EXHIBIT 10.16
VALLEY MEDIA, INC.
EMPLOYMENT AGREEMENT
for
XXXXX X. XXXXXX
This Employment Agreement ("Agreement") is entered into this 27th day of
October, 2000, by and between XXXXX X. XXXXXX ("Executive") and VALLEY MEDIA,
INC., a California corporation ("the Company").
WHEREAS, the Company desires to employ Executive to provide personal
services to the Company and wishes to provide Executive with certain
compensation and benefits in return for his services; and
WHEREAS, Executive wishes to be employed by the Company and provide
personal services to the Company in return for certain compensation and
benefits.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
1. EMPLOYMENT BY THE COMPANY.
1.1 This Agreement shall commence on October 1, 2000 and run for a
period of three (3) years, and terminate on September 30, 2003.
1.2 Subject to the terms set forth herein, the Company agrees to employ
Executive in the position of President and Chief Operating Officer, and
Executive hereby accepts such employment effective as of October 1, 2000
("the employment date"). During the term of his employment with the
Company, Executive will devote his best efforts and substantially all of
his business time and attention (except for vacation periods as set forth
herein and reasonable periods of illness or other incapacities permitted by
the Company's general employment policies) to the business of the Company.
1.3 Executive shall serve in an executive capacity consistent with the
Bylaws of the Company and as required by the Company's Board of Directors
("the Board"). Executive shall also serve as a member of the Board.
1.4 The employment relationship between the parties shall also be
governed by the general employment policies and practices of the Company,
including those relating to protection of confidential information and
assignment of inventions, except that when the terms of this Agreement
differ from or are in conflict with the Company's general employment
policies or practices, this Agreement shall control.
2. COMPENSATION.
2.1 Salary. Executive shall receive, for services to be rendered
hereunder, an annualized base salary of $300,000, payable in equal periodic
payments during the term of this Agreement. It is further agreed between
the parties that the Company shall review annually, and in light of such
review may, at the discretion of the Board, increase such annual salary.
(a) Executive shall additionally receive a bonus in the amount of
$60,000 payable April 1, 2001.
2.2 Restricted Stock. On the date of this Agreement, the Company shall
award to Executive 100,000 shares of its Common Stock. These shares shall
be shares of Common Stock of the Company which are authorized but unissued
shares or shares acquired by the Company and held in its treasury. The
Company will pay to Executive the amount of any income tax liability
arising to Executive from the transfer of this Stock to Executive. It is
the intent of the parties that Executive will receive the Stock herein on a
gross-up basis without income tax liability.
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2.3 Incentive Compensation. Effective with the fiscal year beginning
April 1, 2001, the Board of Directors shall establish an incentive
compensation plan based on a target of one hundred percent (100%) of
Executive's salary. This plan will be consistent with other company
incentive plans.
2.4 Standard Company Benefits. Executive shall be entitled to all rights
and benefits for which he is eligible under the terms and conditions of the
standard company benefits and compensation practices which may be in effect
from time to time and generally provided by the Company to its employees.
Executive will, however, be entitled to these additional benefits:
(a) Vacation. Executive shall receive three (3) weeks paid vacation
per year.
(b) Medical & Dental Insurance Coverage. The Company will provide
medical and dental benefits for Executive and his family consistent
with the standard company benefits available. The Company will pay the
premiums for these benefits, and Executive will pay any deductible and
co-payments under these plans.
2.5 Relocation Expenses. The Company shall pay to Executive the
following expenses in connection with Executive's relocation from
Executive's current residence in Beaverton, Oregon, to the Sacramento area:
(a) Transportation, fares, meals and lodging for Executive and his
spouse from Executive's present residence to any new residence located
near the new principal place of work.
(b) Moving of Executive's household goods and personal effects of
Executive and Executive's family from Executive's present residence to
the new residence.
(c) Lodging and meals for Executive and Executive's family for a
reasonable period while occupying temporary living quarters located
near the new principal place of work.
(d) Round-trip travel, meals and lodging expense for Executive and
Executive's family for a reasonable number of house-hunting trips to
locate a new residence.
(e) Expenses in connection with the sale of Executive's residence,
including realtor fees, mortgage pre-payment penalties, termite
inspector's fees, title insurance policy and revenue stamps, escrow
fees, fees for preparing documents, state and local taxes, mortgage
discount points, and seller's attorneys' fees, if any. The term
"residence" shall mean the property occupied by Executive as his
principal residence at the time of the transfer and does not include
vacation homes, houseboats, boats or airplanes. All such payments made
hereunder shall be paid on a gross-up basis with the Company paying to
Executive an amount equal to any income tax liability arising from
Company's payment hereunder.
(f) In the event Executive's employment is terminated during the
term of this Agreement for any reason other than for cause as set forth
in Section 5.3 herein, or by voluntary termination as set forth in
section 5.4, the Company will provide relocation expenses for Executive
and his family back to Portland, Oregon only, in the amount of the
actual cost of movement of Executive's household goods from Portland to
Sacramento, plus costs incurred in selling Executive's home in
Sacramento. Should Executive desire to relocate to any other location,
the Company will not make any contribution toward moving expenses.
2.6 Automobile. The Company shall provide to Executive a leased
automobile of Executive's choice, with a value not to exceed manufacturer's
suggested retail price of $55,000. The Company shall additionally provide
all maintenance and operating costs.
2.7 Attorneys' Fees. The Company shall pay or reimburse to Executive the
reasonable fees and expenses of Executive's personal counsel for
professional services rendered to Executive in connection with this
Agreement and related matters.
2.8 Expense Reimbursement. The Company shall reimburse Executive for
reasonable expenses that Executive occurs in connection with his services
for the Company contemplated by this Agreement on presentation by Executive
of appropriate vouchers and receipts for such expenses to the Company.
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3. PROPRIETARY INFORMATION OBLIGATIONS.
3.1 Agreement. Executive agrees to execute and abide by the Proprietary
Information and Inventions Agreement attached hereto as Exhibit A.
3.2 Remedies. Executive's duties under the Proprietary Information and
Inventions Agreement shall survive termination of his employment with the
Company. Executive acknowledges that a remedy at law for any breach or
threatened breach by him of the provisions of the Proprietary Information
and Inventions Agreement would be inadequate, and he therefore agrees that
the Company shall be entitled to injunctive relief in case of any such
breach or threatened breach.
4. OUTSIDE ACTIVITIES.
4.1 Except with the prior written consent of the Board, Executive will
not, during the term of this Agreement, undertake or engage in any other
employment, occupation or business enterprise other than those in which
Executive is a passive investor. Executive may engage in civic and not-for-
profit activities so long as such activities do not materially interfere
with the performance of his duties hereunder.
4.2 Except as permitted by Section 4.3, Executive agrees not to acquire,
assume or participate in, directly or indirectly, any position, investment
or interest known by him to be adverse or antagonistic to the Company, its
business or prospects, financial or otherwise.
4.3 During the term of his employment by the Company, except on behalf
of the Company, Executive will not directly or indirectly, whether as an
officer, director, stockholder, partner, proprietor, associate,
representative, consultant, or in any capacity whatsoever engage in, become
financially interested in, be employed by or have any business connection
with any other person, corporation, firm, partnership or other entity
whatsoever which is known by him to compete directly with the Company,
throughout the world, in any line of business engaged in (or planned to be
engaged in) by the Company; provided, however, that anything above to the
contrary notwithstanding, he may own, as a passive investor, securities of
any competitor corporation, so long as his direct holdings in any one such
corporation shall not in the aggregate constitute more than 1% of the
voting stock of such corporation.
5. TERMINATION OF EMPLOYMENT.
5.1 Termination Without Cause.
(a) The Company shall have the right to terminate Executive's
employment with the Company at any time without cause. For purposes of
this section only, termination includes a significant change in job
responsibilities, title or location.
(b) In the event Executive's employment is terminated without cause,
the Company shall continue to pay Executive's salary for one (1) year
from the date of the termination. Executive will not continue to accrue
vacation or sick leave. For a period of one (1) year, Executive will
continue to receive medical and dental benefits.
(c) If Executive elects to terminate his employment with the Company
or its successor within six (6) months of a Change of Control (as
defined below), Company or its successor shall continue to pay
Executive's salary and medical and dental benefits for twelve (12)
months.
5.2 Change of Control. For purposes of this Agreement, "Change of
Control" means the occurrence of one or more of the following events:
(a) The Company sells substantially all of its assets to a single
purchase or a group of associated purchasers;
(b) At least fifty percent (50%) of the outstanding corporate shares
of the Company are sold, exchanged or otherwise disposed of in one
transaction; or
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(c) There is a merger or consolidation of the Company in a
transaction in which the Company's shareholders receive less than fifty
percent (50%) of the outstanding voting shares of the new or continuing
corporation.
5.3 Termination for Cause.
(a) The Company shall have the right to terminate Executive's
employment with the Company at any time for cause.
(b) "Cause" for termination shall mean: (i) indictment or conviction
of any felony or of any crime involving dishonesty; or (ii)
participation in any fraud against the Company.
(c) In the event Executive's employment is terminated at any time
for cause, he will not be entitled to severance pay, pay in lieu of
notice or any other such compensation.
5.4 Voluntary or Mutual Termination.
(a) Executive may voluntarily terminate his employment with the
Company at any time, after which no further compensation will be paid
to Executive.
(b) Except for a resignation as set forth in paragraph 5.1(c) above,
in the event Executive voluntarily terminates his employment, he will
not be entitled to severance pay, pay in lieu of notice or any other
such compensation.
5.5 Permanent Disability. If during the period of employment Executive
shall become permanently disabled, the Company shall pay Executive $230,000
for each year (and additional fractional portion of a year) from the date
of disability to October 1, 2003, less any amounts paid or payable to
Executive under any long-term disability plan or pension plan maintained by
the Company providing for disability benefits. Amounts paid to Executive
pursuant to this section shall be paid in substantially equal monthly
payments.
For the purposes of this section and this Agreement, "permanent
disability" means inability to perform the services of President and Chief
Operating Officer of the Company required under this Agreement due to
physical or mental disability which continues for 180 consecutive days in
any period of 12 months, and "date of disability" means the day following
the close of such 180-day period. Evidence of such disability shall be
certified by a physician acceptable to both the Company and Executive.
Evidence of such disability as so certified shall be conclusive,
notwithstanding that a disability policy, or clause in an insurance policy,
covering employee shall contain a different definition of "permanent
disability". If the Company and Executive cannot agree on such a physician
or if Executive feels that he is unable to perform his duties under this
Agreement, the question of whether Executive is "permanently disabled"
within the meaning of this Agreement shall be submitted to a panel of three
impartial and reputable physicians, one selected by the Company, one
selected by Executive, and a third to be selected by the then President of
the Medical Society for Yolo County, California. The panel's determination
of Executive's ability to so perform shall be binding on the parties.
For the purposes of this Agreement, the period of employment will be
deemed to terminate on the day immediately preceding the date of
disability.
6. GENERAL PROVISIONS.
6.1 Notices. Any notices provided hereunder must be in writing and shall
be deemed effective upon the earlier of personal delivery (including
personal delivery by facsimile) or the third day after mailing by first
class mail to the Company at its primary office location and to Executive
at his address as listed on the Company payroll.
6.2 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable
provisions had never been contained herein.
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6.3 Waiver. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
6.4 Complete Agreement. This Agreement and its Exhibit constitute the
entire agreement between Executive and the Company and it is the complete,
final, and exclusive embodiment of their agreement with regard to this
subject matter. It is entered into without reliance on any promise or
representation other than those expressly contained herein, and it cannot
be modified or amended except in writing signed by an officer of the
Company.
6.5 Counterparts. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
6.6 Headings. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
6.7 Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive and the Company and their
respective successors, assigns, heirs, executors and administrators, except
that Executive may not assign any of his duties hereunder, and he may not
assign any of his rights hereunder without the written consent of the
Company, which shall not be withheld unreasonably.
6.8 Attorneys' Fees. If either party hereto brings any action to enforce
his or its rights hereunder, the prevailing party in any such action shall
be entitled to recover his or its reasonable attorneys' fees and costs
incurred in connection with such action.
6.9 Choice of Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the laws of the
State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
VALLEY MEDIA, INC.
/s/ Barnet X. Xxxxx
By: _________________________________
Date: October 27, 2000
/s/ Xxxxx X. Xxxxxx
By: _________________________________
Date: October 27, 2000
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