of the Company.
e. For purposes of this Agreement, the "Non-Competition
Period" means the period that Executive is employed by the Company plus one year
following the termination of the Executive's employment.
f. For purposes of this Agreement, the term "Change of
Control" shall be deemed to have occurred as of the first day that any one or
more of the following conditions is satisfied:
(i) Any person is or becomes the "beneficial owner"
(as that term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of
securities of the Company representing 50% or
more of the combined voting power of the
Company's then outstanding; or
(ii) Any of the following occur: (A) any merger or
consolidation of the Company, other than a
merger or consolidation in which the voting
securities of the Company immediately prior to
the merger or consolidation continue to
represent (either by remaining outstanding or
being converted into securities of the surviving
entity) 20% or more of the combined voting power
of the Company or surviving entity immediately
after the merger or consolidation with another
entity; (B) any sale, exchange, lease, mortgage,
pledge, transfer, or other disposition (in a
single transaction or a series of related
transactions) of all or substantially all of the
assets or earning power of the Company on a
consolidated basis; (C) any complete liquidation
or dissolution of the Company; (D) any
reorganization, reverse stock split or
recapitalization of the Company that would
result in a Change of Control as otherwise
defined herein; or (E) any transaction or series
of related transactions having, directly or
indirectly, the same effect as any of the
foregoing.
6. Any notice or other communication required or permitted under
this Agreement shall be effective only if it is in writing and delivered
personally or sent by registered or certified mail, postage prepaid, addressed
as follows:
If to the Company:
------------------
Soft Wave Media, Inc.
0 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If to the Executive:
--------------------
Xxxxx Xxxx
0 Xxx Xxxxxxx Xxx
Xxxxxxxx, XX 00000
or to such other address as either party may designate by notice to the other,
and shall be deemed to have been given upon receipt.
7. This Agreement and those contemplated or referenced herein
constitute the entire agreement between the parties hereto with respect to the
Executive's employment by the Company, and supersedes and is in full
substitution for any and all prior understandings or agreements with respect to
the Executive's employment.
8. The Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be waived only by an
instrument in writing signed by the party or parties against whom or which
enforcement of such waiver is sought. The failure of either party hereto at any
time to require the performance by the other party hereto of any provision
hereof shall in no way affect the full right to require such performance at any
time thereafter, nor shall the waiver by either party hereto of a breach of any
provision hereof be taken or be held to be a waiver of any succeeding breach of
such provision or a waiver of the provision itself or a waiver of any other
provision of this Agreement.
9. This Agreement is binding on and is for the benefit of the
parties hereto and their respective successors, heirs, executors, administrators
and other legal representatives, including but not limited to any purchaser of
substantially all of the Company's assets or into which the Company' is merged.
Except as otherwise expressly provided herein, neither this Agreement nor any
right or obligation hereunder may be assigned by the Company or by the
Executive.
10. If any provision of this Agreement, or portion thereof, is so
broad, in scope or duration, so as to be unenforceable, such provision or
portion thereof shall be interpreted to be only so broad as is enforceable.
11. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
12. Any disputes between Company and Executive shall be resolved
through arbitration in the County of Westchester, State of New York, pursuant to
the Commercial Arbitration Rules of the American Arbitration Association, and
judgments on the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. Each party shall pay the fees of his or its
attorneys; the expenses of his or its witnesses; and all other expenses
connected with presenting his or its case. Other costs of the arbitration,
including filing fees, the cost of any record or transcripts of the arbitration
hearing, administrative fees, the fees of the arbitrator, and all other fees and
costs shall be borne by the Company.
13. This Agreement may be executed in several counterparts, each
of which shall be deemed an original, but all of which shall constitute one and
the same instrument.
14. The Company hereby agrees to indemnify, defend, save, and hold
harmless Executive to the maximum extent permitted by law from and against all
claims, liabilities, causes of action, damages, judgments, attorneys' fees,
court costs, and expenses which he may incur as a result of his employment with
Company, except for the Executive's own willful and wanton misconduct. The
Company understands that this obligation of indemnification survives the
expiration or termination of this Agreement.
15. This Agreement shall be assigned or transferred to, and shall
be binding upon and shall inure to the benefit of, any successor of the Company,
and any such successor or successors shall be deemed substituted for all
purposes for "the Company," as applicable, under the terms of this Agreement. As
used in this Agreement, the term "successor" shall mean any Person which at any
time, whether by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the Company and any person whose beneficial ownership
causes a Change in Control. The Company shall require any successor to agree in
writing to assume, satisfy and discharge all obligations of the Company under
this Agreement, such written agreement to be for the benefit of and enforceable
by Executive as a third party beneficiary. Except as herein provided, this
Agreement may not otherwise be assigned by the Company.
16. ACKNOWLEDGMENT. Executive acknowledges that he has carefully
read this Agreement, has had an opportunity to consult counsel regarding the
Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed
this Agreement as of the date first written above.
/s/ Xxxxx Xxxx SOFT WAVE MEDIA, INC.
--------------------------------
Executive's Name: Xxxxx Xxxx
By: /s/ Xxxxxxx Xxxxxxxxx
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Name: Xxxxxxx Xxxxxxxxx
Title: President
