Employment Agreement - Youbet.com Inc. and Phillip Hermann
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of
March 22, 2001 by and between Youbet.com, Inc., a Delaware corporation ("the
Company") and Phillip Hermann ("Executive"), in connection with the Company's
engagement of Executive for personal services and supersedes the prior
employment agreement between the Company and Executive.
1. EMPLOYMENT; DUTIES AND ACCEPTANCE
Employment by Company. The Company hereby engages Executive, and
Executive hereby agrees to serve as Executive Vice President and Chief
Financial Officer of the Company on the terms and conditions of this
Agreement. Throughout the Term of this Agreement Executive shall, subject to
the provisions contained herein, devote substantially all of his work time to
the employment described hereunder.
LOCATION OF EMPLOYMENT. Executive shall render his services at the
Company's offices at 5901 Desoto, Woodland Hills, CA; and provided, however,
that Executive agrees to render his services at such other locations from
time-to-time as the proper performance of Executive's duties may reasonably
require. Notwithstanding the foregoing, the Company's principal offices shall
remain in Southern California, and Executive need not relocate to render his
duties hereunder.
2. TERM
The term of Executive's employment hereunder shall commence on the date
hereof and end on April 30, 2002 (the "Term") unless sooner terminated
pursuant to Section 7 hereof. After the Term the employment of Executive
shall be at will, and as such either party may terminate this Agreement upon
30 days prior written notice to the other party.
3. COMPENSATION AND BENEFITS
SALARY. Executive shall receive a salary of $157,500, however,
effective May 1, 2001 and during the remainder of the Term, Executive shall
receive a salary (the "Annual Salary") at the rate of $175,000 per annum. All
Salary shall be less such deductions as shall be required to be withheld by
applicable law and regulations and shall be pro-rated for any period that
does not constitute a full twelve (12) month period.
BONUS. Executive is eligible to participate in any formal Bonus plans
instituted by the Company for the benefit of Employees. Cash and or stock
bonuses based on performance may be offered from time to time at the
discretion of the Board of Directors of the Company.
STOCK OPTIONS. Executive is eligible to participate in any formal Stock
Option grant instituted by the Company for the benefit of Employees.
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Any unvested options shall terminate if the Executive ceases to be
employed by the Company, or as provided in the Company's 1998 Stock Option
Plan.
All unvested options will vest upon a "Change of Control" if the
Executive is employed with the Company at the time of Change of Control.
For purposes of this Agreement, the term "Change of Control" shall mean,
(i) the acquisition by a single entity or group of affiliated entities of
more than thirty-five percent (35%) of the outstanding capital stock of the
Company and which is accompanied or followed by a change either in a majority
of the members of the Board or of those members of the Board who are not full
time employees of the Company, or (ii) the consummation of any merger of the
Company or any sale, transfer or other disposition of all or substantially
all of the Company's assets directly or indirectly, if the shareholders of
the Company immediately before the consummation of such a transaction own,
immediately following the consummation of such transaction on a fully-diluted
basis, equity securities (other than options, warrants, or rights to acquire
securities) possessing less than sixty-five percent (65%) of the voting power
of the surviving or acquiring corporation (or any corporation in control of
the surviving or acquiring corporation whose equity securities are issued or
transferred in such transaction).
SEVERANCE. If this Agreement shall be terminated for any reason other
than (i) a termination for disability pursuant to Section 7(a) hereof, (ii)
for cause pursuant to Section 7(c) hereof or (iii) without cause pursuant to
Section 7(d) hereof, Executive shall be entitled to receive an amount equal
to three (3) months of his Annual Salary.
4. PARTICIPATION IN EXECUTIVE BENEFIT PLANS:
FRINGE BENEFITS. Executive shall be permitted during the Term to
participate in any group life, medical, hospitalization, dental, health and
accident and disability plans, supplemental health care plans and plans
providing for life insurance coverage, and any other plans and benefits,
generally maintained by Company for executives of the stature and rank of
Executive during the Term hereof, each in accordance with the terms and
conditions of such plans (collectively referred to herein as "Fringe
Benefits") provided, however, that Company shall not be required to establish
or maintain any such Fringe Benefits.
VACATION. Executive shall accrue, in addition to sick days and days on
which Company is closed, paid vacation days at the rate of one and
one-quarter (1-1/4) days per month up to a maximum of fifteen (15) work days.
The accumulation of vacation time will be consistent with Company policy as
outlined in the Employee manual.
EXPENSES. Company will reimburse Executive for actual and necessary
travel and accommodation costs, entertainment and other business expenses
incurred as a necessary part of discharging the Executive's duties hereunder,
subject to receipt of reasonable and appropriate documentation by Company and
in accordance with Company policy.
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Company will also reimburse Executive $750 per month for all business related
operating expenses of Executive's automobile.
5. CERTAIN COVENANTS OF EXECUTIVE:
Without in any way limiting or waiving any right or remedy accorded to
Company or any limitation placed by Executive by law, Executive agrees as
follows:
CONFIDENTIAL INFORMATION: Executive agrees that, neither during the
Term nor at anytime thereafter shall Executive (i) disclosed to any person,
firm or corporation not employed by the Company, Youbet.com, Inc., or any
affiliate of either (the "Protected Company") or not engaged to render
services to any Protected Company or (ii) use for the benefit of himself, or
others, any confidential information of any Protected Company obtained by the
Executive prior to the execution of this Agreement, during the Term or any
time thereafter, including, without limitation, "know-how", trade secrets
details of suppliers, pricing policies, financial data, operational methods,
marketing and sales information or strategies, product development techniques
or plans or any strategies relating thereto, technical processes, designs and
design projects, and other proprietary information of any Protected Company;
PROVIDED, HOWEVER, that this provision shall not preclude the Executive from
(x) upon advice of counsel and notice to the Company, making any disclosure
required by any applicable law of (6) using or disclosing information known
generally to the public (other than information known generally to the public
as a result of any violation of this Section 5(a)).
PROPERTY OF COMPANY. Any interest in trademarks, service-marks,
copyrights, copyright applications, patents, patent applications, slogans,
developments and processes which the Executive, during the Term, may develop
relating to the business of the Company in which the Company may then be
engaged and any memoranda, notes, lists, records and other documents (and all
copies thereof) made or compiled by the Executive or made available to the
Executive concerning the business of any Protected Company shall belong and
remain in the possession of any Protected Company, and shall be delivered to
the Company promptly upon the termination of the Executive's employment with
Company or at any other time on request.
NON-INTERFERENCE. Executive will not, during the Term hereof and for
a period of two (2) years after the Term induce any person who is an
executive, officer or agent, customer or supplier of the Company to terminate
his relationship with the Company.
6. OTHER PROVISIONS:
RIGHTS AND REMEDIES UPON BREACH. If the Executive breaches, or
threatens to commit a breach of, any of the provisions of Section 5 hereof
(the "Restrictive Covenants") the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to
the Company at law or in equity.
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ACCOUNTING. The right and remedy to require the Executive to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits") derived or received by
the Executive as a result of any transactions constituting a breach of any of
the Restrictive Covenants, and the Executive shall account for and pay over
such Benefits to the Company.
SEVERABILITY OF COVENANTS. If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.
BLUE-PENCILING. If any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration
or geographic scope of such provision, such court shall have the power to
reduce the duration or scope of such provision and, in its reduced form, such
provision shall then be enforceable.
ENFORCEABILITY IN JURISDICTIONS. The parties intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of
any jurisdiction within the geographical scope of such Restrictive Covenants.
If the courts of any one of more of such jurisdictions hold the Restrictive
Covenants unenforceable by reason of the breadth of such scope or otherwise,
it is the intention of the parties that such determination not bar or in any
way affect Company's right to the relief provided in this Section 6 in the
courts of any other jurisdiction within the geographical scope of such
Restrictive Covenants, as to breaches of such Restrictive Covenants in such
other respective jurisdictions, such Restrictive Covenants as they relate to
each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
INJUNCTIVE RELIEF. Executive agrees and understands that the remedy
at law for any breach by Executive of the provisions of Section 5 hereof may
be inadequate and that damages resulting from such breach may not be
susceptible to being measured in monetary terms. Accordingly, it is
acknowledged that upon Executive's breach of any provision of Section 5
hereof, the Company shall be entitled to seek to obtain from any court of
competent jurisdiction injunctive relief to prevent the continuation of such
breach. Nothing contained herein shall be deemed to limit the Company's
remedies at law or in equity for any breach of the provisions of Section 5
hereof which may be available to the Company.
7. TERMINATION:
TERMINATION UPON DEATH OR DISABILITY. If during the Term, Executive
shall (i) die or (ii) become so physically or mentally disabled whether
totally or partially, that Executive is unable to perform the duties,
functions and responsibilities required hereunder for (aa) a period of three
(3) consecutive months or (bb) shorter periods aggregating for four (4)
months within any period of twelve (12) months ("Disability"), then in such
event, Company may, at any time thereafter, by written notice to Executive,
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terminate Executive's employment hereunder. Executive agrees to submit to
reasonable medical examinations upon the request of Company. A reputable
physician selected by Company who is experienced in the relevant field
of medicine shall make the determination of whether a Disability exists. If
Executive's services are terminated, as aforesaid, Executive or the
designated beneficiary of Executive, shall be entitled to receive Executive's
Annual Salary, accrued share of the Bonus for that Fiscal Year and unused
vacation, if any, and Fringe Benefits earned through the date of Executive's
termination and continuing thereafter through the end of the Term and shall
also receive four (4) months' of his Annual Salary. The Company shall deduct
any disability payments made to Executive from any insurance source from
payments required to be made to Executive after the termination date.
DESIGNATION OF BENEFICIARY. The parties hereto agree that the Executive
shall designate, by written notice to the Company, a beneficiary to receive
the payments described in Section 7 in the event of his death and the
Executive may change the designation of any such beneficiary from time to
time by written notice to the Company. In the event the Executive fails to
designate a beneficiary as herein provided, any payments which are to be made
to the Executive's designated beneficiary under Section 7 shall be made to
the Executive's widow, if any, during her lifetime. If the Executive has
no designees or widow, such payments shall be paid to the Executive's estate.
TERMINATION FOR CAUSE. The Company shall have the option to terminate
Executive upon the occurrence of any of the following:
Executive shall have breached any of the terms of this Agreement and shall have
failed to cure such breach (if such breach is curable) within 15 days of
notice thereof by the Company.
Executive shall have been convicted of a crime involving moral turpitude.
Executive shall materially breach any of the representations and warranties
hereunder.
If Executive's services are terminated as set forth in this subsection,
Executive's services shall cease as of such effective date of termination and
all compensation shall cease as of such effective date.
TERMINATION WITHOUT CAUSE. If the Executive is terminated by the Company
without cause the Executive shall be entitled to receive his Annual Salary,
health benefits, accrued share of any bonus for that year and unused
vacation, if any, earned through the date of Executive's termination.
Executive shall also receive his Annual Salary and additional compensation
equal to the current health benefits under the end of the Term, and for an
additional four (4) months hereafter. Notwithstanding the above, if the
Company sells, transfer, or otherwise divests itself of a majority interest
of the domestic horse racing business to an independent party and the
Executive is offered comparable employment terms with the acquiring entity,
then no additional pay or benefits shall be due except as accrued through
normal service.
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EXECUTIVE STOCK OPTIONS. If the Executive is terminated without cause
by the Company during the Term, the period within which Executive must
exercise stock options granted under the 1995 Stock Option Plan of the 1998
Stock Option Plan shall be changed to three years and all options granted to
Executive which would have vested during the Term shall vest.
8. EXECUTIVE REPRESENTATIONS AND WARRANTIES:
RIGHT TO ENTER INTO AGREEMENT. Executive has the unfettered right to
enter into this entire Agreement on all of the terms, covenants and
conditions hereof; and Executive has not done or permitted to be done
anything, which may curtail or impair any of the rights granted to Company
herein.
BREACH UNDER OTHER AGREEMENT OR ARRANGEMENT. Neither the execution and
delivery of this Agreement nor the performance by Executive of any of his
obligations hereunder will constitute a violation or breach of, or a default
under, any agreement, arrangement or understanding, or any other restriction
of any kind, to which Executive is a party or by which Executive is bound.
SERVICES RENDERED DEEMED SPECIAL, ETC. Executive acknowledges and agrees
that the services to be rendered by him hereunder are of a special, unique,
extraordinary and intellectual character which gives them peculiar value, the
loss of which cannot be adequately compensated for in an action at law and
that a breach of any term, condition or covenant hereof will cause
irreparable harm and injury to the Company and in addition to any other
available remedy the Company will be entitled to seek injunctive relief.
9. USE OF NAME:
The Company shall have the right during the Term hereof to use Executive's
name, biography and approved likenesses in connection with Company's
business, including advertising their products and services; and the Company
may grant such rights to others, but not for use a direct endorsement.
10. ARBITRATION:
Any dispute whatsoever arising out of or referable to this Agreement,
including, without limitation, any dispute as to the rights and entitlements
and performance of the parties under this Agreement or concerning the
termination of Executive's employment or of this Agreement or its
construction or its validity or enforcement, or as to the arbitrator's
jurisdiction, or as the ability to arbitrate any such dispute, shall be
submitted to final and binding arbitration in Los Angeles, California by and
pursuant to the Labor Arbitration Rules of the American Arbitration
Association with discovery proceedings, pursuant to Section 1283.05 of the
California Code of Civil Procedure. The arbitrator shall be entitled to award
any relief, which might be available at law or in equity, including that of a
provisional, permanent or injunctive nature. The prevailing party in such
arbitration as
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determined by the arbitrator, or in any proceedings in respect thereof as
determined by the person presiding, shall be entitled to receive its or his
reasonable attorneys' fees incurred in connection therewith.
11. NOTICES:
DELIVERY. Any notice, consent or other communication under this
Agreement shall be in writing and shall be delivered personally, telexed,
sent by facsimile transmission or overnight courier (regularly providing
proof of delivery) or sent by registered, certified, or express mail and
shall be deemed given when so delivered personally, telexed, sent by
facsimile transmission or overnight courier, or if mailed two (2) days after
the date of deposit in the United States mail as follows: to the parties at
the following addresses (or at such other address as a party may specify by
notice in accordance with the provisions hereof to the other):
If to Phillip Hermann, to his address at:
10809 Eton Avenue
Chatsworth CA 91311
(818) 998-5498
If to Company, to its address at:
Youbet.com, Inc.
5901 Desoto
Woodland Hills, CA 91367
Attention: Chief Executive Officer
Copy to:
Christensen, Miller, Fink, Jacobs
Glaser, Weil & Shapiro, LLP
2121 Avenue of the Stars, 18th Floor
Los Angeles, CA 90067
Attention: Jeff Soza
CHANGE OF ADDRESS. Either party may change its address for notice
hereunder by notice to the other party in accordance with this Section 11.
12. COMPLETE AGREEMENT: MODIFICATION AND TERMINATION
This Agreement contains a complete statement of all the arrangements
between the parties with respect to the matters covered hereby and,
supersedes all existing agreements between the parties concerning the subject
matter hereof, including that
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certain Employment Agreement dated as of April 28, 2000 between the Company
and Executive. This Agreement may be amended, modified, supersedes or
canceled, and the terms and conditions hereof may be waiver, by the party
waiving compliance. No delay on the part of any party in exercising any shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any such right or remedy, nor any single or partial exercise of any such
right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy.
13. GOVERNING LAW:
This Agreement shall be governed by and construed in accordance with the
laws of the State of California applicable to agreements entered into and
performed entirely within such State.
14. HEADINGS:
The headings in this Agreement are solely for the convenience of
reference and shall not affect its interpretation.
15. INDEMNIFICATION:
The company will indemnify, defend, and hold Executive harmless for any
costs, claims, causes of action, or liabilities (including reasonable
attorney's fees) arising out of: (i) any breach of the Company's covenants,
warranties, or representations; and (ii) any other matter relating to or
arising out of Executive's employment hereunder which does not arise from
executive's gross negligence, will misconduct, or a breach of Executive's
covenants, warranties, or representations hereunder.
WHEREFORE, the parties hereto have executed this
Agreement as of the day and year first above written.
By _________________________________________________
Phillip Hermann
Agreed to and Accepted:
Youbet.com, Inc., a
Delaware corporation
By:____________________
Its:___________________