Exhibit 10(l)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made effective as
of the 17th day of July, 1998, among X-ceed, Inc. (the "Company"), a Delaware
corporation having an executive offices at 488 Madison Avenue, New York, New
York 10022, and Scott Mednick ("Executive"), residing at 7927 Mulholland Drive,
Los Angeles, California 90046.
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive on the terms
and conditions hereinafter set forth;
WHEREAS, Executive desires to accept such employment on the
terms and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
Company and Executive agree as follows:
1. Employment.
1.1 Effectiveness of Agreement. This Agreement shall become
effective on the date hereof (the "Effective Date").
1.2 Employment Period. The Company hereby employs Executive,
and Executive hereby accepts employment with the Company with the duties
hereinafter set forth, for a period (the "Employment Period") commencing on the
Effective Date and ending on the fourth anniversary thereof (subject to
extension pursuant to Section 5.1 of this Agreement, the "Expiration Date"),
except that Executive may at his option terminate the employment on the second
anniversary thereof by written notice to the Company not less than sixty (60)
days prior to the second anniversary date.
2. Executive Duties.
2.1 Duties. Throughout the Employment Period, Executive shall
serve as the Chairman of the Board of Directors ("Chairman") and Chief Strategic
Officer of the Company and in those capacities shall perform such strategic
services as identifying companies for possible business combinations or other
strategic alliances with the Company, advising the President and Chief Executive
Officer of the Company and the Board of Directors on the methods and means by
which the Company can achieve growth in the interactive sector, identifying
customers for the Company and furthering the Company's position within the
investment community. Executive
understands that his position as Chairman is subject to approval by the
shareholders of the Company at each and every annual meeting of shareholders
during the Employment Period.
2.2 Performance. Executive agrees that, during the Employment
Period, Executive shall devote substantially all of his time, skills and efforts
to the business and affairs of the Company and its wholly owned subsidiaries and
its affiliated companies, if any, and to the promotion of their interests.
Notwithstanding the preceding sentence, nothing in this Agreement shall preclude
Executive from devoting reasonable amounts of time (i) for serving as a
director, officer or member of committee of any organization or entity involving
no conflict of interest with the Company subject to approval of the Company's
Board of Directors, which approval shall not be unreasonably withheld; or (ii)
engaging in charitable and community activities; provided, however, that such
activities do not interfere with the performance by Executive of his duties
hereunder. Executive shall faithfully and diligently discharge his duties
hereunder and use his best efforts to implement the policies established by the
Board of Directors of the Company (the "Board"). Executive shall during the
Employment Period, work exclusively for the Company and shall not work as an
employee, agent, sales representative or independent contractor for any other
person, firm or entity. The Company hereby acknowledges and agrees that any and
all services provided by Executive to the Company will be performed principally
in the Los Angeles area during the Employment Period.
2.3 Executive hereby acknowledges, covenants and agrees that
all intellectual property which Executive may develop, create, write or
otherwise produce during the Employment Period specifically for the Company
and/or its clients, and which pertain or relate directly to the business of the
Company, shall be the property of the Company free and clear of all claims,
liens or encumbrances by Executive. The Company acknowledges, covenants and
agrees that all intellectual property which Executive may develop, create, write
or otherwise produce during the Employment Period in connection with Executive's
other activities which do not interfere with the performance by Executive of his
duties hereunder and which do not pertain or relate directly to the business of
the Company nor compete with the Company, shall be the property of the Executive
free and clear of all claims, liens or encumbrances of the Company or any of its
affiliates. The covenants set forth herein shall survive the termination of this
Agreement.
2.4 Reporting. Executive shall report directly to the
President and Chief Executive Officer of the Company and the Board.
3. Compensation and Related Matters.
3.1 Signing Bonus. As an inducement to Executive to associate
himself with the Company and in recognition of Executive's prior background,
experience and talent, Executive shall receive a signing bonus (the "Signing
Bonus") in the total amount of $960,000 payable in twelve (12) monthly
installments on or before the first day of each month of Executive's employment
with the first installment commencing on or before August 1, 1998. Executive's
entitlement to the Signing Bonus shall vest and mature upon the execution of
this Agreement by Executive and the Company, and such Signing Bonus or any
portion thereof shall not be subject to
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forfeiture of any kind, regardless of any change in Executive's employment
status with the Company or Executive's performance or breach of this Agreement
by either party to this Agreement.
3.2 Base Salary. As base compensation for Executive's services
hereunder, the Company shall pay Executive a salary at the rate of $350,000 per
year (the "Base Salary") during the Employment Period in substantially equal
periodic payments in accordance with the Company's compensation practices less
appropriate payroll deductions as required by state and federal law. Executive
shall be entitled to a minimum ten (10%) percent increase in Base Salary,
including prior period increases, at the commencement of the second and third
and fourth anniversary during the Employment Period.
3.3 Bonus. Executive shall be eligible, subject to the
Company's performance, growth and/or profitability and Executive's performance,
to a bonus ("Bonus") of $100,000 at the end of the first and second anniversary.
3.4 Stock Options.
3.4.1 Upon execution of this Agreement by Executive, Executive
shall receive stock options in the form agreement annexed hereto as Exhibit A
entitling Executive to purchase 1,000,000 shares of the Common Stock of the
Company on exercise price equal to $6.00 per share. The options shall expire on
the tenth anniversary date from the date of grant.
3.4.2 In the event of exercise of more than 500,000 options by
Executive, Executive shall not sell, assign or transfer such excess within a
48-month period commencing with the date of execution of this Agreement, unless
the price of the Common Stock achieves the following trading prices on a
cumulative basis:
NUMBER OF ADDITIONAL SHARES
STOCK PRICE RELEASED FROM TRANSFER RESTRICTIONS
----------- -----------------------------------
12 100,000
15 100,000
18 100,000
21 100,000
24 100,000
Notwithstanding the foregoing restrictions, Executive shall be permitted to
transfer all or any portion of the Common Stock received pursuant to the
exercise of the options granted pursuant to this Section 3.4 to (a) Executive's
spouse or issue, a trust for their benefit or pursuant to any will or
testamentary trust, or (b) upon Executive's death, to any person in accordance
with the laws of descent and/or testamentary distribution.
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3.4.3 The Company agrees to register with the Securities and
Exchange Commission the shares of Common Stock underlying the options within
twelve (12) months from the date hereof.
3.4.4 All of the options granted pursuant to this Section 3.4
may be exercised by way of "cashless exercise" in which event Executive shall
tender to the Company a written notice of exercise together with the delivery of
an order to a broker to sell such shares of Common Stock having an aggregate
fair market value at least equal to the total exercise price of the underlying
options, and the Company shall forthwith sell for its account such shares so
exercised through a broker selected by the Company and shall thereafter remit to
Executive the net proceeds less the exercise price.
4. Benefits.
4.1 Benefit Plans. Upon the expiration of Executive's right to
participate in the health insurance program of THINK New Ideas, Inc. ("THINK")
on July 24, 1999 and during the period Executive elects to continue his health
insurance coverage under the health insurance program of THINK under COBRA, the
Company shall pay all of Executive's out-of-pocket costs to participate in the
health insurance program of THINK under COBRA. Except as set forth previously in
this Section 4.1, Executive and his eligible dependents shall participate in all
employee benefit plans generally available to the Company's senior management
personnel. Nothing contained in this Agreement shall obligate the Company to
adopt or implement an employee benefit plan or shall prevent or limit the
Company from making any amendments, changes, or modifications of the eligibility
requirements or any other provisions of, or terminating, any employee benefit
plan at any time (whether during or after the Employment period), and
Executive's participation in or entitlement under any such employee benefit plan
shall at all times be subject in all respects to any such amendment,
termination, change or modification.
4.2 Vacations. Subject to the requirements of Executive's
position and corporate office, Executive shall be entitled to annual vacations
in accordance with the Company's policy in effect from time to time, but in no
event less than four (4) weeks per year.
4.3 Reimbursement of Expenses. The Company shall reimburse
Executive for all proper and reasonable out-of-pocket expenses incurred by him
in performing his duties hereunder, subject to Executive's submission of an
accounting and receipts as required by the Company and provided their extent and
nature are approved in accordance with the policy and procedures of the Company.
4.4 Automobile Allowance. Executive shall receive an
automobile allowance of $1,300 per month during the term of this Agreement.
4.5 Office Space. Employer shall bear the reasonable expense
of office space and communication costs for Executive in the Los Angeles
metropolitan area and shall provide Executive with an assistant approved by
Executive and located in such Los Angeles office.
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Executive shall not bind the Company to any lease obligation or hire any person
without Employer's prior written approval.
5. Expiration of Employment Period and Termination.
5.1 Expiration. Executive's employment by the Company shall
automatically expire and terminate on the Expiration Date unless sooner
terminated by Executive pursuant to Section 1.2 or unless sooner terminated
pursuant to the provisions of this Section 5. Notwithstanding the foregoing, no
later than six months before the Expiration Date, the Company and Executive
shall commence good-faith negotiations for an extension of the Employment Period
for an additional period of no less than one year on terms acceptable to both
the Company and the Executive. If the Company and Executive agree on the terms
and conditions of such an extension, then this Agreement shall be amended to
reflect such terms and conditions, and the Expiration Date shall be deemed to be
the last day of such extended Employment Period.
5.2 Death. Except with respect to the Company's payment
obligation for any unpaid portion of the Signing Bonus under Section 3.1 hereof,
Executive's employment by the Company and this Agreement shall automatically
terminate upon Executive's death.
5.3 Disability. Except with respect to the Company's payment
obligation for any unpaid portion of the Signing Bonus under Section 3.1 hereof,
the Company shall have the right and option, exercisable by giving written
notice to Executive, to terminate Executive's employment by the Company and this
Agreement at any time after Executive has been unable to perform the services or
duties required of Executive in connection with Executive's employment by the
Company as a result of physical or mental disability (or disabilities) which has
(or have) continued for a period of (180) consecutive days in any 365 day
period.
5.4 For Cause. Except with respect to the Company's payment
obligation for any unpaid portion of the Signing Bonus under Section 3.1 hereof,
the Company shall have the right and option, exercisable by giving written
notice to Executive, to terminate Executive's employment by the Company and this
Agreement at any time after the occurrence of any of the following events or
contingencies (any such termination being deemed to be a termination "For
Cause"):
5.4.1 Executive materially breaches, repudiates or otherwise
fails to comply with or perform any of the terms of this Agreement or any of the
Company's reasonable policies or procedures; provided, however, that Executive
has not corrected such breach, repudiation or failure thirty (30) days following
written notice specifying such breach, repudiation or failure;
5.4.2 Executive materially interferes with the compliance by
any other employee of the Company with any of the Company's reasonable policies
or procedures, but only if Executive has not corrected such interference thirty
(30) days following written notice thereof;
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5.4.3 The conviction by Executive of a felony or the pleading
by Executive of no contest (or similar plea) to a felony other than a crime for
which vicarious liability is imposed upon Executive solely by reason of
Executive's position with the Company, and not by reason of Executive's conduct
which involves moral turpitude or which could potentially result in a material
adverse effect on the Company;
5.4.4 Any act or omission by Executive constituting fraud,
willful misconduct or dishonesty with Executive's employment by the Company, of
the theft or misappropriation of assets of the Company; or
5.4.5 Executive uses alcohol or drugs to an extent that
materially interferes with the performance of his duties hereunder.
5.5 No Obligation to Renew. Subject to the obligation to
negotiate set forth in Section 5.1, the Company shall have no obligation to
renew or extend the Employment Period.
5.6 Termination Without Cause. Except with respect to the
Company's payment obligation for any unpaid portion of the Signing Bonus under
Section 3.1 hereof, the Company shall have the right and option, exercisable by
giving written notice to Executive, to terminate Executive's employment by the
Company and this Agreement at any time, in its sole discretion, provided that in
such event the Company shall continue to pay the Base Compensation without
interruption and in accordance with Section 3.2 of this Agreement through the
termination of the Employment Period (without regard to Executive's option to
terminate his employment after two (2) years pursuant to Section 1.2 of this
Agreement).
6. Noncompetition.
6.1 Executive covenants and agrees that during the Employment
Period or so long as he is receiving Base Compensation pursuant to Section 5.6
of this Agreement and continuing for a twelve (12) month period thereafter if
and only if Executive terminates his employment either (i) after two (2) years
pursuant to Section 1.2 of this Agreement or (ii) Executive elects not to extend
this Agreement after the completion of the initial four (4) year period (without
regard to any extensions) as set forth under Section 1.2 of this Agreement, or
(iii) Executive voluntarily resigns other than pursuant to Section 1.2 of this
Agreement, he will not directly (as agent, employee, advisor, director, officer,
stockholder, partner or individual proprietor, or as an investor who has made an
advance, loan or contributions to capital), compete with the Company or with any
wholly owned subsidiaries or affiliated companies, if any, in the Company's
business. Notwithstanding the foregoing, the parties hereto acknowledge and
agree that the prohibition on competing with the Company contemplated pursuant
to this Section 6 shall not include the ownership of any investment security
listed on a national securities exchange or traded in the over-the-counter
market provided Executive does not participate in the management of such entity.
6.2 Executive covenants and agrees that during the Employment
Period or so long as he is receiving Base Compensation pursuant to Section 5.6
of this Agreement and
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continuing for a twelve (12) month period thereafter if and only if Executive
terminates his employment either (i) after two (2) years pursuant to Section 1.2
of this Agreement or (ii) Executive elects not to extend this Agreement after
the completion of the initial four (4) year period (without regard to any
extensions) as set forth under Section 1.2 of this Agreement, he will not
contact or solicit business that competes directly with the Company's business
from persons who, at any time during the Employment Period, were customers of
the Company or its wholly owned subsidiaries or affiliated companies, if any, or
induce such persons to do business with any person other than the Company or its
affiliated companies, if any.
7. Confidentiality.
7.1 All information about the business and affairs of the
Company which is not generally available to the public including, without
limitation, its secrets and information about the business, financial
conditions, business practices, prospects, products, technology, know-how and
the names of its suppliers, customers and lenders and the nature of its dealings
with them constitute "Company Confidential Information."
7.2 Executive acknowledges that he will have access to, and
knowledge of Company Confidential Information, and that improper use or
revelation of same by Executive, whether during or after the termination of his
Employment Period by the Company, could cause serious injury to the business of
the Company. Accordingly, Executive covenants and agrees that, except as
required to perform his duties under this Agreement, or as required by law, he
will not, at any time during or after the Employment Period, directly or
indirectly, disclose Company Confidential Information to any other person or
organization for so long as such Company Confidential Information is not
generally known by, or accessible to, the public. Executive further covenants
and agrees that he will not use any Company Confidential information for his own
benefit or for the benefit of any person or organization other than the Company
and its wholly owned subsidiaries and affiliates, if any.
8. Injunctive Relief. Executive agrees that the remedies at
law for any breach by him of Section 7 of this Agreement will be inadequate and
that the Company shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damages.
9. Key Person Life Insurance. Executive acknowledges that the
Company may be obligated pursuant to contracts with third parties to obtain and
maintain term life insurance on Executive's life for the Company's benefit.
Executive shall submit to such examinations, provide such information and fill
out and sign such forms as may reasonably be required by the insurer selected by
the Company.
10. General Provisions.
10.1 Governing Law. Any dispute or controversy between the
parties relating to or arising out of this Agreement or any amendment or
modification hereof, shall be governed by the laws of the State of New York
governing contracts made and to be performed wholly within the State of New
York.
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10.2 Severability. In the event any provision (or any portion
of any provision) of this Agreement shall be held to be void or unenforceable,
the remaining provisions of this Agreement (and the remaining portion of any
provision held void or unenforceable in part only) shall continue in full force
and effect.
10.3 Entire Agreement. This Agreement contains the full and
complete understanding of the parties and supersedes all prior agreements and
understandings among the parties with respect to the entire subject matter
hereof.
10.4 Waiver of Breach. A waiver of a breach or violation of
any term, provision, covenant or condition herein contained must be executed in
writing to be effective and shall not be deemed to be a continuing waiver or a
waiver of any future or past breach or violation.
10.5 Parties in Interest. This Agreement and the benefits
hereunder shall be nondelegable or assignable by Executive, shall be binding
upon, and inure to the benefit of, Executive (or upon Executive's death,
Executive's rights to payments hereunder shall enure to the benefit of
Executive's personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees). This Agreement may not be assigned by the
Company without the prior consent of Executive, and it shall be binding upon and
inure to the benefit of the Company and any entity succeeding to all or
substantially all of the business assets of the company by merger,
consolidation, purchase of assets or otherwise.
10.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall be deemed one and the same instrument.
10.7 No Violations. Each party to this Agreement represents
that the provisions of this Agreement do not breach or violate any other
Agreement, contract or understanding by which such party is legally bound.
10.8 Notices. All notices and other communications given or
made pursuant to or relating to this Agreement shall be made in writing and
shall be either personally delivered, sent by telecopier or mailed by registered
or certified mail (postage prepaid, return receipt requested) to be delivered at
such address as is indicated below, or at such other address or to the attention
of such other person as the recipient has specified by prior written notice to
the sending party. Notice shall be effective when so personally delivered, or
when so sent by telecopier, or if so mailed, then three (3) days after being so
mailed to the parties at the following addresses (or at such other address for
the party as shall be specified by like notice, except that notice of changes of
address shall be effective upon receipt):
To the Company: X-ceed, Inc.
488 Madison Avenue
New York, New York 10022
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To Executive: Scott Mednick
7927 Mulholland Drive
Los Angeles, California 90046
With a copy to:
Riordan & McKinzie
300 South Grand Ave., 29th Floor
Los Angeles, California 90071-3155
Attn: Jeffrey L. Glassman
10.9 Attorneys' Fees. In any litigation relating to this
Agreement between the parties hereto, the prevailing party shall be entitled to
recover reasonable attorneys' fees, court costs and other reasonable expenses
incurred in connection with such litigation.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
X-CEED, INC. /s/ Scott Mednick
SCOTT MEDNICK
By: /s/ Werner G. Haase
Werner G. Haase, CEO
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