EXHIBIT 10.67
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 18th day of
November, 2002 by and between Liquid Audio, Inc., a Delaware corporation
(hereafter referred to as "the Company", "the Employer", or "Liquid Audio"), and
Xxxxxxx Xxxxxx (hereafter referred to as "Executive").
1. EMPLOYMENT AND DUTIES AND RESPONSIBILITIES: Executive will perform the
duties and responsibilities of Chief Operating Officer of Liquid Audio
reporting to the Chief Executive Officer (hereafter "CEO"), and in that
capacity Executive shall perform all services, acts or functions necessary
or advisable to manage and conduct the business of Liquid Audio, and shall
perform such other duties and responsibilities as the Employer may from
time-to-time direct. At all times the Executive shall be subject to the
policies and directions of the Board of Directors, and subject to all
applicable laws, rules and regulations. The CEO may, from time to time, at
his sole discretion, modify or reassign Executive's duties,
responsibilities, titles and/or reporting relationships.
2. DEVOTION OF TIME TO EMPLOYER'S BUSINESS: Executive further agrees to devote
his time to the success of the Company to perform his duties and
responsibilities to the best of his professional skill and ability.
Executive shall not engage in any activities which are, or could be,
construed as being illegal, unethical, a conflict of interest with, or in
competition with the activities and interests of the Company and its
affiliates, or otherwise without approval from the Board of Directors.
3. COMPENSATION: For the term of this Agreement, Executive shall be
compensated as follows:
a. Base Salary: For the services to be rendered by Executive as
Chief Operating Officer, or in such other capacity as may be directed by
the CEO, Employer agrees to pay Executive an annual base salary of
One-Hundred Fourteen Thousand Dollars ($114,000.00), subject to all payroll
deductions as required by law. On the first payroll date following
execution of this Agreement, Executive shall be advanced six months of his
salary ($72,000.00) in a single lump sum payment. Beginning November 18,
2002 salary payments to Executive will begin, with an initial payment of
$12,000 for the first month followed by additional payments of $6,000/month
for the remaining five months.
b. Fringe Benefits: Executive shall be entitled to participate in
the benefit plans generally offered by the Company to its executive
employees with such modifications as may be determined by the Board in
light of the benefits provided to Executive hereunder. Executive shall
accrue paid vacation benefits during the Employment Period at the rate of 4
weeks per year.
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4. TRADE SECRETS AND CONFIDENTIAL INFORMATION OF COMPANY AND ITS AFFILIATES:
During the course of his employment, Executive has and will come into the
possession of or acquire confidential, proprietary and trade secret
information of the Company and its affiliates. Executive hereby covenants
and agrees that he will not, either during the term of his employment or at
any time thereafter, disclose any such confidential, proprietary or trade
secret information to any third person (other than those in the Company's
organization and those of the Company's affiliates qualified to receive
such information) for any purpose or reason whatsoever unless and until
such information generally enters the public domain through no act or
omission of Executive. Such confidential and proprietary information shall
be deemed to include, but not be limited to:
a. the nature and terms of the Company's and its affiliates'
contractual relationships, product specifications, data, know-how,
formulae, processes, designs, inventions and ideas, research and
development, manufacturing or distribution methods and processes, customer
lists, customer requirements, vendor and supplier lists and pricing
information, marketing plans and strategies, market share, business plans,
manuals, computer software and databases, computer systems, structures, and
architectures and any other information, however documented or stored, that
is confidential, proprietary or a trade secret;
b. information, however documented or stored, concerning the
business and affairs of the Company and its affiliates (which includes but
is not limited to financial statements, sales, capital spending, profit
margins, projections, plan and budgets regarding any of the preceding, and
the names, compensation and backgrounds of key personnel);
c. notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Company or its affiliates containing or
based, in whole or in part, on any information included in the foregoing;
and
d. the terms and conditions of this Agreement subject to necessary
disclosure to Executive's legal and financial consultants who agree in
writing to be bound to protect its confidentiality.
Executive specifically agrees that he will not make use of any such
confidential or proprietary information or trade secrets for his own
purpose, or for the benefit of any person, firm, corporation or other
entity except the Company and its appropriate affiliates. Executive further
agrees that he will not in any manner solicit, induce or attempt to induce
any employee, independent contractor, consultant, or member of the Board of
Directors of the Company or its affiliates to terminate their employment,
contractual or other relationship with the Company or its affiliates.
5. TERM: Executive's employment arrangement under this Agreement shall
commence on November 18, 2002 and continue for one (1) year until November
18, 2003 (hereinafter referred to as the "Expiration Date") subject to the
provisions of this Agreement as to termination contained in Section 6
below.
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The period during which Executive's employment continues in effect pursuant
to this Agreement is referred to herein as the "Employment Period."
6. TERMINATION OF EMPLOYMENT:
a. Notice Required: The Company shall have the right to terminate
this Agreement and Executive's employment at any time before the Expiration
Date with or without cause upon ten (10) days' notice to Executive. Under
no circumstances shall any severance pay be due to Executive as a result of
the termination of his employment. Rather, the Company shall be obligated
to pay Executive only his base salary prorated to the effective date of
termination.
b. Voluntary Resignation: Executive may voluntarily terminate his
employment under this Agreement at any time; however Executive agrees to
provide at least ten (10) days written notice to the Employer. Provided
Executive complied with the ten (10) day notice requirement, the Company
shall be obligated to pay Executive only his base salary prorated to the
effective date of termination only.
7. NON-COMPETITION AND NON-SOLICITATION:
a. The Executive acknowledges that: the services to be performed by
him under this Agreement are of a special, unique, unusual, extraordinary,
and intellectual character; the Company's business is international in
scope and its products and services are currently marketed and sold around
the world including throughout the United States; the Company competes with
other businesses that are or could be located in any part of the United
States or the rest of the world; the provisions of this Section 7 are
reasonable and necessary to protect the Company's business; and in
connection with the fulfillment of his duties and responsibilities
hereunder, the Company will provide Executive with confidential,
proprietary and trade secret information necessitating the execution of the
covenants contained in this Section.
b. During Executive's employment, Executive agrees that he will not
do any of the following in paragraphs (i) and (ii):
(i) Engage or invest in, own, manage, finance, or participate
in the ownership, management, operation, financing, or control of, be
employed by, associated with, lend the Executive's name to, lend
Executive's credit to or render services or advice to as an independent
contractor, consultant or otherwise to any business whose products,
services or activities compete in whole or in part with the products,
services or activities of the Company or its affiliates anywhere within a
100 mile radius of any physical location utilized, operated, or staffed by
the Company; provided, however, that the Executive may purchase or
otherwise acquire up to (but not more than) five percent of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any
national or regional securities exchange or have been registered under
Section 12(g) of the Securities Exchange Act of 1934;
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(ii) Solicit business of the same or similar type being carried
on by the Company or its affiliates from any person known by the Executive
to be a customer of the Company or its affiliates;
c. If any covenant in this Section 7 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as a court or arbitrator
of competent jurisdiction may determine to be reasonable will be binding
and enforceable against the Executive.
d. The covenants by the Executive in Section 7 are essential
elements of this Agreement, are designed among other reasons to prevent the
inevitable disclosure of confidential and proprietary information and trade
secrets and to protect the Company's and its affiliates' businesses.
Without the Executive's agreement to comply with such covenants, the
Company would not have entered into this Agreement or continued the
employment of the Executive.
8. DEATH OR DISABILITY. Upon Executive's death or Disability during the
Employment Period, the employment relationship created pursuant to this
Agreement shall immediately terminate, and no further compensation shall
become payable to Executive pursuant to Section 3. In connection with such
termination, the Company shall only be required to pay Executive or his
estate (i) any unpaid base salary earned under Section 3(a) for services
rendered through the date of his termination; and (ii) the dollar value of
all accrued and unused vacation benefits based upon Executive's most recent
level of base salary. For purposes of this Section 8, Disability shall mean
the Executive's inability, by reason of any physical or mental injury or
illness, to substantially perform the services required by him hereunder
for a period in excess of ninety (90) consecutive days or in excess of
ninety (90) total days in any consecutive six (6) month period. In such
event, Executive's employment shall be deemed to have terminated by reason
of Disability on the last day of the applicable ninety (90)-day or six
(6)-month period. In addition to the foregoing, Executive or his estate
shall be entitled to any benefits available under the terms of any
disability or other plan in which Executive was a participant at the time
of his death or Disability.
9. ARBITRATION OF DISPUTES. Should either party to this Agreement have any
dispute as to any aspect of this Agreement, or arising out of, or related
or connected with Executive's termination, compensation, or benefits, or
should Executive allege that the Company has violated any of his rights
under state or federal employment or civil rights laws or any other laws,
statutes or constitutional provisions, including, but not limited to, the
Age Discrimination in Employment Act of 1967, the California Fair
Employment and Housing Act, the Civil Rights Act of 1964, the Americans
With Disabilities Act of 1990, the Federal Family and Medical Leave Act, or
the California Family Leave Act, the parties will submit any such dispute
to final and binding arbitration pursuant to the
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JAMS/Endispute Arbitration Rules and Procedures for Employment Disputes.
Unless another limitations period is expressly mandated by statute, to be
timely, any dispute must be referred to arbitration within twelve (12)
months of the incident or complaintgiving rise to the dispute. Disputes not
referred to arbitration within such twelve (12) month period shall be
deemed waived, and the arbitrator shall deny any untimely claims. THE
PARTIES EXPRESSLY AGREE THAT SUCH ARBITRATION SHALL BE THE EXCLUSIVE REMEDY
FOR ANY DISPUTE INVOLVING THIS AGREEMENT, THE EXECUTIVE'S EMPLOYMENT,
TERMINATION, COMPENSATION, BENEFITS OR THE VIOLATION OF EXECUTIVE'S CIVIL
RIGHTS, AND HEREBY EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A
COURT TRIAL OR A JURY TRIAL OF ANY SUCH DISPUTE. In making an award, the
arbitrator shall have no power to add to, delete from or modify this
Agreement, or to enforce purported unwritten or prior agreements, or to
construe implied terms or covenants into the Agreement. It is further
agreed by the parties that venue for any arbitration or other legal
proceedings shall be Santa Xxxxx County, California. This arbitration
clause is entered pursuant to, and shall be governed by, the Federal
Arbitration Act, but in all other respects this Agreement shall be governed
by the provisions of California law. If the Federal Arbitration Act is not
applicable then the California Arbitration statute shall govern (Code of
Civil Procedure Section 1280 et seq). In any event, the Company shall pay
the cost of the arbitrator and any other type of cost unique to the
arbitration setting (e.g., administrative fees in excess of the filing fee
Executive would have paid in court). If any one or more provisions of this
arbitration clause shall for any reason be held invalid or unenforceable,
it is the specific intent of the parties that such provisions shall be
modified to the minimum extent necessary to make it or its application
valid and enforceable.
10. ATTORNEYS' FEES: Should any arbitration or litigation commence between the
parties concerning this Agreement or the rights and obligations of either
party, whether it be an action for damages, equitable or declaratory
relief, the prevailing party in any arbitration or litigation shall be
entitled to, as an element of its costs, in addition to other relief as may
be granted by the arbitrator or Court, reasonable sums as and for
attorneys' fees and expert witness fees, or such prevailing party may
recover such attorneys' fees and expert witness fees in a separate action
brought for that purpose.
12. CONSTRUCTION: Except as provided above in Section 9, this Agreement shall
be governed by the laws of the State of California. The invalidity of any
provision hereof shall not invalidate any other provision hereof.
13. SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon the parties'
heirs, successors and assigns. The obligations and covenants of the
Executive under this Agreement, being personal, may not be delegated or
assigned.
14. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction or an arbitrator, the
other provisions of this Agreement will remain in full force and effect.
Any provision of this Agreement
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held invalid or unenforceable only in part or degree will remain in full
force and effect to the extent not held invalid or unenforceable.
15. ENTIRE AGREEMENT: This is the entire agreement between the parties and
supersedes any and all prior agreements or understandings between them.
Except as expressly provided herein, this Agreement may be not changed or
terminated orally, and no change, termination or attempted waiver of any of
the provisions hereof shall be binding unless in writing signed by both
Executive and the duly authorized officers of the Employer. Any such
written changes, terminations or waivers must specifically reference this
Agreement, and such changes as the Employer may from time-to-time make in
its general policies and procedures shall not be deemed or construed to be
written amendments to this Agreement, whether such changes are in writing
or not.
16. NO WAIVER. The waiver by either party of any term, condition or provision
of this Agreement shall not be construed as a waiver of any other or
subsequent term, condition or provision of this Agreement.
17. VOLUNTARY AGREEMENT: Executive and the Company represent and agree that
each has reviewed all aspects of this Agreement, has carefully read and
fully understands all provisions of this Agreement and is voluntarily
entering into this Agreement. Each party represents and agrees that such
party has had opportunity to review any and all aspects of this Agreement
with the legal tax, or other advisors of such party's choice.
Executed this _4th__day of ___December_______________________ , 2002.
COMPANY
By: /s/ XXXXXXX X. XXXX
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Title: CEO
Executive
/s/ XXXXXXX XXXXXX
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