Exhibit 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as
of July 9, 2002 between L90, Inc., a Delaware corporation d/b/a MaxWorldwide
(the "Company"), and William H. Mitchell (the "Employee").
R E C I T A L
The Company desires to employ the Employee, and the Employee
desires to be so employed by the Company, on the terms and subject to the
conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth in this Agreement, the Company and the Employee hereby agree
as follows:
1. Employment.
(a) Subject to the terms and conditions contained herein, the
Company hereby agrees to employ the Employee, and the
Employee accepts such employment, from July 16, 2002 (the
"Effective Date") until the date such employment is
terminated pursuant to Section 4 of this Agreement. During
the Employee's employment under this Agreement, the Employee
shall perform such duties for the Company consistent with his
position as Chief Financial Officer as may from time to time
be assigned to the Employee by the Chief Executive Officer of
the Company and Employee shall report to the Chief Executive
Officer of the Company. The Employee shall have the title of
Chief Financial Officer and such other title or titles, if
any, as from time to time may be assigned to the Employee by
the Chief Executive Officer.
(b) Except as otherwise provided herein, the Employee will devote
substantially all his business time, energy, attention and
skill to the services of the Company and its affiliates and
to the promotion of their interests. So long as the Employee
is employed by the Company, the Employee shall not, without
the written consent of the Company:
(i) engage in any other activity for compensation,
profit or other pecuniary advantage, whether received
during or after the term of this Agreement;
(ii) render or perform services of a business,
professional, or commercial nature other than to or for
the Company, either alone
or as an employee, consultant, director, officer, or
partner of another business entity, whether or not for
compensation, and whether or not such activity,
occupation or endeavor is similar to, competitive with,
or adverse to the business or welfare of the Company;
or
(iii) invest in or become a shareholder of another
corporation or other entity; provided, that the
Employee's investment solely as a shareholder in
another corporation shall not be prohibited hereby so
long as such investment is not in excess of one percent
(1%) of any class of shares that are traded on a
national securities exchange.
Notwithstanding the foregoing, the Employee may provide up to 10
days of services to Tally Systems Corporation ("Tally Service") during the first
year of Employee's employment; provided, however, that the Employee shall
provide the Chief Executive Officer with reasonable notice prior to any such
Tally Service; provided, further, that neither such Tally Service nor the
Employee's absence from the Company in connection with such Tally Service shall
adversely affect the business of the Company.
(c) Prior to or concurrently with the execution of this
Agreement, the Employee has executed an Employee Proprietary
Information, Trade Secret and Confidentiality Agreement (the
"Confidentiality Agreement"), an Insider Trading Policy and
an Employee Handbook.
2. Location of Employment. The Employee's principal place of
employment shall be at the executive offices of the Company located at New York
City, New York, or, as may be requested by the Chief Executive Officer, at any
other office of the Company or any of its affiliates currently or hereinafter
located in the metropolitan New York City area (including Westchester County) or
Connecticut; provided, that at the direction of the Chief Executive Officer, the
Employee may from time to time be required to travel to various domestic and
foreign locations. Notwithstanding the foregoing, for each year of full
employment, the Employee (upon reasonable notice to the Company) may work up to
six (6) days remotely from New Hampshire; provided, however, that the Company
shall not be liable to the Employee for any travel or related expenses in
connection therewith.
3. Compensation.
(a) In exchange for performance of the Employee's obligations and
duties under this Agreement, the Company shall pay the
Employee a base salary at an annual rate of $200,000.00,
payable in accordance with the Company's standard payroll
practices, but not less frequently than monthly. In any
payment period in which the Employee shall be employed for
less than the entire number of days in such payment period,
the salary payable under Section 3(a) shall be prorated on
the basis of the number of days during which the Employee was
actually employed divided by the number of days in such
payment period.
(b) For each year of full service as an employee of the Company,
the Employee shall also be eligible to receive a
discretionary annual bonus which annual bonus will be at
least $25,000. The Employee's target bonus for the year
ending the first anniversary of Employee's employment with
Company will be $75,000.00. In addition, the Company shall
reimburse Employee up to $7,500 for reasonable expenses
incurred during the first 75 days following the Effective
Date relating to his relocation to New York (receipts to be
submitted with such reimbursement requests).
(c) The base salary described in subsection (a) hereof and the
bonus described in subsection (b) hereof are gross amounts,
and the Company shall be required to withhold from such
amounts deductions with respect to Federal, state and local
taxes, FICA, unemployment compensation taxes and similar
taxes, assessments or withholding requirements.
(d) Upon approval by the Compensation Committee of the Board of
Directors, the Company shall grant the Employee a stock
option pursuant to the Company's stock option plan to
purchase 200,000 shares of the Company's common stock with an
exercise price equal to the fair market value on the date of
grant (as determined in accordance with the Company's Stock
Option Plan). It is the Company's intention that the grant
date of such option be the Effective Date. Such option shall
vest in one-third (1/3) increments on the first, second and
third anniversaries of the date of grant, so long as the
Employee then remains a full-time employee of the Company.
Such option shall be an incentive stock option to the extent
permitted by law, with the balance being granted as a
non-qualified stock option. Such option shall be subject to
all terms of the Company's Stock Option Plan and the option
agreements between the Employee and the Company evidencing
such option.
(e) The Employee shall be entitled to 10 business days vacation
for the first full year of employment under this Agreement,
which vacation time will accrue in accordance with the
vacation policy of the Company. Thereafter, for each full
year of employment under this Agreement, the Employee shall
be entitled to 15 business days vacation, which vacation time
will accrue in accordance with the vacation policy of the
Company.
(f) The Employee shall be entitled to participate in all benefit
plans (including deferred compensation plans and any medical,
dental or life insurance plans) which shall be available from
time to time to the domestic management employees of the
Company generally, except to the extent
such participation in any plan would, in the opinion of the
Chief Executive Officer, alter the intended tax treatment of
such plan; provided, however, that the Employee shall have no
right under this Agreement, except as set forth in Section
3(d) hereof, to participate in any stock option, stock
purchase or other plan relating to shares of capital stock of
the Company or its affiliates, which participation, if any,
shall be governed by separate agreement. The Employee
acknowledges and agrees that the Chief Executive Officer may
in its discretion terminate at any time or modify from time
to time any such benefit plans.
(g) Other than as expressly set forth in this Section 3, the
Employee shall not receive any other compensation or benefits
except to the extent determined by the Chief Executive
Officer.
4. Termination.
(a) The employment of the Employee under this Agreement may be
terminated by the Company upon giving the Employee notice if
the Employee has been unable to substantially discharge his
essential job duties by reason of illness or injury for
either (A) a period of two consecutive months or (B) twelve
weeks in any twelve-month period.
(b) The employment of the Employee under this Agreement shall
terminate on the date of the Employee's death.
(c) (1) The employment of the Employee under this Agreement may
be terminated by the Company for cause. The Company may
terminate the Employee for cause only after a Cause Event (as
hereinafter defined) has occurred. As used herein, a "Cause
Event" shall mean the following circumstances: (i) repeated
refusal or failure to perform any duties assigned to the
Employee by the Chief Executive Officer as are appropriate to
be performed by Chief Financial Officer and are commensurate
with such title and position, (ii) otherwise committed a
breach of the terms of this Agreement or any other legal
obligation to the Company, (iii) failed to perform any of the
Employee's material obligations under the Confidentiality
Agreement, (iv) demonstrated gross negligence or willful
misconduct in the execution of the Employee's assigned
duties, (v) been convicted of or pleaded nolo contendere to
(a) a felony or (b) any other serious crime involving fraud,
dishonesty, theft, misappropriation or embezzlement or which,
in the reasonable business judgment of the Chief Executive
Officer, results in a material adverse effect on the Company,
(vi) continual use of illegal drugs or of alcohol where such
use of alcohol interferes with the performance of Employee's
duties under this Agreement, (vii) engaged in business
practices which, in the opinion of the Chief Executive
Officer, are unethical or reflect
adversely on the Company, (viii) misappropriated assets of
the Company or (ix) been repeatedly absent from work during
normal business hours for reasons other than disability or
vacation.
(2) Within three months following the effective date of a
Change of Control, the employment of the Employee under this
Agreement may be terminated by the Employee upon delivery by
the Employee to the Chief Executive Officer of a written
notice of termination signed by the Employee stating that
Employee is terminating his employment hereunder as a result
of such Change of Control, if and only to the extent that,
following such Change of Control, the following occurs,
without Employee's consent, Employee's job title or
responsibilities are materially reduced. For purposes of this
Agreement, a "Change of Control" shall mean: (i) the
acquisition by any person, entity or group (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) after the date hereof
of the beneficial ownership of more than fifty percent (50%)
of the total combined voting power of all outstanding
securities of the Company; (ii) a merger or consolidation in
which the Company is not the surviving entity, except for a
transaction in which the stockholders of the Company
immediately prior to such merger or consolidation hold, in
the aggregate, securities possessing more than fifty percent
(50%) of the total combined voting power of all outstanding
voting securities of the surviving entity immediately after
such merger or consolidation; (iii) a reverse merger in which
the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total
combined voting power of all outstanding voting securities of
the Company are transferred to or acquired by a person or
entity different from the persons or entities holding those
securities immediately prior to such merger; (iv) the sale,
transfer or other disposition (in one transaction or a series
of related transactions) of all or substantially all of the
assets of the Company; or (v) a change in the composition of
the Board which is the direct result of a proxy solicitation
and contest pursuant to the Exchange Act such that the
members of the Board immediately prior to the commencement of
such solicitation and contest no longer constitute a majority
of the Board after the conclusion of such solicitation and
contest.
(d) The employment of the Employee under this Agreement shall
terminate upon receipt by the Chief Executive Officer of a
written notice of resignation signed by the Employee or, if
no notice is given, on the date on which the Employee
voluntarily terminates his employment relationship with the
Company.
(e) In addition to the circumstances described in subsections
(a), (b), (c)(1) and (d) above, the Company may terminate the
Employee's employment for any reason or no reason and with or
without cause or prior notice. The Employee understands that,
subject to subsections (f)(iii) and (f)(iv) below, he is an
at-will employee and may be terminated by the Company without
cause or prior notice pursuant to this subsection (e)
notwithstanding any other provision contained in this
Agreement. This at-will relationship will remain in effect
during the term of this Agreement and so long thereafter
provided that the Employee remains employed by the Company,
unless such at-will employment relationship is modified by a
specific, express written agreement signed by the Company.
(f) If the Employee's employment is terminated pursuant to this
Section 4 or for any other reason, the Employee shall not be
entitled to any compensation or benefits from the Company,
under Section 3 of this Agreement or otherwise, except for
the following:
(i) base salary and vacation pay accrued, and reasonable
business expenses incurred, under Section 3 of this
Agreement through the date of such termination;
(ii) such benefits, if any, as may be required to be
provided by the Company under the Comprehensive Omnibus
Budget Reconciliation Act (COBRA) or as required by
under the terms of any death, insurance or retirement
plan, program or agreement provided by the Company and
to which the Employee is a party or in which the
Employee is a participant, including, but not limited
to, any short-term or long-term disability plan or
program, if applicable;
(iii) if the Employee's employment is terminated without
cause pursuant to subsection (e) above prior to August
16, 2002, the Company shall continue to pay to the
Employee the base salary described in Section 3(a)(i)
above for a period of 30 days following the date of
such termination of employment; and
(iv) if the Employee's employment is terminated without
cause pursuant to subsection (e) above on or after
August 16, 2002, or the Employee terminates his
employment on or after August 16, 2002 pursuant to
subsection (c)(2) above, the Company shall continue to
pay to the Employee the base salary described in
Section 3(a)(i) above for a period of six (6) months
following the date of such termination of employment.
5. Employee's Representations.
(a) into this Agreement and that he is free to enter into this
Agreement and not under any contractual restraint which
would prohibit the Employee from satisfactorily performing
his duties to the Company under this Agreement.
(b) The Employee acknowledges that he is free to seek advice
from independent counsel with respect to this Agreement. The
Employee has either obtained such advice or, after carefully
reviewing this Agreement, has decided to forego such advice.
The Employee is not relying on any representation or advice
from the Company or any of its officers, directors,
attorneys or other representatives regarding this Agreement,
its content or effect.
6. Arbitration. Any controversy or claim arising out of or
relating to this Agreement or any breach hereof or the Employee's employment by
the Company or termination thereof, shall be settled by arbitration by one
arbitrator in accordance with the rules of the American Arbitration Association,
and judgment upon such award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. The arbitration shall be held in the City of
New York or such other place as may be agreed upon at the time by the parties to
the arbitration.
7. Equitable Relief. The Employee acknowledges that the Company
is relying for its protection upon the existence and validity of the provisions
of this Agreement, that the services to be rendered by the Employee are of a
special, unique and extraordinary character, and that irreparable injury will
result to the Company from any violation or continuing violation of the
provisions of this Agreement for which damages may not be an adequate remedy.
Accordingly, the Employee hereby agrees that in addition to the remedies
available to the Company by law or under this Agreement, the Company shall be
entitled to obtain such equitable relief as may be permitted by law in a court
of competent jurisdiction including, without limitation, injunctive relief from
any violation or continuing violation by the Employee of any term or provision
of this Agreement.
8. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws (without
regard to choice of law principles) of the State of New York.
9. Entire Agreement. This Agreement constitutes the whole
agreement of the parties hereto in reference to any employment of the Employee
by the Company and in reference to any of the matters or things herein provided
for or hereinabove discussed or mentioned in reference to such employment; all
prior agreements, promises, representations and understandings relative thereto
being herein merged.
10. Assignability.
(a) In the event the Company shall merge or consolidate with any
other corporation, partnership or business entity, or all or
substantially all of the Company's business or assets shall
be transferred in any manner to any other corporation,
partnership or business entity, then such successor to the
Company shall thereupon succeed to, and be subject to, all
rights, interests, duties and obligations of, and shall
thereafter be deemed for all purposes hereof to be, the
"Company" under this Agreement.
(b) This Agreement is personal in nature and the Employee shall
not, without the written consent of the Company, assign or
transfer this Agreement or any rights or obligations
hereunder.
(c) Except as set forth in subsection (a) above, nothing
expressed or implied in this Agreement is intended or shall
be construed to confer upon or give to any person, other than
the parties to this Agreement, any right, remedy or claim
under or by reason of this Agreement or of any term, covenant
or condition of this Agreement.
11. Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants of this
Agreement may be waived only by a written instrument executed by the parties to
this Agreement or, in the case of a waiver, by the party waiving compliance. Any
such written instrument must be approved by the Board to be effective as against
the Company. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right at a later time to enforce the same. No waiver by any party of the breach
of any term or provision contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach, or a waiver of the breach of
any other term or covenant contained in this Agreement.
12. Notice. All notices, requests or consents required or
permitted under this Agreement shall be made in writing and shall be given to
the other party by personal delivery, overnight air courier (with receipt
signature) or facsimile transmission (with "answerback" confirmation of
transmission), if to the Company, sent to such party's addresses or telecopy
number as are set forth below such party's signature to this Agreement, and if
to the Employee, to his address as set forth in the records of the Company, or
such other addresses or telecopy numbers of which the parties have given notice
pursuant to this Section 12. Each such notice, request or consent shall be
deemed effective upon the date of actual receipt, receipt signature or
confirmation of transmission, as applicable.
13. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
14. Survival. The representations and agreements of the Employee
set forth in Sections 5, 6 and 7 of this Agreement shall survive the expiration
or termination of this Agreement (irrespective of the reason for such expiration
of termination).
15. Attorney's Fees. If any party to this Agreement seeks to
enforce his or its rights under this Agreement, the prevailing party shall be
entitled to recover reasonable fees, costs and expenses incurred in connection
therewith including, without limitation, the fees, costs and expenses of
attorneys, accountants and experts, whether or not litigation is instituted, and
including such fees, costs and expenses of appeals.
[Signature Page Follows]
[Signature Page to Employment Agreement]
IN WITNESS WHEREOF, the parties to this Agreement have executed
this Employment Agreement as of the date first above written.
L90, INC.,
a Delaware corporation d/b/a MaxWorldwide
By
-----------------------------
An Authorized Officer
Address for Notices:
4499 Glencoe Avenue
Marina del Rey, California 90292
Attention: Chief Executive Officer
Telecopy: (310) 578-9942
EMPLOYEE:
----------------------------
William H. Mitchell