Pre-Effective Amendment to Registration of Securities by a Small-Business Issuer — Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SB-2/A Pre-Effective Amendment to Registration of 142 740K
Securities by a Small-Business Issuer
2: EX-1 Underwriting Agreement 54 225K
3: EX-4.2 Instrument Defining the Rights of Security Holders 31 107K
4: EX-4.3 Instrument Defining the Rights of Security Holders 38 141K
5: EX-4.4 Instrument Defining the Rights of Security Holders 9 46K
6: EX-5 Opinion re: Legality 3 14K
7: EX-9.1 Voting Trust Agreement 6 27K
8: EX-9.2 Voting Trust Agreement 1 10K
9: EX-9.3 Voting Trust Agreement 1 10K
10: EX-9.4 Voting Trust Agreement 1 10K
11: EX-10.1 Material Contract 17 57K
12: EX-10.2 Material Contract 16 57K
13: EX-10.3 Material Contract 13 47K
14: EX-10.35 Material Contract 12 55K
15: EX-10.36 Material Contract 12 55K
16: EX-10.37 Material Contract 12 55K
17: EX-10.38 Material Contract 11 45K
18: EX-10.39 Material Contract 10 40K
19: EX-10.40 Material Contract 1 10K
20: EX-10.41 Material Contract 23 81K
21: EX-10.42 Material Contract 6 22K
22: EX-10.43 Material Contract 5 23K
23: EX-10.44 Material Contract 6 25K
24: EX-10.45 Material Contract 7 30K
25: EX-10.46 Material Contract 2 11K
26: EX-23.1 Consent of Experts or Counsel 1 8K
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Agreement") dated as of April 30, 1996, by and among Sound Source
Interactive, Inc., a Delaware corporation ("SSI/DE"), and Sound Source
Interactive, Inc., a California corporation ("SSI/CA") (collectively,
"Employer"), and Eric H. Winston ("Executive").
W I T N E S S E T H:
WHEREAS, Executive has served as President and Chief Operating
Officer of Employer since April 1994;
WHEREAS, Employer and Executive entered into an Employment
Agreement dated as of April 6, 1994, a copy of which is attached hereto as
Exhibit A (the "Original Agreement");
WHEREAS, Employer and Executive entered into an Amended and
Restated Employment Agreement dated as of September 15, 1995 (the "Prior
Agreement"), pursuant to which the Original Agreement was amended and
restated as set forth therein;
WHEREAS, Employer and Executive mutually desire to amend and
restate the Prior Agreement as set forth herein;
WHEREAS, Executive continues to possess an intimate knowledge of
the business and affairs of Employer, its policies, methods, personnel,
opportunities and problems;
WHEREAS, Employer desires to assure itself of Executive's continued
employment by Employer and to compensate him for such efforts; and
WHEREAS, Executive is desirous of committing himself to serve
Employer on the terms herein provided;
NOW, THEREFORE, in consideration of the covenants herein contained,
the parties hereto hereby agree as follows:
1. EMPLOYMENT. Executive is hereby employed as the President and
Chief Operating Officer of Employer. Executive shall report to the Chief
Executive Officer of Employer. Until the appointment of a new Chief
Executive Officer, Executive, along with the Chief Executive Officer of
Employer, shall have supervision and control over, and responsibility for,
the operations and affairs of Employer, and shall have such other powers and
duties as may be from time assigned to him by the Board of Directors (the
"Board"). Upon the appointment of a new Chief Executive Officer, Executive's
duties may be changed by the Chief Executive Officer or the Board; Executive
may, at his option, either accept the new duties or advise the Board that he
will perform no duties. Such an event
will not constitute a breach of contract by either Executive or Employer, and
Executive shall be entitled to the continuation of his salary, bonuses and
benefits and all other covenants for the remaining original term of this
Agreement and shall not thereafter be obligated to devote further time and
attention to the affairs of Employer.
2. PLACE OF PERFORMANCE. In connection with his employment by
Employer, Executive shall be based at Employer's principal executive offices.
3. COMPENSATION.
(a) BASE SALARY. Employer shall pay to Executive, and
Executive shall accept, for all services which may be rendered by him
pursuant to this Agreement, a base salary ("Base Salary") as hereinafter set
forth. The initial Base Salary of Executive hereunder shall be $175,000 per
annum. Executive acknowledges that Employer is currently seeking to retain a
new Chief Executive Officer, and agrees that upon the commencement of
employment thereof the annual Base Salary shall be reduced by $35,000. At
the end of the first full year of this Agreement, the Base Salary shall be
increased by an amount equal to the Base Salary then in effect multiplied by
a fraction, the numerator of which shall be the difference between (a) the
Consumer Price Index (as hereinafter defined) as of the first anniversary of
the Effective Date (as hereinafter defined) and (b) the Consumer Price Index
as of the Effective Date, and the denominator of which shall be the Consumer
Price Index as of the Effective Date; provided, that the "fraction" set forth
in this sentence shall never be zero or less. At the end of each succeeding
full year of this Agreement, the Base Salary shall be increased in a like
manner.
At such time as the Company shall have net revenues of
$1,500,000 or more for any three consecutive calendar month period during the
term hereof, the Base Salary shall be increased by $35,000 per annum,
retroactive to the first day of the three calendar month period in question.
Such adjustment shall be made one time only, but shall continue in effect
thereafter for the remaining term of this Agreement.
Any increase in Base Salary or other compensation granted by
Employer, the Board or any committee thereof shall in no way limit or reduce
any other obligation of Employer hereunder and, once established at an
increased specified rate, Executive's Base Salary hereunder shall not
thereafter be reduced, other than as necessitated by Employer's adverse
financial condition.
-2-
Executive's salary shall be payable in accordance with Employer's payroll
practices as from time to time in effect.
For purposes of this Agreement, the "Consumer Price Index" as
of any particular date means the Consumer Price Index for Urban Consumers for
All Items, as reported in the Monthly Labor Review (published by the Bureau
of Labor Statistics of the United States Department of Labor) in respect of
the month immediately preceding such particular date. In the event that the
Consumer Price index is not available, a successor or substitute index shall
be used for the computations herein set forth. In the event that the
Consumer Price Index or such successor or substitute index is not published,
a reliable governmental or other nonpartisan publication evaluating the
information theretofore used in determining the Consumer Price index shall be
used for the computations herein set forth.
(b) ADDITIONAL CASH COMPENSATION. Employer shall pay
Executive compensation in addition to Executive's Base Salary upon attainment
of one or more revenue or profitability levels. This additional compensation
shall be computed on an annual basis at the close of Employer's fiscal year
and paid to Executive within ten days of completion of the annual audit.
Such bonuses will be measured only with respect to the financial results
related to products developed by Employer and its current employees
("Included Products"), and not with respect to any products that may be owned
or developed by companies acquired by or merged with Employer after the date
hereof ("Excluded Products"). Bonuses shall be determined based on an
allocation of expenses between Included Products and Excluded Products in
accordance with Generally Accepted Accounting Principles ("GAAP")
consistently applied. Any disagreements regarding the calculation of the
bonuses payable under this Section 3(b) shall be determined by binding
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association in Los Angeles, California. Such
arbitration shall be conducted by a single arbitrator who shall be a
certified public accountant associated with a "Big Six" accounting firm and
not affiliated with either party. Such arbitrator shall be selected by
Employer and shall be reasonably acceptable to Executive.
-3-
(i) REVENUE ATTAINMENT. Employer shall pay Executive a
cash bonus if Employer realizes certain gross revenues. The cash bonus shall
be based upon the following schedule:
[Download Table]
CUMULATIVE
REVENUE ATTAINMENT CASH BONUS
------------------ ----------
$ 7,500,000 $ 25,000
$10,000,000 $ 75,000
$15,000,000 $125,000
The foregoing schedule shall apply in respect of the fiscal year ending June
30, 1996. The revenue attainment levels set forth in the schedule shall be
increased annually by 60 percent per annum for each subsequent fiscal year
during the term of this Agreement.
(ii) EMPLOYER GROSS PROFIT. Employer shall pay Executive
a cash bonus if Employer achieves successful gross profit levels. For
purposes hereof, "gross profit" means total revenues less cost of sales as
determined by Employer's independent public accountants in accordance with
GAAP consistently applied. The cash bonus shall be calculated based upon the
following performance schedule:
[Download Table]
CUMULATIVE
GROSS PROFIT CASH BONUS
------------ ----------
$ 2,000,000 $ 50,000
$ 2,250,000 $ 75,000
$ 2,500,000 $100,000
The foregoing schedule shall apply in respect of the fiscal year ending June
30, 1996. The gross profit attainment levels set forth in the schedule shall
be increased annually by 60 percent per annum per annum for each subsequent
year during the term of this Agreement.
(iii) PRE-TAX PROFITABILITY. Employer shall pay
Executive a cash bonus upon Employer's achieving certain levels of pre-tax
profitability. For purposes hereof, "pre-tax profitability" shall mean
earnings before interest, amortization, depreciation and income taxes divided
by gross revenues as determined by Employer's independent public accountants
in accordance with GAAP. For each fiscal year during the term of this
Agreement, the cash payment shall be based on the following pre-tax
profitability schedule:
-4-
[Download Table]
CUMULATIVE
PRE-TAX PROFITABILITY CASH BONUS
--------------------- ----------
10% $ 50,000
15% $100,000
(iv) SEPARATE BONUS CATEGORIES. Each of the three bonus
categories set forth above shall be independent of each other and Executive
may obtain cash bonuses from one or more of the categories in the same fiscal
year.
(c) AUTOMOBILE. In order to facilitate travel by Executive
in the performance of his duties hereunder, Employer shall furnish Executive,
at no expense to him, with an automobile owned or leased by Employer;
provided, that the total cost to the Company for lease/purchase payments
shall not exceed $1,000 per month. The manufacturer and type of such
automobile shall be chosen by Employer. Employer shall reimburse Employee
for all expenses of maintaining, insuring and operating such automobile upon
the presentation of appropriate vouchers and/or receipts (to the extent that
Employer does not pay such expenses directly). At the discretion of
Executive, Employer shall, in lieu of furnishing Executive with an automobile
owned or leased by Employer and paying all maintenance, insurance and
operation expenses in connection therewith, reimburse Executive for all
expenses he incurs in maintaining, insuring and operating one automobile
owned or leased by Executive upon the presentation of appropriate vouchers
and/or receipts (to the extent that Employer does not pay such expenses
directly); provided, that the aggregate amount of such expenses subject to
reimbursement by Employer shall not exceed $1,000 per month.
(d) LIFE INSURANCE. During the term of his employment
hereunder, the Company shall purchase and keep in effect life insurance in
the amount of $1,000,000 on the life of the Executive; provided, that the
total cost to the Company for such insurance shall not exceed $7,500 per
annum. Such life insurance will name as beneficiaries those individuals
designated by the Executive.
(e) EXPENSES. During the term of his employment hereunder,
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by him in performing services hereunder,
provided that Executive properly accounts therefor in accordance with
Employer's policy relating thereto. Without limiting the generality of the
foregoing, the parties agree that any travel Executive undertakes in
connection with the performance of his duties hereunder shall be in business
-5-
class or better, and Employer shall reimburse Executive for such expenses.
(f) BENEFIT PLANS. Executive shall be entitled to
participate in or receive benefits under any employee benefit plan or
arrangement currently available, or made available by Employer in the future,
to its executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plan
or arrangement. If Executive elects not to participate in any of the health
plans sponsored by Employer, then Employer shall reimburse Executive in an
amount not to exceed $1,000 per month for costs incurred by Executive in
obtaining alternative health care coverage for Executive and his family.
Employer shall not make any changes in any employee benefit plans or
arrangements in effect on the date hereof or during the term of this
Agreement in which Executive participates (including, without limitation, any
pension and retirement plan, supplemental pension and retirement plan,
savings and profit sharing plan, stock ownership plan, stock purchase plan,
stock option plan, life insurance plan, medical insurance plan, disability
plan, dental plan, health-and-accident plan or arrangement) which would
adversely affect Executive's rights or benefits thereunder, unless such
change occurs pursuant to a program applicable to all executives of Employer
and does not result in a proportionately greater reduction in the rights of
or benefits to Executive as compared with any other executive of Employer.
Any payments or benefits payable to Executive hereunder in respect of any
calendar year during which Executive is employed by Employer for less than
the entire such year shall, unless otherwise provided in the applicable plan
or arrangement, be prorated in accordance with the number of calendar days in
such calendar year during which he is so employed.
(g) VACATIONS, HOLIDAYS AND SICK LEAVE. Executive shall be
entitled to the number of paid holidays, personal days off, vacation days and
sick leave days in each calendar year as are determined by Employer from time
to time for its senior executive officers, but not less than four weeks in
any calendar year (prorated, in any calendar year during which Executive is
employed under this Agreement for leans than the entire such year, in
accordance with the number of calendar days in such calendar year during
which he is so employed). Vacation may be taken in Executive's discretion, so
long as it is not inconsistent with the reasonable business needs of
Employer. Executive shall be entitled to accrue from year to year all
vacation days not taken by him.
(h) PERQUISITES. Executive shall be entitled to continue to
receive the perquisites and fringe benefits
-6-
appertaining to the office of the President and Chief Operating Officer of
Employer in accordance with present practice and appropriate to the industry.
(i) KEY MAN LIFE INSURANCE. Executive shall cooperate with
Employer to secure, for Employer, a key man life insurance policy on the life
of Executive in the amount of $2,000,000 to $5,000,000, to be paid to
Employer upon Executive's death.
(j) BASE SALARY NOT EFFECTED BY OTHER BENEFITS. None of the
benefits to which Executive is entitled under any of the provisions of
Sections 3(b) - 3(g) hereof shall in any manner reduce or be deemed to be in
lieu of the Base Salary payable to Executive pursuant to Section 3(a) hereof.
(k) STOCK REGISTRATION. Employer shall undertake its best
efforts to cause the underwriters for its pending initial public offering to
cause to be registered and sold pursuant to the underwriters' over-allotment
option portion of such offering 10,000 shares of Employer's common stock
owned by Executive.
4. TERM OF EMPLOYMENT. The employment by Employer of Executive
pursuant hereto shall commence as of the date hereof (the "Effective Date")
and, subject to the provisions of Section 5 hereof, shall terminate on
September 15, 1998 (the "Termination Date"). This Agreement shall
automatically be extended for one additional year beyond the Termination Date
(the "Extended Termination Date") unless at least 30 calendar days prior to
the Termination Date, Executive or Employer shall have given notice that he
or it does not wish to extend this Agreement.
5. PREMATURE TERMINATION. Anything in this Agreement contained
to the contrary notwithstanding:
(a) DEATH. Executive's employment hereunder shall terminate
forthwith upon the death of Executive.
(b) DISABILITY. Executive's employment hereunder shall
terminate, at the option of Employer, in the event that the Board makes a
good faith determination that Executive suffers from Disability (as
hereinafter defined) so as to be unable to substantially perform his duties
hereunder for an aggregate of 180 calendar days during any period of 12
consecutive months. As used in this Agreement, the term "Disability" shall
mean the material inability, in the opinion of three-fourths of the entire
membership of the Board set forth in a resolution giving the particulars
-7-
thereof, of Executive to render his agreed-upon services to Employer due to
physical and/or mental infirmity, which opinion is concurred in by a
physician or psychiatrist selected by Executive or his duly appointed
representative or guardian and reasonably acceptable Employer.
(c) TERMINATION FOR CAUSE. Employer may terminate
Executive's employment hereunder for Cause. For purposes of this Agreement,
Employer shall have "Cause" to terminate Executive's employment hereunder
upon (i) the willful and continued failure by Executive to substantially
perform his duties hereunder (other than any such failure resulting from
Executive's incapacity due to physical or mental illness) after demand for
substantial performance is delivered by Employer specifically identifying the
manner in which Employer believes Executive has not substantially performed
his duties, or (ii) the willful engaging by Executive in misconduct which is
materially injurious to Employer, monetarily or otherwise, or (iii) the
willful violation by Executive of the provisions of Section 8 hereof provided
that such violation results in material injury to Employer. No act, or
failure to act, on Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interest of Employer.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to
Executive a copy of a resolution, duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice to
Executive and an opportunity for him, together with his counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board,
Executive conducted, or failed to conduct, himself in a manner set forth
above in clause (i), (ii), or (iii) of this Section 5(c), and specifying the
particulars thereof in detail. Any dispute as to whether Cause to dismiss
Executive exists, shall be resolved by arbitration conducted in Los Angeles,
California in accordance with the rules of the American Arbitration
Association and by a single arbitrator reasonably acceptable to Executive and
Employer.
(d) TERMINATION BY EXECUTIVE. Executive may terminate his
employment hereunder (i) for Good Reason (as hereinafter defined) or (ii) if
his physical or mental health becomes impaired to an extent that makes the
continued performance of his duties hereunder hazardous to his physical or
mental health or his life, provided that Executive shall have furnished
Employer with a written statement from a doctor or psychiatrist to such
effect, and provided further, that, at Employer's request and expense,
Executive shall submit to an examination by a physician or
-8-
psychiatrist selected by Employer and such physician or psychiatrist shall
have concurred in the conclusion of Executive's physician or psychiatrist.
Until Executive terminates his employment pursuant to clause (ii) of this
Section 5(d), he shall continue to receive his full Base Salary, payable at
the time such payments are due.
(e) "GOOD REASON" DEFINED. For purposes of this Agreement,
"Good Reason" shall mean (i) any removal of Executive as, or any failure to
re-elect Executive as, President of Employer except in connection with
termination of Executive's employment for Disability; provided, however, that
any removal of Executive as, or any failure to re-elect Executive as,
President of Employer (except in connection with termination of Executive's
employment for Disability) shall not diminish or reduce the obligations of
Employer to Executive under this Agreement, or (ii) a reduction of ten
percent (10%) or more in Executive's then current Base Salary, other than a
reduction necessitated by Employer's adverse financial condition, or any
failure by Employer to comply with any of the provisions of Sections 1, 2, 3
or 4 hereof, or (iii) the failure of Employer to obtain the assumption of the
agreement to perform this Agreement by any successor to Employer, as provided
for in Section 8 hereof.
(f) NOTICE OF TERMINATION. Any termination of Executive's
employment by Employer or by Executive (other than termination pursuant to
Section 5(a) hereof) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice Of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated.
(g) DATE OF TERMINATION. For purposes of this Agreement,
"Date of Termination" shall mean (i) if Executive's employment is terminated
by his death, the date of his death, (ii) if Executive's employment is
terminated pursuant to Section 5(b) hereof, 30 calendar days after Notice of
Termination is given (provided that Executive shall not have returned to the
performance of his duties on a full-time basis during such 30-day period),
and (iii) if Executive's employment is terminated for any other reason, the
date on which a Notice of Termination is given.
-9-
6. PAYMENTS AND BENEFITS UPON EARLY TERMINATION.
(a) EARLY TERMINATION FOR DEATH OR DISABILITY. Upon the
termination of this Agreement prior to the Termination Date (or, if this
Agreement shall have been extended to the Extended Termination Date, as
provided in Section 4 hereof, prior to the Extended Termination Date) (X) by
Employer as a result of death or Disability or (Y) by Executive for any of
the reasons set forth in clause (ii) of Section 5(d) hereof, Employer shall
pay Executive:
(i) his Base Salary through the Date of Termination at the
rate in effect at the time of Notice of Termination is given or, in
the case of the death of Executive, the Date of Termination, payable
at the time such payments are due; and
(ii) all other amounts to which Executive is entitled,
including, without limitation, expense reimbursement amounts or
amounts due under any benefit plan of Employer accrued to the Date
of Termination, at the time such payments are due.
(b) EARLY TERMINATION OTHER THAN FOR DEATH OR DISABILITY.
Upon the termination of this Agreement prior to the Termination Date (or, if
this Agreement shall have been extended to the Extended Termination Date, as
provided in Section 4 hereof, prior to the Extended Termination Date) (X) by
Employer other than for death or Disability or Cause or (Y) by Executive for
Good Reason or as a result of a breach of this Agreement by Employer,
Employer shall pay to Executive:
(i) his Base Salary through the Termination Date at the rate in
effect at the time Notice of Termination is given, payable at the time
such payments are due (or, if this Agreement shall have been extended
to the Extended Termination Date, as provided in Section 4 hereof, his
Base Salary through the Extended Termination Date at the rate in
effect at the time Notice of Termination is given, payable at the
time such payments are due); and
(ii) all other amounts to which Executive is entitled, including,
without limitation, expense reimbursement amounts or amounts due under
any benefit plan of Employer accrued to the Date of Termination, at
the time such payments are due.
-10-
In addition, for the 36-month period after termination
for any of the reasons specified in this Section 6(b), Employer shall arrange
to provide Executive with life and health insurance benefits substantially
similar to those which Executive was receiving immediately prior to the
Notice of Termination.
(c) PAYMENT OF DAMAGES. Upon the early termination of this
Agreement, Employer shall pay all other damages to which Executive may be
entitled as a result of Employer's termination of his employment under this
Agreement, including damages for any and all loss of benefits to Executive
under Employer's employee benefit plans which he would have received if
Employer had not breached this Agreement and had his employment continued for
the full term provided in Section 4 hereof, and including all legal fees and
expenses incurred by him in contesting or disputing any such termination of
in seeking to obtain or enforce any right or benefit provided by this
Agreement.
(d) MITIGATION NOT REQUIRED. Executive shall not be required
to mitigate the amount of any payment provided for in this Section 6 by
seeking other employment or otherwise. However, the amount of any payment
provided for in this Section 6 shall be reduced by any compensation earned by
Executive as the result of employment by another employer engaged in the
business of interactive educational computer software after the Date of
Termination, or otherwise.
7. REGISTRATION RIGHTS.
(a) At the request of Executive made at any time subsequent
to the Date of Termination, SSI/DE, on not more than two occasions, will, as
promptly as practicable (and in any event no later than 120 days following
the Executive's request): (i) prepare and file under the Securities Act of
1933, as amended ("Securities Act"), using its year-end financial statements
for the preceding year, a registration statement relating to all of the
common stock of SSI/DE held by or issuable to Executive pursuant to any
option or other agreement between SSI/DE and Executive (collectively, the
"Registrable Securities"); and (ii) prepare and file with the appropriate
Blue Sky authorities the necessary documents to register or qualify such
Registrable Securities. Notwithstanding the foregoing, Executive shall not
be entitled to exercise his rights under this Section 7(a) for a period of
one year following the initial public offering of common stock of the
employer without the consent of the lead underwriter in the initial pubic
offering.
-11-
(b) Any sale of Registrable Securities pursuant to Section
7(a) shall be made through The Boston Group, L.P. If the Registrable
Securities are offered and sold through The Boston Group, L.P. on an
underwritten basis, then Executive shall enter into an underwriting agreement
with The Boston Group, L.P. on customary terms and conditions, and shall pay
The Boston Group, L.P. a customary underwriting discount. If the Registrable
Securities are offered and sold through The Boston Group, L.P. on a
nonunderwritten basis, then Executive shall pay The Boston Group, L.P. its
customary and reasonable fees.
(c) As a condition for the inclusion of any Registrable
Securities in any registration statement pursuant to this paragraph 7, at the
request of SSI/DE, Executive shall enter into an underwriting agreement with
SSI/DE and the underwriter(s) with respect to the registration of the
Registrable Securities, in such form as may be reasonably agreed upon by
SSI/DE and such underwriter(s), as long as such agreement is consistent with
those then in use by major underwriters and with the provisions hereof.
(d) SSI/DE shall pay all registration expenses relating to
any registration of Registrable Securities pursuant to this paragraph 7.
Executive shall pay all brokerage fees, underwriting fees and discounts,
transfer taxes, if any, and the fees and expenses of Executive's legal
counsel in connection with the registration and sale of the Registrable
Securities.
8. NONDISCLOSURE; NONCOMPETE.
(a) CONFIDENTIAL INFORMATION. Executive shall not, to the
detriment of Employer, knowingly use for his own benefit or disclose or
reveal to any unauthorized person, any trade secret or other confidential
information received by Executive in the course of his employment or
engagement in any capacity by employer which relates to Employer or to any of
the businesses operated by it, including, but not limited to, any customer
lists, customer needs, price and performance information, specifications,
hardware, software, devices, supply sources and characteristics, business
opportunities, marketing, promotional, pricing and financing techniques, or
other information relating to the business of Employer, and Executive
confirms that such information constitutes the exclusive property of
Employer. However, said restriction on confidential information shall not
apply to information which is: (i) generally available in the industry in
which Employer operates, (ii) disclosed in published literature or (iii)
obtained by Executive from a third party without binder or secrecy.
Executive agrees that, except as otherwise expressly agreed to by Employer,
he will return to Employer, promptly upon the request of the Board
-12-
or any executive officer designated by the Board, any physical embodiment of
such confidential information.
(b) NONCOMPETITION. During the term of his employment by
Employer, Executive shall not engage, directly or indirectly (which includes,
but is not limited to, owning, managing, operating, controlling, being
employed by, giving financial assistance to, participating in or being
connected in any material way with any business or person so engaged),
anywhere in the continental United States, in the business of interactive
educational computer software based on licensed products from major motion
pictures and television shows; provided, however, that Executive's ownership
as a passive investor of less than five percent of the issued and outstanding
stock of any publicly held corporation or partnership so engaged shall not by
itself be deemed to constitute such engagement by Executive; and provided
further that, subject to obtaining (as and when required) prior written
consent, which consent will not be unreasonably withheld, nothing herein
shall be construed to prevent Executive from engaging, directly or
indirectly, in any capacity in any business in the computer software or movie
industries not specified above. During such period, Executive shall not act
to induce any of Employer's or its subsidiaries, customers or employees to
take action which might be disadvantageous to Employer.
(c) REMEDIES. Executive recognizes that the possible
restrictions on his activities which may occur as a result of his performance
of his obligations under this Section 8 are required for the reasonable
protection of Employer and its investments, and Executive expressly
acknowledges that damages alone will be an inadequate remedy for any breach
or violation of this Section 8, and that Employer, in addition to all other
remedies at law or in equity, shall be entitled, as a matter of right, to
injunctive relief, including specific performance, with respect to any such
breach or violation, in any court of competent jurisdiction. If any of the
provisions of this Section 8 are held to be in any respect an unreasonable
restriction upon Executive, then they shall be deemed to extend only over the
maximum period of time, geographic area, and/or range of activities as to
which they may be enforceable.
(d) NONEXCLUSIVITY. The undertakings of Executive contained
in Sections 8(a), 8(b) and 8(c) hereof shall be in addition to, and not in
lieu of, any obligations which he may have with respect to the subject matter
hereof, whether by contract, as a matter of law or otherwise.
-13-
9. SUCCESSORS; BENEFITS.
(a) SUCCESSORS. Employer shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of Employer, by
agreement in form and substance satisfactory to Executive, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that Employer would be required to perform it if no such succession
had taken place. Failure of Employer to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle Executive to compensation from Employer in the same amount and
on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Employer" shall
mean Employer as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the agreement provided
for in this Section 9 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(b) BENEFITS. This Agreement and all rights of Executive
hereunder shall inure to the benefit of and be enforceable by Executive's
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Executive should die while
any amounts would still be payable to him hereunder if he had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive's devisee, legatee,
or other designee or, if there be no such designee, to Executive's estate.
10. MISCELLANEOUS PROVISIONS.
(a) EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
(b) NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, if delivered personally, or
three calendar days after having been mailed, if mailed by registered or
certified mail, postage prepaid, return receipt requested, as follows:
-14-
If to Employer, to: Sound Source Interactive,Inc.
2985 East Hillcrest Drive
Suite A
Westlake Village, CA 91362
If to Executive, to: Eric H. Winston
5567 Springhill Court
Westlake Village, CA 91362
or to such other address as either party hereto shall have designated by like
notice to the other party hereto (except that a notice of change of address
shall only be effective upon receipt).
(c) AMENDMENT. This Agreement may only be amended by a
written instrument executed by each of the parties hereto.
(d) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof,
and supersedes all prior agreements and understandings of the parties hereto,
oral and written, with respect to the subject matter hereof except that:
(i) SURVIVAL OF OPTIONS. The options to purchase a
total of 292,838 shares of SSI/DE's common stock granted to Executive
pursuant to the Original Agreement shall remain in full force and effect and
shall not be affected by this Agreement, and Executive shall be entitled to
exercise all such options on a cashless basis (I.E., the option exercise
price may be paid by the surrender of shares of SSI/DE's common stock to
Employer).
(ii) SURVIVAL OF RIGHT OF FIRST OFFER. The right of
first offer granted by Executive to Vincent J. Bitetti pursuant to paragraph
15 of the Original Agreement shall survive in full force and effect.
(e) APPLICABLE LAW. This Agreement shall be governed by the
laws of the State of California applicable to contracts made and to be wholly
performed therein.
(f) HEADINGS. The headings contained herein are for the sole
purpose of convenience of reference and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
(g) WAIVER, ETC. The failure of either of the parties hereto
to at any time enforce any of the provisions of this Agreement shall not be
deemed or construed to be a waiver of any
-15-
such provision, nor to in any way affect the validity of this Agreement or
any provision hereof or the right of either of the parties hereto to
thereafter enforce each and every provision of this Agreement. No waiver of
any breach of any of the provisions of this Agreement shall be effective
unless set forth in a written instrument executed by the party against whom
or which enforcement of such waiver is sought; and no waiver of any such
breach shall be construed or deemed to be a waiver of any other or subsequent
breach.
IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto as of the date first above written.
EMPLOYER:
SOUND SOURCE INTERACTIVE, INC.
By: /s/ Vincent J. Bitetti
---------------------------------
Vincent J. Bitetti
Chairman of the Board & Chief
Executive Officer
SOUND SOURCE INTERACTIVE, INC.
By: /s/ Vincent J. Bitetti
----------------------------------
Vincent J. Bitetti
Chairman of the Board & Chief
Executive Officer
EXECUTIVE:
/s/ Eric H. Winston
---------------------------------------
Eric H. Winston
-16-
Dates Referenced Herein and Documents Incorporated by Reference
↑Top
Filing Submission 0000912057-96-008749 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Wed., Apr. 24, 5:49:44.1am ET