EMPLOYMENT AGREEMENT
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AGREEMENT dated as of the 31" day of March 2003, between SCORES HOLDING
COMPANY, INC., a Utah corporation with its principal place of business at 000 X.
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("SCOH") and XXXXXXX XXXXXXXX an
individual whose address is 0 Xxx Xxxxx Xxxxx, Xxxxxxxx, XX 00000 (the
"Employee").
W I T N E S S E T H:
WHEREAS, SCOH intends to engage in the business of owning and operating
adult entertainment nightclubs;
and
WHEREAS, SCOH intends to engage in the business of managing adult
entertainment nightclubs owned by third parties and/or licensing the right to
use the Scores name or other intellectual property owned by SCOH to adult
entertainment nightclubs owned by third parties; and
WHEREAS, Employee presently serves as President, Chairman and Chief
Executive Officer, for SCOH and SCOH seeks to further engage Employee on the
terms and conditions set forth below; and
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Employment. SCOH hereby employs Employee and Employee accepts
employment upon the terms and conditions of this Agreement. In addition to his
other duties, Employee shall be primarily responsible for SCOH's licensing
program. Employee shall not be precluded hereunder from continuing his
employment as Operations Manager for Scores Showroom, an adult entertainment
nightclub located at 000-X.00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx so long as such
employment shall not interfere with Employee's ability to properly perform the
duties assumed pursuant to this Agreement.
2. Term. SCOH hereby employs Employee and Employee hereby accepts
employment for a term commencing on the date hereof (the "Commencement Date"),
and expiring on the tenth (10) anniversary of this Agreement, unless sooner
terminated as hereinafter provided (the "Employment Period"). Except as
otherwise provided herein, Employee may unilaterally terminate this Agreement at
any time, upon providing SCOH with sixty (60) days prior written notice.
3. Employment and Duties.
3.1 Title. Employee is employed in the capacity of President
and Chief Executive Officer for SCOH.
3.2 Duties and Responsibilities. The services to be rendered by
Employee pursuant to this Agreement shall consist of such services as defined
and directed by SCOH's board of directors. Employee agrees to perform such
services with great diligence and care.
3.3 Observance of Rules and Regulations. Employee agrees to
observe and comply with the rules and regulations of SCOH with respect to the
performance of his duties.
4. Compensation; Benefits and Expenses
4.1 Base Salary. As compensation for the services to be rendered
hereunder, SCOH shall pay to Employee a base annual salary (the "Base Salary")
of $104,000 payable in equal bi-weekly installments.
4.2 Other Benefits. Employee shall also be eligible to
participate in any benefit programs of SCOH, including but not limited to
pension, insurance or other supplemental or special compensation plans or
arrangements. Employee shall also be eligible to receive performance based
bonuses as approved and authorized by SCOH's board of directors.
4.3 Travel, Automobile and Living Allowances. During the term of
this Agreement, Employee shall be entitled to annual travel, automobile and
living allowances. In connection herewith, SCOH agrees to advance and/or
reimburse Employee for all reasonable travel, automobile, living and other
expenses incurred by Employee in rendering the services hereunder on behalf of
SCOH provided Employee has all expenses in excess of $5,000 preapproved by SCOH.
Employee will be reimbursed upon presentation of vouchers or other documents
reasonably necessary to verify the expenditures and sufficient, in form and
substance, to satisfy Internal Revenue Service requirements for such expenses.
The maximum amount of Employee's annual automobile and living allowances under
this Agreement shall be determined by SCOH's board of directors.
5. Disability or Death of Employee.
5.1 SCOH shall obtain death and disability insurance on
Employee listing SCOH as the beneficiary in the minimum amount of $5,000,000. In
the event Employee dies or becomes disabled during the Employment Period,
entitling SCOH to receive payment under the insurance policy, SCOH's obligation
to pay Employee further Base Salary and benefits shall cease. Notwithstanding
the forgoing, Employee or his estate shall be entitled to all accrued but unpaid
Base Salary and other benefits due to Employee through the date of death or
disability.
5.2 (i) SCOH shall apply the insurance proceeds to the purchase
of Employee's stock in SCOH which will be valued and purchased by SCOH at a 20%
discount from the market price of the stock as at the date of death or
disability.
(ii) Except as otherwise provided in Section 5.2(iv) below, in the
event Employee owns SCOH stock with a value of less than $5,000,000 as at the
date of death or disability, SCOH shall be entitled to retain the balance of
insurance proceedings remaining after the purchase of Employee's SCOH stock.
(iii) In the event Employee owns stock with a value of more than
$5,000,000 as at the date of death or disability, SCOH shall have the right, but
not the obligation, to purchase more than $5,000,000 of such stock at the
discounted price. In connection therewith, SCOH shall give notice to Employee or
his estate, as the case may be, not more than 15 days after the date of death or
disability to advise of its intention as to Employee's additional SCOH shares.
Such notice will include the number of additional SCOH shares which are being
purchased.
(iv) Notwithstanding Section 5.2(ii) above, in the event Employee owns
no SCOH stock or owns SCOH stock with a discounted value of less than $1,000,000
as at the date of death or disability , Employee or his estate, as the case may
be, shall be entitled to retain all of their SCOH shares and receive $1,000,000
of the insurance proceeds.
6. Termination.
6.1 Termination By SCOH For Cause. Notwithstanding
anything to the contrary in this Agreement, SCOH shall have the right, subject
to this Section 6, to terminate this Agreement "for cause", by giving Employee
seven (7) days prior written notice to that effect, and Employee's right to
further compensation and benefits hereunder, shall then immediately cease. Any
termination SCOH under this paragraph "for cause" shall be without prejudice to
Employee's right to receive all compensation and benefits owed to him through
the effective date of termination. As used herein and throughout this Agreement,
the term "for cause" shall mean (i) commission of a willful act of dishonesty in
the course of Employee's duties hereunder, (ii) a material breach of this
Agreement that is not cured within 30 days of receipt of notice thereof, or
(iii) Employee's conviction of a criminal offense or crime constituting a felony
or conviction in respect to any act involving fraud, dishonesty or moral
turpitude resulting in detriment to SCOH or reflecting upon SCOH's integrity
(other than traffic infractions or similar minor offenses).
6.2 Termination By Employee Other Than For Good Reason. In the event
Employee terminates this Agreement without Good Reason (as defined in Section
6.3 hereof), Employee's rights to further compensation and benefits, hereunder
shall then immediately cease. Employee must give SCOH a minimum of 60 days prior
written notice to effect such a termination. Notwithstanding the foregoing, in
the event Employee terminates this Agreement without Good Reason more than three
years and less than seven years after the Commencement Date, SCOH shall pay
Employee a $1,000,000 termination fee.
6.3 Termination By Employee For Good Reason or Termination BY SCOH
Without Cause. (i) In the event Employee terminates this Agreement for "Good
Reason" or SCOH terminates this Agreement without cause, Employee shall be
entitled to receive all of the remaining Base Salary then due Employee under
this Agreement plus any previously unreimbursed travel, living or car expenses.
(ii) Employee shall have the right to terminate this Agreement and his
employment hereunder for "Good Reason" if (A) Employee shall have given SCOH
prior written notice of the reason therefore, (B) such notice shall have been
given to SCOH within fifteen (15) days after Employee is notified or otherwise
first learns of the event constituting "Good Reason," and (C) a period of
fifteen (15) days following receipt by SCOH of such notice shall have lapsed and
the matters which constitute or give rise to such "Good Reason" shall not have
been cured or eliminated within such fifteen (15) day period, such period shall
be extended up to forty-five (45) days, provided that SCOH shall take and
diligently pursue during such period such action necessary to cure or eliminate
such matters. In the event SCOH shall not take such action within such period,
Employee may send another notice to SCOH electing to terminate his employment
hereunder and, in such event, Employee's employment hereunder shall terminate
and the effective date of such termination shall be the 30 days after SCOH shall
have received such notice.
(iii) For the purpose of this Agreement, "Good Reason" shall mean the
occurrence of any of the following without Employee's prior written consent:
(1) Requiring Employee to engage in an illegal act, or an act
which is inconsistent with prior practices of SCOH and which could
reasonably be deemed to be materially damaging or detrimental to
Employee;
(2) A default by SCOH in the payment of any material sum or
the provision of any material benefit due to Employee pursuant to this
Agreement;
(3) The failure of SCOH to obtain the assumption of this
Agreement by any successor to substantially all of the assets or
business of SCOH; or
(4) Any material breach by SCOH of any provision of this
Agreement which is not corrected by SCOH or, if the breach cannot be
corrected, as to which XXXX fails to pay to Employee reasonable
compensation for such breach, within 60 days following receipt by SCOH
of written notice from Employee specifying the nature of such breach.
7. Confidentiality. Employee agrees that all confidential and
proprietary information relating to the business of SCOH shall be kept and
treated as confidential both during and after the term of this Agreement, except
as may be permitted in writing by SCOH's Board of Directors or as such
information is within the public domain or comes within the public domain
without any breach of this Agreement.
8. Assumption of Insurance Policy. In the event this Agreement is
terminated by SCOH without cause or by Employee for Good Reason, Employee shall
have the right, if exercised by Employee in writing within 15 days of such
termination, to assume the death and disability insurance policy, and to make
Employee the beneficiary thereof.
9. Indemnification. SCOH and Employee shall indemnify the other
party for any losses, damages, liabilities, judgments, claims, costs, penalties
and expenses incurred by such other party (including without limitation costs
and reasonable attorneys' fees and costs), resulting from the indemnifying
party's failure to perform any of their obligations contained in this Agreement.
SCOH shall indemnify Employee against any liabilities incurred by him in
connection with any proceeding to which he is made a party as the result of his
performing his duties hereunder, unless such liability results from Employee's
gross negligence or misconduct in the performance of such duties.
10. Vacation. Employee shall be entitled to eight (8) weeks of paid
vacation time per contract year.
11. Governing Law. This Agreement shall be governed by the internal
laws of the State of New York. Any action to enforce any term hereof shall be
brought exclusively within the state or federal courts of New York, New York to
which jurisdiction and venue all parties hereby submit themselves.
12. Binding Effect. Except as otherwise herein expressly provided,
this Agreement shall be binding upon, and shall inure to the benefit of the
parties hereto, their respective heirs, legal representatives, successors and
assigns.
13. Notices. All notices, designations, consents, offers,
acceptances, waivers or any other communication provided for herein, or required
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, overnight courier, or delivered by hand.
The notices shall be addressed as follows:
If to Employee: to the address set forth above
If to SCOH: to the address set forth above
or to such other address as a party hereto may notify the other pursuant to this
Section.
14. Additional Documents. Each of the parties hereto agrees to
execute and deliver, without cost or expense to any other party, any and all
such further instruments or documents and to take any and all such further
action reasonably requested by such other of the parties hereto as may be
necessary or convenient in order to effectuate this Agreement and the intents
and purposes thereof
15. Counterparts. This Agreement and any amendments hereto may be
executed in two (2) or more counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same instrument, binding
on the parties and the signature of any party to any counterpart shall be deemed
a signature to, and may be appended to, any other counterpart.
16. Entire Agreement. This Agreement contains the sole and entire
agreement and understanding of the parties and supersedes any and all prior
agreements, discussions, negotiations, commitments and understandings among the
parties hereto with respect to the subject matter hereof. There are no
representations, agreements, arrangements or understandings, oral or written,
between or among the parties concerning the subject matter hereto, which are not
fully expressed herein or in any supplemental written agreements of even or
subsequent date hereof
17. Severability. If any provision of this Agreement, or the
application thereof to any person or circumstances, shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby, but rather shall be enforced to the greatest extent permitted
by law.
18. Modification. This Agreement cannot be changed, modified or
discharged orally, but only if consented to in writing by both parties.
19. Contract Headings. All headings of the Sections of this Agreement
have been inserted for convenience of reference only, are not to be considered a
part of this Agreement, and shall in no way affect the interpretation of any of
the provisions of this Agreement.
20. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants, or conditions hereof shall not be deemed a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one time or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
21. Representation of Employee. Employee, with the full knowledge
that SCOH is relying thereon, represents and warrants that he has not made any
commitment inconsistent with the provisions hereof and that he is not under any
disability which would prevent him from entering into this Agreement and
performing all of his obligations hereunder.
[Signature page follows]
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
SCORES HOLDING COMPANY, INC.
By:
Name:
Title:
