Exhibit 10.1
RETENTION AND AMENDMENT AGREEMENT
This Retention and Amendment Agreement, dated as of August 29, 2001 (this
"Agreement") is entered into between Simon Worldwide, Inc., a Delaware
corporation formerly known as Cyrk, Inc. (the "Corporation"), Simon Marketing,
Inc., a Delaware corporation ("Simon"), and Xxxxx Xxxxx (the "Executive").
WHEREAS, the Corporation, the Executive and Simon, a wholly owned
subsidiary of the Corporation, are parties to that certain Employment Agreement,
dated as of September 1, 1999 (the "Employment Agreement"); and
WHEREAS, the Executive has issued a Promissory Note and Pledge Agreement,
dated July 10, 2000, in the principal amount of $1,000,000 to the Corporation
(the "July Promissory Note"); and
WHEREAS, the Executive has issued a Promissory Note and Pledge Agreement,
dated October 18, 2000, in the principal amount of $1,000,000 payable to Simon
(the "October Promissory Note"); and
WHEREAS, the Corporation and Simon believe that it is vital to their
interests to ensure the continued availability of Executive, especially in
light of the recent notice from XxXxxxxx'x Corporation, the largest customer of
Simon, that XxXxxxxx'x Corporation is terminating its relationship with Simon;
and
WHEREAS, the parties hereto desire to enter into certain agreements and
amend in certain respects the Employment Agreement, the July Promissory Note
and the October Promissory Note to induce Executive to remain an employee of
the Corporation.
NOW THEREFORE, the parties hereto agree as follows:
1. Special Severance. (a) The Corporation or Simon shall have the right
to terminate Executive's employment with the Corporation or Simon without cause
at any time, but in the event of any such termination, Executive shall be paid
by the Corporation and Simon a lump sum payment of $750,000. Executive shall
not be required to seek other employment or otherwise to mitigate his damages
in the event of his discharge without cause.
(b) Executive shall have the right to terminate his employment with
the Corporation or Simon at any time for good reason. For purposes of this
Agreement, "good reason" shall mean and be limited to a material breach by the
Corporation or Simon of a material obligation of the Corporation or Simon under
the Employment Agreement, which such material breach is not cured within thirty
(30) days written notice to the Corporation or Simon. Upon termination of
employment by Executive for good reason, Executive shall be entitled to receive
the lump sum payment provided in Section 1(a) of this Agreement within five (5)
days after Executive gives notice of termination hereunder.
(c) Payments made by Corporation and Simon pursuant to Section 1(a)
and (b) of this Agreement are entirely separate and distinct from the
obligations of Corporation and Simon under the Employment Agreement.
2. In order to secure the payments of the amounts set forth in
Sections 1(a) and (b) of this Agreement, Simon will deposit to an account at
[to be selected] the sum of $750,000. Simon hereby grants to Executive a
security interest in all of Simon's right, title and interest in that account,
and Simon and Executive shall execute and deliver a Control Agreement
substantially in the form attached hereto as Exhibit A providing that such
account constitutes cash collateral to secure such obligations. Upon payment of
the amounts set forth in Sections 1(a) and (b) of this Agreement, such cash
collateral will be released to Simon. Alternatively at the request of
Executive, a prepaid letter of credit may be substituted for the collateral
account maintained pursuant to this Paragraph 2, if such a letter of credit can
be obtained without imposing a material burden on Simon or the Corporation.
3. Section 1 of the July Promissory Note is hereby amended to add at the
end thereof;
"Notwithstanding anything herein to the contrary, this Note
shall not accrue any interest on or after August 29, 2001."
4. Section 1 of the October Promissory Note is hereby amended to add at
the end thereof;
"Notwithstanding anything herein to the contrary, this Note
shall not accrue any interest on or after August 29, 2001."
5. Section 11.2 of the Employment Agreement is hereby amended by
deleting clause (iv) thereof and replacing it with the following:
"(iv) will be due and payable on November 22, 2004, and"
6. Commencing September 1, 2001, for each month Executive is employed by
the Corporation or Simon, the unpaid principal of and accrued interest on the
July Promissory Note shall be reduced by $200,000 per month until it is reduced
to zero, and thereafter the unpaid principal of and accrued interest on the
October Promissory Note shall be reduced by $200,000 per month until it is
reduced to zero; provided, however, in the event of Executive's termination of
employment by the Corporation or Simon without cause or by Executive for good
reason as defined in Paragraph 1(b) hereof, the remaining balance of the unpaid
principal and interest on both the July Promissory Note and October Promissory
Note shall be forgiven in full and Executive shall be relieved of any further
liability thereon. Excepting the Special Severance obligations of the
Corporation and Simon to Executive under Paragraphs 1 and 2 hereof, any
forgiveness of debt under this Paragraph shall reduce, on a dollar for dollar
basis, the Corporation's and Simon's remaining severance obligations to
Executive under Executive's Employment Agreement.
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7. Except as otherwise expressly provided in this Agreement, the terms
of the Employment Agreement, the July Promissory Note and the October
Promissory Note shall remain in full force and effect.
8. The obligations of the Corporation and Simon under this Agreement are
joint and several. This Agreement shall not confer any rights or remedies upon
any person other than the parties and their respective successors and permitted
assigns.
9. This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted assigns. No
party may assign either this Agreement or any of his or its rights, interests,
or obligations hereunder without the prior written approval of the Corporation
and Executive; provided, however, that the Corporation may (i) assign any or
all of its rights and interests hereunder to one or more of its affiliates;
(ii) designate one or more of its affiliates to perform its obligations
hereunder (in any or all of which cases the Corporation nonetheless shall
remain responsible for the performance of all of its obligations hereunder);
and (iii) assign its rights and interests hereunder to any entity into which
the Corporation may be merged or which may succeed to substantially all of its
assets or business.
10. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.
11. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California without giving effect to
any choice or conflict of law provision or rule (whether of the State of
California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.
12. No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by Corporation and Executive.
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13. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
"THE CORPORATION"
SIMON WORLDWIDE, INC.
and
"SIMON"
SIMON MARKETING, INC.
By: /s/ Xxxxxx Xxxxxxxx
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XXXXXX XXXXXXXX, Director
"EXECUTIVE"
/s/ Xxxxx Xxxxx
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XXXXX XXXXX
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