EMPLOYMENT AGREEMENT
Employment Agreement made as of February 24, 1998, by and between
Interactive Imaginations, Inc., a New York corporation, with its principal place
of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to employ Executive as its Chief
Executive Officer and President, and Executive is willing to serve in such
capacities; and
WHEREAS, the Company and Executive desire to set forth the terms and
conditions of such employment.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and Executive agree as follows:
1. EMPLOYMENT.
(a) The Company hereby agrees to employ Executive, and Executive
agrees to be employed by the Company, on the terms and conditions herein
contained as its Chief Executive Officer and President. Executive shall report
to the Board of Directors of the Company (the "Board") and shall have such
duties, authority and responsibilities commensurate with Executive's position
for similarly sized companies in the industry.
(b) Executive shall devote all of his business time, energy, skill and
efforts to the performance of his duties hereunder and shall faithfully and
diligently serve the Company. The foregoing shall not prevent Executive from
participating in not-for-profit activities or from managing his passive personal
investments, provided that these activities do not materially interfere with
Executive's obligations hereunder.
(c) Upon the request of the Board, Executive shall also serve as a
director or officer of subsidiaries in positions commensurate with his position
with the Company without additional compensation. If any compensation is paid
Executive by such subsidiaries, they shall be a credit against amounts due
hereunder.
2. TERM OF EMPLOYMENT.
(a) Except for earlier termination as provided in Section 7 hereof or
as extended in this Section 2, Executive's employment under this Agreement (the
"Employment Term") shall commence on the date hereof (the "Commencement Date")
and continue through January 1, 2001. The Employment Term shall be automatically
renewed for successive one-year terms unless either party gives written notice
to the other at least six months prior to the expiration of the then
1
Employment Term, of such party's intention to terminate Executive's employment
hereunder at the end of the then current Employment Term.
(b) Notwithstanding anything else herein, the provisions of Sections 8
and 9 hereof shall survive and remain in effect notwithstanding the termination
of the Employment Term or a breach by the Company or Executive of this Agreement
or any of its terms.
3. COMPENSATION.
(a) As compensation for his services under this Agreement, the Company
shall pay Executive a base salary (the "Base Salary") as set forth on Exhibit A
hereto. Payment of the Base Salary shall be made in equal installments twice a
month.
(b) In addition to the Base Salary, the Company shall pay Executive a
bonus in accordance with the schedule set forth on Exhibit A hereto. Such
schedule may be revised from year to year by agreement of the parties hereto.
4. BENEFITS AND FRINGES.
(a) During the Employment Term, Executive shall be entitled to such
benefits and fringes, if any, as are generally provided from time to time by the
Company to its executive officers, including pension, retirement, savings,
welfare (including life and health insurance) and other employee benefit plans
and arrangements.
(b) Except as otherwise specifically provided herein, the Executive
shall be responsible for the tax consequences of all benefits and fringes.
5. EXPENSES. The Company shall reimburse Executive in accordance with
its expense reimbursement policy as in effect from time to time for all
reasonable expenses incurred by Executive in connection with the performance of
his duties under this Agreement upon the presentation by Executive of an
itemized account of such expenses and appropriate receipts and otherwise in
compliance with such rules relating thereto as the Company may, from time to
time, adopt.
6. VACATION. During the Employment Term, Executive shall be entitled
to vacation in accordance with the Company's practices.
2
7. TERMINATION.
(a) Executive's employment under this Agreement and the Employment
Term shall terminate upon any of the following events:
(i) Automatically on the date of Executive's death.
(ii) Upon written notice given by the Company to Executive if
Executive is unable to substantially perform his material duties hereunder for
one hundred eighty (180) continuous days during any period of three hundred
sixty (360) consecutive days by reason of physical or mental incapacity.
(iii) Upon written notice by the Company to Executive for Cause.
Cause shall mean (a) Executive being convicted of (or pleading nolo contendere
to) a felony (other than a traffic violation) or a crime involving fraud,
misappropriation, or embezzlement; (b) refusal of the Executive to attempt to
properly perform his obligations under this Agreement, or follow any direction
of the Board consistent with this Agreement, which in either case is not
remedied within ten (10) business days after receipt by Executive of written
notice from the Company specifying the details thereof, provided the refusal to
follow a direction shall not be Cause if Executive in good faith reasonably
believes that such direction is not legal, ethical or moral and promptly
notifies the Board in writing of such belief; (c) Executive's gross negligence
with regard to his duties or willful misconduct with regard to the business,
assets or employees of the Company; or (d) any other breach by Executive of a
material provision of this Agreement that remains uncured for twenty (20)
business days after written notice thereof is given to Executive or such longer
period as may reasonably be required to remedy the default, provided that the
Executive endeavors in good faith to remedy the default.
(iv) Upon written notice by the Company without Cause.
(b) Upon termination of the Employment Term, Executive shall be
promptly paid any unpaid salary and accrued vacation through his date of
termination and reimbursement for any expenses incurred in connection with the
official business of the Company prior to his date of termination which he would
be otherwise entitled to reimbursement for in accordance with the Company's
policies on the reimbursement of business expenses and any benefits or amounts
under any benefit or equity plan in accordance with the terms of said plan and
any fringe benefits due for the period prior to such termination. In addition,
he shall be paid any declared, but unpaid, bonus.
(c) If Executive's termination is pursuant to subsection (a)(i) above,
Executive's Beneficiary (as defined in the next sentence) shall continue to
receive payments of Executive's Base Salary, at the same time such amounts would
have been paid if Executive was still an employee of the Company for a period of
six (6) months following Executive's death. For purposes of this provision,
Executive's Beneficiary shall be Executive's spouse; if Executive is not married
on his date of death, Executive's children, per stirpes; and otherwise,
Executive's estate.
3
(d) If Executive's termination is pursuant to subsection (a)(ii)
above, Executive shall be entitled to receive for six (6) months following the
termination of Executive's employment, at the same time as it would have been
paid if he was an employee of the Company, his Base Salary less any amounts
actually received by him pursuant to long term disability coverage, if any,
provided for by the Company for the matching pay period. After such six (6)
months, Executive shall only be entitled to any amounts due him under the long
term disability coverage, if any.
(e) If Executive's termination is pursuant to subsection (a)(iv)
above, Executive shall receive:
(i) severance pay in an amount equal to two (2) times the sum of
(a) Executive's Base Salary on the date of his termination, and (b) the maximum
bonus for which Executive is eligible during the fiscal year of termination of
Executive's employment, which shall be payable in a lump sum within thirty (30)
days after such termination; and
(ii) continued medical coverage for a period of two (2) years
following termination of Executive's employment.
(f) All amounts payable pursuant to this Section 7 shall be subject to
required withholding. The Company shall have no other obligations to Executive
as a result of his termination.
8. CONFIDENTIAL INFORMATION AND NON-COMPETITION.
Executive has entered into a Non-Competition and Non-Disclosure and
Developments agreement of even date herewith, which agreement is attached
hereto and made a part hereof as though fully set forth herein.
9. INDEMNIFICATION. During the Employment Term and thereafter, the
Company shall indemnify Executive to the fullest extent permitted by law against
any judgments, fines, amounts paid in settlement and reasonable expenses
(including attorneys' fees), and advance amounts necessary to pay the foregoing
at the earliest time and to the fullest extent permitted by law, in connection
with any claim, action or proceeding (whether civil or criminal) against
Executive (other than a claim brought by the Company) as a result of Executive
serving as an officer or director of the Company or in any capacity at the
request of the Company, in or with regard to any other entity, employee benefit
plan or enterprise. This indemnification shall be in addition to, and not in
lieu of, any other indemnification Executive shall be entitled to pursuant to
the Company's Certificate of Incorporation or By-laws or otherwise. Following
Executive's termination of employment, the Company shall continue to cover
Executive under the Company's directors and officers insurance for the period
during which Executive may be subject to potential liability for any claim,
action or proceeding (whether civil or criminal) as a result of his service as
an officer or director of the Company or in any capacity at the request of the
Company, at the highest level then maintained for any then or former officer or
director.
4
10. EXECUTIVE REPRESENTATION. Executive represents and warrants that
he is not limited under any contractual or other provision from entering into
this Agreement and performing his obligations hereunder.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement constitutes the
full and complete understanding of the parties hereto and will supersede all
prior agreements and understandings, oral or written, with respect to the
subject matter hereof. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by either party, or anyone acting on behalf of either party, which are
not embodied herein and that no other agreement, statement or promise not
contained in this Agreement shall be valid or binding. This Agreement may not be
modified or amended except by an instrument in writing signed by the party
against whom or which enforcement may be sought.
12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
13. WAIVER OF BREACH. The waiver by any party of a breach of any
provisions of this Agreement, which waiver must be in writing to be effective,
shall not operate as or be construed as a waiver of any subsequent breach.
14. NOTICES. All notices hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, or one (1) day after
sending by United States Postal Service express mail or other "overnight mail
service," or three (3) days after sending by certified or registered mail,
postage prepaid, return receipt requested. Notice shall be sent as follows: if
to Executive, to his home address as listed in the Company's records; and if to
the Company, at its office as set forth at the head of this Agreement. Either
party may change the notice address by notice given as aforesaid.
15. ASSIGNABILITY; BINDING EFFECT. This Agreement shall be binding
upon and inure to the benefit of Executive and Executive's legal
representatives, heirs and distributees, and shall be binding upon and inure to
the benefit of the Company, its successors and assigns. This Agreement may not
be assigned by Executive. This Agreement may not be assigned by the Company
except in connection with a merger or a sale by the Company of all or
substantially all of its assets, and then only provided that the assignee
specifically assumes in writing all of the Company's obligations hereunder.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement, other than injunctive relief under Section 8
(provided that Executive may bring an arbitration to recover legal fees in
connection with such injunctive activities under the last sentence of this
Section 16) shall be settled exclusively by arbitration, conducted before a
panel of three arbitrators in New York, New York, in accordance with the rules
of the American Arbitration Association then in effect, and judgment may be
entered on the arbitrators' award in any court having
5
jurisdiction. The decision of the arbitrator shall be final and binding on the
parties. The parties shall equally divide all costs of the American Arbitration
Association and the arbitrator, except that the arbitrator shall direct the
Company to reimburse Executive's portion of the cost on the same basis as set
forth in the next sentence with regard to legal fees. Each party shall bear its
own legal fees in any dispute except that, in the event the Executive prevails
on any material issue, the arbitrator shall award the Executive his legal fees
attributable to all matters other than frivolous positions taken by the
Executive (as determined by the arbitrator).
17. GOVERNING LAW. All issues pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the State of New York, without giving
effect to the conflict or choice of law provisions thereof.
18. HEADINGS. The headings in this Agreement are intended solely for
convenience or reference and shall be given no effect in the construction or
interpretation of this Agreement.
19. 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.
6
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and Executive has hereunto set his hand as of the date first set forth
above.
INTERACTIVE IMAGINATIONS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
7
EXHIBIT A
Base Salary
The Company shall pay Executive a base salary at a rate of $225,000 per annum
from the date hereof through January 1, 2001. In the event that the Employment
Agreement is renewed automatically pursuant to Section 2(a) and the parties do
not mutually agree otherwise, the Base Salary shall be increased by 10% on
January 2, 2001 and 3% on the first date of each successive one-year term
thereafter, if any. Executive shall also receive on the date hereof 225,000
restricted Common Shares of the Company. Such shares shall vest in three equal
increments on January 1, 1999, January 1, 2000 and January 1, 2001. The grant of
such shares is pursuant to, and is governed by, the Company's 1998 Stock
Incentive Plan.
Incentive
In addition, Executive shall be eligible to receive a target bonus of $275,000
(one-half of which shall be Revenue Incentive and one-half of which shall be
Profit/Loss Incentive) in accordance with the 24/7 Media 1998 Senior Management
Incentive Plan, a copy of which is attached hereto. Executive shall be eligible
to receive a target bonus of $300,000 and $325,000 in 1999 and 2000
respectively, in accordance with incentive plans to be agreed upon in good faith
by the Board and Executive.