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Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of September
1, 2007 by and between Thomas Kidrin (the "Executive") and
Worlds.com, Inc., a New Jersey corporation (the
"Company").
W
I T N E S S E T H:
WHEREAS,
Executive and the Company desire to enter into an Employment
Agreement to provide for Executive's employment by the Company
on the terms and subject to the conditions set forth
herein.
NOW,
THEREFORE, in consideration of the mutual promises,
representations and warranties set forth herein, and for other
good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as
follows:
1.
Offices and Duties . The Company hereby employs
Executive during the Term (as hereinafter defined) to serve as the
Company’s President and Chief Executive Officer and to
perform such executive and supervisory duties on behalf of the
Company as the Company’s Board of Directors may from time to
time reasonably direct. Executive hereby accepts such
employment and agrees that throughout the Term he shall faithfully,
diligently and to the best of his ability, in furtherance of the
business of the Company, perform the duties assigned to him or
incidental to the offices assumed by him pursuant to this
Section. Executive shall devote substantially all of his
business time and attention to the business and affairs of the
Company, but Executive shall not be required to devote any minimum
amount of time or report or perform his duties hereunder on a fixed
or periodic basis, and Executive may engage or participate in such
other activities incidental to any other employment, occupation or
business venture or enterprise as do not materially interfere with
or compromise his ability to perform his duties
hereunder. Executive shall at all times be subject to
the direction and control of the Company’s Board of
Directors, and observe and comply with such rules, regulations,
policies and practices as the Company’s Board of Directors
may from time to time establish.
2.
Term . The employment of Executive hereunder shall
commence on the date hereof and end on August 31, 2012, provided,
that Executive shall have the right in his sole discretion to
extend the term for an additional 12 months ending on August
31, 2013, by notifying the Company in writing of such no later than
June 1, 2012, subject in all respects to earlier termination
upon the terms and conditions provided elsewhere
herein. The term during which Executive is employed
hereunder shall be referred to herein as the
“Term”. As used herein, “Termination
Date” means the last day of the Term.
3.
Compensation .
(a)
As
compensation for his services hereunder, the Company shall pay to
Executive during the Term:
(i)
a
base salary at the rate of $200,000 per annum (the “Base
Salary”), such Base Salary to be paid in substantially equal
installments no less often than twice monthly;
(ii)
the
Base Salary shall be increased by 10% on January 1 of each
year of the Term over the prior year’s Base
Salary;
(iii) a
car allowance in the amount of $1,000 per month, payable
monthly;
(iv) a
bonus (the “2.5% Bonus”) in respect of each Bonus
Period (as hereinafter defined), payable within ninety (90)
days after the end of such Bonus Period, in an amount equal to
two and one-half percent (2.5%) of Pre-Tax Income (as
hereinafter defined);
(v) a
bonus (the “Additional Bonus”) in respect of each
Bonus Period, payable within ninety (90) days after the end of
such Bonus Period, as follows: (A) $75,000, if Pre-Tax Income
for the Bonus Period is between 150% and 200% of the prior
fiscal year’s Pre-Tax Income; or (B) $100,000, if
Pre-Tax Income for the Bonus Period is between 201% and 250%
of the prior fiscal year’s Pre-Tax Income; or (C)
$200,000, if Pre-Tax Income for the Bonus Period is 251% or
greater than the prior fiscal year’s Pre-Tax Income; but
in no event shall the Additional Bonus payable to Executive
with respect to any Bonus Period exceed five (5%) percent of
Pre-Tax Income for such Bonus Period; and
(vi) such
additional incentive or bonus compensation as the
Company’s Board of Directors may from time to time
determine.
(b)
For
the purposes of paragraph 3(a):
(i)
“Bonus
Period” is a fiscal year of the Company ending during the
Term; and
(ii)
The
“Pre-Tax Income” in any Bonus Period is the
Company’s income before provision for income
taxes.
The
determination of the Pre-Tax Income and the 2.5% Bonus and
Additional Bonus for any Bonus Period shall be determined by
the Company’s then Chief Financial Officer (or other
senior most accounting official if no one holds a position
with that title) in accordance with the Company’s
audited financial statements as prepared by the
Company’s independent auditor, which shall be conclusive
and binding upon the Company and Executive.
(c)
The
Company shall provide major medical, hospitalization and dental
insurance for the benefit of Executive and his family consistent
with benefits made available to other of the Company’s senior
executives and if no such benefits are then available or paid to
other executives, than in amount of, and providing coverage for, no
lesser benefits than Executive has prior to the date hereof, and
the Company shall pay all premiums and any other costs or expenses
incurred to maintain such policies in effect during the
Term.
(d)
In
addition to his Base Salary and other compensation provided herein,
Executive shall be entitled to participate, to the extent he is
eligible under the terms and conditions thereof, in any stock,
stock option or other equity participation plan and any
profit-sharing, pension, retirement, insurance, medical service or
other employee benefit plan generally available to the executive
officers of the Company, and to receive any other benefits or
perquisites generally available to the executive officers of the
Company pursuant to any employment policy or practice, which may be
in effect from time to time during the Term. The above
notwithstanding, the Company shall use its commercially reasonable
efforts to obtain for the benefit of Executive a life insurance
policy with a death benefit of at least $2 million payable to
a beneficiary of Executive’s choice, provided, however, that
the Company shall not be obligated to spend more than $10,000
annually on the premiums for such policy. Except as
otherwise expressly provided herein, the Company shall be under no
obligation hereunder to institute or to continue any such employee
benefit plan or employment policy or practice.
(e)
No
provision hereof is intended, or shall be deemed, to impair or
limit Executive’s eligibility to receive, or any right he may
now or at any time hereafter have to receive, hold or dispose of
any common stock, par value $.001 per share, of the Company (the
“Common Stock”) or other securities of the Company or
to receive, hold or exercise any options, warrants or other rights
to acquire any Common Stock or other securities of the
Company.
(f)
During
the Term, Executive shall not be entitled to additional
compensation for serving in any office of the Company (or any
subsidiary thereof) to which he is elected or appointed, except
that, throughout any period or periods during which he shall serve
as a director of the Company (or such subsidiary), Executive shall
be entitled to directors’ fees in accordance with the
policies and practices of the Company (or such subsidiary) then in
effect.
4.
Stock Options .
(a)
By its
approval of this Agreement, the Company’s Board of
Directors has approved the issuance to Executive of an option
to acquire 15,000,000 shares of the Company’s Common
Stock, under and pursuant to the provisions of the Worlds.com,
Inc. 2007 Stock Option Plan, as adopted by the Company’s
Board of Directors and as will be submitted to the
Company’s Shareholders for approval (the
“Plan”) and on the terms set forth in the Stock
Option Agreement annexed to this Agreement as Exhibit A (the
“Option Agreement”), which provides inter
alia that such option shall vest as set forth below, and
be exercisable at the exercise price of $0.05 per share at any
time during the five (5) year period following the date hereof
(subject to earlier termination as provided under the
Plan):
(i) the
option to acquire 5,000,000 shares shall vest
immediately;
(ii) the
option to acquire 5,000,000 shares shall vest on August 31,
2008; and
(iii) the
option to acquire 5,000,000 shares shall vest on August 31,
2009.
(b)
T he option being
granted hereby is subject in all respects to the terms and
provisions of the Plan and the Option Agreement, including,
without limitation, the termination provisions contained in
the Plan, and in the event of any conflict between the terms
of this Agreement and the Plan or the Option Agreement, the
Plan or the Option Agreement shall control. The
option granted hereby is also subject to the approval of the
Plan by the Company’s shareholders. It
is the intention of the parties hereto that, to the extent
possible, the options granted herein shall be “incentive
stock options” as such term is defined in the Internal
Revenue Code of 1986 and any of the terms of the options shall
be modified, as minimally as necessary, to maintain their
status as incentive stock options.
(c)
Executive shall receive such other option, restrictive
stock awards or other security-based compensation as the Board
of Directors shall approve.
5.
Expense Allowance . The Company shall pay directly,
or advance funds to Executive or reimburse Executive for, all
expenses reasonably incurred by him in connection with the
performance of his duties as an employee or consultant hereunder,
upon the submission to the Company of itemized expense reports,
receipts or vouchers in accordance with its then customary policies
and practices.
6.
Location; Office . Except for routine travel and
temporary accommodation reasonably required to perform his services
hereunder, Executive shall not be required to perform his services
hereunder at any location other than the principal executive office
of the Company, which office shall be located throughout the Term
at its location on the date hereof, or, if relocated, at a location
within a distance of 30 miles from its location on the date hereof,
or at such other office or site to which Executive may, in his sole
discretion, consent; nor shall he be required to relocate his
principal residence to, or otherwise to reside at, any location
specified by the Company. The Company shall provide
Executive with suitable office space, furnishings and equipment,
secretarial and clerical services and such other facilities and
office support as Executive may reasonably request.
7.
Vacation . Executive shall be entitled to four (4)
weeks paid vacation during each year of his full time employment
hereunder, such vacation to be taken at such time or times as shall
be agreed upon by Executive and the Company. Vacation
time shall be cumulative from year to year, except that Executive
shall not be entitled to take more than six weeks vacation during
any consecutive 12-month period during the Term. Accrued
but unused vacation time shall be paid in cash on the Termination
Date, except that in the event of a Termination pursuant to Section
12, the amount of accrued vacation time to be paid on the
Termination Date shall be limited to six weeks and in the event of
a Termination pursuant to Section 13, the amount of vacation time
to be paid on the Termination Date shall be limited to four
weeks.
8.
Key-Man Insurance . The Company shall have the right
from time to time to purchase, increase, modify or terminate
insurance policies on the life of Executive for the benefit of the
Company in such amounts as the Company may determine in its sole
discretion. In connection therewith, Executive shall, at
such time or times and at such place or places as the Company may
reasonably direct, submit himself to such physical examinations and
execute and deliver such documents as the Company may deem
necessary or appropriate.
9.
Trade Secrets .
(a)
Executive
shall hold in a fiduciary capacity for the benefit of the Company
all confidential or proprietary information relating to or
concerned with the Company or its Affiliates (as defined below) or
its products or services, prospective products or services,
operations, business and affairs (“Confidential
Information”), and he shall not, at any time hereafter, use
or disclose any Confidential Information to any person other than
to the Company or its designees or except as may otherwise be
required in connection with the business and affairs of the
Company, and in furtherance of the foregoing Executive agrees
that:
(i) Executive
will receive, maintain and hold Confidential Information in
strict confidence and will use the same level of care in
safeguarding it that he uses with his own confidential
material of a similar nature;
(ii) Executive
will take all such steps as may be reasonably necessary to
prevent the disclosure of Confidential Information;
and
(iii) Executive
will not utilize Confidential Information for his personal
benefit without first having obtained the Company’s
consent to such utilization.
“Affiliate”
of a Person means another Person directly or indirectly
controlling, controlled by, or under common control with, such
Person; for this purpose, “control” of a Person
means the power (whether or not exercised) to direct the
policies, operations or activities of such Person by virtue of
the ownership of, or right to vote or direct the manner of
voting of, securities of such Person, or pursuant to agreement
or law or otherwise. The term “Person”
includes without limitation a natural person, corporation,
joint stock company, limited liability company, partnership,
joint venture, association, trust, governmental authority, or
any group of the foregoing acting in concert.
(b)
The
commitments set forth in paragraph 9(a) shall not extend to any
portion of Confidential Information:
(i) that
is generally available to the public;
(ii) that
was not acquired, directly or indirectly and/or in any manner,
from the Company and which Executive lawfully had in his
possession prior to the date of this Agreement;
or
(iii) that,
hereafter, through no act or omission on the part of the
Executive, becomes information generally available to the
public.
(c) At
any time upon written request by the Company (i) the
Confidential Information, including any copies, shall be
returned to the Company, and (ii) all documents, drawings,
specifications, computer software, and any other material
whatsoever in the possession of the Executive that relates to
such Confidential Information, including all copies and/or any
other form of reproduction and/or description thereof made by
Executive shall, at the Company’s option, be returned to
the Company or destroyed.
(d) In
the event that Executive becomes legally compelled (by
deposition, interrogatory, request of documents, subpoena,
civil investigative demand or similar process) to disclose any
of the Confidential Information, the Executive shall provide
the Company with prompt prior written notice of such
requirement so that it (or its designees) may seek a
protective order or other appropriate remedy and/or waive
compliance with the terms of this Agreement. In the
event that such protective order or other remedy is not
obtained, or the Company waives compliance with the provisions
hereof, the Executive agrees to furnish only such portion of
the Confidential Information which is legally required to be
furnished.
10.
Intellectual Property . Any idea, invention, design,
process, system, procedure, improvement, development or discovery
conceived, developed, created or made by Executive, alone or with
others, during the Term and applicable to the business of the
Company, whether or not patentable or registrable, shall become the
sole and exclusive property of the Company. Executive
shall disclose the same promptly and completely to the Company and
shall, during the Term or thereafter, (i) execute all documents
requested by the Company for vesting in the Company the entire
right, title and interest in and to the same, (ii) execute all
documents requested by the Company for filing and procuring such
applications for patents, trademarks, service marks or copyrights
as the Company, in its sole discretion, may desire to prosecute,
and (iii) give the Company all assistance it may reasonably
require, including the giving of testimony in any Proceeding (as
defined below), in other to obtain, maintain and protect the
Company’s right therein and thereto.
A
“Proceeding” is any suit, action, arbitration,
audit, investigation or other proceeding before or by any
court, magistrate, arbitration panel or other tribunal, or any
governmental agency, authority or instrumentality of competent
jurisdiction.
11.
No Competition .
(a)
During
the Restricted Period (as defined below), Executive shall not,
directly or indirectly:
(i)
own,
control, manage, operate, participate or invest in, or otherwise be
connected with, in any manner, any business activity, venture or
enterprise which is engaged in any business in the United States in
which the Company (or any subsidiary thereof) is currently engaged
or is engaged at the time of termination of Executive’s
employment hereunder, or
(ii)
for
himself or on behalf of any other person, employ or engage any
person who at the time shall have been within the preceding
12-month period an employee of the Company (or such subsidiary) or
contact any supplier, customer or employee of the Company (or such
subsidiary) for the purpose of soliciting or diverting any
supplier, customer or employee from the Company (or such
subsidiary).
(b)
The
provisions of paragraph 11(a) notwithstanding, Executive may
invest his funds in securities of an issuer if the securities of
such issuer are listed for trading on a registered securities
exchange or actively traded in an over-the-counter market and
Executive’s holdings therein represent less than 5% of the
total number of shares or principal amount of the securities of
such issuer outstanding.
(c)
Executive
acknowledges that the provisions of this Section, and the period of
time, geographic area and scope and type of restrictions on his
activities set forth herein, are reasonable and necessary for the
protection of the Company.
(d)
“Restricted
Period” shall mean the period commencing on the date
here
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