Employment Agreement - eUniverse Inc. and John V. Hanke
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the
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Closing Date, by and between eUniverse, Inc., a corporation organized under the
laws of the State of Nevada (the "Company"), and John V. Hanke, an individual
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residing in Berkeley, California (the "Employee"). Except as otherwise defined
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herein, capitalized terms used herein and defined in that certain Agreement and
Plan of Reorganization by and among the Company, The Big Network, Inc. ("BNI"),
the Employee and certain shareholders of BNI (the "Reorganization Agreement")
shall be used herein as so defined.
WITNESSETH:
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WHEREAS, the Employee and Company have entered into the Reorganization
Agreement, providing for the sale of all of the BNI capital stock owned by the
Employee to the Company; and
WHEREAS, the Company desires to employ the Employee, and the Employee
desires to accept such employment, on the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Term of Employment.
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Subject to the terms and conditions of this Agreement, the Company hereby
employs the Employee and the Employee hereby accepts employment with the Company
pursuant to this Agreement for the period commencing on the Closing Date (the
"Commencement Date"), and ending twelve months after the Commencement Date.
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Said period of time is hereinafter referred to as the "Initial Term".
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Subsequent to the last day of the Initial Term, if the parties do not expressly
agree in writing to extend this Agreement for a specified period of time, the
Employee's employment by the Company shall continue pursuant to the terms of
this Agreement except that the Employee shall be an employee-at-will, without a
specified term of employment.
As used herein, the term "Employment Period" shall mean the entire period
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of time that the Employee is employed by the Company, inclusive of the Initial
Term, any extensions hereof for a specified period of time, and any period
during which the Employee is an employee-at-will without a specified term of
employment.
2. Position; Duties and Place of Employment.
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(a) The Company hereby employs the Employee as Vice President, Marketing
and Community Architecture. The Employee shall report to the Chief Executive
Officer; provided, however, that the Company, in its sole discretion, shall have
the right to make changes in the Employee's reporting assignment. The Employee
and the Company agree that the Employee's
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duties and areas of authority shall be as described on Exhibit "A" attached
hereto and shall also include such other duties as shall from time to time be
assigned to him reasonably and in good faith by the Company.
(b) The Employee shall perform his duties faithfully, diligently and to
the best of his ability in accordance with the reasonable directions and orders
of the person to whom he reports, and the Company's Board of Directors, or their
designees, and shall devote such time, efforts and attention to the business and
affairs of the Company as may reasonably be required to achieve its objectives
and to perform the duties required hereunder. The Employee shall devote
substantially all of his working time, efforts and attention for the benefit of
the Company and to the performance of his duties and responsibilities under this
Agreement.
(c) The Employee shall not render to others any service of any kind for
compensation without the prior approval of the Chief Executive Officer of the
Company, which approval shall be at his sole discretion to grant or deny. The
Employee shall not engage in any activity, including any ownership interest,
which conflicts or interferes with the performance of duties hereunder or usurps
the business interests, existing or potential, of the Company, provided, that
Employee shall not be prohibited from acquiring a five percent (5%) or under
ownership interest in any other publicly traded company.
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(d) The place of employment of the Employee shall be at San Francisco,
California. During the Employment Period, the Company shall lease or sublease
approximately 2300 square feet of office space in San Francisco, California for
the Company's operations (the "San Francisco Office"). During the Employment
Period, Employee shall work in the San Francisco office and the Company shall
pay all support costs and lease payments for the San Francisco Office up to an
amount equal to $10,000.00 per month. At any time that the Company and the
Employee deem it to be appropriate, the Employee shall temporarily work at other
place or places as may be determined by the Company.
(e) Except as authorized by the Company in writing or under the terms of
this Agreement, the Employee shall not have any right to obligate or bind the
Company in any manner whatsoever nor represent to third parties that he has any
right to enter into any binding obligation on the Company's behalf.
3. Compensation.
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(a) During the Initial Term, the Company shall pay to the Employee,
as compensation for Employee's services and his compliance with this Agreement,
a salary of $96,000 per annum, payable in periodic installments in accordance
with the Company's normal payroll practices (the "Compensation"), and the whole
amount of which shall be guaranteed for the Initial Term as provided herein.
(b) In addition to the Compensation set forth above in Section 3(a), within
thirty (30) days from the date of this Agreement, Employee shall be granted an
option to purchase 300,000
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shares of Common Stock of the Company, at a per share price of $8.25 with such
shares vesting quarterly over a three year period.
4. Benefits.
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The Company shall provide the Employee with coverage pursuant to a medical
plan which shall be selected by the Company in its sole discretion. The
Employee shall also be entitled to participate in all other benefit plans
provided by the Company to which Employee is eligible.
5. Reimbursement of Expenses.
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The Company shall reimburse the Employee for normal and reasonable business
expenses incurred by him in the course of his employment, including the
reasonable costs for transportation and accommodations when the Employee is
required by the Company to travel away from the location set forth at Section
2(d) herein. Such reimbursement shall be subject to the Company's standard
procedures with respect to reimbursement, including such matters as pre-approval
requirements, lodging and meal allowances, and reimbursement rates for
automobile travel. The Employee shall present to the Company an itemized
accounting for such expenses, including receipts, within two (2) weeks of such
expenditures.
6. Confidentiality.
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For a period commencing with the date first above written and continuing in
perpetuity, the Employee shall not, either directly or indirectly, on his own
behalf or in the service of or on behalf of others, copy, make use of, or
disclose or make available, directly or indirectly, to any person, any of the
Company's Trade Secrets, as that term is defined in Section 35-51(d) of the
Connecticut General Statutes Annotated.
The Employee acknowledges that in connection with his employment by the
Company, he will have access to information and materials which the Company
desires to keep confidential, including customer lists, supplier lists,
financial statements, business records and data, marketing and business plans,
and information and materials relating to the Company's services, products,
methods of operation, key personnel, proprietary software and other proprietary
intellectual property and any of the Company's information and materials,
whether oral or written, that are not Trade Secrets but may be reasonably
understood, from legends, the nature of such information itself and/or the
circumstances of such information's disclosure, to be confidential and/or
proprietary to the Company or to third parties to which the Company owes a duty
of nondisclosure (collectively, the "Confidential Information"); provided,
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however, that Confidential Information does not include information which (i) is
or becomes publicly known through the lawful action of any party other than the
Employee; (ii) has been made available by the Company, directly or indirectly,
to a non-affiliated third party without obligation of confidentiality; or (iii)
is independently developed by the Employee from sources or through persons that
the Employee can demonstrate had no access to the Confidential Information or
Trade Secrets; or (iv) is lawfully known by the Employee at the time of
disclosure other than by reason of discussions with or disclosures by the
Company. The Employee may disclose
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Confidential Information if required by law, a court, or governmental agency of
competent jurisdiction, provided that the Company has been notified of the
requirement promptly after the Employee becomes aware of the requirement, and
provided, further, that the Employee undertakes all lawful and reasonable
measures to avoid disclosing such Confidential Information until the Company has
had reasonable time to seek a protective order. The Employee agrees to comply
with any protective order that covers the Confidential Information to be
disclosed.
The Employee covenants and agrees that, both during the Employment Period
and for a period of two (2) years thereafter, he shall keep secret all
Confidential Information and shall not disclose, reveal, divulge or otherwise
make known any Confidential Information to any person (other than the Company or
its employees or agents in the course of performing his duties hereunder) or use
any Confidential Information for his own account or for the benefit of any other
individual or entity, except with the prior written consent of the Company.
7. Ownership of Intellectual Property.
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The Employee agrees that all inventions, copyrightable material, software,
formulas, trademarks, Trade Secrets and the like which are developed or
conceived by the Employee in the course of his employment by the Company or on
the Company's time or property (collectively, the "Intellectual Property") shall
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be disclosed promptly to the Company and the Company shall own all right, title
and interest in and to the Intellectual Property. The Parties expressly agree
that any and all of the Intellectual Property developed by the Employee shall be
considered works made-for-hire for the Company pursuant to the United States
Copyright Act of 1976, as amended from time to time. In order to ensure that
the Company shall own all right, title and interest in and to the Intellectual
Property in the event that any of the Intellectual Property is not deemed a work
made-for-hire (as defined in Section 101 of the Copyright Act of 1976) and in
any other event, the Employee hereby assigns all such Intellectual Property to
the Company, and the Employee covenants and agrees to affix to the Intellectual
Property appropriate legends and copyright notices indicating the Company's
ownership of all Intellectual Property and all underlying documentation to the
extent reasonably appropriate, and shall execute such instruments of transfer,
assignment, conveyance or confirmation as the Company considers necessary to
transfer, confirm, vest, perfect, maintain or defend the Company's right, title
and interest in and to the Intellectual Property throughout the world.
8. Covenant to Deliver Business Materials and to Report.
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The Employee acknowledges and agrees that all written materials including,
without limitation, all memoranda, notes, records, reports, programs, algorithms
and other documents or codes (and all copies thereof) concerning the business or
affairs of the Company including, without limitation, the Intellectual Property,
which he created or obtained or which otherwise came into his possession or
control while employed with the Company, are property of the Company. Upon
termination of his employment with the Company for any reason whatsoever the
Employee shall promptly deliver all such materials and all copies thereof within
the Employee's possession to the Company by courier or registered U.S. mail
(return receipt requested). In addition, the Employee agrees to render to the
Company such reports as it may
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request with respect to the activities undertaken by him or conducted under his
direction in connection with his employment by the Company.
9. Non-Competition Agreement.
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The Employee hereby acknowledges and recognizes that prior to the date
hereof and during the Employment Period he has been and will be privy to Trade
Secrets and other Confidential Information which is critical to the business of
the Company; that his services to the Company will be of special, unique and
intellectual character; and that the Company would find it extremely difficult
to replace the Employee. Accordingly, in the event the employment of the
Employee is terminated for any reason, the Employee agrees that, in
consideration of the covenants and agreements of the Company contained in this
Agreement, the sufficiency of which are hereby acknowledged by the Employee, he
shall not, either directly or indirectly through another person or entity, on
his own behalf or in the service of or on behalf of others, from the date hereof
through the date which is twelve months after the last day of the Employee's
employment by the Company (i) engage or participate in, offer, perform or
provide any services, business or products which are competitive with those Big
Network-style interactive games and instant messaging/live help products and
services provided to the Company by Employee within the two year period
immediately preceding the date of termination of the Employee's employment by
the Company, or (ii) solicit, or attempt to solicit, persuade or induce any
client or customer of the Company or any of its subsidiaries to terminate or
reduce its business relationship with the Company or any of its subsidiaries.
The Employee understands that the foregoing restrictions may limit his
ability to earn a livelihood in a business similar to the business of the
Company and its subsidiaries, but he nevertheless believes that he has received
and will receive sufficient consideration and other benefits pursuant to this
Agreement to clearly justify such restrictions. In light of his education,
skills and ability, the Employee believes that the foregoing restrictions will
not prevent him from earning a living.
10. Right of Injunction.
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The Employee acknowledges that the harm and injury to the Company that
would result from the breach or threatened breach of any of the provisions of
Sections 6, 7, 8 or 9 of this Agreement (the "Injunctive Sections") by the
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Employee cannot be adequately compensated for in money damages. The Employee
further acknowledges that any breach of any of the provisions of the Injunctive
Sections by him would cause the Company irreparable harm. Therefore, the
Employee agrees that in the event of a breach or threatened breach of any of the
provisions of the Injunctive Sections by him, the Company shall have the right,
in addition to any other remedies available to it at law or in equity, to enjoin
the Employee in a court of equity from violating or threatening to violate its
obligations under the Injunctive Sections; and in any such lawsuit seeking an
injunction restraining the Employee from such actual or threatened breach, shall
not be required to prove (i) that irreparable harm or injury would result from
the breach of said Injunctive Sections, or (ii) that the Company has no adequate
remedy at law.
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The Employee shall reimburse the Company for all reasonable costs and
expenses (including, without limitation, reasonable attorney's fees and
expenses) incurred in connection with the enforcement of any of the provisions
of the Injunctive Sections.
Nothing contained herein shall be construed as prohibiting the Company or
the Employee from pursuing any other remedies (including, without limitation, an
action for damages) which may be available for any actual or threatened breach
of any provision this Agreement, and the pursuit of an injunction or any other
particular remedy shall not be deemed to be an election of such remedy to the
exclusion of any other remedy.
11. Termination of Employment.
(a) Termination by Company for Cause. Notwithstanding anything to the
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contrary contained herein, the Company may terminate the employment of the
Employee at any time for Cause (as defined below) upon written notice to the
Employee. As used herein, the term for "Cause" shall be defined as (i) the
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Employee shall have committed any material breach of any of the provisions set
forth herein; provided that the Employee shall have been provided written notice
of such breach and shall not have cured or taken steps to cure such breach
within one week after receiving such notice; or (ii) the Employee shall have
committed any act of fraud or willful misconduct in connection with the
performance of his duties or obligations hereunder, or shall have been convicted
of any felony under the laws of the United States or any of its subdivisions (or
pleaded guilty or nolo contendre to any such crime) or any other crime that
relates to the Employee's services to, or employment by, the Company; or (iii)
the Employee shall have committed any material act of misfeasance, malfeasance,
nonfeasance, or , dishonesty to the detriment of the Company.
(b) Termination Due to Disability. Notwithstanding anything to the
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contrary contained herein, but subject to the provisions of applicable law, the
Company shall have the right to terminate the Employee's employment by the
Company if he becomes Disabled (as hereinafter defined) during the Employment
Period. As used herein, "Disabled" shall mean that the Employee has a physical
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or mental condition which prevents him from performing the essential functions
required of him pursuant to this Agreement, with or without accommodation, which
condition has continued for a period of sixty (60) consecutive business days or
existed for a total of at least ninety (90) business days in any twelve month
period as determined in good faith by the Board of Directors of the Company.
(c) Termination Due to Death. Notwithstanding anything to the contrary
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contained herein, the Employee's employment by the Company shall terminate if he
dies during the Employment Period.
(d) Effect of Termination. Upon termination of this Agreement under
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Section 11(a) above, the compensation and all other obligations of the parties
under the Agreement shall cease; provided, however, that the covenants in the
Injunctive Sections shall remain in full force and effect.
(e) Termination by Company Without Cause. Notwithstanding anything to the
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contrary contained herein, in the event that the Company terminates the Employee
other than for Cause,
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then the Employee shall be entitled to receive the remainder of his Compensation
for the unexpired portion of the Initial Term of this Agreement; provided,
however, that if the Company has filed a registration statement with the
Securities and Exchange Commission pertaining to the offer of any shares of EUI
capital stock owned by the Employee and the registration statement has become
effective, Employee shall not receive any such remainder Compensation. The
covenants in the Injunctive Sections shall survive termination of this Agreement
for any reason whatsoever.
12. Miscellaneous Provisions.
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(a) Survival of Certain Obligations. The Employee's duties and obligations
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under Sections 6, 7, 8 and 9 and the Company's rights under Section 10 of this
Agreement and any other provision hereof specifying an obligation or a right of
a party after the termination of Employee's employment, for any reason
whatsoever, shall survive such termination and shall remain in full force and
effect.
(b) Successors and Assigns; Prohibition on Assignment. This Agreement is
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binding upon, and shall inure to the benefit of, the Company and its successors
and assigns. With respect to the Employee, this is an agreement for the
performance of personal services. Absent the prior written consent of the
Company, and subject to the terms of the Employee's will and the laws of descent
and distribution, the Employee shall not assign, transfer, convey, encumber or
otherwise dispose of any of his rights under this Agreement, and likewise, he
shall not assign any of his duties or obligations under this Agreement.
(c) No Conflicts. The Employee represents and warrants to, and covenants
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with, the Company that the execution and delivery by him of this Agreement do
not, and his performance of his obligations hereunder will not, constitute a
breach of any agreement, written or oral, to which he is a party or by which he
is bound.
(d) Entire Agreement. This Agreement contains all of the representations,
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covenants and agreements between the parties hereto with respect to the subject
matter hereof, and constitutes the entire agreement of the parties with respect
to said subject matter. This Agreement supersedes any and all other prior or
contemporaneous agreements, whether oral or in writing, between the parties with
respect to the subject matter thereof.
(e) Construction in Favor of Validity. It is the desire and intent of the
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parties hereto that the provisions of this Agreement be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated by a court of competent
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or enforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
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(f) Amendment and Waiver. This Agreement may not be amended or modified
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except by an instrument in writing signed by the party to be bound thereby.
No delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege hereunder. Any failure by either party hereto
to require strict performance by the other party or any waiver by any party
hereto of any term, covenant or agreement herein shall not be construed as a
waiver of any other breach of the same or any other term, covenant or agreement
herein.
(g) Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Connecticut without giving effect to
any principles of conflicts of law.
(h) Notices. Any notice required or permitted to be given hereunder shall
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be (a) in writing, (b) effective on the first business day following the date of
receipt, and (c) delivered by one of the following means: (i) by personal
delivery; (ii) by prepaid, overnight package delivery or courier service; (iii)
by the United States Postal Service, first class, certified mail, return receipt
requested, postage prepaid; or (iv) by prepaid telecopier, telex, or other
similar means of electronic communication (followed by confirmation on the same
or following day by overnight delivery or by mail as aforesaid). All notices
given under this Agreement shall be addressed as follows:
in the case of the Company:
eUniverse, Inc.
101 North Plains Industrial Road
Wallingford, Connecticut 06492
Attention: President
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with a copy to
Christopher G. Martin, Esq.
Martin, Lois & Gasparrini, LLC
1177 Summer Street
Stamford, CT 06905
and, in the case of the Employee:
John V, Hanke
or to such other addresses or telecopier numbers of which the parties have been
advised in writing by any of the above-described means. Personal delivery to a
party or to any officer, partner, agent, or employee of such party at its
address herein shall constitute receipt. The
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following shall also constitute receipt: (i) a party's rejection or other
refusal to accept notice, and (ii) the inability to deliver to a party because
of a changed address or telecopier number of which no notice has been received
by the other party. Notwithstanding the foregoing, no notice of change of
address or telecopier number shall be effective until ten (10) days after the
date of receipt thereof. This Section shall not be construed in any way to
affect or impair any waiver of notice or demand herein provided.
IN WITNESS WHEREOF, this Agreement was executed by the undersigned as of
the date first above written.
eUniverse, Inc.
("Company")
By: __________________________
Name:
Its:
___________________________
Name: John V. Hanke
("Employee')
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EXHIBIT "A"
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DUTIES AND AREAS OF AUTHORITY
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Employee is to be hired as the Vice President for Marketing and Community
Architecture. Employee will be responsible for creating a new eUniverse web
presence that combines content from eUniverse sites, and for overseeing site
design, development, and rollout for all eUniverse sites. Employee will also be
responsible for creating a new eUniverse corporate identity and brand and for
orchestrating consumer-oriented company PR including selecting and working with
an outside PR firm. Employee will coordinate marketing activities for all
eUniverse groups. Employee will also continue to lead the
LivePlace/LiveStore/LiveGames product development team.