Employment Agreement - THINK New Ideas Inc. and Joseph Nicholson
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of this
31st day of October 1997, between THINK New Ideas, Inc., a Delaware corporation
(the "Company"), and Joseph Nicholson an individual resident of Winchester,
Massachusetts (the "Employee").
WITNESSETH
WHEREAS, it is the desire of the Company to offer the Employee employment
with the Company upon the terms and subject to the conditions set forth herein;
and
WHEREAS, it is the desire of the Employee to accept the Company's offer
of employment with the Company upon the terms and subject to the conditions set
forth herein.
NOW THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements contained herein and for such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Employee, collectively, referred to as the "Parties", each
intending to be legally bound hereby, agree as follows:
1. Employment. The Company hereby agrees to employ the Employee
and the Employee hereby agrees to be employed by the Company upon the terms and
subject to the conditions set forth herein for the period of employment as set
forth in Section 2 hereof (the "Period of Employment"). Nothing set forth herein
shall be construed to give the Company the right to require the Employee to
relocate or be based in any place other than the Boston, Massachusetts area.
2. Term; Period of Employment. Subject to extension or
termination as hereinafter provided, the Period of Employment hereunder shall be
from the date hereof (the "Effective Date") through the second anniversary of
the Effective Date. Thereafter, the Period of Employment may be extended for
successive one (1) year periods at the option of the Company upon delivery of
written notice by the Company to the Employee, subject to acceptance by the
Employee, not less than one (1) month prior to the expiration of the Period of
Employment, as previously extended. The phrase "Period of Employment" as used
herein shall: (a) specifically include any extensions permitted hereunder or
provided herein; and (b) be deemed to have terminated as of the date of any
notice provided to the Employee pursuant to Section 9 hereof, notwithstanding
the Company's obligation to pay Monthly Compensation to the Employee pursuant to
Subsections 9(b) and 9(c) hereof.
3. Office and Duties. During the Period of Employment:
(a) the Employee shall be employed as the head of the Company's
New England division in the event that the Company does not continue to operate
BBG as a separate subsidiary. Such position shall have the responsibilities
reasonably prescribed by the board of
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directors ("Board of Directors") of the Company (as the sole stockholder of BBG)
in accordance with the bylaws of the Company (the "Bylaws"); and
(b) the Employee shall devote substantially all of his time to
the business and affairs of the Company (which phrase shall hereinafter include
BBG) except for vacations, illness or incapacity, as hereinafter set forth.
Notwithstanding the preceding sentence, nothing in this Agreement shall preclude
the Employee from devoting reasonable amounts of time:
(i) for serving as a director, officer or member of a
committee of any organization or entity involving no conflict of interest with
the Company; or
(ii) engaging in charitable and community activities;
provided, however, that such activities do not interfere with the performance by
the Employee of his duties hereunder. In consideration of such employment, the
Employee agrees that he shall not, directly or indirectly, individually or as a
member of any partnership or joint venture, or as an officer, director,
stockholder, employee or agent of any other person, firm, corporation, business
organization or other entity, engage in any trade or business activity or
pursuit for his own account or for, or on behalf of, any other person, firm,
corporation, business organization or other entity, irrespective of whether the
same competes, conflicts or interferes with that of the Company or the
performance of the Employee's obligations hereunder; provided, however, that
nothing contained herein shall be construed to prevent the Employee from: (x)
investing in the stock of any corporation, which does not compete with the
Company, which is listed on a national securities exchange or traded in the
over-the-counter market if the Employee does not and will not as a result of
such investment own more than five percent (5%) of the stock of such corporation
("Permitted Investments"); or (y) engaging in personal business ventures to
which the Employee devotes time outside of the time required to be devoted to
the business of the Company hereunder.
The Employee represents and warrants that he is not party to any
agreement, oral or written, which restricts in any way: (a) his ability to
perform his obligations hereunder; or (b) his right to compete with a previous
employer or such employer's business.
(c) the Employee shall be entitled to vacation time based upon
the cumulative number of years the Employee is or has been employed by the
Company (deemed for this purpose to include a predecessor, successor, subsidiary
or other affiliate of the Company) as follows:
Weeks of Vacation Full Years of Service
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Two (2) One (1) through Six (6)
Three (3) Seven (7) through Nine (9)
Four (4) Ten (10) through Fourteen (14)
Five (5) Fifteen (15) and Beyond
4. Compensation and Benefits. In exchange for the services rendered by
the Employee pursuant hereto in any capacity during the Period of Employment,
including without
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limitation, services as an officer, director, or member of any committee of the
Company or any affiliate, subsidiary or division thereof, the Employee shall be
compensated as follows:
(a) Compensation. The Company shall pay the Employee
compensation equal to at least One Hundred Twenty-Five Thousand Dollars
($125,000) per annum at a rate of Ten Thousand Four Hundred Sixteen Dollars and
Sixty-Seven Cents ($10,416.67) per month (such monthly amount as the same may be
increased from time to time by virtue of the adjustments set forth herein below
shall be defined as the "Monthly Compensation"). Such salary shall be payable in
accordance with the customary payroll practices of the Company.
(b) Options. The Company shall grant the Employee options to
purchase 200,000 shares of common stock of the Company, $.0001 par value per
share (the "Common Stock") pursuant to and in accordance with the THINK New
Ideas, Inc. Amended and Restated 1997 Stock Option Plan (the "Plan"). The
exercise price of the Options shall be the market price of the Common Stock, as
provided in the Plan, and the Options shall vest and become exercisable
commencing one (1) year from the date of the grant for a period of four (4)
years in equal annual increments, subject to acceleration if by the second
anniversary of the Effective Date, the Measurement Period Sales, as defined in
the definitive Stock Purchase Agreement (the "Purchase Agreement") between THINK
New Ideas, Inc. and BBG at the end of the Measurement Period, as defined in the
Purchase Agreement, reflect revenue growth of thirty percent (30%) per year
over Base Sales, as defined in the Purchase Agreement.
(c) Profitability Bonus. The Company may pay the Employee a
bonus if, in the sole judgment of the Board of Directors, the earnings of the
Company or the services of the Employee merit such a bonus.
(d) Withholding and Employment Tax. Payment of all compensation
hereunder shall be subject to customary withholding tax and other employment
taxes as may be required with respect to compensation paid by an
employer/corporation to an employee.
5. Business Expenses. The Company shall: (a) pay or reimburse the
Employee for all reasonable travel or other expenses incurred by the Employee in
connection with the performance of his duties under this Agreement, provided
that the same are previously authorized by the Company, in accordance with such
procedures as the Company may from time to time establish for employees and as
required to preserve any deductions for federal income taxation purposes to
which the Company may be entitled; and (b) pay the Employee $600 per month as an
automobile allowance, which amount shall include all expenses related to
maintenance of such an automobile and repairs, registration, insurance and fuel.
6. Disability. The Company shall provide the Employee with substantially
the same disability insurance benefits as those, if any, currently being
provided by the Company for similar employees.
7. Death. The Company shall provide the Employee with substantially the
same life insurance benefits as those currently being provided by the Company
for similar employees. In the event of the Employee's death, the obligation of
the Company to make payments pursuant to Section 4 hereof shall cease as of the
date of such Employee's death and the Company shall pay to
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the estate of the Employee any amount due to the Employee under Sections 4 and 5
which has accrued up to the date of death.
8. Other Benefits. The Employee shall be entitled to participate in
fringe benefit, deferred compensation and stock option plans or programs of the
Company, if any, to the extent that his position, tenure, salary, age, health
and other qualifications make him eligible to participate, subject to the rules
and regulations applicable thereto. Such additional benefits shall include, but
not be limited to, paid sick leave and individual health insurance (all in
accordance with the policies of the Company) and professional dues and
association memberships. Except as specifically set forth herein, the terms of,
and participation by the Employee in, any deferred compensation plan or program
shall be determined by the Board of Directors in its sole discretion.
9. Termination of Employment. Notwithstanding any other provision of this
Agreement, employment hereunder may be terminated:
(a) By the Company, in the event of the employee's death or
Disability (as hereinafter set forth) or for "Just Cause." "Just Cause" shall be
defined to be limited to: (i) the Employee's indictment or conviction of a crime
involving a felonious act or acts, including dishonesty, fraud or moral
turpitude by the Employee; and (ii) "cause" as the same is construed for
employment purposes under the laws of the State of Delaware. The Employee shall
be deemed to have a "Disability" for purposes of this Agreement if he is unable
to perform, by reason of physical or mental incapacity, a material portion of
his duties or obligations under this Agreement for a period of one hundred
twenty (120) consecutive days in any three hundred sixty-five day (365-day)
period. A majority vote of the Board of Directors (or such vote as is then
prescribed by the Company's then effective Bylaws or by applicable law) shall
determine whether and when the Disability of the Employee has occurred or when
the Employee shall be subject to a Just Cause determination and such
determination shall not be arbitrary or unreasonable. The Company shall by
written notice to the Employee given within thirty (30) days after discovery of
the occurrence of an event or circumstance which constitutes "Just Cause,"
specify the event or circumstance giving rise to the Company's exercise of its
right hereunder and, with respect to Just Cause arising under Section 9(a)(i),
the Employee's employment hereunder shall be deemed terminated as of the date of
such notice; with respect to Just Cause arising under Section 9(a)(ii), the
Company shall provide the Employee with thirty (30) days written notice of such
violation and the Employee shall be given reasonable opportunity during such
thirty (30) day period to cure the subject violation;
(b) By the Company, in its sole and absolute discretion,
provided that in such event the Company shall, as liquidated damages or
severance pay, or both, pay the Employee an amount equal to the Employee's then
Monthly Compensation (as deemed in Section 4(a) hereof) multiplied by the sum
of the number of months remaining during the Period of Employment (the
"Termination Formula"); or
(c) By the Employee: (i) upon any material violation of any
material provision of this Agreement by the Company, which violation remains
unremedied for a period of thirty (30) days after written notice of the same is
delivered to the Company by the Employee; (ii) upon any material change in the
nature of the Company's business, without the Employee's prior
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consent; and (iii) upon any material change in the responsibilities of the
Employee, without the Employee's prior consent, provided that in such event, the
Company shall, as liquidated damages or severance pay, or both, pay to the
Employee an amount equal to the Employee's Monthly Compensation multiplied by
the Termination Formula.
Nothing set forth in this section shall: (i) require the Employee in the
event of termination pursuant to Subsections 9(b) or 9(c) above to mitigate
damages during the period in which the Employee is receiving payment thereunder
(the "Severance Period"); or (ii) entitle the Company to offset the amounts owed
by the Company to the Employee pursuant to Subsections 9(b) or 9(c) by any
income or compensation received by the Employee from sources other than the
Company during such Severance Period. In addition, the Company shall not be
entitled to withhold or otherwise offset any amounts payable to the Employee
under Subsections 9(b) or 9(c) above in response to an alleged violation by the
Employee of any of the obligations which are imposed under this Agreement and
survive termination hereof until such time as a court of competent jurisdiction
or other appropriate governing body has rendered judgment or otherwise made a
determination with respect to whether such violation has occurred.
In the event that this Agreement is terminated pursuant to Sections 9(b)
and 9(c), the Employee shall be entitled to continue to participate, at the
Company's expense, in any health insurance plan of the Company then in place for
such period as the Employee is entitled to receive severance payments hereunder.
10. Non-Competition. Notwithstanding any earlier termination, during the
Period of Employment and for one (1) year thereafter:
(a) the Employee shall not, anywhere in North America, directly
or indirectly, individually or as a member of any partnership or joint venture,
or as an officer, director, stockholder, employee or agent of any other person,
firm, corporation, business organization or other entity, participate in, engage
in, solicit or have any financial or other interest in any activity or any
business or other enterprise in any in any field which at the time of
termination is competitive with the business or is in substantially the same
business as the Company or any affiliate, subsidiary or division thereof (unless
the Board of Directors shall have authorized such activity and the Company shall
have consented thereto in writing), as an individual or as a member of any
partnership or joint venture, or as an officer, director, stockholder, investor,
employee or agent of any other person, firm, corporation, business organization
or other entity; provided, however, that nothing contained herein shall be
construed to prevent the employee from investing in Permitted Investments; and
(b) the Employee shall not: (i) solicit or induce any employee
of the Company to terminate his/her employment or otherwise leave the Company's
employ or hire any such employee (unless the Board of Directors shall have
authorized such employment and the Company shall have consented thereto in
writing); or (ii) contact or solicit any clients or customers in connection with
the business of the Company, either as an individual or as a member of any
partnership or joint venture, or as an officer, director, stockholder, investor,
employee or agent of any other person, firm, corporation, business organization
or other entity.
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11. Confidential Information. The parties hereto recognize that it is
fundamental to the business and operation of the Company, its affiliates,
subsidiaries and divisions thereof to preserve the specialized knowledge, trade
secrets, and confidential information of the foregoing concerning the field of
advertising, marketing and interactive Internet solutions. The strength and good
will of the Company is derived from the specialized knowledge, trade secrets,
and confidential information generated from experience through the activities
undertaken by the Company, its affiliates, subsidiaries and divisions thereof.
The disclosure of any of such information and the knowledge thereof on the part
of competitors would be beneficial to such competitors and detrimental to the
Company, its affiliates, subsidiaries and divisions thereof, as would the
disclosure of information about the marketing practices, pricing practices,
costs, profit margins, design specifications, analytical techniques, concepts,
ideas process developments (whether or not patentable), customer and client
agreements, vendor and supplier agreements and similar items or technologies. By
reason of his being an employee of the Company, in the course of his employment,
the Employee has or shall have access to, and has obtained or shall obtain,
specialized knowledge, trade secrets and confidential information such as the
described herein about the business and operation of the Company, its
affiliates, subsidiaries and divisions thereof. Therefore, the Employee hereby
agrees as follows, recognizing and acknowledging that the Company is relying on
the following in entering into this Agreement:
(a) The Employee hereby sells, transfers and assigns to the
Company, or to any person or entity designated by the Company, any and all
right, title and interest of the Employee in and to all creations, designs,
inventions, ideas, disclosures and improvements, whether patented or unpatented,
and copyrightable material, made or conceived by the Employee solely or jointly,
in whole or in part, during or before the term hereof (commencing with the date
of the Employee's employment with the Company) which: (i) relate to methods,
programs, designs, products, processes or technologies created, promoted,
marketed, distributed, sold, leased, used, developed, relied upon or otherwise
provided by the Company or any affiliate, subsidiary or division thereof; or
(ii) otherwise relate to or pertain to the business, operations or affairs of
the Company or any affiliate, subsidiary or division thereof. Whether during the
Period of Employment or thereafter, the Employee shall execute and deliver to
the Company such formal transfers and assignments and such other papers and
documents as may be required of the Employee to permit the Company or any person
or entity designated by the Company to file, enforce and prosecute the patent
applications relating to any of the foregoing and, as to copyrightable material,
to obtain copyright thereon; and
(b) Notwithstanding any earlier termination, during the Period
of Employment and for a period of one (1) year thereafter, the Employee shall,
except as otherwise required by or compelled by law, keep secret and retain in
Strict confidence, and shall not use, disclose to others, or publish any
information shall be deemed not to be confidential information, relating to the
business, operation or other affairs of the Company, its affiliates,
subsidiaries and divisions thereof, including but not limited to confidential
information concerning the design and marketing practices, pricing practices,
costs, profit margins, products, methods, guidelines, procedures, programs,
engineering designs and standards, design specification, analytical techniques,
technical information, customer, client, vendor or supplier information,
employee information, and any and all other confidential
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information acquired by him in the course of his past or future services for the
Company or any affiliate, subsidiary or division thereof. The Employee shall
hold as the Company's property all notes, memoranda, books, records, papers,
letters, formulas and other data and all copies thereof and therefrom in any way
relating to the business, operation or other affairs of the Company, its
affiliates, subsidiaries and divisions thereof, whether made by him or otherwise
coming into his possession. Upon termination of his employment or upon the
demand of the Company, at any time, the Employee shall deliver the same to the
Company within twenty-four (24) hours of such termination or demand.
12. Reasonableness of Restrictions. The Employee hereby agrees that the
restrictions in this Agreement, including without limitation, those relating to
the duration of the provisions hereof and the territory to which such
restrictions apply, are necessary and fundamental to the protection of the
business and operation of the Company, its affiliates, subsidiaries and
divisions thereof, and are reasonable and valid.
13. Reformation of Certain Provisions. Notwithstanding the foregoing, in
the event that a court of competent jurisdiction determines that the
non-compete or the confidentiality provisions hereof are unreasonably broad or
otherwise unenforceable because of the length of their respective terms or the
breadth of their territorial scope, or for any other reason, the parties hereto
agree that such court may reform the terms and/or scope of such covenants so
that the same are reasonable and, as reformed, shall be enforceable.
14. Remedies. Subject to Section 15 below, in the event of a breach of
any of the provisions of this Agreement, the non-breaching party shall provide
written notice of such breach to the breaching party. The breaching party shall
have thirty (30) days after receipt of such notice in which to cure its breach.
If, on the thirty-first (31st) day after receipt of such notice, the breaching
party shall have failed to cure such breach, the non-breaching party thereafter
shall be entitled to seek damages. It is acknowledged that this Agreement is of
a unique nature and of extraordinary value and of such a character that a breach
hereof by the Employee shall result in irreparable damage and injury to the
Company for which the Company for which the Company may not have any adequate
remedy at law. Therefore, if, on the thirty-first (31st) day after receipt of
such notice, the breaching party shall have failed to cure such breach, the
non-breaching party, or such other relief by way of restraining order,
injunction or otherwise as may be appropriate to ensure compliance with this
Agreement. The remedies provided by this section are non-exclusive and the
pursuit of such remedies shall not in any way limit any other remedy available
to the parties with respect to this Agreement, including, without limitation,
any remedy available at law or equity with respect to any anticipatory or
threatened breach of the provisions hereof.
15. Certain Provisions: Specific Performance. In the event of a breach by
the Employee of the non-competition or confidentiality provisions hereof, such
breach shall not be subject to the cure provision of Section 14 above and the
Company shall be entitled to seek immediate injunctive relief and a decree of
specific performance against the Employee. Such remedy is non-exclusive and
shall be in addition to any other remedy to which the Company or any affiliate,
subsidiary or division thereof may be entitled.
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16. Consolidation; Merger: Sale of Assets. Nothing in this Agreement
shall preclude the Company from combining, consolidating or merging with or
into, transferring all or substantially all of its assets to, or entering into a
partnership or joint venture with, another corporation or other entity, or
effecting any other kind of corporate combination, provided that, the
corporation resulting from or surviving such combination, consolidation or
merger, or to which such assets are transferred, or such partnership or joint
venture assumes this Agreement and all obligations and undertakings of the
Company hereunder. Upon such a consolidation, merger, transfer of assets or
formation of such partnership or joint venture, this Agreement shall inure to
the benefit of, be assumed by, and be binding upon such resulting or surviving
transferree corporation or such partnership or joint venture, and the term
"Company," as used in this Agreement, shall mean such corporation, partnership
or joint venture, or other entity and this Agreement shall continue in full
force and effect and shall entitle the Employee and his heirs, beneficiaries and
representatives to exactly the same compensation, benefits, perquisites,
payments and other rights as would have been their entitlement and such
combination, consolidation, merger, transfer of assets or formation of such
partnership or joint venture not occurred.
17. Survival. Sections 10 through 15 shall survive the termination for
any reason of this Agreement (whether such termination is by the Company, by the
Employee, upon the expiration of this Agreement by its terms or otherwise);
provided, however, that in the event that the Company ceases to exist and
neither an affiliate, subsidiary or division thereof has assumed, at its
option, the obligations of the Company hereunder, the Employee shall no longer
be bound by the Non-Competition provisions set forth in Section 10 hereof.
18. Severability. The provisions of this Agreement shall be considered
severable in the event that any of such provisions are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable. Such
invalid, void or otherwise unenforceable provisions shall be automatically
replaced by other provisions which are valid and enforceable and which are as
similar as possible in term and intent to those provisions deemed to be invalid,
void or otherwise unenforceable. Notwithstanding the foregoing, the remaining
provisions hereof shall remain enforceable to the fullest extent permitted by
law.
19. Entire Agreement: Amendment. Agreement contains the entire agreement
between the Company and the Employee with respect to the subject matter hereof
and thereof. This Agreement may not be amended, changed, modified or discharged,
nor may any provision hereof be waived, except by an instrument in writing
executed by or on behalf of the party against whom enforcement of any amendment,
waiver, change, modification or discharge is sought. No course of conduct or
dealing shall be construed to modify, amend or otherwise affect any of the
provisions hereof.
20. Notices. All notices, request, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
physically delivered, delivered by express mail or other expedited service or
upon receipt if mailed, postage prepaid, via first class mail as follows:
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(a) To the Company: THINK New Ideas, Inc.
45 West 36th Street, 12th Floor
New York, New York 10018
Attention: President
(b) To the Employee: Mr. Joseph Nicholson
c/o BBG New Media, Inc.
92 Montvale
Stoneham, Massachusetts 02180
(c) With an additional copy Kirkpatrick & Lockhart LLP
by like means to: 1800 Massachusetts Ave., N.W.
Second Floor
Washington, D.C. 20036
Attn: Victoria A. Baylin, Esq.
and
Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attn: Steven P. Rosenthal, Esq.
Mary-Laura Greely, Esq.
and/or to such other persons and addresses as any party hereto shall have
specified in writing to the other.
21. Assignability. This Agreement shall not be assignable by the
Employee, but shall be binding upon and shall inure to the benefit of his heirs,
executors, administrators and legal representatives. This Agreement shall be
assignable by the Company to any affiliate, subsidiary or division thereof and
to any successor in interest.
22. Governing Law. This Agreement shall be governed by and construed
under the laws of the state of Delaware, without regard to the principles of
conflicts of laws thereof.
23. Waiver and Further Agreement. Any waiver of any breach of any terms
or conditions of this Agreement shall not operate as a waiver of any other
breach of such terms of conditions or any other term or condition hereof, nor
shall any failure to enforce any provision hereof operate as a waiver of such
provision hereof. Each of the parties hereto agrees to execute all such further
instruments and documents and to take all such further action as the other party
may reasonably require in order to effectuate the terms and purposes of this
Agreement.
24. Headings of No Effect. The headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
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25. Vesting. In the event of a Change in Control (as hereinafter
defined), any and all options, rights or other securities which are exercisable
into shares of Common Stock of the Company granted to the Employee pursuant
hereto shall vest and become immediately exercisable to the extent permitted by
applicable law. The Term "Change in Control", for purposes hereof, shall mean:
(i) the sale of all or substantially all of the assets of the Company; (ii) the
acquisition of capital stock of the Company by any person or group of persons
resulting in ownership by such person or group of more than forty percent (40%)
of the issued and outstanding shares of capital stock of the Company; (iii) any
plan for the liquidation or dissolution of the Company; or (iv) any merger or
consolidation of the Company in which the Company is not the surviving company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THINK NEW IDEAS, INC., the Company
By: /s/ Ron Bloom, President
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Ron Bloom, President
THE EMPLOYEE
By: /s/ Joseph Nicholson
-------------------------
Joseph Nicholson