EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of the 22nd day of October, 1999, by and
between Audio Book Club, Inc., a Florida corporation, with offices at 0000
Xxxxxxxxx Xxxxxxxxx, X.X., Xxxxx 000, P.O. Box 5002, Boca Raton, Florida
33431-0802 (the "Company"), and Xxxx X. Xxxx, residing at 000 Xxx Xxxx Xxxx,
Xxxxxxxxx, Xxx Xxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the audio book club business; and
WHEREAS, the Company desires to continue to employ the Executive beyond
the expiration date of the current Employment Agreement between the Company and
the Executive; and
WHEREAS, the Executive is willing to commit himself to continue to
serve and to establish a minimum period during which he will continue to serve
the Company on the terms and conditions herein provided.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained and intending to be
legally bound hereby, the parties agree as follows:
1. Recitals. The Whereas clauses recited above are hereby incorporated
by reference as though they were fully set forth herein.
2. Employment. The Company shall employ the Executive and the Executive
shall serve the Company, on the terms and conditions set forth herein.
3. Term. The employment of the Executive by the Company as provided in
paragraph 2 shall commence on November 10, 1999 and end on the second (2nd)
anniversary of such commencement, subject, however, to the other termination
provisions contained herein.
4. Position and Duties. The Executive shall be employed by the Company
as an Executive Vice President and Chief Financial Officer. His power and
authority shall be and remain subject to the direction and control of the Board
of Directors and all officers senior to him including but not limited to the
Co-Chief Executive Officers Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx. The Executive
shall have responsibility for the financial oversight of the business and
affairs of the Company, including without limitation responsibility for all
filings with the Securities and Exchange Commission, the Internal Revenue
Service and all other agencies (federal, state or local) and/or stock
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exchanges to which the Company must report, subject to appropriate review and
approval of the Board of Directors and senior officers and such further
revisions as the Executive deems necessary. The scope of his duties and the
extent of his responsibilities shall be substantially the same as the duties and
responsibilities of other chief financial officers of public companies. The
Executive shall be required to spend his full time and attention, without other
outside business interests, in the performance of his duties and the Company's
business and affairs.
5. Compensation and Related Matters.
(a) Salary. During the term of this Agreement, the Company
shall pay to the Executive, as compensation for his services, an initial annual
salary of $165,000 in equal monthly installments during the first year of the
term of this Agreement; and $180,000 during the second year of the term of this
Agreement. In addition, the Executive may receive a performance-based bonus to
be determined by the Chief Executive Officer in his sole and absolute discretion
with a minimum bonus at the end of year one, provided the Executive is still
employed by the Company at that time, of Fifteen Thousand and 00/100 U.S.
Dollars ($15,000.00) and a minimum bonus at the end of year two, provided the
Executive is still employed by the Company at that time, of Seventeen Thousand
Five Hundred and 00/100 U.S. Dollars ($17,500.00); such bonuses shall be paid
within forty-five (45) days after the end of each year.
(b) Expenses. The Executive shall receive prompt reimbursement
for all reasonable travel and business expenses in connection with services
performed hereunder in accordance with normal Company policy, as the same may be
determined from time to time.
(c) Insurance and Employee Benefits. The Executive shall
receive employee benefits applicable to all officers of the Company except the
executive will not receive medical insurance unless his wife is no longer
employed at a position which provides family coverage. In addition, the
Executive shall be reimbursed for reasonable costs associated with up to
twenty-four (24) hours of continuing education courses with respect to topics
germane to his duties, including reasonable local travel costs to attend such
courses and reasonable fees for such courses. In addition, the Company will
reimburse the Executive for his dues to the AICPA and ISCPA and subscriptions to
the Wall Street Journal, Business Week, Forbes Magazine and America Online. The
Executive will be provided with a portable computer, cellular phone and pocket
electronic organizer at the Company's expense.
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(d) Vacation. The Executive shall receive, prorata during each
full year of his employment, three (3) weeks paid vacation approved one (1)
month in advance. The Executive will make every effort to schedule the vacation
time at a time most convenient for the Company, with the Company recognizing
that the Executive's flexibility is limited by school calendars. Notwithstanding
the foregoing, the Executive shall not be entitled to vacation during the three
(3) week period prior to the date on which the Company's Annual Report on Form
10-KSB (or Form 10-K) or Quarterly Report on Form 10-QSB (or Form 10-Q) are
required to be filed with the Securities and Exchange Commission. In addition,
the Executive will receive normal Company holidays, plus two (2) days off for
Rosh Hashanah and one (1) day off for Yom Kippur unless such holy days fall on a
weekend.
(e) Stock Options. The Executive is hereby granted stock
options to acquire thirty thousand (30,000) shares of Common Stock in the
Company pursuant to and in accordance with the Company's Stock Option Plan.
Options with respect to ten thousand (10,000) shares shall vest on November 10,
2000, provided that the Executive is an employee of the Company at that time and
options with respect to twenty thousand (20,000) shares will vest on November
10, 2001, provided that the Executive is still employed by the Company at that
time. Such options shall be exercisable at a price per share of Thirteen Dollars
($13.00), and will be on the terms and conditions as more specifically provided
for in the Company's Stock Option Plan.
6. Termination by the Company. The Executive's employment hereunder may
be terminated by the Company without any breach of this Agreement only under the
circumstances described below.
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, as determined by a physician mutually chosen
by the Executive and the Company, the Executive shall have been absent from his
duties hereunder for a consecutive period of forty-five (45) days and after
notice of termination is given (which may be given before or after the end of
such 45 day period but which will in no event be effective until, at the
earliest, the day following the forty- fifth day of the period) shall not have
returned to the performance of his duties hereunder, as that concept is
contemplated in this Agreement, within ten (10) days after the notice of
termination is given, the Company may terminate the Executive's employment
hereunder.
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(c) Cause. The Company may terminate the Executive's
employment under this Agreement at any time for cause. For purposes of this
Agreement, the term "cause" shall include one or more of the following: (i)
willful misconduct, (ii) continued failure by the Executive to perform his
duties, as contemplated in this Agreement, as Chief Financial Officer (other
than through disability as defined in paragraph 6(b), above), (iii) conviction
of a crime or alcohol or drug abuse, or (iv) the Executive's breach of this
Agreement. The termination shall be evidenced by written notice thereof to the
Executive.
(d) Without Cause. In addition to any other rights the Company
has to terminate the Executive's employment under this Agreement, the Company
may, at any time, by a vote of not less than sixty percent (60%) of the
directors then in office (excluding the vote of the Executive if he is also a
director), terminate the Executive without cause upon ninety (90) days' prior
written notice to the Executive setting forth the reasons, if any, for the
termination. For purposes of this Agreement, the term "without cause" shall mean
termination by the Company on any grounds other than those set forth in
paragraphs 6(a), (b) or (c) hereof. It shall also be a termination without
cause, at the election of the Executive, if the Executive is asked to work at a
business location of the Company which is more than fifty (50) miles from
Westfield, New Jersey. Notwithstanding the foregoing, it is understood that
travel in connection with the performance of Executive's duties shall not be
deemed to be termination without cause and that the 10 West Building on Xxxxx
00, Xxxxxxxxxx-Xxxx Xxxxx is within fifty (50) miles.
(e) Severance Pay. In the event that the Company has
terminated the Executive's employment under this Agreement (i) "without cause"
or (ii) in the event there is a "Change of Control" (as defined below), then the
Executive will be entitled to receive severance pay equal to fifty percent (50%)
of his base salary for the unexpired period of his two (2) year employment term;
such payment, if any, shall be made to the Executive within thirty (30) days of
such termination of the Executive's employment.
(f) Change of Control. For purposes of this Agreement, a
"Change of Control" shall be deemed to occur, unless previously consented to in
writing by the Executive, and only if the Executive is not offered continued
employment, upon (i) the actual acquisition of fifty percent (50%) or more of
the voting securities of the Company by any company or entity or affiliated
group of companies or entities (other than pursuant to a bona fide underwriting
agreement relating to a public distribution of securities of the Company), (ii)
the completion of a tender or exchange offer for more than fifty percent (50%)
of the voting securities of the Company by any company or entity or affiliated
group of companies or entities not affiliated with the Executive, (iii) the
completion of a
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proxy contest against the management for the election of a majority of the Board
of Directors of the Company if the group conducting the proxy contest owns, has
or gains the power to vote at least fifty percent (50%) of the voting securities
of the Company, or (iv) a merger or consolidation in which the Company is not
the surviving entity or a sale of or substantially all of the assets of the
Company.
(g) Change of Control Compensation. In the event of a
completion of a tender or exchange offer for more than fifty percent (50%) of
the voting securities of the Company by any company or entity or affiliated
group of companies or entities not affiliated with the Executive, the stock
options, described in paragraph 5(e), shall immediately be exercisable and any
unvested shall immediately vest.
(h) The Executive shall not be required to mitigate the amount
of any payment provided for in this paragraph 6 by seeking other employment or
otherwise nor shall the amount of any payment provided for in this paragraph 6
be reduced by any compensation earned by the Executive as the result of
employment by another employer or business or by profits earned by the Executive
from any other source at any time before and after the date of termination. The
amounts payable to the Executive under this Agreement shall not be treated as
damages, but as severance pay to which the Executive is entitled by reason of
his employment and the circumstances contemplated by this Agreement.
(i) The severance pay which the Executive will be entitled to
receive as a result of the termination of his employment under this Agreement,
shall be the Executive's exclusive remedy in the event of such termination.
7. Non-Competition and Confidentiality Covenant. The Executive hereby
covenants and agrees that he will not serve as an officer of or perform any
functions for any other company during the term of his employment under this
Agreement, except that the Executive shall be permitted to serve as a board
member of the Israel Histradrut Group Foundation, a not-for-profit entity,
provided serving as a board member for such entity does not interfere with the
performance of the Executive's duties under this Agreement. In addition, during
the term of this Agreement and for a period of two (2) years immediately
following the termination of his employment, whether said termination is
occasioned by the Company, the Executive or a mutual agreement of the parties,
the Executive shall not, for himself or on behalf of any other person, persons,
firm, partnership, corporation or company, engage or participate in any
activities which are in direct or indirect conflict with the interests of the
Company or solicit or attempt to solicit the business or patronage of any
person, firm, corporation, company or partnership, which had previously been a
customer of the
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Company, for the purpose of selling products and services similar to those
provided by the Company.
Furthermore, the Executive acknowledges and agrees that: all
mailing lists; customer, member and prospect names; license or arrangement;
front-end and back-end marketing performance; financial statements; operating
system, database and other computer software, specific to the Company; and all
information which is known by the Executive to be subject to a confidentiality
agreement or obligation of confidentiality, even without a confidentiality
agreement between the Company and another person or party, shall be maintained
by the Executive in a confidential manner and the Executive agrees that the
Executive will not use such information to the detriment of the Company or
disclose such information to any third party, except as may be necessary in the
course of performing the Executive's job responsibilities. The Executive further
agrees that these obligations of confidentiality with respect to such
information shall continue after the Executive ceases to be employed by the
Company. Disclosure of the aforementioned information shall not be prohibited if
such disclosure is directly pursuant to a valid and existing order of a court or
other governmental body or agency within the United States; provided, however,
that (i) the Executive shall first have given prompt notice to the Company of
any such possible or prospective order (or proceeding pursuant to which any such
order may result), (ii) the Company shall have been afforded a reasonable
opportunity to review such disclosure and to prevent or limit any such
disclosure, and (iii) the Executive shall, if requested by the Company and at
the Company's cost and expense, use his best efforts to prevent or limit any
such disclosure by means of a protective order or a request for confidential
treatment.
The Executive further acknowledges that the Executive will not
disclose any information with respect to the Company, its operations or its
officers and directors, whether or not such information is confidential, to
Xxxxxxx Xxxx or any entity or company in which Xxxxxxx Xxxx has an ownership
interest or is a director, officer or employee or to any attorneys, accountants,
agents or representatives of Xxxxxxx Xxxx or any of the aforementioned companies
or entities.
8. Indemnification. To the maximum extent permitted under the corporate
laws of the State of Florida or, if more favorable, the Articles of
Incorporation and/or By-Laws of the Company as in effect on the date of this
Agreement, (a) the Executive shall be indemnified and held harmless by the
Company, as provided under such corporate laws or such Articles of Incorporation
and/or ByLaws, as applicable, for any and all actions taken or matters
undertaken, directly or indirectly, in the performance of his duties and
responsibilities under this Agreement or otherwise on behalf of the
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Company, provided the Executive did not act wantonly or recklessly or was not
grossly negligent or engaged in willful misconduct, and (b) without limiting
clause (a), the Company shall indemnify and hold harmless the Executive from and
against (i) any claim, loss, liability, obligation, damage, cost, expense,
action, suit, proceeding or cause of action (collectively, "Claims") arising
from or out of or relating to the Executive's acting as an officer, director,
employee or agent of the Company or any of its affiliates or in any other
capacity, including, without limitation, any fiduciary capacity, in which the
Executive serves at the request of the Company, and (ii) any cost or expense
(including, without limitation, fees and disbursements of counsel)
(collectively, "Expenses") incurred by the Executive in connection with the
defense or investigation thereof. If any Claim is asserted or other matter
arises with respect to which the Executive believes in good faith the Executive
is entitled to indemnification as contemplated hereby, the Company shall, at its
election, to be determined in its sole and absolute discretion, either assume
the defense or investigation of such Claim or matter or pay the Expenses
incurred by the Executive in connection with the defense or investigation of
such Claim or matter, provided that the Executive shall reimburse the Company
for such amounts, plus simple interest thereon at the then current Prime Rate as
in effect from time to time, compounded annually, if the Executive shall be
found, as finally judicially determined by a court of competent jurisdiction,
not to have been entitled to indemnification hereunder.
9. Binding Agreement. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, divisees and legatees. In addition, this Agreement and the
obligations and rights of the Company hereunder shall be binding on any person,
firm or corporation which is a successor-in-interest to the Company.
10. Notice. For the purpose of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally, or by private
overnight courier or mail service, postage prepaid or (unless otherwise
specified) mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: To the address at the head of this
Agreement
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If to the Company: Audio Book Club, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, X.X., Xxxxx 000
P.O. Box 5002
Xxxx Xxxxx, Xxxxxxx 00000-0000
(000) 000-0000
or to such other address as the parties may furnish to each other in writing.
Copies of all notices, demands and communications shall be sent to the home
addresses of all members of the Board of Directors of the Company.
11. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by the parties hereto, provided, however, that this Agreement may be
modified, waived or discharged by mutual agreement in writing.
(b) No delay, waiver, omission or forbearance (whether by
conduct or otherwise) by any party hereto at any time to exercise any right,
option, duty or power arising out of breach or default by the other party of any
of the terms, conditions or provisions of this Agreement to be performed by such
other party shall constitute a waiver by such party or a waiver of such party's
rights to enforce any right, option or power as against the other party or as to
subsequent breach or default by such other party, and no explicit waiver shall
constitute a waiver of similar or dissimilar terms, provisions or conditions at
the same time or at any prior or subsequent time.
12. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Florida and any action brought by either party shall be
commenced in the courts of the State of Florida. The Executive and the Company
hereby irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the courts of the State of Florida and the United States of
America located in Palm Beach County, Florida for any and all actions, suits or
proceedings arising out of or resulting from or relating to this Agreement and
the transactions contemplated hereby and the parties agree not to commence any
action, suit or proceeding relating thereto except in such courts. The parties
hereby irrevocably and unconditionally waive any objection to the laying of
venue of any such action, suit or proceeding arising out of, resulting from or
relating to this Agreement or the transactions contemplated hereby in such
courts and hereby further irrevocably and
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unconditionally waive and agree not to plead or claim in any such court that
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
13. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
14. 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 will constitute one and the same instrument.
15. Entire Agreement. This Agreement contains the entire understanding
of the Company and the Executive with respect to his employment by the Company.
This Agreement supersedes all prior agreements and understandings whether
written or oral between the Executive and the Company, and there are no
restrictions, agreements, promises, warranties or covenants other than those
stated in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date shown below effective as of the date first written above.
"COMPANY"
Date Signed: October 22, 1999 AUDIO BOOK CLUB, INC., a Florida
corporation
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Printed Name: Xxxxxxx Xxxxxxx
--------------------------
Title: Co-CEO
----------------------------------
"EXECUTIVE"
Date Signed: October 22, 1999 Xxxx X. Xxxx
----------------------------------------
Printed Name: Xxxx X. Xxxx
--------------------------
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