EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated this ____ day of July 2003, is between
PYRAMID MUSIC CORP., (hereinafter referred to as "PYRAMID") and XXX XXXXXXX,
(hereinafter referred to as "GARLAND"), and in exchange for the mutual covenants
and consideration recited hereinafter, it is hereby agreed as follows:
1. EMPLOYMENT: This Agreement will govern terms and conditions of your
employment with the company PYRAMID MUSIC CORP., commencing upon the closing
date of the transactions contemplated by the Agreement (hereinafter referred to
as "Effective Date"). The period which GARLAND is actively employed by the
Company is hereinafter referred to as the "Employment Period".
2. POSITION; DUTIES: GARLAND will be employed by the Company as the Chief
Operating Officer of "the Tube". GARLAND will report to the Companies Board of
Directors ("the Board") or such persons as designated by the Board, and shall
perform such duties as may be assigned to GARLAND. Such duties will include,
without limitation, leading the Company's strategic planning process, developing
the Company's annual business plans, directing the process of monitoring the
Company's progress toward achieving financial and operating goals, and human
resources and business development. GARLAND agrees to use his best offers to
perform such duties faithfully, to devote all of his working time, attention and
energies to the businesses of the Company, and while he remains employed, not to
engage in any other business activity that is in conflict with his duties and
obligations to the Company.
It is the condition TO GARLAND's obligations hereunder that GARLAND be
named a member of the Company's Board of Directors concurrently with the
commencement of employment with the Company. The Company shall use its best
efforts thereafter to cause GARLAND to continue as a member of the Board of
Directors, subject to the fiduciary duties of the other members of the Board of
Directors and the rights of holders of the Company's common stock ("Common
Stock") to elect directors annually. GARLAND agrees to resign from the Board
upon GARLAND's termination of employment of any reason.
1
3. BASE SALARY: GARLAND will be paid a base salary ("Base Salary") at an
annual rate of $350,000.00 payable in accordance with the Company's normal
payroll practices. GARLAND's Base Salary will be reviewed at least annually, and
may be subject to upward (but not downward) adjustment at the discretion of the
Company.
4. ADDITIONAL BENEFITS: If during the term of this Agreement, PYRAMID
MUSIC CORP., consummates its own business combination defined as (i) any merger
or
consolidation involving PYRAMID MUSIC CORP., or (ii) the acquisition by a
person, group or entity of fifty percent (50%) of the voting stock, or all or a
substantial portion of the assets of PYRAMID MUSIC CORP., in any one
transaction, by way of tender, or exchange offer, negotiated purchase or
otherwise (XXX XXXXXXX) shall be paid a fee equal to 3% of the Aggregate Market
Value of the business combination with a minimum of $3 million and a maximum of
$10 million provided, that in the event (XXX XXXXXXX) introduces the transaction
to PYRAMID MUSIC CORP., there shall be no maximum.
5. BENEFITS: GARLAND will be provided with such retirement benefits,
vacation, fringe benefits and insurance coverages as are made available to
employees of the Company generally.
6. TERMINATION: GARLAND will be free to resign from the Company at any
time, and the Company will be free to terminate GARLAND's employment at any
time. Upon any such termination or resignation, GARLAND will be entitled to any
amounts earned and payable but not yet paid. In addition, if the Company
terminates GARLAND's employment other than for Cause, or you resign for Good
Reason, then in lieu of any other severance benefits otherwise payable under any
Company policy, or any other damages payable in connection with such
termination, GARLAND will be entitled to receive: (i) monthly installments
payable during the shorter of the remainder of the Term or the one-year period
following such termination of employment (the "Severance Period"), in an amount
equal to one-twelfth of GARLAND's Base Salary at the time of termination, and
(ii) during the Severence Period, or if earlier, until GARLAND become eligible
for coverage under another employer's group health, continued medical insurance
coverage on the same basis that such coverage is provided to active employees of
the Company (which period of coverage will offset periods of coverage required
under COBRA).
2
The provision of the benefits set forth in clauses (i) and (ii) above shall be
conditional upon (x) GARLAND's compliance with the Restrictive Covenants (as
defined below), (y) GARLAND's compliance with the provision of paragraphs 11 and
(z) GARLAND's execution of a customary release of claims in favor of the Company
and its affiliates, in a form prescribed by the Company.
"Cause" means a finding by the Company that GARLAND has (i) willfully and
continually failed or refused to conform to the organizational and management
structure prescribed by the Company, (ii) committed a felony or a crime
involving moral turpitude, (iii) committed any act of gross negligence or fraud,
(iv) materially breached this Agreement or any of the condition of his
employments which breach either cannot be cured or was not cured after adequate
and specific written notice thereof, (v) failed to substantially perform his
duties (other than by reason of a physical or mental impairment) or to implement
the directives of the Company that continued for 30 days after GARLAND has been
provided adequate and specific written notice thereof, or (vi) willfully engaged
in conduct That is materially injurious to the Company, monetary or otherwise.
"Good Reason" means a material breach of this Agreement by the Company which
breach either cannot be cured or was not cured after adequate specific written
notice thereof.
7. CONFIDENTIAL INFORMATION: GARLAND agrees that he will, at all times
during the Employment Period and thereafter, maintain in confidence, and shall
not disclose, directly or indirectly, to any third party or use for any purpose,
and Confidential Information (as defined below), except (i) to the extent such
information becomes publicly known other than by his breach of this Agreement;
(ii) to the extent GARLAND is required by law to disclose any Confidential
Information in which event GARLAND will provide the Company with prompt notice
of such required disclosure so that the Company may seek an appropriate
protective order and/or waive his compliance with the provisions of this
Agreement, and GARLAND will consult with the Company as to the advisability of
taking legal available steps to resist or narrow such disclosure, and if in the
absence of a protective or the receipt of a waiver hereunder, GARLAND will
consult with the Company as to the advisability of taking legal available steps
to resist or narrow such disclosure, and if in the absence of a protective order
or the receipt of a waiver hereunder, GARLAND nonetheless, based on advice of
his legal counsel, is compelled to disclose any of the Confidential Information
to any tribunal or else stand liable for contempt or suffer other censure or
penalty, GARLAND may disclose such of the
3
Confidential Information which he is compelled to disclose to such tribunal
without liability hereunder; provide, however, that GARLAND shall give the
Company written notice of the Confidential Information to be disclosed as far in
advance of its disclosure as is practicable and shall use his best efforts to
obtain and cooperate with the Company in seeking to obtain an order or other
reliable assurance that confidential treatment will be accorded to such portions
of the Confidential Information required to be disclosed as the Company
designates; (iii) in GARLAND's capacity as an employee of the Company to the
extent reasonably appropriate in furtherance of the business of the Company or
its subsidiaries; or (iv) to your attorneys or accountants, provided, that such
attorneys or accountants will be informed of the content of this paragraph 7 and
by receiving such information agree to be bound by the provisions of this
paragraph 7 and GARLAND hereby agrees to be responsible for any breach hereof by
its attorneys or accountants. Upon GARLAND's termination of employment with the
Company for any reason, or otherwise upon the request of the Company, GARLAND
will deliver to the Company (a) all documents and materials containing
Confidential Information, and (b) all documents, materials and other property
belonging to the Company which is in his possession or under his control,
including but not limited to all Company keys, entry cards, credit cards,
parking passes, portable projectors, computers, cellular telephones, office
equipment and other property belonging to the Company or any of its
subsidiaries.
"Confidential Information" shall mean any ideas, methods, trade secrets,
customer information or business plans or any other confidential or proprietary
information of the Company or any of its subsidiaries. Without limiting the
generality of the foregoing, Confidential Information shall include: (i)
customer or prospective customer lists and details of agreements and
arrangements with customers; (ii) marketing, financial and other business
information and plans; (iii) research and development; (iv) computer programs;
(v) sources of supply; (vi) identities of consultants and contractors; (vii)
purchasing operating and other cost date (iii) special customer needs, costs and
pricing data; (ix) employee information. Confidential Information shall also
include information recorded in manuals, memoranda, projections, minutes, plans,
drawing, designs, formula books, specifications, computer programs and records,
whether or not legended or otherwise identified as Confidential Information.
4
8. DISCOVERIES AND WORKS: All discoveries and Works (as defined below)
made or conceived by GARLAND during the employment Period or during the period
that he owned securities of the Company, jointly or with others, that relate to
the present or anticipated activities of the Company or its subsidiaries, or are
used or usable by the Company or any subsidiary. The term "Discoveries and
Works" includes, by way of example but without limitation, Confidential
Information, patents and patent applications, trademark and trademark
registrations and applications, service marks and service xxxx registrations and
applications, trade names, copyrights and copyright registrations and
applications. Discoveries and Works shall not be deemed to have been made or
conceived by GARLAND "jointly or with others" if such Discoveries and Works are
made and conceived by an entity in which GARLAND is merely a passive investor
and if GARLAND has no knowledge of such Discoveries and Works and is not an
active participant in the discovery or development of such Discovery and Works.
GARLAND agrees to (a) promptly notify, make full disclosure to, and execute and
deliver any documents requested by the Company or any subsidiary, as the case
may be, to evidence or better assure title to Discoveries and Works in the
company or any subsidiary, as so requested, (b) renounce any and all claims,
including, without limitation, claims or ownership and royalty, with respect to
all Discoveries and Works and all other property owned or licensed by the
Company or any subsidiary, (c) assist the Company or any subsidiary in obtaining
or maintaining for itself as its own expense United States and foreign patents,
copyrights, trade secrets protection or other protection of any and all
Discoveries and Works, and (b) promptly execute all applications or other
endorsements necessary or appropriate to maintain patents and other rights for
the Company or any subsidiary and to protect the title of the Company or any
subsidiary thereto, including, without limitation, assignments or such patents
or other rights. Any Discoveries and Works which, within six months after the
termination of GARLAND's employment with the Company, are made, disclosed,
reduced to a tangible or written form or description, or are reduced to practice
by GARLAND and which pertain to the business carried on or products or services
being sold or developed by the Company or any subsidiary at the time of such
termination will, as between such GARLAND and the Company or any subsidiary, as
the case may be, presumed to have been made during such GARLAND's employment
with or service as a director of the Company or any Subsidiary or ownership of
securities of the Company, as the case may be. GARLAND acknowledges that all
Discoveries and Works shall be deemed "works made for hire" under the Copyright
Act of 1976, as amended, 17 U.S.C. 101.
5
9. COMPETING BUSINESS, ETC. GARLAND agrees that during the Employment
Period and for a period of one year thereafter, he will not directly or
indirectly: (i) own, manage, operate, join, or have financial interest in,
control or participate in the ownership, management, operation or control of, or
be employed as an employee, agent or consultant, or in any Other individual or
representative capacity whatsoever, or use or permit his name to be used in
connection with, or be otherwise connected in any manner with any business of
enterprise worldwide (x) engaged in the design, development, manufacture,
distribution or sale of any of the same or similar types of products, or the
provision of any of the same or similar types of services, which the Company or
any subsidiary was designing, developing, manufacturing, distributing, selling
or providing at any time during the Employment Period, or (y) which is otherwise
competitive with the business carried on or planned by the Company or any
subsidiary at any time during the Employment Period; provided that the foregoing
restriction shall not be construed to prohibit GARLAND's ownership of not more
that two percent (2%) of any class of securities registered pursuant to the
Securities Exchange Act of 1934, as amended, which securities are publicly owned
and regularly traded on any national exchange or in the over-the-counter market,
provided further, that such ownership represents a passive investment and
GARLAND does not, in any way, either directly or indirectly, manage or exercise
control over any such Company, guarantee any of its financial obligations,
otherwise take part in its business other than exercising his or her rights as a
share holder, or seek to do any of the foregoing; (ii) solicit or canvass the
trade, business or patronage of any persons or entities that were either
customers with respect to any products sold, distributed or otherwise provided
by the Company or any subsidiary at the time of GARLAND's termination of
employment, or sell, distribute or otherwise provide to any such persons or any
such prospective customers any such products; (iii) whether in writing or
orally, criticize, disparage, or otherwise demean in any way the Company or its
affiliates or their respective products, officers, directors employees or
shareholders; (v) influence any individual who was an employee or consultant of
the Company or any such subsidiary at any time during the Employment Period or
during any period that GARLAND was an owner of securities of the Company, to
terminate its, his or her employment or consulting relationship with the Company
or any subsidiary or to become employed by or a consultant to you, directly or
indirectly; or
6
(v) interfere in any way with the employment, or other relationship, of any
employee or consultant of the Company or any subsidiary.
10. ENFORCEMENT; REMEDIES; GARLAND agrees that the Company's remedies at
law for any breach or threat of breach by him or his agreements in paragraphs 7,
8, and 9 (the "Restrictive Covenants") would be inadequate, and that, in
addition to any other remedy to which the Company may be entitled at law or in
equity, the Company shall be entitled to a temporary or permanent injunction or
injunctions or temporary restraining order or orders to prevent breaches of the
Restrictive Covenants and to enforce specifically the terms and provisions
thereof, in each case without the need to post any security or bond, and to the
extent the Company prevails in any such action, GARLAND shall pay the Company
all costs of such action, including the legal fees. Nothing contained in this
Agreement shall be construed as prohibiting the Company from pursuing, in
addition, any other remedies available for such breach or threatened breach.
A waiver by the Company of any breach of any provision hereof shall not operate
or be construed as a waiver of a breach of any other provision of this Agreement
or of any subsequent breach by GARLAND. It is expressly understood and agreed
that although the parties hereto consider the Restrictive Covenants to be
reasonable for the purpose of preserving the goodwill, proprietary rights and
going concern value of the Company and its subsidiaries, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in paragraphs 7, 8 or 9 is an unenforceable
restriction on GARLAND's activities, the provisions thereof shall not be
rendered void but shall be deemed amended to apply as to such maximum time and
territory and to such other extent as such court may judicially determine or
indicate to be reasonable. Alternatively, if the court referred to above finds
that any Restrictive Covenant or any remedy provided herein is unenforceable,
and such restriction or remedy cannot be amended so as to make it enforceable,
such finding shall not affect the enforce ability of any of the other
Restrictive Covenants or the availability of any other remedy.
7
11. FUTURE COOPERATION: GARLAND agrees that upon the Company's reasonable
request following his termination of employment, GARLAND will use reasonable
efforts to assist and cooperate with the Company in connection with the defense
or prosecution of any claim that may be made against or by the Company or its
affiliates, or in connection with any ongoing or future investigation or dispute
or claim of any kind involving the Company or its affiliates, including any
proceeding before any arbitral, administrative, regulatory, self-reimbursement
for reasonable out-of-pocket expenses incurred in connection with providing such
assistance, except to the extent such assistance is provided after the Severance
Period, in which case GARLAND shall be paid a per diem fee based on GARLAND's
Base Salary at the time of his termination of employment.
12. INDEMNIFICATION: The Company will indemnify and hold GARLAND harmless
from and against any and all liabilities, suits, claims, actions, causes of
action, and debts arising from and in connection with GARLAND's employment by
the Company and in the performance of your duties for the Company in accordance
with terms of this Agreement. Such indemnification shall not apply to any such
liabilities, suits, claims, actions, causes of actions or debts resulting from:
(i) any action by GARLAND constituting gross negligence, fraud or criminal
conduct, (ii) any action by GARLAND which is in violation of the terms of this
Agreement or in violation of any direction given to GARLAND by the Company or
any officer of the Company, or (iii) any action which is in violation of any
laws, rules, regulations or directives applicable to the Company and/or the
business of the Company.
13. KEY MAN INSURANCE: During the Employment Period, the Company may at
any time effect insurance on GARLAND's life and/or health in such amounts and in
such form as the Company may in its sole discretion decide. GARLAND will not
have any interest in such insurance, but shall if the Company requests, submit
to such medical examinations, supply such information and execute such documents
as may be required in connection with, or so as to enable the Company to effect,
such insurance.
14. WITHHOLDING: The Company shall have the right to withhold from any
amount payable to GARLAND hereunder an amount necessary in order for the Company
to satisfy any withholding tax obligation it may have under applicable law.
8
15. GOVERNING LAW: The terms of this Agreement, and any action
arising thereunder, shall be governed by and construed in accordance
with the domestic law of the State of Florida, without giving effect to
any choice of law or conflict of law provision or rule (whether of the
State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Florida.
16. WAIVER: This Agreement may not be released, changed or
modified in any manner, except by an instrument in writing signed by
GARLAND and the Company. The failure of either party to enforce any of
the provisions of this Agreement shall in no way be construed to be a
waiver of any other or subsequent breach.
17. ASSIGNMENT: This Agreement is personal to GARLAND. GARLAND
shall not assign this Agreement or any of his rights and/or obligations
under this Agreement to any other person. The Company may, without
GARLAND's consent, assign the Agreement to any successor to its
business.
18. DISPUTE RESOLUTION: To benefit mutually from the time and cost
saving or arbitration over the delay and expense of the use of the
federal and state courts systems, all disputes involving this Agreement
(except, at the election of the Company, for injunctive Restrictive
Covenants), including claims of violations of federal or state
discrimination statutes or public policy, shall be resolved pursuant to
the binding arbitration in New York, New York. In the event of a
dispute, a written request for arbitration shall be submitted to the
New York office of the American Arbitration Association. The award of
the arbitrators shall be final and binding and judgment upon the award
may be entered in any court having jurisdiction thereof. Except as
otherwise provided above, this procedure shall be the exclusive means
of settling any disputes that may arise under this Agreement. All fees
and expenses of the arbitrators and all other expenses of the
arbitration, except for attorney's fees and witness expenses, shall be
shared equally by GARLAND and the Company. Each party shall bear its
own witness expenses and attorneys' fees.
19. ENTIRE AGREEMENT: Upon the Effective Date, this Agreement
supersedes all previous and contemporaneous communications, agreements
and understandings, whether oral or written, between GARLAND on the one
hand, and the Company or any of its affiliates, on the other hand, and
constitutes the sole and entire agreement between GARLAND and the
Company and any other parties named therein.
20. NO CONFLICT: GARLAND represents and warrants to the Company
that his acceptance of employment and the performance of his duties for
the Company will not conflict with or result in a violation or breach
of, or constitute a default under any contract, agreement or
understanding to which GARLAND is or was a party or of which GARLAND is
aware that there is no restrictions, covenants, agreements or
limitation on his right or ability to enter into and perform the terms
of this Agreement.
-------------------------- --------------------------
-------------------------- --------------------------
-------------------------- --------------------------
