EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is dated as of November 2, 2009, and effective as of July 1, 2009 (the “Effective Date”) by and between China Youth Media, Inc, a Delaware corporation, with an office located at 0000 Xxxxxxx Xxxxxx, Xxxxxx Xxx Xxx, XX 00000 (the “Company”) and Xxx Xxxxxx, an individual with an address 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000 (“Xxxxxx”).
WHEREAS, the Company desires to retain the services of Xxxxxx as the Company’s President and Chief Executive Officer and, Xxxxxx is willing to be employed by the Company in such capacity.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows:
1. Employment. The Company hereby agrees to employ Xxxxxx as its President and Chief Executive Officer, and Xxxxxx hereby agrees to accept such employment and serve in such capacities, during the “Employment Term” (as defined below) and upon the terms and conditions set forth in this Agreement. In addition, Xxxxxx shall also serve as the Chairman of the Board of Directors of the Company during the Employment Term.
2. Duties. Xxxxxx shall be responsible for the overall development, operations and corporate governance of the Company. In addition, Xxxxxx’x duties shall be such duties and responsibilities as the Company shall specify from time to time, but only if and to the extent that such duties and responsibilities are those customarily performed by the President and Chief Executive Officer of a company with a business commensurate with that of the Company. Xxxxxx shall have such authority, discretion, power and responsibility, and shall be entitled to office, secretarial and other facilities and conditions of employment, as are customary or appropriate to his position. Xxxxxx shall diligently and faithfully execute and perform such duties and responsibilities, subject to the general supervision and control of the Company’s Board of Directors. Xxxxxx shall be responsible and report to the Company’s Board of Directors. Xxxxxx shall devote such amount of his time, attention, energy, and skill during normal business hours to the business and affairs of the Company as he may deem reasonably necessary to fulfill his responsibilities hereunder.
Nothing in this Agreement shall preclude Xxxxxx from devoting reasonable periods required for:
(a) serving as a director or member of a committee of any organization or corporation involving no conflict of interest with the interests of the Company;
(b) serving as a consultant in his area of expertise (in areas other than in connection with the business of the Company), to government, industrial, business and academic panels where it does not conflict with the interests of the Company; and
(c) managing his personal or family investments or engaging in any other non-competing business; provided that such activities do not materially interfere with the regular performance of his duties and responsibilities under this Agreement.
3. Efforts of Xxxxxx. During his employment and while performing his services hereunder, Xxxxxx shall, subject to the direction and supervision of the Company’s Board of Directors, use his business judgment, skill and knowledge to advance the Company's interests and to discharge his duties and responsibilities hereunder. Notwithstanding the foregoing, nothing herein shall be construed as preventing Xxxxxx from investing his assets in any business.
4. Employment Term. The term of this Agreement shall commence as of the Effective Date and shall, unless terminated pursuant to Section 12 of this Agreement, and continue for a term of three (3) years (the “Initial Term”), and shall be automatically renewed for successive one (1) year terms (a “Renewal Term”) unless a party hereto delivers to the other party written notice of such party’s intention not to renew at least thirty (30) days prior to the end of the Initial Term or the applicable Renewal Term, as the case may be. Any such non-renewal by the Company shall be considered a termination pursuant to Section 12(c) without “Cause”. The terms “Initial Term” and “Renewal Term” are collectively referred to herein as the “Employment Term.”
5. Compensation of Xxxxxx.
(a) Compensation. As compensation for the services provided by Xxxxxx under this Agreement, the Company shall pay Xxxxxx a base salary of Two Hundred Thousand Dollars ($200,000) for the initial year of the Employment Term (the “Initial Salary”). The parties acknowledge and agree that the Initial Salary does not represent a market salary for an executive of Xxxxxx’x experience and is based upon the Company’s early stage. The Company agrees that Xxxxxx’x salary for subsequent periods should take into consideration the Company’s growth and the market compensation for executives of Xxxxxx’x caliber, including compensation and benefits such as life insurance. Irrespective of the Company’s growth, Xxxxxx’x base salary shall increase at least 10% in the second year of the Employment Term and at least 10% more for the third year of the Employment Term. The compensation of Xxxxxx under this Section shall be paid in accordance with the Company’s usual payroll procedures.
(b) Stock Options. Xxxxxx acknowledges that on May 11, 2009 the Company granted Xxxxxx options to purchase 3,750,000 shares of the Company’s common stock with an exercise price of $0.13 per share which stock options vested fully on the grant date, and cancelled, with the consent of Xxxxxx, options held by Xxxxxx to purchase 4,400,000 shares of the Company’s common stock, exercisable at $0.85 per share. In addition, Xxxxxx acknowledges that on May 11, 2009 the Company granted Xxxxxx options to purchase 20,000,000 shares of the Company’s common stock with an exercise price of $0.13 per share, which stock options shall vest annually over a period of four years from the date of grant (the “May 2009 Vesting Options”). Xxxxxx shall also be eligible to receive shares of the Company’s authorized stock and additional options to purchase shares of the Company’s authorized stock from time to time as determined by the Board of Directors. Notwithstanding the vesting provisions applicable to any of said options, all of the options shall immediately vest on an accelerated basis, and remain exercisable (including options which are then already fully vested) for a period of ten (10) years from the date of grant on the first to occur of any of the following: (i) any “Change in Control” of the Company or its business, (ii) if the employment of Xxxxxx is terminated by the Company without “Cause” (as defined below) or by Xxxxxx with “Good Reason” (as defined below), or (iii) if the employment of Xxxxxx is terminated upon the death or Total Disability of Xxxxxx. For purposes hereof, “Change of Control” and “Total Disability” shall have the meanings set forth in the stock option agreement between the Company and Xxxxxx representing the May 2009 Vesting Options. The Company hereby agrees to register its existing Stock Option and Restricted Stock Plan on a Form S-8 registration statement as soon reasonably practicable so Xxxxxx may, subject to Rule 144 under the Securities Act of 1933, as amended, exercise the above options and freely sell the shares of common stock obtained thereby in the public market.
(c) Bonus. In addition to the compensation under Sections 5(a) and 5(b) hereof, Xxxxxx shall be eligible to receive an annual bonus determined by the Board of Directors based on the performance of the Company.
6. Benefits. Xxxxxx shall also be entitled to participate in any and all Company benefit plans in effect from time to time for employees of the Company. Such participation shall be subject to the terms of the applicable plan documents and shall include, without limitation family health, vision, dental, life and disability insurance. Xxxxxx shall also be entitled to receive a car allowance as shall be reasonably determined by the Board of Directors.
7. Vacation, Sick Leave and Holidays. Xxxxxx shall be entitled to four (4) weeks of paid vacation during the first year of the Employment Term and five (5) weeks per year thereafter. In addition, Xxxxxx shall be entitled to such sick leave and holidays at full pay in accordance with the Company's policies established and in effect from time to time.
8. Business Expenses. The Company shall promptly reimburse Xxxxxx for all reasonable out-of-pocket business expenses incurred in performing Xxxxxx’x duties and responsibilities hereunder in accordance with the Company's policies, provided Xxxxxx promptly furnishes to the Company adequate records of each such business expense. Xxxxxx shall be entitled to reimbursement for first-class airfare and hotel for Company travel.
9. Location of Xxxxxx'x Activities. Xxxxxx’x principal place of business in the performance of his duties and obligations under this Agreement shall be at a place no more than twenty (20) miles from the current Marina Del Rey office of the Company. Notwithstanding the preceding sentence, and subject to Xxxxxx’x availability, Xxxxxx will engage in such travel as may be reasonably necessary or appropriate in furtherance of his duties hereunder.
10. Confidentiality. Xxxxxx recognizes that the Company has and will have business affairs, products, future plans, trade secrets, customer lists, and other vital information which is valuable to the Company because it is not public and not required by applicable law to be made public (collectively “Confidential Information”) that are valuable assets of the Company. Xxxxxx agrees that he shall not at any time or in any manner divulge, disclose or communicate any Confidential Information to any third party (other than to attorneys and advisors for the Company and/or Xxxxxx) without the prior written consent of the Company’s Board of Directors.
11. Non-Competition. Xxxxxx acknowledges that he has gained, and will gain extensive knowledge in the business conducted by the Company and has had, and will have, extensive contacts with customers of the Company. Accordingly, Xxxxxx agrees that he shall not compete with the Company, during the Employment Term and, if the Company terminates his employment with Cause or if Xxxxxx terminates his employment without Good Reason, then for an additional one (1) year period immediately after such termination of Xxxxxx’x employment and shall not, during such period, make public statements in derogation of the Company. For the purposes of this Section 11, competing with the Company shall mean engaging as principal owner, officer, partner, consultant, advisor, either alone or in association with others, in the operation of any entity engaged in a business which is similar to and competes with the “Company Business”. As used herein, “Company Business” means the distribution of video content through retail marketing channels and peripheral hardware storage devices.
12. Termination. Notwithstanding any other provisions hereof to the contrary, Xxxxxx’x employment hereunder shall terminate under the following circumstances:
(a) Voluntary Termination by Xxxxxx. Xxxxxx shall have the right to voluntarily terminate this Agreement and his employment hereunder at any time during the Employment Term.
(b) Termination by Xxxxxx with “Good Reason”. Xxxxxx shall have the right to terminate this Agreement and his employment hereunder with “Good Reason” at any time during the Employment Term. As used herein, “Good Reason” shall mean (i) material breach of this Agreement by the Company including, without limitation, any diminution in title, office, rights and privileges of Xxxxxx or failure to receive base salary payments on a timely basis pursuant to Section 5(a) of this Agreement; (ii) relocation of the principal place for Xxxxxx to provide his services hereunder to any location more than twenty (20) miles away from 0000 Xxxxxxx Xxx, Xxxxxx Xxx Xxx, Xxxxxxxxxx 00000; (iii) failure of the Company to maintain in effect directors’ and officers’ liability insurance covering Xxxxxx in compliance with Paragraph 17(c) below; (iv) any assignment or transfer by the Company of any of its rights or obligations under this Agreement; or (v) any change in control of the Company including, without limitation, if Xxxxxx shall cease to own a majority of the voting securities of the Company.
(c) Voluntary Termination by the Company Without “Cause”. The Company shall have the right to voluntarily terminate this Agreement and Xxxxxx’x employment hereunder at any time after the Initial Term. Termination of Xxxxxx’x employment pursuant to this Section 12(c) shall not be effective unless the Company shall have first given Xxxxxx a written notice thereof at least thirty (30) days prior to the annual anniversary of the Effective Date of Xxxxxx’x employment under this Agreement.
(d) Termination for Cause. The Company shall have the right to terminate this Agreement and Xxxxxx’x employment hereunder at any time for “Cause”. As used in this Agreement, “Cause” shall mean (i) continual and repeated willful refusal by Xxxxxx to substantially implement or adhere to lawful policies or material directives of the Company’s Board of Directors, (ii) material breach by Xxxxxx of this Agreement, (iii) Xxxxxx’x conviction of a felony that may have a material adverse impact on the Company’s reputation, or (iv) the criminal misappropriation by Xxxxxx of funds from or resources of the Company. Cause shall not be deemed to exist unless the Company shall have first given Xxxxxx a written notice thereof specifying in reasonable detail the facts and circumstances alleged to constitute “Cause” and thirty (30) days after such notice such conduct has, or such circumstances have, as the case may be, not ceased or been remedied.
(e) Termination Upon Death or for Disability. This Agreement and Xxxxxx’x employment hereunder shall automatically terminate upon Xxxxxx’x death or upon written notice to Xxxxxx and certification of Xxxxxx’x disability by a qualified physician or a panel of qualified physicians if Xxxxxx is unable to perform the duties contained in this Agreement for a period beyond twelve (12) months.
(f) Effect of Termination. In the event that this Agreement and Xxxxxx’x employment is voluntarily terminated by Xxxxxx pursuant to Section 12(a) without Good Reason, or in the event the Company terminates this Agreement for Cause pursuant to Section 12(d), all obligations of the Company and all duties, responsibilities and obligations of Xxxxxx under this Agreement shall cease. Upon such termination, the Company shall: (i) pay Xxxxxx such compensation pursuant to Section 5(a) equal to all accrued compensation through the date of termination plus all accrued vacation pay, reimbursement and bonuses, if any; and (ii) provide, at the Company’s expense, coverage (A) to Xxxxxx under the life, accident and disability insurance policies available to the senior executive officers of the Company, and (B) to Xxxxxx and his dependents under the health, dental and vision insurance plans available to the Company’s senior executive officers and their dependents, in each case for a period of three (3) months after the date of termination or, in the event any of such life, accident, disability, health, dental or vision insurance are not continued or Xxxxxx is not eligible for coverage thereunder due to his termination of employment, the Company shall pay for the premiums for equivalent coverage, in any event, for a period of three (3) months after the date of termination. In the event this Agreement is terminated by the Company without Cause or by Xxxxxx with Good Reason, or upon the death or disability of Xxxxxx, Xxxxxx shall be entitled to all compensation pursuant to Section 5 for the period between the effective termination date to the end of the Employment Term pursuant to Section 4, plus all applicable vacation pay, reimbursement and bonuses and the same insurance/health benefits described above, but for the entire remainder of the Employment Term. Payment will be made to Xxxxxx or Xxxxxx’x appointed trustee.
13. Resignation as Officer. In the event that Xxxxxx’x employment with the Company is terminated for any reason whatsoever, Xxxxxx agrees to immediately resign as an Officer of the Company, absent some other agreement by the parties to the contrary.
14. Governing Law, Jurisdiction and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California without giving effect to any applicable conflicts of law provisions and all actions and proceedings relating hereto shall be brought exclusively in courts of competent jurisdiction located in Los Angeles County, California.
15. Business Opportunities. During the Employment Term, Xxxxxx agrees to bring to the attention of the Company’s Board of Directors all written business proposals that come to Xxxxxx’x attention and all business or investment opportunities of whatever nature that are created or devised by Xxxxxx and that are within the scope of the Company Business.
16. Employee’s Representations and Warranties. Xxxxxx hereby represents and warrants that he is not under any contractual obligation to any other company, entity or individual that would prohibit or impede Xxxxxx from performing his duties and responsibilities under this Agreement and that he is free to enter into and perform the duties and responsibilities required by this Agreement. Xxxxxx hereby agrees to indemnify and hold the Company and its officers, directors, employees, shareholders and agents harmless from losses they suffer as a result of his breach of the representations and warranties made by Xxxxxx in this Section 16.
17. Indemnification.
(a) The Company agrees that if Xxxxxx is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he is or was a director, officer or employee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is Xxxxxx’x alleged action in an official capacity while serving as a director, officer, member, employee or agent, Xxxxxx shall be indemnified and held harmless by the Company to the fullest extent permitted or authorized by the Company’s certificate of incorporation or bylaws or, if greater, by the laws of the State of Delaware, against all cost, expense, liability and loss (including, without limitation, attorney's fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by Xxxxxx in connection therewith, and such indemnification shall continue as to Xxxxxx even if he has ceased to be a director, member, employee or agent of the Company or other entity and shall inure to the benefit of Xxxxxx’x heirs, executors and administrators. The Company shall advance to Xxxxxx to the extent permitted by law all reasonable costs and expenses incurred by his in connection with a Proceeding within 20 days after receipt by the Company of a written request, with appropriate documentation, for such advance. Such request shall include an undertaking by Xxxxxx to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses.
(b) Neither the failure of the Company (including its Board of Directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of any proceeding concerning payment of amounts claimed by Xxxxxx that indemnification of Xxxxxx is proper because he has met the applicable standard of conduct, nor a determination by the Company (including its Board of Directors, independent legal counsel or stockholders) that Xxxxxx has not met such applicable standard of conduct, shall create a presumption that Xxxxxx has not met the applicable standard of conduct.
(c) During the Employment Term, the Company shall maintain in effect directors’ and officers’ liability insurance covering Xxxxxx, with coverage reasonably satisfactory to Xxxxxx.
(d) Promptly after receipt by Xxxxxx of notice of any claim or the commencement of any action or proceeding with respect to which Xxxxxx is entitled to indemnity hereunder, Xxxxxx shall notify the Company in writing of such claim or the commencement of such action or proceeding, and the Company shall: (i) assume the defense of such action or proceeding; (ii) employ counsel reasonably satisfactory to Xxxxxx; and (iii) pay the reasonable fees and expenses of such counsel. Notwithstanding the preceding sentence, Xxxxxx shall be entitled to employ counsel separate from counsel for the Company and from any other party in such action if Xxxxxx reasonably determines that a conflict of interest exists, which makes representation by counsel chosen by the Company not advisable. In such event, the reasonable fees and disbursements of such separate counsel for Xxxxxx shall be paid by the Company to the extent permitted by law.
(e) After the termination of this Agreement and upon the request of Xxxxxx, the Company agrees to reimburse Xxxxxx for all reasonable travel, legal and other out-of-pocket expenses related to assisting the Company to prepare for or defend against any action, suit, proceeding or claim brought or threatened to be brought against the Company or to prepare for or institute any action, suit, proceeding or claim to be brought or threatened to be brought against a third party arising out of or based upon the transactions contemplated herein and in providing evidence, producing documents or otherwise participating in any such action, suit, proceeding or claim. In the event Xxxxxx is required to appear after termination of this Agreement at a judicial or regulatory hearing in connection with Xxxxxx'x employment hereunder, or Xxxxxx'x role in connection therewith, the Company agrees to pay Xxxxxx a sum, to be mutually agreed upon by Xxxxxx and the Company, per diem for each day of his appearance and each day of preparation therefor.
18. Notices. All demands, notices, and other communications to be given hereunder, if any, shall be in writing and shall be sufficient for all purposes if personally delivered, sent by facsimile (with confirmation of receipt) or sent by a recognized overnight courier service or by United States certified mail, return receipt requested, to the address below or such other address or addresses as such party may hereafter designate in writing to the other party as herein provided.
Company |
Xxxxxx |
China Youth Media, Inc |
c/o Rebel Holdings LLC |
With a mandatory copy to: |
|
Xxxxx X. Xxxx, Esq. |
Any such notice shall be deemed given upon personal delivery, upon receipt if sent via facsimile, upon delivery if by a recognized overnight courier service, or upon receipt as shown on the United States mail return receipt.
19. Entire Agreement. This Agreement contains the entire agreement of the parties and there are no other promises or conditions in any other agreement, whether oral or written with respect to the subject matter contained herein. This Agreement supersedes any prior written or oral agreements between the parties regarding the subject matter hereof, including, without limitation, that certain Employment Agreement between the Company and Xxxxxx dated as of September 30, 2005. This Agreement may be modified or amended if the amendment is made in writing and is signed by both parties. This Agreement is for the unique personal services of Xxxxxx to the Company and is not assignable or delegable, in whole or in part, by Xxxxxx or the Company. The headings contained in this Agreement are for reference only and shall not in any way affect the meaning or interpretation of this Agreement. If any provision of this Agreement (other than regarding stock options, compensation or benefits) shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver or limitation of that party's right to subsequently enforce and compel strict compliance with every provision of this Agreement. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument and, in pleading or proving any provision of this Agreement, it shall not be necessary to produce more than one of such counterparts. In the event of any inconsistency between this Agreement and any other agreement between Xxxxxx and the Company, this Agreement shall control except as otherwise specifically set forth in such other agreement.
20. Choice of Counsel. Xxxxxx agrees that Xxxx Xxxxxx Xxxxx Xxx & Xxxxxxxxx, LLP, the draftsperson of this Agreement, has prepared this Agreement on behalf of the Company and is not representing Xxxxxx in an individual capacity in the negotiation and consummation of the transactions hereunder. Xxxxxx further agrees that he has participated in the preparation of this Agreement and has read and fully understands this Agreement and has been advised and has had the opportunity to retain independent counsel of his own choosing and has done so to the extent he has deemed necessary.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
CHINA YOUTH MEDIA, INC:
By: /s/ Xxx Xxxxxx
Name: Xxx Xxxxxx
Title: Chief Executive Officer
/s/ Xxx Xxxxxx
XXX XXXXXX
