EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of October, 1999, ("Effective Date")by
and between Paradise Music & Entertainment, Inc. ("Employer") and Xxx
Xxxxxxxxxxx, an individual (the "Executive").
W I T N E S S E T H:
WHEREAS, Employer and the Executive wish to set forth the terms and
conditions of the Executive's employment by Employer effective as of October 1,
1999 ("Effective Date").
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. Employer agrees to employ the Executive for the Term
specified in Section 2 and in the capacities set forth in Section 3 and the
Executive agrees to accept such employment, upon the terms and conditions
hereinafter set forth.
2. Term. This Agreement shall be for a term commencing on the Effective
Date and expiring on June 30, 2003 ("Term").
3. Duties and Responsibilities.
(a) During the Term, the Executive shall serve as President and
Chief Operating Officer of Employer and as such all division heads of Employer
shall report to the Executive. The Executive shall report to the Chief Executive
Officer and/or the Board of Directors of Employer.
(b) Except as provided for in Schedule A annexed hereto or as
otherwise mutually agreed to in writing, the Executive shall devote
substantially all his business efforts to the affairs of Employer. The Executive
will devote his best efforts, skill and ability: (i) to promote Employer's
interests; (ii) to carry out his duties in a competent and professional manner;
and (iii) to work with other employees of Employer in a competent and
professional manner.
(c) The Executive shall be headquartered in New York, New York, and,
subject to reasonable travel, the Executive's duties shall be performed in New
York, New York, unless mutually agreed upon by the Executive and Employer.
4. Compensation.
(a) As compensation for services rendered hereunder and in
consideration of his agreement not to compete as set forth in Section 11 below,
Employer shall pay the Executive at a rate of $450,000 ("Annual Salary") per
annum payable in accordance with Employer's normal payroll practices. In
addition the executive will recerive a one time signing bonus of 12,500. The
Executive's compensation will be reviewed
annually, with respect to possible increases only, by Employer's Compensation
Committee with bonus awards or increases in salary to be considered based on the
Executive's and Employer's performance. The determination of bonus awards will
take into account Employer's overall profitability, growth, capital appreciation
and unused vacation. Such awards may consist of all or a combination of cash,
stock, stock options, stock warrants, stock appreciation rights or other forms
of non-cash compensation as mutually agreed upon between the Compensation
Committee and the Executive.
(b) In addition to the compensation set forth in Section 4(a) above,
the Executive will receive ten year non-qualified stock options for 600,000
shares of Employer's Common Stock, $.01 par value. Such options will be granted
outside Employer's existing stock option plan. The exercise prices for such
options are $5.00. One-third of such options will vest on July 2000; one-third
of such options will vest on July 2001; and one-third of such options will vest
on July 2002, provided that, in each case, the Executive is employed by Employer
on the applicable vesting date. In the event of the Executive's death during the
first one year vesting period, options for 200,000 shares shall vest upon the
Executive's death. If the Executive's employment by Employer terminates for any
reason, the Executive (or his estate) shall have 90 days (five years in the case
of the Executive's estate) after such termination date to exercise all vested
options. Employer shall promptly file and continue to keep effective and
supplemented, without cost to the Executive, an S-8 registration statement
covering the shares to be issued upon exercise of the option, as well as an S-8
reoffer prospectus pursuant to which the Executive can make unrestricted sales
of the shares.
5. Benefits.
(a) During the Term, the Executive shall be entitled to participate
in the benefit plans established by Employer for the benefit of its key
executives. In addition, during the Term, the Employer shall provide the
Executive with life insurance in the amount of $1,000,000. Employer will
cooperate with the Executive with respect to the Executive's assignment of such
policy to a life insurance trust for estate planning purposes.
(b) The Executive shall be entitled to four (4) weeks of paid
vacation per year.
(c) Employer hereby agrees to indemnify, release and hold harmless
the Executive to the fullest extent permitted by applicable law, including
without limitation, when and if (i) he is the subject of any claim or is or
becomes a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, administrative,
investigative or criminal by reason of the fact that he is or was an officer,
director, employee, consultant or agent to Employer, its subsidiaries and/or
affiliates, or by reason of any action alleged to have been taken or omitted in
such capacity; (ii) against any and all costs, charges and expenses, including,
without limitation, reasonable attorneys' and other fees and expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by the Executive in connection therewith and any appeal therefrom if the
Executive acted in good faith and in a manner he reasonably believed to be in
the best interests of the Employer, and with respect to any criminal action or
proceeding, had no
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reasonable cause to believe his conduct was unlawful. The termination of any
civil action, suit or proceeding by settlement or consent decree shall not, of
itself, create a presumption that the Executive did not satisfy the foregoing
standard of conduct to the extent applicable thereto. The Executive shall be
added as an additional insured under all liability insurance policies now in
force or hereafter obtained covering any officer of the Company in his capacity
as an officer.
(d) Employer shall reimburse the Executive for all properly
vouchered reasonable business expenses.
6. Key Man Insurance. Employer shall have the right to obtain key man life
insurance for the benefit of Employer on the life of the Executive. If requested
by Employer, the Executive shall submit to such physical examination and
otherwise take such actions and execute and deliver such documents as may be
reasonably necessary to enable Employer to obtain such life insurance.
7. Discharge by Employer.
(a) Discharge for Cause. Employer shall be entitled to immediately
terminate the Term and to discharge the Executive for cause, which shall be
limited to the following grounds:
(i) Conviction of a felony involving any financial impropriety
or which would materially interfere with the Executive's ability to perform his
services required under this Agreement; or
(ii) Commission of a willful or intentional act of moral
turpitude which reasonably could be expected to materially injure the
reputation, business or business relationships of Employer, including acts of
moral turpitude such as continuing alcohol or substance abuse or the material
violation of the terms of Sections 10 and 11 hereof, which is not cured within
30 days after Executive has received a written notice from the Company stating
in reasonable detail the willful or intentional act(s) at issue and the nature
of the injury or damage. The preceding terms of this Section 7(a)(ii) shall not
be applicable to any acts of the Executive that are undertaken in good faith in
executing his duties under this Agreement.
(b) Termination Without Cause. In the event the Executive's
employment hereunder is terminated by Employer other than pursuant to Section
7(a) or Section 8, or if the Executive's employment is terminated by the
Executive for Good Reason (as hereinafter defined), the Executive shall be
entitled to receive the following:
(i) The Annual Salary that the Executive would have received
for the remaining balance of the Term, payable in accordance with Employer's
normal payroll practices.
(ii) Employer shall pay for the cost of 18 months of COBRA
continuation coverage for the Executive.
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(iii) Full vesting of all stock options issued to the
Executive and not yet vested at the time of such termination. The Executive
shall have the right to exercise such options during the remainder of the ten
year option exercise term.
(iv) All premiums on any officers liability insurance policy
maintained by Employer on the Executive's behalf which are necessary to cover
any claims with respect to events, actions, etc. which arose prior to the
Executive's termination and which claims are made prior to the expiration of the
applicable statute of limitations.
(v) All other reimbursements, unpaid bonuses and other
payments due to the Executive shall be paid in full within ten (10) business
days following the effective date of such termination.
For purposes of this Agreement, "Good Reason" shall mean, without the express
written consent of the Executive, the occurrence of any of the following events
unless such events are fully corrected within 30 days following written
notification by the Executive to Employer that he intends to terminate his
employment hereunder for one of the reasons set forth below, which notice shall
specify the nature of such breach or event in reasonable detail:
(i) A material breach by Employer of any provision of this
Agreement; or
(ii) Any change in the Board of Directors of Employer pursuant
to a "change in control" of Employer.
Executive shall be entitled to all amounts provided in (b) and shall have no
duty to mitigate damages.
8. Disability, Death.
(a) If the Executive shall be unable to perform his duties hereunder
by virtue of illness or physical or mental incapacity or disability (from any
cause or causes whatsoever) in substantially the manner and to the extent
required hereunder prior to the commencement of such disability as determined by
a competent medical doctor (all such causes being herein referred to as
"Disability") and the Executive shall fail to have performed substantially such
duties for 90 consecutive days or for periods aggregating 180 days, whether or
not continuous, in any continuous period of one year (such 90th or 180th day to
be known as the "Disability Date"), Employer shall have the right to terminate
the Executive's employment hereunder as at the end of any calendar month
thereafter upon written notice to him. The Executive shall be entitled to his
Annual Salary for the remainder of the fiscal year in which the Disability Date
occurred plus all bonuses earned through the Disability Date for such fiscal
year.
(b) In case of the death of the Executive, this Agreement shall
terminate and Employer shall be obligated to pay to the Executive's estate or as
otherwise directed by
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the Executive's duly appointed and authorized legal representative, the Annual
Salary for the remainder of the fiscal year in which death occurs and all
bonuses earned through the date of death for such fiscal year.
9. Voluntary Termination. If the Executive voluntarily terminates his
employment prior to the end of the Term, he shall only be entitled to receive
compensation accrued through the date of termination. Nothing contained in this
Section 9 shall be deemed or construed to provide or grant Employer the right to
terminate this Agreement other than in accordance with Section 7 or Section 8.
10. Confidential Information. The Executive recognizes that he will occupy
a position of trust with respect to business and technical information of a
secret or confidential nature which is the property of Employer, or any of its
affiliates, and which has been and will be imparted to him from time to time in
the course of his employment with Employer. In light of this understanding, the
Executive agrees that:
(a) the Executive shall not at any time knowingly use or disclose,
directly or indirectly, any of the confidential information or trade secrets
which is the property of Employer, or any of its affiliates, to any person,
except that he may use and disclose to authorized Employer personnel, licensees
or franchisees in the course of his employment; and
(b) within five (5) days from the date upon which his employment
with Employer is terminated, for any reason or for no reason, or otherwise upon
the request of Employer, he shall return to Employer any and all documents and
materials which constitute or contain the confidential information or trade
secrets of Employer, or any of its affiliates.
For purposes of this Agreement, the terms "confidential information" or "trade
secrets" shall include all information of any nature and in any form which is
owned by Employer, or any of its affiliates, and which is not publicly available
or generally known to persons engaged in businesses similar to that of Employer,
or any of its affiliates. Notwithstanding the foregoing, when the Executive's
employment with Employer is terminated, for whatever reason, the limitations
provided in this Section 10 shall not prevent the Executive from using for his
own benefit any information which he acquired prior to the Effective Date.
11. Non-Competition.
(a) The Executive agrees that his services hereunder are of a
special character, and his position with Employer places him in a position of
confidence and trust with Employer's artists, clients, customers and employees.
The Executive and Employer agree that in the course of employment hereunder, the
Executive has and will continue to develop a personal acquaintanceship and
relationship with Employer's artists, clients and customers, and a knowledge of
those artists', clients' and customers' affairs and requirements which may
constitute Employer's primary or only contact with such artists, clients and
customers. The Executive consequently agrees that it is reasonable and necessary
for the protection of the goodwill and business of Employer that the Executive
make the covenants contained herein and that Employer would not have entered
into this Agreement or the
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Purchase Agreement unless the covenants set forth in this Section 11 were
contained in this Agreement. Accordingly, the Executive agrees that while he is
in Employer's employ, and for a three month period thereafter the Executive will
not, without the prior written consent of Employer, either directly or
indirectly, or in any capacity whether as a promoter, proprietor, partner, joint
venturer, employee, agent, consultant, director, officer, manager, equity holder
(except (i) as an equity holder holding less than five percent (5%) of a
publicly traded company's issued and outstanding equity securities, or otherwise
or (ii) as a passive investor in private companies in amounts up to $1,000,000,
provided that investments above $1,000,000 shall be permitted if first offered
to Employer), work for, act as a consultant to or own any interest in any direct
competitor of Employer which operates in or provides services essentially the
same as Employer in any portion of the geographic territory where Employer
operates or sells its products or services, except as allowed pursuant to
Section 3(b) of this Agreement. Subject to Section 3(b), the preceding sentence
shall not prevent or preclude the Executive from engaging in a business activity
that is not competitive with Employer if Employer thereafter engages in such
business activity. The foregoing restrictions are hereinafter referred to as the
"Non-Compete Restrictions". The Executive further agrees that during the Term,
and for the one year period following the Executive's termination of employment
with Employer, the Executive will not solicit any employee of Employer (i) to
become, an employee of Employer, (ii) to alter, terminate or refrain from
extending or renewing any contractual or other relationship with Employer, or
(iii) to commence a similar or substantially similar relationship with the
Executive, any entity with whom the Executive is affiliated or employed by or
any direct competitor of Employer. The restrictions in the immediately preceding
sentence are hereinafter referred to as the "Non-Solicitation Restrictions". If
the Executive voluntarily terminates his employment prior to the end of the Term
or if Employer terminates the Executive's employment for reasons of cause prior
to the end of the Term, the Non-Compete Restrictions and the Non-Solicitation
Restrictions shall apply for a period of one year following such termination.
Notwithstanding the foregoing, if Employer breaches any provision of this
Agreement, which breach is not cured within 10 days after written notice thereof
from the Executive to Employer, the Non-Compete Restrictions shall not apply.
(b) As used in this Section 11, the term "Employer" shall include
subsidiaries of Employer, and the term "employee" shall mean any person who is
then, or who had been at any time during the three month period immediately
preceding the date of termination of the Executive's employment, an employee of
Employer.
(c) The parties hereto agree that the duration and area for which
the covenant not to compete set forth herein is to be effective are reasonable.
In the event that any court determines that the time period or the area, or both
of them, are unreasonable and that such covenant is to that extent
unenforceable, the parties hereto agree that the covenant shall remain in full
force and effect for the greatest time period and in the greatest area that
would not render it unenforceable.
(d) The existence of any claim or cause of action of the Executive
against Employer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of those covenants and
agreements.
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12. Resolution of Disputes. Any dispute by and among the parties hereto
arising out of or relating to this Agreement, the terms, conditions or a breach
thereof, or the rights or obligations of the parties with respect thereto, shall
be arbitrated in the City of New York, New York, before and pursuant to then
applicable commercial rules and regulations of Jams - Endispute, or any
successor organization. The arbitration proceedings shall be conducted by a
panel of three arbitrators, one of whom shall be selected by Employer, one by
the Executive (or his legal representative) and the third arbitrator by the
first two so chosen. The parties shall use their best efforts to assure that the
selection of the arbitrators shall be completed within 30 days and the parties
shall use their best efforts to complete the arbitration as quickly as possible.
In such proceeding, the arbitration panel shall determine who is a substantially
prevailing party and shall award to such party its reasonable attorneys',
accountants' and other professionals' fees and its costs incurred in connection
with the proceeding. The award of the arbitration panel shall be final, binding
upon the parties and nonappealable and may be entered in and enforced by any
court of competent jurisdiction. Such court may add to the award of the
arbitration panel additional reasonable attorneys' fees and costs incurred by
the substantially prevailing party in attempting to enforce such award.
13. Enforceability. The failure of either party at any time to require
performance by the other party of any provision hereunder shall in no way affect
the right of that party thereafter to enforce the same, nor shall it affect any
other party's right to enforce the same, or to enforce any of the other
provisions of this Agreement; nor shall the waiver by either party of the breach
of any provision hereof be taken or held to be a waiver of any subsequent breach
of such provision or as a waiver of the provision itself.
14. Assignment. This Agreement is a personal contract and the Executive's
rights and obligations hereunder may not be sold, transferred, assigned, pledged
or hypothecated by the Executive. The rights and obligations of Employer
hereunder shall be binding upon and run in favor of the successors and assigns
of Employer. If any assignment or transfer of rights hereunder is attempted by
the Executive contrary to the provisions hereof, Employer shall have no further
liability for payments hereunder.
15. Modification. This Agreement may not be canceled, changed, modified or
amended orally, and no cancellation, change, modification or amendment shall be
effective or binding, unless it is in writing, signed by both parties to this
Agreement.
16. Severability, Survival. If any provision of this Agreement is held to
be void and unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement nevertheless shall be binding upon the parties with
the same effect as though the void or enforceable part has been Severed and
deleted.
17. Notice. Notices given pursuant to the provisions of this Agreement
shall be sent by certified mail, postage prepaid, or by overnight courier, or by
telex, telecopier or telegraph, charges prepaid, to the following address or
such other address as shall be specified by written notice:
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To Employer: Paradise Music & Entertainment, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Fax No.: 000-000-0000
with a copy to: Xxxxx & Xxxxxxx LLP
0000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax No.: 000-000-0000
To the Executive: Xxx Xxxxxxxxxxx
00 Xxxxxxxxx Xxxx
Xx. Xxxxx, Xxx Xxxx 00000
Fax No.: 000-000-0000
with a copy to: Xxxxxxxx Xxxxx Singer & Xxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxxx Xxxxx, Esq.
Fax No.: 000-000-0000
18. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
19. No Conflict. The Executive represents and warrants that he is not
subject to any agreement, instrument, order, judgment or decree of any kind, or
any other restrictive agreement of any character, which would prevent him from
entering into this agreement or which would be breached by the Executive upon
his performance of his duties pursuant to this agreement.
20. Entire Agreement. This agreement represents the entire agreement
between Employer and the Executive with respect to the subject matter hereof,
and all prior agreements relating to the employment of the Executive, written or
oral, are nullified and superseded hereby.
21. Representations of Employer. Employer has the full corporate power and
authority to make, execute, deliver and perform this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all required corporate action
on behalf of Employer, and this Agreement has been duly and validly executed and
delivered by Employer and assuming due authorization, execution and delivery by
the Executive, constitutes legal, valid and binding obligations of Employer,
enforceable against it in accordance with its terms. Employer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware with full corporate power and authority to own its property
and to carry on its
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business all as and in the places where such properties are now owned or
operated or such business is now being conducted.
IN WITNESS WHEREOF, the parties have set their hands and seals on and as
of the day and year first above written.
PARADISE MUSIC & ENTERTAINMENT, INC.
By:
---------------------------------------
Name:
Title:
------------------------------------------
Xxx Xxxxxxxxxxx
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Schedule A
Xxxxxxxxxxx Exempt Entities
Xxxxxxxxxxx & Associates, Inc.
U.S. Narrow Network, Inc.
xxxxxxxxx.xxx, inc.
Avitar, Inc.
Sunrise Technologies International
