Ex. 10.12
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, effective as of August 1, 1999 between CDKnet,
LLC, a New York limited liability company, having a place of business at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Employer"), and ▇▇▇▇ ▇▇▇ ▇▇▇▇,
residing at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ("Employee").
W I T N E S S E T H :
WHEREAS, Employer desires to employ the Employee to serve as the
President of Employer in accordance with the terms of this Agreement, and the
Employee desires to be so employed by Employer;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee
hereby accepts employment with Employer upon the terms and conditions set forth
herein.
2. TERM.
2.1 The term of Employee's employment hereunder shall be for
two years commencing effective as of August 1, 1999 (the "Commencement Date").
2.2 Notwithstanding the foregoing, this Agreement and
employee's employment hereunder shall terminate on the earliest of:
(a) The death of Employee;
(b) The disability of Employee. Disability, for the purposes
of this Section 2.2 (b), shall mean any physical or mental illness or injury as
a result of which Employee remains absent from work or cannot adequately perform
his duties hereunder for one hundred twenty (120) days (whether or not
continuous) or sixty (60) consecutive days during any period of three hundred
sixty (360) consecutive days. The disability shall be deemed to have occurred on
the one hundred twentieth (120th) or sixtieth (60th), as the case may be, day of
Employee's absence or lack of adequate performance;
(c) Upon notice by Employer to Employer of the termination of
Employee's employment for cause. "Cause" shall include, but not be limited to:
(i) Employee's conviction of a felony; (ii) Employee's material breach of any of
this obligations under this Agreement; (iii) Employee's gross negligence with
respect to his duties or gross misfeasance or malfeasance of office; (iv)
employee's termination of this Agreement; (v) employee's commission of a
material act of dishonesty related to Employer's business or its relationships
with any of its employees,
suppliers, contractors or customers; (vi) Employee's refusal or willful failure
to furnish information concerning Employer's affairs as reasonably requested by
or under the authority of the Management committee, or Employee's willful and
material falsification of such information; (vii) whatever material acts or
material omissions that a court of competent jurisdiction determines to
constitute cause for the dismissal of Employee under the circumstances;
PROVIDED, HOWEVER, that in the event of subsections (ii) or (vii) above,
Employee shall be given notice of such termination and fifteen (15) days to cure
(if curable) such breach prior to the effectiveness of such termination,
provided that no such notice or time to cure will be afforded employee for any
subsequent breach of the same nature of a breach for which notice was given
pursuant hereto; or
(d) upon notice by Employer to Employee of the termination of
Employee's employment without cause.
2.3. Upon termination of this Agreement, Employer's
obligations hereunder shall cease; PROVIDED, HOWEVER, that in the event of
termination pursuant to Section 2.2. (a) or 2.2. (b) Employer shall pay to
Employee or Employee's estate all salary and vacation, leave and holiday
benefits, if any, accrued but unpaid as of the Termination Date; and in the
event of termination pursuant to Section 2.2 (d) Employer shall pay to Employee
an amount equal to six (6) months of salary at the then current rate, such
amount to be paid over a six (6) month period plus the vesting of the
outstanding options pursuant to Section 4.5 (d) (ii) below. Employer shall be
entitled to enforce the terms of Sections 7 and 8 hereof notwithstanding the
termination of Employee's employment pursuant hereto. Payment by Employer to
Employee pursuant to this Section 2.3, and the vesting in options as set forth
in Section 4 below, if any, subsequent to termination of Employee's employment
shall constitute satisfaction of all obligations of Employer to Employee
hereunder.
2.4. The date on which this Agreement terminates pursuant to
any of the provisions above is the Termination Date.
3. BASIC COMPENSATION.
3.1. COMPENSATION.
For all services to be rendered by Employee hereunder and in
consideration of all of the covenants set forth in this Agreement, and subject
to the performance of the services required to be performed by Employee
hereunder, Employer shall pay to Employee a salary at the annual rate of One
Hundred Fifty Thousand Dollars ($150,000.00), which shall be payable in
accordance with the general payroll practices of Employer, but in no event less
frequently than monthly. The salary may be adjusted annually in the sole
discretion of Employer's Management Committee, but the salary shall be no less
than $150,000 per year.
3.2. BONUS.
Employee shall be entitled to a bonus if any, in an amount
determined annually Employer's Management Committee in its sole discretion;
PROVIDED, HOWEVER, that Employee shall receive such bonus in any year hereunder
so that this combined salary plus bonus will not be exceeded by that of any of
Employer's full time employees (not including any of such full-time employees'
deemed income from stock option exercises or dispositions, if any) (pro-rated
for any partial year of Employee) to a maximum total salary and bonus of
$500,000.
3.3. DEDUCTIONS.
Employer shall be entitled to deduct applicable withholding
and other payroll taxes and the like from all amounts payable to employee under
this Agreement before remitting the same to Employee.
4. BENEFITS.
4.1. Employee will be entitled to four (4) weeks vacation per
contract year, to be taken no more than two (2) week(s) at a time. Employee also
shall be entitled to participate, to the extent of his eligibility therefore, in
family health insurance coverage and other benefit programs generally provided
by Employer to its employees. The foregoing shall not be construed to require
Employer to create or continue any such programs or prevent Employer from
modifying or terminating any such programs. Employer may from time to time make
certain awards under the terms of such benefits that are quantitatively
different between employees, or award different or additional benefits to
certain, but not all, employees in its sole discretion.
4.2. Employer shall furnish Employee with such working
facilities and other services which Employer deems suitable to employee's
position and duties.
4.3. Employer shall reimburse Employee, upon receipt of proper
vouchers or receipts therefor, for all proper business expenses incurred by
Employee in the performance of his duties hereunder; PROVIDED, HOWEVER, that
Employee shall not incur any such expenses in excess of One Thousand Dollars
($1,000) without the prior written consent of Employer.
[SECTION 4.4 INTENTIONALLY OMITTED]
4.5. Employer will grant Employee options to purchase up to
750,000 shares of common stock of employer's parent company (▇▇▇▇▇▇.▇▇▇, Inc.)
on the following terms:
(a) The options will vest as follows:
-- 25% at each of the six month,
twelve month, eighteen month and
twenty-four month anniversary of the
Commencement Date;
(b) The options may be exercised in multiples of five
thousand shares. The exercise price for the options is $1.00 per share.
(c) The options will vest immediately if this
Agreement is terminated without cause subsequent to the closing of an initial
public offering of equity interests in Employer or upon the sale of all of
substantially all of the assets of Employer or 50% or more of the equity
interests in Employer or if any third party obtains the right to control the
Management Committee of Employer (collectively, a "Transaction").
(d) The options will terminate upon the fifth
anniversary of the Commencement Date; provided, however, that (i) if Employee
resigns or his employment is terminated for cause, the options terminate 90 days
from the date of such resignation or termination (and all options which were not
vested prior to the date of such resignation or termination will be immediately
cancelled upon such resignation or termination), and (ii) if Employer terminates
Employee's employment without cause or Employee's employment with Employer does
not continue (for any reason other than cause) subsequent to the expiration of
this Agreement, the options terminate two (2) years from the date of such
termination or expiration (but in the case of termination without cause, 75% of
the options which were not vested prior to the date of such termination will
immediately vest on the date of such termination.)
(e) Employee may exercise up to 50% of the options
outstanding at any time (up to an aggregate maximum of 375,000 shares) by
converting such options into common stock of ▇▇▇▇▇▇.▇▇▇, Inc., upon notice of
the Company making specific reference to this Section 4. Any such conversion
shall be effective upon the giving of such notice by Employee. The number of
shares into which such options shall be converted shall equal the number of
options to be converted multiplied by a fraction, the numerator of which is the
difference between the market price of ▇▇▇▇▇▇.▇▇▇, Inc.'s common stock on the
date of conversion minus the exercise price of the options, and the denominator
of which shall equal the market price of ▇▇▇▇▇▇.▇▇▇, Inc.'s common stock on such
date.
(f) ▇▇▇▇▇▇.▇▇▇, Inc. hereby agrees to register the
▇▇▇▇▇▇.▇▇▇, Inc. shares underlying 50% of the vested warrants held by Employee
pursuant to this Section 4.5 by March 1, 2000; and grants piggy-back
registration rights (pro rata with the other management of Employer and/or
▇▇▇▇▇▇.▇▇▇, Inc.) to Employee for the shares underlying the remaining vested
warrants, all on the terms and conditions of the Registration Rights Agreement
executed the date hereof.
4.6. Employer shall pay directly to an auto leasing company,
on behalf of and as directed by Employee, up to $700 per month, which allowance
will cover all and any expenses incurred by Employee in connection with his
automobile travel and usage for the Employer.
5. DUTIES.
Duties the term of Employee's employment hereunder, Employee
agrees to serve as the President of Employer and shall perform such duties and
services to Employer consistent
with the position in which Employee is serving and its responsibilities as may
be determined from time to time by Employer (including without limitation a
right to hire and fire Employees). Employee shall report to the Management
Committee of Employer and to such other executive officers of Employer as the
committee shall determine from time to time. Employee agrees that in the
performance of Employee's duties hereunder Employee will act only in good faith
and in the best interest of Employer. Employee further agrees that Employer, in
its sole discretion, may change Employee's title to any other executive title
not inconsistent with the role of an executive vice president or chief operating
officer.
6. EXTENT OF SERVICES. During the period of his employment
hereunder, Employee shall serve Employer faithfully and to the best of his
ability and shall devote his best efforts and entire business time, attention,
energies and skill to the business and affairs of Employer, its parent
corporation and subsidiaries. Employee shall be expected to work during normal
business hours and, when necessary, on additional assignments and projects
consistent with his duties hereunder. Employer acknowledges that the foregoing
does not prohibit Employee's continued work on entities in which (i) Employee
presently has an equity interest, (ii) Employee presently devotes certain time
and attention, and (iii) no products, services or any other business sold,
bought or otherwise transacted by such entities, directly or indirectly are
competitive in any way with that of Employer provided that such continued work
does not interfere with the performance of his duties hereunder (not in
limitation of the generality of the foregoing, employee agrees that his
continued work on such interests will involve no more than five (5) hours per
work week). Schedule G lists the name and description of business of each such
entity.
7. SECRECY AND NONDISCLOSURE.
7.1. Without the prior written consent of Employer in each
instance, and in further consideration of the employment of Employee hereunder,
employee agrees to treat as secret and confidential all of the Trade Secrets (as
hereinafter defined) of Employer, and Employee agrees further not to disclose,
use, publish, or in any other manner reveal, directly or indirectly, at any time
during or after the term of this Agreement, any Trade Secret, except as may be
necessary to perform employee's services hereunder or except as required by law
in which case Employee shall provide Employer with written notice of such
requirements by law no less than five days prior to any such disclosure.
7.2. "Trade Secrets", as used in this Agreement, shall mean
any and all information regarding the business of Employer and any Subsidiary or
Affiliate (as hereinafter defined) of Employer, including, but not limited to,
information regarding operations, systems, technology, services, know-how,
supplier lists, customer lists, customer accounts, financial information,
costing data, and marketing plans, to the extent not generally known in the
computer software industry or not otherwise disclosed by Employer to the public.
7.3 "Affiliates", as used this Agreement, shall mean any
person, firm or entity that, directly or indirectly, is controlled by or is
under common control with Employer. In this definition, the term "control" shall
mean the ownership of 15% or more of the beneficial interest
in the firm or entity referred to. "Subsidiary" shall mean wholly as well as
partly-owned subsidiaries.
8. COVENANTS.
8.1. NON-COMPETITION.
(a) Employee agrees that during Employee's employment with
Employer, and for the eighteen (18) months (nine (9) months if pursuant to
Section 2.2 (d) above) immediately after the Termination Date, Employee shall
not, directly or indirectly, for his own account or as an Employee, officer,
director, partner, joint venturer, shareholder, investor or otherwise, within
the United States of America, either engage in any phase of any business or
enterprise similar to that of Employer or in competition with Employer or
compete with Employer in any Technology (as defined in Section 8.4 below)
related business in which Employer may be engaged or which it is actively
developing or had developed as of the Termination Date; PROVIDED, HOWEVER, that
nothing in this Section 8.1 (a) shall be construed to prevent the employee from
making any investments in the securities of any business enterprise whether or
not engaged in competition with the employer or any of its Subsidiaries or
Affiliates, to the extent that such securities are actively traded on a national
securities exchange or the NASDAQ system in the United States or on any foreign
exchange and represent, at the time of acquisition, not more than three percent
(3%) of the aggregate equity of such business enterprise.
(b) Employee agrees that during the period of his employment
with Employer, Employee shall not, directly or indirectly, employ or solicit the
employment or engagement by himelf or others of any employees of Employer or of
any independent contractors or suppliers servicing Employer.
(c) Employee agrees that for a period of eighteen (18) months
immediately following the termination of his employment with Employer, Employee
shall not, directly or indirectly, employ or solicit the employment or
engagement by himself or others of any employees of Employer or of any
independent contractors or suppliers servicing Employer; PROVIDED, HOWEVER, that
this Section 8.1 (c) shall apply only with respect to such employment or
solicitation of employment in a business or venture related to the Technology
industry (as defined in Section 8.4 below).
(d) The existence of any claim or cause of action by Employee
against Employer shall not constitute a defense to the enforcement by Employer
of the covenants contained in this section, but such claim or cause of action
shall be litigated separately.
8.2. SOLICITATION OF CUSTOMERS OF EMPLOYER.
(a) Employee agrees that during the period of his employment
with Employer, Employee shall not, directly or indirectly, for himself, or as an
agent, Employee or consultant of another person, firm or corporation, knowingly
canvass or solicit business from any of Employer's customers.
(b) Employee agrees that for a period of eighteen (18) months
immediately following his employment with Employer, Employee shall not, directly
or indirectly, for himself, or as agent, Employee or consultant of another
person, firm or corporation, knowingly canvass or solicit business from any of
Employer's customers; PROVIDED, HOWEVER, that this Section 8.2 (b) shall apply
only with respect to such canvassing or solicitation of business which business
involves the Technology industry.
8.3 INVENTIONS AND DISCOVERIES.
(a) Employee shall promptly and fully disclose to the
Employer, and with all necessary detail for a complete understanding of the
same, all developments, know-how, discoveries, inventions, improvement,
concepts, ideas, writings, formulae, processes and methods (whether
copyrightable, patentable or otherwise) made, received, conceived, acquired or
written by Employee (whether or not at the request or upon the suggestion of the
Employer) during the period of his employment with the Employer or any if its
subsidiaries, solely or jointly with others, in or relating to any activities of
the Employer or any of its subsidiaries (collectively the "Subject Matter").
(b) Employee hereby assigns and transfers, and agrees to
assign and transfer, to the Employer, all his rights, title and interest in and
to the Subject Matter, and further agrees to deliver to the Employer any and all
drawings, notes, software, code, specifications and data relating to the Subject
Matter. Employee shall assist the Employer in obtaining such copyrights or
patents during the term of this agreement, and to testify in any prosecution or
litigation involving any of the Subject Matter.
8.4. DEFINITIONS. For purposes of this Section 8, (i)
businesses or enterprises "similar to" or "in competition with" Employer shall
mean those engaged, in whole or in part, in the business of developing and
producing proprietary programming technologies for use in multiple industries
interested in the enhanced integration of sound, video and text, and/or one-
button push to an Internet site (the "CDK Technology") and/or the Game Player
and screen saver technology (the "Game Player Technology") and/or custom
compilation of video and audio content on a CD or DVD medium ("CD Live
Technology") (the CDK technology and Game Player technology and CD Live
Technology are collectively referred to as the "Technology"), and (ii) Employer
shall mean Employer and any subsidiaries and affiliates of Employer.
8.5. REASONABLENESS OF RESTRICTION. Employee acknowledges that
the restrictions specified under Section 8 hereof are reasonable, in view of the
nature of the business in which Employer is engaged and Employee's special and
unique skills, reputation and knowledge of Employer's operations. Employee
further acknowledges that his service, if used by a competitor, could cause
significant harm to Employer.
8.6. MODIFICATION OF RESTRICTIONS. Notwithstanding anything
contained in Section 8 to the contrary, if the restrictions specified under
Section 8 to the contrary, if the restrictions specified under Section 8 hereof
should be determined to be unreasonable in any judicial proceeding, then the
period of time and area of the restriction shall be reduced so that
this agreement may be enforced in such area and during such period of time as
shall be determined to be reasonable.
9. CONSENT TO EQUITABLE RELIEF. Employee consents and agrees that if
Employee violates or threatens to violate any of the provisions contained in
Sections 7 or 8 of this Agreement, Employer shall, in addition to such other
remedies as it may have at law or shall, in addition to such other remedies as
it may have at law or in equity, be entitled to an injunction to be issued by a
court or arbitrator of competent jurisdiction restraining and prohibiting
Employee from committing or continuing any violation of such provisions. If the
scope of any restriction contained in this Agreement is too broad to permit
enforcement to its fullest extent, then such restriction shall be enforced to
the maximum extent permitted by law.
10. REPRESENTATIONS OF EMPLOYEE. Employee hereby represents and
warrants to Employer that he is not subject to any contract or restriction with
any person or entity that would be violated by his execution of this Agreement,
the performance of his obligations hereunder or the carrying out of his duties
hereunder.
11. NOTICE. For the purposes of this agreement, notices and all other
communications provided for in this agreement shall be in writing and shall be
deemed to have been duly given when delivered, two (2) business days after
delivery to a nationally recognized overnight courier service for next day
priority delivery or three (3) business day s after having been deposited in the
mails by United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Employee: ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy in
each case to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Green, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
If to Employer: CDKnet, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Att: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
With a copy
in each case to: Horowitz, Mencher, ▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Att: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
12. WAIVER OF BREACH. The waiver by either party of a breach of
any provision hereof shall not operate or be construed to operate as a waiver by
such party of any subsequent breach by the other party of any provision hereof.
13. BENEFITS AND BURDENS. The rights and obligations of Employer
hereunder shall inure to the benefit of and shall be binding upon the successors
and assigns of Employer. The rights of Employee hereunder shall inure to the
benefit of his heirs and his personal representatives.
14. ENTIRE AGREEMENT, MODIFICATION AND CONSTRUCTION.
14.1 This Agreement contains the entire Employment Agreement
between Employer and Employee, and supersedes and replaces any and all prior
agreements between the parties concerning the subject matter hereof.
14.2 The terms and conditions hereof may be change only by an
agreement in writing signed by Employer and Employee.
14.3 This Employment Agreement shall be governed by, construed
and enforced under the laws of the State of New York without giving effect to
the conflicts or choice of law provisions thereof.
15. SEVERABILITY. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
16. PARAGRAPH HEADINGS. The paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
17. COUNTERPARTS. This agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
18. EMPLOYEE'S REVIEW OF THIS AGREEMENT. Employee acknowledges
that he had (i) carefully read this Agreement, (ii) had an opportunity to
consult with independent counsel with respect to this Agreement, and (iii)
entered into this Agreement of his own free will.
IN WITNESS WHEREOF, Employer and Employee have executed this Employment
Agreement as of August 1, 1999.
EMPLOYEE: EMPLOYER:
CDKNET, LLC
BY:
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▇▇▇▇ ▇▇▇ ▇▇▇▇ NAME:
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TITLE:
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THE UNDERSIGNED HEREBY GUARANTEES THE OBLIGATIONS OF CDKNET,
LLC SET FORTH ABOVE.
▇▇▇▇▇▇.▇▇▇, INC.
By:
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Name:
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Title:
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