EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT, (this "Agreement") is made and entered into as of this 11th day
of January, 1999, by and between NETRADIO CORPORATION, a Minnesota corporation
(the "Company"), and XXXXXX X. XXXXXXXX, a resident of the State of Minnesota
("Employee").
WITNESSETH
WHEREAS, Employee desires to become employed by the Company, and the Company
desires to employ the Employee pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants
and obligations of this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. EMPLOYMENT. Subject to all of the terms and conditions of this Agreement,
the Company hereby employs Employee and Employee hereby accepts employment
with the Company, as its President and Chief Executive Officer.
2. DUTIES. The services of Employee are exclusive to the Company. Employee
will devote substantially all of his business hours to, and make the best
use of his energy, knowledge and training in, performing his duties as
President and Chief Executive Officer of the Company within the general
guidelines established by the Board of Directors of the Company as the same
may, from time to time, be modified by the Company's Board of Directors.
Employee will report to the Board of Directors and have all the duties
normally subscribed to the President and Chief Executive Officer. Employee
will perform his duties in a competent and professional manner, consistent
with that expected of President and Chief Executive Officer of the Company.
3. TERM. Subject only to earlier termination in accordance with Section 5 of
this Agreement, Employee's term of employment shall commence on the date
hereof and continue until January 11, 2002 (the "Initial Term"). The
Initial Term and any subsequent renewal terms shall be referred to
collectively herein as the "Employment Period".
4. COMPENSATION. As compensation for all of Employee's services under this
Agreement, the Company agrees to pay Employee and Employee agrees to accept
the following:
(a) BASE SALARY. The base salary of $175,000 per annum (the "Base
Salary"), to be increased to $200,000 per annum effective with the
successful completion of an initial public offering of NetRadio,
payable in accordance with the Company's
standard payroll practices. In addition, Employee will be paid a
one-time cash bonus of $20,000 at the time the initial public
offering is completed.
(b) PERFORMANCE BONUS. As additional compensation to Employee, Employee
shall be eligible to receive a bonus (the "Bonus") equal to 60% of
Employee's base salary. This bonus is based on the company achieving
its financial objectives and Employee achieving mutually agreed upon
personal goals. This bonus period runs from January 1 through
December 31 and shall be paid annually not later than 45 days after
the Company's annual audit is completed.
(c) BENEFITS.
(i) EXPENSES. The Company shall reimburse Employee for any and all
ordinary, necessary and reasonable business expenses that
Employee incurs in connection with the performance of his
duties under this Agreement, including entertainment,
telephone, travel and miscellaneous expenses, provided that
Employee provides the Company with documentation for such
expenses in a form sufficient to sustain the Company's
deduction for such expenses under Section 162 of the Internal
Revenue Code of 1986, as amended.
(ii) MEDICAL AND DISABILITY INSURANCE. Subject to Employee taking
and passing the physical examination, if required by the
Company's insurance carrier, the Company shall provide Employee
with full medical and disability insurance coverage provided to
other officers of the Company.
(iii) VACATION. Employee shall be entitled to a paid vacation period
of two weeks each year during the first five years; three weeks
paid vacation after five years, and four weeks paid vacation
after ten years of employment which may be taken at any time
subject to the Company's business needs.
(iv) STOCK OPTIONS. Employee will receive an additional grant of
pre-Initial Public Offering stock options for 125,000 shares of
NetRadio Common Stock which vests over a three year period
at 33 1/3% per year. This option price will be approximately
$5.00 per share and will vest 100% if employee is terminated
without cause.
(v) BENEFIT CHANGES. No reference in this Agreement to any policy
or any employee benefit plan established or maintained by the
Company or the Parent shall preclude the Company from changing
any such policies or amending or terminating any such benefit
plans if a substantially similar benefit is provided to
Employee by the Company.
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(vi) OTHER PLANS. Nothing contained herein is intended to or shall
be deemed to be granted to Employee in lieu of any rights or
privileges which Employee may be entitled to as an employee of
Company under any other policies or benefit plans that are
currently in effect or that may hereafter be adopted. Employee
shall be entitled to participate in any other employee benefit
plans of the Company generally applicable to officers of the
Company, its divisions or subsidiaries, occupying similar
positions as Employee, including, but not limited to, any
profit sharing, pension, stock option, stock appreciation
rights, stock ownership, health, medical, dental, vacation,
insurance or other employee benefit plans.
5. TERMINATION. This Agreement may not be terminated prior to the end of the
Employment Period except as follows:
(a) BY THE COMPANY FOR COMPANY CAUSE. The company may terminate this
Agreement for Company Cause upon Employee's material breach of this
Agreement. Except as to subparagraph (iii) below, the Company shall
give Employee thirty (30) days' advance written notice of such
termination, which notice shall be via registered mail, return
receipt requested, and which shall describe in detail the acts or
omissions which the Company believes constitute such breach. Acts or
omissions which constitute a material breach of this Agreement
constituting "Company Cause" shall be limited strictly to the
following:
(i) Any material breach by Employee of his obligations under this
Agreement;
(ii) Gross misconduct of the Employee, conduct by the Employee which
is manifestly injurious to the Company, or habitual failure or
inability of the Employee to perform his duties under this
Agreement; and
(iii) Any fraud, theft or embezzlement by Employee of the Company's
assets, or any other unlawful or criminal act which is
punishable as a felony.
(b) DEATH. This Agreement shall terminate upon Employee's death.
(c) DISABILITY. This Agreement shall terminate upon Employee's
Disability. As used herein, the term "Disability" shall have such
meaning as set forth in the Company's disability policy in effect at
the date hereof and shall include both permanent and temporary
disability, short term and long term disability, and total and partial
disability. If there is no policy in effect at the date of Employee's
potential disability, Disability shall mean Employee becoming
substantially incapable of performing his duties hereunder for a
period of 6 months or more.
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(d) BY EMPLOYEE FOR EMPLOYEE CAUSE. Employee may terminate this Agreement
upon thirty (30) days' written notice to the Company upon the
occurrence, without Employee's express written consent, of any one or
more of the following events, provided that Employee shall not have
the right to terminate this Agreement if the Company is able to cure
such event within thirty (30) days following delivery of such notice:
(i) The Company is in material breach of this Agreement;
(ii) A reduction by the Company of Employee's Base Salary as the
same may be increased time to time, or a change in the
eligibility requirements or performance criteria for any
benefit other than salary, which adversely effect Employee;
(iii) Any purported termination by the Company of this Agreement of
the employment of the Employee by the Company which is not
expressly authorized by this Agreement or any breach of this
Agreement by the Company which is not remedied by the Company
within thirty (30) days after the Company's receipt of notice
thereof from Employee.
(iv) The Company's requiring Employee to be based at a location more
than 35 miles from Minneapolis or relocating its headquarters
outside the Minneapolis metropolitan area.
6. PAYMENTS UPON TERMINATION.
(a) DEATH. In the event that this Agreement is terminated due to the
death of the Employee, the Employee shall be paid (i) his Base Salary
through the end of the month in which his death occurred, (ii) all
bonuses to which the Employee would have been entitled for the fiscal
year in which death occurred, prorated to the date of death, (iii)
benefits payable under any life insurance policies maintained by the
Company hereunder, to which the Employee would have been entitled for
the fiscal year in which his death occurred, (iv) his accrued but
unpaid vacation pay for the year in which his death occurred, pro
rated to the date of his death, and (v) any unpaid expense
reimbursement.
(b) DISABILITY. In the event that this Agreement is terminated due to
Employee's Disability, Employee shall be paid (i) his Base Salary for
a period of 90 days following the date of such Disability or until the
Employee begins receiving benefits under the Company's disability
benefits plan, whichever occurs first, (ii) all bonuses to which the
Employee would have been entitled for the fiscal year in which such
Disability occurred, prorated to the date of such Disability, (iii)
his accrued but unpaid vacation pay for the year in which such
Disability occurred,
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prorated to the date of such Disability, and (iv) any unpaid
expense reimbursement.
(c) TERMINATION BY COMPANY FOR COMPANY CAUSE OR BY THE EMPLOYEE WITHOUT
EMPLOYEE CAUSE. If Employee is terminated pursuant to Section 5(a)
hereof, or the Employee terminates this Agreement other than in
accordance with Section 5d hereof, the Company shall pay to Employee
(i) his Base Salary through the date of termination, and (ii) any
unpaid expense reimbursement.
(d) TERMINATION WITHOUT COMPANY CAUSE OR BY THE EMPLOYEE FOR EMPLOYEE
CAUSE. In addition to any other rights granted Employee hereunder, if
the Company should terminate this Agreement other than in accordance
with Section 5(a) hereof, or if the Employee should terminate this
Agreement pursuant to Section 5(d) hereof, the Company shall pay to
Employee (i) his Base Salary through the end of the term of this
Agreement; (ii) all Bonuses to which the Employee would have been
entitled to for the fiscal year in which the termination occurred pro
rated to the date of termination, (iii) a sum equivalent to any
accrued but unpaid vacation for the year in which he is terminated,
(iv) any unpaid expense reimbursement, and (v) vest all pre-I.P.O.
stock options outstanding immediately prior to Employee's termination
of employment and provide for the exercise of such options for at
least two years after Employee's termination of employment.
7. OWNERSHIP OF PROPERTIES; CONFIDENTIALITY; EXCLUSIVITY; INVESTMENTS.
(a) OWNERSHIP OF PROPERTIES. The Company, as employer, shall own, and
Employee hereby transfers and assigns to the Company, all rights in
and to any material and/or ideas written, suggested or submitted by
Employee during the Employment Period and all other results and
proceeds of his services under this Agreement (the "Properties").
Without limiting the generality of the foregoing, these rights shall
include all rights in and to the Properties, including the sole and
exclusive right to manufacture, publish, market, sell and/or
distribute the Properties and/or adaptations thereof, either publicly
or privately and for profit or otherwise. The Company and its
licensees and assigns shall have the right to adapt, change, revise,
delete from, add to and/or rearrange the Properties or any part
thereof written or submitted by Employee and to combine the same with
other works to any extent, and to change or substitute the title
thereof and in this connection Employee hereby waives any so-called
"moral rights" of authors. Employee agrees to execute and deliver to
the Company such releases, assignments or other instruments as the
Company may require from time to time to evidence its ownership of the
results and proceeds of Employee's services hereunder provided,
however, that nothing in this Section 7(a) shall be deemed in
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any manner to restrict or qualify the Employee's ownership or right to
exploit the Employee's memoirs.
The requirements of this Section 7(a) do not apply to Properties for
which no equipment, facility or confidential information of the
Company was used and which were developed entirely on Employee's own
time, and which (i) do not relate directly to the Company's business
or to the Company's actual research or development, or (ii) do not
result from any work Employee performed for the Company. Except as
previously disclosed to the Company in writing, Employee does not have
and will not assert any claims to or rights under any Properties as
having been made, conceived, authored or acquired by Employee prior to
his executions of this Agreement.
(b) CONFIDENTIALITY. Employee acknowledges that his services will,
throughout the Employment Period, bring Employee in close contact with
many confidential affairs of the Company and its affiliates, including
information about costs, profits, financial data, markets, trade
secrets, sales, products, computer programs, key personnel, pricing
policies, customer lists, development projects, operational methods,
technical processes, plans for future development, business affairs,
and methods and other information not readily available to the public.
Employee further acknowledges that the businesses of the Company and
its affiliates are international in scope, that their products are
marketed throughout the world, that the Company and its affiliates
compete in nearly all of their business activities with other
organizations which are or could be located in nearly any part of the
world and that the nature of Employee's services, position and
expertise are such that he is capable of competing with the Company
and it affiliates from nearly any location in the world. In
recognition of the foregoing Employee covenants and agrees:
(i) that Employee will keep secret all material confidential
matters of the Company and its affiliates which are not
otherwise in the public domain and will not disclose them to
anyone outside of the Company or its affiliates, either during
or after the Employment Period except with the Company's
written consent and except for such disclosure as is necessary
in the performance of Employee's duties during the Employment
Period; and
(ii) that Employee will deliver promptly to the Company on
termination of his employment with the Company or at any other
time the Company may so request, at the Company's expense, all
confidential memoranda, notes, records, reports and other
documents (and all copies thereof) relating to the Company's
and its affiliates' business, which Employee obtained while
employed by, or otherwise serving or acting on behalf of, the
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Company or which the employee may then possess or have under
his control.
(c) EXCLUSIVITY. The Employee agrees that during his employment with the
Company and/or a period of one year thereafter, he will not alone, or
in any capacity with another entity or person, (i) engage in any
commercial activity that competes with the Company's business, as it
is conducted during the Employment Period, within any state of the
United States, (ii) in any way interfere or attempt to interfere with
the Company's relationships with any of its current or potential
customers, or (iii) attempt to employ any of the Company's then
employees on behalf of any other entities competing with the Company.
Employee further acknowledges that all services of Employee shall be
exclusive to the Company, and that Employee's performance and services
hereunder are of a special, unique, unusual, extraordinary and
intellectual character which gives them peculiar value, the loss of
which cannot be reasonably or adequately compensated in an action at
law for damages and that a breach by Employee of the terms hereof
(including without limitation this Section 7) will cause the Company
irreparable injury. Employee agrees that the Company is entitled to
injunctive and other equitable relief to prevent a breach or
threatened breach of the Agreement, which shall be in addition to any
other rights or remedies to which the Company may be entitled. For
purposes of this Section 7(c), the term "Company" shall include the
Company, its successors, assigns and affiliates.
8. REMEDIES. The parties hereto recognize and agree that, because the
material breach of this Agreement or any part hereof would result in
damages difficult to ascertain, upon any allegations of material breach of
this Agreement, either party hereto shall be entitled:
(a) PROCEEDINGS. To institute proceedings in a court located in the State
of Minnesota to enjoin the breach, termination, or threatened
termination of this Agreement. Such injunctive remedy shall be in
addition to and not in lieu of any right to recover money for any such
breach.
(b) COSTS AND EXPENSES. The successful party in any action brought
concerning the breach or termination of this Agreement shall be
entitled to recover all costs and expenses, including attorney's fees
incurred or associated with the enforcement of any covenant of this
Agreement.
9. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement is binding on and inures to
the benefit of the Company's successors and assigns, provided,
however, that is Agreement may not be assigned by any of the partied
hereto without the prior written consent of each of the parties
hereto. This Agreement shall be binding upon and inure to
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the benefit of any successor of the Company, and any such successor
shall absolutely and unconditionally assume all of the Company's
obligations hereunder. Upon the written request of Employee, the
Company shall seek to have any successor, by agreement in form and
substance satisfactory to Employee, assent to the fulfillment by the
Company of its obligations under this Agreement. Failure to attain
such assent at least thirty (30) business days prior to the time a
person or entity becomes a successor in interest to the Company shall
be considered Employee Cause for termination of this Agreement in
accordance with Section 5(d) hereof.
(b) OFFSETS. In no event shall any amount payable to Employee pursuant
to this Agreement be reduced for purposes of offsetting, either
directly or indirectly, any indebtedness or liability of Employee to
Company.
(c) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
(d) CONSTRUCTION. Wherever possible, each provision of this Agreement
will be interpreted so that it is valid under the applicable law. If
any provision of this Agreement is to any extent invalid under the
applicable law, that provision will still be effective to the extent
it remains valid. The remainder of this Agreement also will continue
to be valid, and the entire Agreement will continue to be valid in
other jurisdictions.
(e) WAIVERS. No failure or delay by either the Company or Employee in
exercising any right or remedy under this Agreement will waive any
provision of this Agreement, nor will any single or partial exercise
by either the Company or Employee of any right or remedy under this
Agreement preclude either of them from otherwise or further exercising
these right or remedies, or any other rights or remedies granted by
any law or any related document.
(f) CAPTIONS. The headings in this Agreement are for convenience of
reference only and do not affect the interpretation of this Agreement.
(g) MODIFICATION/ENTIRE AGREEMENT. This Agreement may not be altered,
modified or amended except by an instrument in writing signed by all
of the parties hereto. No person, whether or not an officer, agent,
employee or representative of any party, has made or has any authority
to make for or on behalf of that party any agreement, representation,
warranty, statement, promise, arrangement or understanding not
expressly set forth in this Agreement or in any other document
executed by the parties concurrently herewith ("Parol Agreements").
This Agreement and all other documents executed by the parties
concurrently herewith,
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constitute the entire agreement between the parties and supersede all
express or implied, prior or concurrent, Parol Agreements and prior
written agreements with respect to the subject matter hereof. The
parties acknowledge that in entering into this Agreement, they have
not relied and will not in any way rely upon any Parol Agreements.
(h) GOVERNING LAW. The laws of the State of Minnesota shall govern the
validity construction and performance of this Agreement. Any legal
proceeding related to this Agreement shall be brought in an
appropriate Minnesota court, and each of the parties hereto consents
to the exclusive jurisdiction of the courts of the State of Minnesota
for this purpose.
(i) NOTICES. All notices and other communications required to permitted
under this Agreement shall be in writing and sent by registered first
class mail, postage prepaid, and shall be deemed received five (5)
days after mailing to the addresses stated below:
If to the Company:
NetRadio Corporation
00 Xxxx Xxxxxx X.X., Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Chairman of the Board of Directors
If to the Employee:
Xxxxxx X. Xxxxxxxx
0000 Xxxx Xxx Xxxx
Xxxxxx Xxxx, XX 00000
(j) SURVIVAL. Notwithstanding the termination of this Agreement or
Employee's employment with the Company, the terms of this Agreement
concerning confidentiality rights and remedies of the parties shall
survive such termination and shall govern in perpetuity all rights,
disputes, claims, or causes of action arising out of or in any way
related to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE COMPANY: EXECUTIVE:
NETRADIO CORPORATION
By: /s/ Xxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxxx
---------------------- ----------------------
Its Chairman XXXXXX X. XXXXXXXX
