EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") effected as of this 15th
day of March, 1999, by and between Directrix, Inc. (the "Company" or
"Employer"), a Delaware corporation, and J. Roger Faherty (the "Executive")
(collectively the Company and the Executive are referred to as the "Parties").
INTRODUCTION
WHEREAS, the Parties desire to enter into an Agreement and to
set forth herein the terms and conditions of the Executive's employment by the
Company. Accordingly, in consideration of the mutual covenants and agreement set
forth herein and the mutual benefits to be derived herefrom, and intending to be
legally bound hereby, the Company and the Executive agree as follows:
1. Employment
1.1 Duties. The Company shall employ the Executive on the
terms and conditions set forth in this Agreement, as Chairman of the Board and
Chief Executive Officer. The Executive accepts such employment with the Company
and shall perform and fulfill such duties as are assigned to him hereunder
consistent with his status as a senior executive of the Company, devoting his
best efforts and all of his professional time and attention, to the performance
and fulfillment of his duties and to the advancement of the best interests of
the Company, subject only to the specific directives of the Board of Directors
of the Company. In addition, and without any additional consideration, the
Executive is and/or may be requested to serve as a director or as an employee
and officer of any or all subsidiaries of the Company. Unless otherwise
indicated by the context, the "Company" shall include the Company and all its
subsidiaries.
1.2 Place of Performance. In connection with his employment by
the Company, the Executive shall be based in the New York, New York metropolitan
area, except for required travel on Company business. The Executive may be
required to relocate on a permanent or temporary basis consistent with business
necessity.
2. Term.
The Executive's employment under this Agreement shall commence as of
February 26, 1999 (the "Commencement Date") and shall continue uninterrupted up
to and including the hour of midnight of December 31, 2004 (the "Term"), unless
otherwise terminated as provided for in Sections 7.1 or 7.3. Unless prior to the
end of any calendar year, notice of non-renewal is given by either party, the
term of this Agreement shall automatically be extended for an additional period
of one year upon completion of each year. Therefore, upon each January 1 of a
year, this Agreement shall be effective for a six-year term unless prior thereto
such notice of non-renewal has been given.
3. Compensation.
3.1 Base Salary. During the Term the Executive shall receive a
minimum annual salary (the "Base Salary") payable in installments at such times
as the Company customarily pays its other senior executive employees (but in any
event no less often than bi-monthly), and calculated as follows:
3.1.1 The Base Salary to be paid to the Executive
during the Term shall be $385,875; and
3.1.2 For each Year beginning after December 31,
1999, the Company shall increase the Base Salary by an amount equal to five
percent (5%) of the prior year's Base Salary. Each such increase shall be
cumulative so that the Base Salary for each succeeding year shall include the
prior year's increase.
3.2 Health Insurance and Other Benefits. During the Term the
Executive shall be provided all employee benefits provided by the Company to its
management and all other Company salaried employees, including without
limitation, all medical insurance and life insurance plans or arrangements and
shall be entitled to participate in all pension, profit sharing, stock option
and any other employee benefit plan or arrangement established and maintained by
the Company for similarly situated employees, all subject, however, to the
Company rules and policies then in effect regarding participation therein.
During the Term, the benefits provided to the Executive, as described in the
preceding sentence, shall not be reduced except in accordance with the general
reduction of such benefits applicable to similarly situated employees generally,
but then only to the extent that such benefits are reduced for such other
similarly situated employees.
3.3 Automobile Allowance. During the Term, the Company shall
pay directly lease payments or purchase installments and parking for one
automobile comparable to the automobile currently used by the Executive and
reimburse Executive for automobile insurance with respect thereto.
3.4 Health Club Membership. During the Term, the Company
shall pay the costs of one health club membership for the Executive in each of
the Executive's two principal places of residence.
3.5 Life Insurance.
3.5.1 Purchase. Provided that the Executive is
insurable at rates that are comparable to those obtainable on other persons of
similar age and position in good health (if the Executive is classified in a
higher risk category he may elect to pay the excess premium cost to obtain the
coverage), during the Term the Company shall procure and maintain life insurance
on the life of the Executive in the face amount of $1,000,000. The Executive
shall be the owner of such life insurance policy and shall have the absolute
right to designate the beneficiaries thereunder. The type of policy (whether
term, whole life, etc., or combination of types) shall be in the sole discretion
of the Company.
3.5.2 Payment of Premiums. The Company shall pay
all premiums for such life insurance.
3.5.3 Medical Examination. The Executive agrees
to submit to all medical examinations, supply all information and execute all
documents required by the insurance company in connection with the issuance of
a policy for such insurance as well as for any key man insurance the Company may
desire to maintain on the Executive's life.
4. Reimbursement of Expenses.
The Executive shall be reimbursed for all items of travel,
entertainment and miscellaneous expenses (including home Internet access) which
the Executive reasonably incurs in connection with the performance of his duties
hereunder, provided that the Executive submits to the Company on proper forms
provided by the Company, such statements and other evidence supporting such
expenses as the Company may require and provided such expenses meet the
Company's policy concerning such matters.
5. Stock Options.
The Executive may be entitled to participate in all Company employee
stock option programs as determined by the Compensation Committee of the
Company's Board of Directors and approved by the Company's shareholders.
6. Vacations.
The Executive shall be entitled to not less than four (4) weeks of paid
vacation in any calendar year (prorated in any Year during which the Executive
is employed hereunder for less than the entire Year). Such vacation shall be
taken at such times as are consistent with the reasonable business needs of the
Company. Any vacation not taken during the year may not be taken by the
Executive in subsequent years except to the extent approved by the Company. Upon
termination of the Executive's employment for any reason, any vacation earned by
the Executive but not taken shall be forfeited.
7. Termination of Employment.
7.1 Death or Disability. If the Executive dies during the
Term, the Term shall terminate as of the date of the Executive's death. If the
Executive becomes Totally Disabled (as that term is defined below) for one
hundred eighty (180) days in the aggregate during any consecutive twelve-month
period during the Term, the Company shall have the right to terminate the Term
by giving the Executive thirty (30) days' prior written notice thereof, and upon
the expiration of such thirty-day period, the Executive's employment under this
Agreement shall terminate. If the Executive resumes his duties within thirty
(30) days after receipt of a notice of termination and continues to perform such
duties for four (4) consecutive weeks thereafter, the Term shall continue and
the notice of termination shall be considered null and void and of no effect.
Upon termination of the Term under this Section 7.1, the Company shall have no
further obligations or liabilities under this Agreement, except to pay to the
Executive's estate or the Executive, as the case may be: (i) the portion, if
any, that remains unpaid of the Base Salary for periods worked by the Executive
plus the excess of one year's Base Salary over the amount payable to the
Executive under the Company's long-term disability plan during such time
(payable as if the Executive remained an employee of the Company); and (ii) the
amount of any expenses reimbursable in accordance with Section 4 above; and
(iii) any amounts due under any Company benefit, welfare or pension plan.
7.2 "Totally Disabled," as used herein, shall mean a mental or
physical condition which, in the reasonable opinion of an independent medical
doctor selected by the Company in its discretion, renders the Executive unable
or incompetent to carry out the material duties and responsibilities of the
Executive under this Agreement.
7.3 Discharge for Cause. The Company may discharge the
Executive for "Cause" upon written notice (as defined in Section 11.1), and
thereby immediately terminate his employment under this Agreement. For purposes
of this Agreement, the Company shall have "Cause" to terminate the Executive's
employment if the Executive, in the reasonable good faith judgment of the
Company, (i) materially breaches any of his agreements, duties or obligations
under this Agreement and has not cured such breach within ten (10) days after
Company's written notice, including, without limitation, the Executive's failure
to perform his duties hereunder, other than a failure resulting from his illness
or sickness; (ii) willfully fails to carry out a material lawful directive of
the Board of Directors; (iii) embezzles or converts to his own use any funds of
the Company or any client or customer of the Company; (iv) converts to his own
use or destroys any property of the Company having a significant value; (v) is
in material violation of any of the Company policies and/or procedures as
identified in the Company's Employee Manual; or (vi) is habitually drunk or
intoxicated. If the Executive is discharged for Cause, he shall receive only
those amounts earned but not distributed under the relevant plan, program or
practice of the Company. The Company and the Executive acknowledge that if the
Company engages in the Adult Business (as defined in Section 9), such business
could be considered controversial in some localities and could result in civil
or criminal litigation against the Company based upon obscenity and similar
laws. The Parties agree that, notwithstanding the other provisions of this
Section, the naming of the Executive in any such suit, and any conviction of the
Executive or plea bargain, settlement or other disposition of such litigation
relating to the Executive, shall not be considered Cause for the termination of
the Executive's employment, so long as the conduct of the Executive upon which
such claim was based consisted of the Executive carrying out his duties in good
faith and in accordance with directions of management of the Company.
7.4 Termination by Executive. The Executive may terminate
the Term of his employment:
7.4.1 upon failure by the Company to comply with
the material provisions of this Agreement, which failure is not cured within ten
(10) days after written notice (referred to herein as "Good Reason"); or
7.4.2 upon a "Change in Control of the Company"
(as defined in Section 7.6.1 below) upon thirty (30) days' prior written notice
given at any time within eighteen (18) months after a Change in Control; or
7.4.3 for any reason other than Good Reason or
following a Change in Control of the Company, which termination shall be
considered a "Voluntary Termination" by Executive.
7.5 Severance upon Termination. If, during the Term, the
Executive's employment is terminated by the Company without Cause, or the
Executive shall terminate employment for Good Reason prior to a Change in
Control of the Company (the date of termination is referred to as the
"Termination Date"), then the Company shall pay the Executive in lieu of other
damages, an amount (the "Severance Payments") equal to his then current Base
Salary payable in installments at the same time the Company pays salary to its
other senior executive employees payable over two years (the period over which
the Severance Payments are made is referred to as the "Severance Period"). The
Company shall have no liability to make any Severance Payments as provided for
in this paragraph unless (i) the Executive executes a General Release in a form
substantially as set forth in Exhibit A attached hereto and (ii) the Executive
complies with all provisions in Section 8 (Restrictive Covenants). Such amount
shall reduce the amount of any other severance payment that otherwise would have
been payable to the Executive under any other Company plan, program or
arrangement. In addition, the Company shall maintain during the lesser of the
balance of the Term immediately prior to such termination or the Severance
Period all employee benefit plans and programs which the Executive participated
in immediately prior to such termination other than bonus, incentive
compensation and similar plans based on performance, provided the Executive's
participation is permissible under the general terms and provisions of such
plans and applicable law. In the event of a Voluntary Termination, the Executive
shall receive only his earned but unpaid Base Salary as of the date of his
termination.
7.6 Change in Control.
7.6.1 Definitions. For purposes of this Section
7.6, a "Change in Control" shall mean a change in control of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A, as in effect on the date of this Agreement, promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided,
that whether or not required to be reported under such Item 6(e), without
limitation, such a Change in Control shall be deemed to have occurred if (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the Company's
then outstanding securities; (ii) during any period of two consecutive years,
individuals who, at the beginning of such
period, constitute the Board cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a vote of at least
three-fourths of the directors then still in office who were directors at the
beginning of the period; (iii) the Company's stockholders approve an agreement
to merge or consolidate the Company with another corporation (other than a
corporation 50% or more of which is controlled by, or is under common control
with, the Company); or (iv) any individual who is nominated by the Board of
Directors for election of the Board on any date fails to be so elected as a
direct or indirect result of any proxy fight or contested election for positions
on the Board of Directors; provided, however, that notwithstanding the
foregoing, no Change of Control shall be deemed to have occurred pursuant to
either clause (i) or (ii) above in the event of (and notwithstanding any
resultant change in the membership of the Board) an acquisition by any group
comprised of senior officers of the Company, including the Executive, of 25% or
more of the combined voting power of the Company's then outstanding securities.
7.6.2 Termination Payment. Notwithstanding any
provision of this Agreement, if, within eighteen (18) months following a
Change in Control of the Company, (a) the Executive's employment by the Company
shall be terminated by the Company other than as a result of the Executive
becoming Totally Disabled or for Cause or (b) the Executive terminates the Term
pursuant to Section 7.4.1, then the Executive shall be entitled to the benefits
provided below:
(1) The Company shall pay the Executive
full Base Salary through the Termination Date at the rate in effect at that
time, and shall pay the Executive for any vacation earned but not taken and the
amount, if any, of any bonus for a past Company fiscal year which has not yet
been awarded or paid;
(2) In lieu of any further salary
payments to the Executive for periods subsequent to the Termination Date, the
Company, subject to the limitation described below, shall pay to the Executive
on the 60th day following the Termination Date a lump sum amount equal to four
times the sum of (i) the Base Salary and (ii) cash bonuses and other cash
compensation paid to the Executive during the 12 months preceding the
Termination Date ("Termination Payment"); and
(3) All stock options held by the
Executive shall be fully vested and remain outstanding for their full original
term unless sooner exercised.
7.6.3 Certain Additional Payments by the
Company.
(1) Anything in this Agreement
to the contrary notwithstanding, in the event it shall be determined that any
payment or distribution to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Section 7.6.3 (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(2) Subject to the provisions
of Section 7.6.3(3), all determinations required to be made under this Section
7.6.3, including whether and when Gross-Up Payment is required and the amount
of such Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by Deloitte & Touche LLP (the "Accounting
Firm"); provided, however, that the Accounting Firm shall not determine that no
Excise Tax is payable by the Executive unless it delivers to the Executive a
written opinion (the "Accounting Opinion") that failure to report the Excise Tax
on the Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. In the event that Deloitte &
Touche LLP has served, at any time during the two years immediately preceding a
Change in Control Date, as accountant or auditor for the individual, entity or
group that is involved in effecting or has any material interest in the Change
in Control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations and perform the other functions specified
in this Section 7.6.3
(which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Within fifteen (15) business days of the receipt of notice from
the Executive that there has been a Payment, or such earlier time as is
requested by the Company, the Accounting Firm shall make all determinations
required under this Section 7.6.3, shall provide to the Company and the
Executive a written report setting forth such determinations, together with
detailed supporting calculations, and, if the Accounting Firm determines that no
Excise Tax is payable, shall deliver the Accounting Opinion to the Executive.
Any Gross-Up Payment, as determined pursuant to this Section 7.6.3, shall be
paid by the Company to the Executive within five (5) days of the receipt of the
Accounting Firm's determination. Subject to the remainder of this Section 7.6.3,
any determination by the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that it is ultimately
determined in accordance with the procedures set forth in Section 7.6.3(3) that
the Executive is required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to or for the benefit of
the Executive.
(3) The Executive shall notify
the Company in writing of any claims by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but nolater than thirty
(30) days after the Executive actually receives notice in writing of such claim
and shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid; provided, however, that the failure of the
Executive to notify the Company of such claim (or to provide any required
information with respect thereto) shall not affect any rights granted to the
Executive under this Section 7.6.3 except to the extent that the Company is
materially prejudiced in the defense of such claim as a direct result of such
failure. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which he gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such claim;
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request
in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by
an attorney selected by the Company and reasonably acceptable
to the Executive;
(iii) cooperate with the Company in good
faith in order effectively to contest such claim; and
(iv) if the Company elects not to assume and
control the defense of such claim, permit the Company to
participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 7.6.3, the Company shall have the right, at its sole option, to
assume the defense of and control all proceedings in connection with
such contest, in which case it may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim, and may either direct the
Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on
an interest-free basis, and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided, that any extension of
the statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Company's right to assume the defense of and control
the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(4) If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 7.6.3(3)
the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Company's complying with the requirements
of Section 7.6.3(3)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 7.6.3(3) a determination is made that the Executive
shall not be entitled to any refund with respect to such claim, and the Company
does not notify the Executive in writing of its intent to contest such denial
of refund prior to the expiration of thirty (30) days after such determination,
then such advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Restrictive Covenants.
8.1 Non-Disclosure of Information. The Executive
shall:
8.1.1 Never, directly or indirectly,
disclose to any person or entity for any reason, or use for his own personal
benefit, any "Confidential Information" as hereinafter defined; and
8.1.2 At all times take all reasonable
precautions necessary to protect from loss or disclosure by Executive or his
subordinates any and all documents or other information containing, referring,
or relating to such Confidential Information. Upon termination of employment
with the Company for any reason, the Executive shall promptly return to the
Company any and all documents or other tangible property containing, referring,
or relating to such Confidential Information, whether prepared by him or others.
8.1.3 Notwithstanding any provision to the
contrary in Section 8, this paragraph shall not apply to information which the
Executive is called upon by legal process (including, without limitation, by
subpoena or discovery requirement) to disclose or any information which has
become part of the public domain or is otherwise publicly disclosed through no
fault or action of the Executive.
8.1.4 For purposes of this Agreement,
"Confidential Information" shall mean any information relating in any way to the
business of the Company disclosed to or known to the Executive as a consequence
of, result of, or through the Executive's employment by the Company which may
consist of, but not be limited to, technical and non-technical information about
the Company's proprietary products, processes, programs, concepts, forms,
business methods, data, any and all financial and accounting data, employees,
marketing, customers, customer lists, and services and information corresponding
thereto acquired by the Executive during the term of the Executive's employment
by the Company. Confidential Information shall not include any of such items
which arc published or are otherwise part of the public domain, or freely
available from trade sources or otherwise.
8.1.5 Upon termination of this Agreement
for any reason, the Executive shall return to a designated officer of the
Company all equipment and/or tangible property then in the Executive's
possession or custody which belongs or relates to the Company, including,
without limitation, copies or reproductions of correspondence, memoranda,
reports, notebooks, drawings, photographs, data base, or any other documents or
electronically stored information which constitutes Confidential Information.
8.2 Trade Secrets - Intellectual Property Rights. The
Executive shall provide the Company with any copyrightable work, trade secrets
and other protectable intellectual property developed or produced by the
Executive while in the employ of the Company pursuant to this Agreement
(collectively, "Work Product").
8.2.1 All Work Product shall be considered
works made for hire and shall be the exclusive property of the Company and the
Company shall be considered the author and/or creator of such work for worldwide
copyright purposes and renewals and extensions thereof. The Company may
request, at its own cost and expense, that the Executive assist the Company in
obtaining worldwide patent, copyright and other property rights for the Work
Product.
8.2.2 If the Executive's rights in the
Work Product cannot be assigned to the Company, the Executive waives enforcement
of all such rights against the Company. The Executive further agrees to join in
any action, at the Company's sole cost and expense, to enforce or to procure a
waiver of such rights.
8.2.3 If the rights of the Work Product
cannot be waived or the Work Product is not deemed a "work for hire", the
Executive hereby grants the Company and its assigns a worldwide royalty-free
license to reproduce, distribute, modify, publicly display, sublicense and
assign such rights in all media or distribution technologies now known and
hereinafter developed or devised.
8.2.4 The Executive hereby appoints the
Company as his attorney in fact to execute and file any patent, copyright or
other lawful application with respect to the Work Product.
8.3 Non-Solicitation. During the Term and during the Severance
Period, the Executive will not, directly or indirectly, individually or on
behalf of other persons, solicit, aid or induce (i) any employee of the Company
or any of its affiliates to leave their employment with the Company or its
affiliates to accept employment with or render services to or with any person,
firm, corporation or other entity or assist or aid any other person, firm,
corporation or other entity in identifying or hiring away such employee, (ii)
any customer or vendor of the Company to alter its business relationship with
the Company or to purchase products or services then sold by the Company or its
affiliates from another person, firm, corporation or other entity or assist or
aid any other person or entity in identifying or soliciting any such customer or
vendor or (iii) any other remaining employee of the Company or its affiliates to
leave such employee's employment with the Company or its affiliates.
8.4 Conflict of Interest. The Executive shall exercise good
judgment and maintain high ethical standards in the course of his dealings so as
to preclude the possibility of a conflict between the interest of the Company
and his own personal interest. The Executive, therefore, has an obligation to
avoid any activity, agreement, personal interest, or other relationship or
situation which: (i) conflicts with the Company's best interest; (ii) interferes
with the Executive's responsibility to serve the Company to the best of the
Executive's ability; or (iii) gives the appearance of self dealing.
8.4.1 This policy requires that the
Executive shall not have any relationship, nor engage in any activity that
might impair the independence or judgment in the execution of the Executive's
duties. The Executive shall not have any direct or direct personal financial
interests in suppliers of property, goods or services that would affect his
decisions or actions on the Company's behalf. The Executive shall not accept
gifts, benefits, or unusual hospitality that would be reasonably likely to
influence the Executive in the performance of his duties.
8.4.2 If any possible conflict of interest
situation arises, the Executive is responsible to immediately disclose the
facts to the Board of Directors of the Company so that an evaluation may
determine whether a problem exists and, if so, to eliminate it.
8.5 Injunctive Relief/Legal Remedies. The Parties agree that
the remedy at law for any breach by the Executive of this Agreement and
specifically the provisions of Section 8 ("Restrictive Covenants"), will be
inadequate and that the Company or any of its subsidiaries or other successors
or assigns shall be entitled to injunctive relief without bond. Such injunctive
relief shall not be exclusive, but shall be in addition to any other rights and
remedies Company or any of its subsidiaries or their successors or assigns might
have for such breach.
8.5.1 The Executive acknowledges: (i) that
compliance with the restrictive provisions contained in Section 8 is necessary
to protect the business and goodwill of the Company and its subsidiaries,
and (ii) that a breach of this Agreement will result in irreparable and
continuing damage to the Company, for which monetary damages may not provide
adequate relief. Consequently, the Executive agrees that in the event of a
breach or threatened breach of any of the restrictive covenants described
herein, the Company, at its discretion, shall be entitled to seek both: (i)
a preliminary and/or permanent injunction in order to prevent such damage, or
continuation of such damage, and (ii) monetary damages as determinable. Nothing
herein, however, shall be construed to restrict and/or prohibit the Company
from pursuing any and all other remedies; the Executive acknowledges that all
remedies are cumulative. The Executive specifically acknowledges that the
Executive shall account for and pay over to the Company any profits, monies,
accruals or other benefits derived or received by the Executive as a result of
any transaction constituting a breach of the Restrictive Covenants in Section 8.
8.5.2 If any legal action arises to
enforce the Company's trade secrets, the prevailing party shall be entitled to
recover any and all damages, as well as all costs and expenses, including
reasonable attorney's fees incurred in enforcing or attempting to enforce the
Company's trade secrets.
9. Nature of Company Business.
The Executive acknowledges that the Company, through one or more of its
affiliated companies, is currently involved in providing technical and creative
services to companies which produce and distribute television networks which
feature explicit and cable version adult movies and features and other
programming depicting sexual situations and/or nudity (the "Adult Business"). In
addition, the Executive acknowledges that the Company, through one or more of
its affiliated companies, may become involved in the Adult Business. The
Executive acknowledges that he will likely be exposed, from time to time, to one
or more aspects of the Adult Business during the course of his employment by the
Company. Furthermore, the Executive confirms that he is currently comfortable
working in an environment where some or all aspects of the Adult Business are
present and would be comfortable working for a company engaged in the Adult
Business. If, at any time, the Executive's view on the foregoing changes or the
Executive otherwise become uncomfortable with the nature of the Company's
business, the Executive agrees to promptly inform the Board of Directors of the
Company. The Company will work with the Executive to explore mutually acceptable
means of accommodating the Executive's concerns which, both parties acknowledge,
may result in the termination of the Executive's employment. Termination of the
Executive's employment occasioned by the Executive's desire not to be associated
with the Company as a result of the nature of its business shall be treated as a
Voluntary Termination by the Executive without Good Reason.
10. Arbitration.
10.1 Any and all disputes, controversies and claims arising
out of, or relating to, this Agreement, or with respect to the interpretation of
this Agreement, or the rights or obligations of the Parties and their successors
and permitted assigns, whether by operation of law or otherwise, shall be
settled and determined by arbitration in New York City, New York, pursuant to
the then existing rules of the American Arbitration Association ("AAA"), for
commercial arbitration. Each party shall pay their own legal fees. The losing
party shall pay the fees and costs imposed by the AAA; if neither party clearly
prevails in the arbitration, the parties shall request that the AAA appointed
arbitrator apportion the AAA's fees and costs between the parties.
10.2 The Parties covenant and agree that the decision of the
AAA shall be final and binding and hereby waive their right to appeal therefrom.
11. Miscellaneous.
11.1 Notices. Any notice, demand or communication required or
permitted under this Agreement shall be in writing and shall either be
hand-delivered to the other party or mailed to the addresses set forth below by
registered or certified mail, return receipt requested, or sent by overnight
express mail or courier or facsimile to such address, if a party has a facsimile
machine. Notice shall be deemed to have been given and received (i) when
hand-delivered or after three (3) business days when deposited in the U.S. Mail,
(ii) when transmitted and received by facsimile or sent by express mail properly
addressed to the other party. The addresses are:
To the Company:
Directrix, Inc.
536 Broadway, 10th Floor
New York, New York 10012
Facsimile: (212) 941-7846
Attn: Board of Directors
To the Executive:
J. Roger Faherty
1035 Fifth Avenue
New York, New York 10022
The foregoing addresses may be changed at any time by either
party by notice given in the manner herein provided.
11.2 Integration; Modification. This Agreement, the
Indemnification Agreement executed contemporaneously herewith and any Employee
Manual adopted by the Company constitute the entire understanding and agreement
between the Company and the Executive regarding its subject matter, and
supersede all prior negotiations and agreements or interpretations, whether oral
or written. This Agreement may not be modified except by written agreement
signed by the Executive and a duly authorized officer of the Company.
11.3 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties, including their respective heirs,
executors, successors and assigns, except that this Agreement may not be
assigned by the Executive.
11.4 Waiver of Breach. No waiver by either party of any
condition or of the breach by the other of any term or covenant contained in
this Agreement, whether conduct or otherwise, in any one (1) or more instances
shall be deemed or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition, or the breach of any
other term or covenant set forth in this Agreement. Moreover, the failure of
either party to exercise any right hereunder shall not bar the later exercise
thereof with respect to other future breaches.
11.5 Governing Law. This Agreement shall be
governed by the internal laws of the State of New York, except that Section 10
shall be governed by the Federal Arbitration Act, Title 9, U.S. Code.
11.6 Headings. The headings of the various sections and
paragraphs have been included herein for convenience only and shall not be
considered in interpreting this Agreement.
11.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one (1) and the same instrument.
11.8 Due Authorization. The Company represents
that all corporate action required to authorize the execution, delivery and
performance of this Agreement has been duly taken.
IN WITNESS WHEREOF, this Agreement has been executed by the
Executive and on behalf of the Company by its duly authorized officer on the day
and year first above written.
DIRECTRIX, INC.
Date By: ----------------------------------
Donald J. McDonald, Jr., President
EXECUTIVE:
Date --------------------------------------
J. Roger Faherty
EXHIBIT A
GENERAL RELEASE AND SEPARATION AGREEMENT
1. GENERAL RELEASE. In consideration of the payment of salary through
______, ___ together with accrued vacation pay and __ weeks severance and for
other good and valuable consideration, J. Roger Faherty ("Executive") hereby
forever releases, discharges, acquits and forgives DIRECTRIX, INC., its
officers, directors, stockholders, employees, affiliates, successors and
assignees (collectively, the "Company") from any and all claims, known or
unknown, which Executive or Executive's heirs, successors or assigns have or may
have against the Company and any and all liability which the Company may have to
Executive whether denominated claims, demands, causes of action, obligations,
damages or liabilities arising from any and all bases, however, denominated,
including but not limited to claims of discrimination under the U.S. Age
Discrimination in Employment Act, the U.S. Americans with Disabilities Act of
1990, the U.S. Family and Medical Leave Act of 1993, Title VII of the United
States Civil Rights Act of 1964, 42 U.S.C. Section 1981, the New York Human
Rights Law, including New York Executive Law Section 296, Section 8-107 of the
Administrative Code and Charter of New York City, the Worker Adjustment and
Retraining Notification Act of 1988 or any similar state law or any other
federal, state or local law, or any other law, rule or regulation, or any
workers' compensation or disability claims under any such laws. This release
relates to claims arising from and during Executive's relationship with the
Company or as a result of the termination of such relationship. This release is
for any relief, no matter how denominated, including, but not limited to, wages,
back pay, front pay, compensatory damages or punitive damages. This release
shall not apply to the obligations set forth in this Agreement or any other
claims that may arise after the date on which Executive signs this Agreement.
Notwithstanding any other provision of this Agreement, this release is not
intended to interfere with Executive's right to file a charge with the U.S.
Equal Employment Opportunity Commission (or any state human rights or similar
commission) in connection with any claim Executive believes Executive may have
against the Company. However, by executing this Agreement, Executive hereby
agrees to waive the right to recover in any proceeding Executive may bring
before the U.S. Equal Opportunity Commission (or any state human rights or
similar commission) or in any proceeding brought by the U.S. Equal Employment
Opportunity Commission (or any state human rights or similar commission) on
Executive's behalf.
This release shall be binding upon and inure to the benefit of the
parties, their successors, assigns and personal representatives.
2. NONDISCLOSURE OF PROPRIETARY INFORMATION AND RETURN OF COMPANY
PROPERTY. Executive agrees (i) to promptly surrender and deliver to the Company
all records, materials, equipment, drawings and data of any nature pertaining to
his employment by the Company or any invention or any trade secrets,
confidential information, knowledge, data or other information of the Company
("Confidential Information"), (ii) not to take with him any description
containing or pertaining to any Confidential Information which he may have
produced or obtained during his employment, (iii) not to disclose any
Confidential Information to any third party without the Company's prior written
consent and (iv) to return to the Company all of its property.
3. GOODWILL. The purpose of this Agreement is to arrive at a
mutually agreeable and amicable basis upon which to separate Executive's
employment with the Company the Company. Executive and the Company agree to
refrain from any criticisms of or disparaging comments about each other, except
as may be required by law or judicial process.
4. WAIVER. Executive understands that he may consider whether to agree
to the terms contained herein for a period of 21 days after the date hereof.
Accordingly, Executive may sign and return this Agreement by ______, ___ to
acknowledge his understanding of and agreement with the foregoing. Executive
acknowledges that, prior to signing this Agreement, he was advised by the
Company to consult with an attorney. This Agreement will become effective,
enforceable and irrevocable seven days after the date on which Executive signs
it (the "Effective Date"). During the seven-day period prior to the Effective
Date, Executive may revoke his agreement to accept the terms hereof by
indicating in writing to the Company his intention to revoke. [If Executive
exercises his right to revoke hereunder, Executive shall forfeit his right to
receive the benefits provided under the Employment Agreement and, if such
benefits have already been provided, shall immediately reimburse the Company for
the cost of such benefits.]
Signed this __ day of ______, ____
DIRECTRIX, INC. RELEASOR
- ------------------------ ------------------------
Name:
Title: