EXHIBIT 10.36
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 28 day of January, 2004, by and between
MediaBay, Inc., a Florida corporation, with offices at 0 Xxxxxxxxx Xxxxxx, Xxxxx
Xxxxxx, Xxx Xxxxxx 00000 (the "Company"), and Xxxxxxx X. Xxxxxx residing at 000
Xxx Xxxxx Xxxx, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the audio book club, old time radio and
spoken audio digital download businesses; and
WHEREAS, the Company desires to employ the Executive; and
WHEREAS, the Executive is willing to serve the Company on the terms and
conditions herein provided.
NOW, THEREFORE, in consideration of the promises 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. The
employment relationship between the parties shall also be governed by the
general employment policies and practices of the Company, except that when the
terms of this Agreement differ from or are in conflict with the Company's
general employment policies and practices, this Agreement shall control.
3. Term. The term of this Agreement shall commence on January 28, 2004
("Effective Date") and shall end three (3) years from the Effective Date if not
terminated earlier pursuant to the termination provisions contained herein (the
"Term"). If either the Company or the Executive wish to extend or renew the term
of this Agreement when it expires, then any such extension or renewal will be
mutually agreed to in writing by the parties
4. Position and Duties. Subject to the terms set forth herein, the
Executive shall be employed by the Company as Chief Executive Officer of
MediaBay, Inc. His power and authority shall be and remain subject to the
direction and control of the Board of Directors and the Chairman of the Company.
The Executive shall have profit and loss responsibility for the Company and its
subsidiaries (including Audio Book Club, Inc., Xxxxx Xxxxxxx, Inc. and
XxxxxXxx.xxx, Inc.) as well as operational and marketing oversight of the
business and affairs of the Company and its subsidiaries, and any other
businesses which the Company or its subsidiaries may acquire, and at the option
of the Company, additional lines of business and products related to the
business. The Board of Directors has the right to assign and change the
Executive's title, duties, responsibilities, and oversight at any time. During
the Term, the Executive shall be required to devote his best efforts and spend
his full time and attention, without other outside business interests or
activities, in the performance of his duties and the Company's and its
subsidiaries' business and affairs.
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5. Compensation and Related Matters.
(A) Base Salary. For services rendered pursuant to this Agreement,
the Company shall pay to the Executive an annual base salary of $225,000 in
equal semi-monthly installments in arrears on the 15th and last day of each
month subject to applicable withholding and other taxes. The base salary shall
be increased to $250,000 per year (or a pro-rata portion thereof) upon
consummation of a debt, equity, or combination of debt and equity financing of
$10,000,000 or more prior to June 30, 2004 (as measured against the Company's
balance sheet as of December 31, 2003). The base salary may be adjusted upward
or downward in the sole discretion of the Board of Directors, although it shall
not be adjusted downward other than in conjunction with a general reduction or
other concessionary arrangement affecting all employees or affecting all
executive level employees.
(B) Bonus. The Executive will be eligible to receive a discretionary
annual bonus to be determined by the Compensation Committee of the Board of
Directors of the Company in its discretion. Eligibility for such bonus will be
based upon a set of financial and non-financial objectives set by the
Compensation Committee of the Board of Directors for each fiscal year (which
ends on December 31). Executive must remain an employee through the end of the
applicable fiscal year or he will not be eligible to receive any bonus. If
Executive's employment terminates for any reason, no partial or prorated bonus
payments will be made. Determinations as to whether the Executive shall receive
any bonus, including the determination as to whether objectives have been met,
shall be made at the sole discretion of the Board. Any bonus awarded will be
paid no later than April 15 of the following year.
(C) 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.
(D) Insurance and Employee Benefits. The Executive shall be eligible
to receive such medical insurance and 401k benefits as are made available to all
officers of the Company, subject to the general eligibility and participation
provisions set forth in such plans. The Company reserves the right to adopt,
amend, or discontinue any employee benefit, plan, or program in accordance with
then applicable law.
(E) Vacation. The Executive shall receive during each full year of
his employment, three (3) weeks (fifteen working days) paid vacation. Scheduling
of paid vacation must be approved one (1) month in advance of taking vacation,
and the Executive will make every effort to schedule the vacation time at a time
most convenient for the Company. Unused vacation days shall not be carried
forward into the following year and the Executive shall not receive any
compensation for unused vacation.
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(F) Stock Options. Subject to Board approval, the Executive will be
granted stock options to acquire one million five hundred thousand (1,500,000)
shares of Common Stock in the Company pursuant to and in accordance with (and
therefore subject to all terms and conditions of) the Company's Stock Option
Plan. The Executive will receive these option grants pursuant to six separate
option agreements. All six stock option awards will be granted on the Effective
Date. The First Option with respect to Two Hundred and Fifty Thousand (250,000)
shares shall vest on April 30, 2004 at a price per share of $0.99. The Second
Option with respect to Two Hundred and Fifty Thousand (250,000) shares shall
vest on July 30, 2004 at a price per share of $0.99. The Third Option with
respect to Two Hundred and Fifty Thousand (250,000) shares shall vest on January
30, 2005 at a price per share of $1.55. The Fourth Option with respect to Two
Hundred and Fifty Thousand (250,000) shares shall vest on July 30, 2005 at a
price per share of $1.55. The Fifth Option with respect to Two Hundred and Fifty
Thousand (250,000) shares shall vest on the Jnaury30, 2006 at a price per share
of $1.86. The Sixth Option with respect to Two Hundred Fifty Thousand (250,000)
shares shall vest April 30, 2006 at a price per share of $1.86. The options will
vest in each instance provided that the Executive is an employee of the Company
at the time such vesting is to occur. Such options will be on the terms and
conditions as more specifically provided for in the Company's Stock Option Plan
and will be exercisable as set forth in the Plan.
6. Executive's Representations and Warranties.
(A) Authority to Enter into Agreement. Executive hereby represents
and warrants that Executive has full right and authority to enter into this
Agreement and to perform Executive's obligations hereunder.
(B) Affirmation of Truthfulness of Representations. Executive
represents and warrants that all facts he has represented and conveyed to the
Company, whether contained in his resume or other written materials or
transmitted verbally, are true and complete, and are without consequential
omissions of any kind whatsoever. Executive understands that falsity of
statements or answers or consequential omissions shall be deemed a material
breach of this Agreement.
(C) No Breach of Contract. Executive represents and warrants that
the execution and delivery of this Agreement by the Executive and the
performance of the Executive's obligations hereunder will not conflict with or
breach any agreement, order or decree to which the Executive is a party or by
which the Executive is bound.
(D) No Conflict of Interest. Executive warrants that Executive is
not, to the best of Executive's knowledge and belief, involved in any situation
that might create, or appear to create, a conflict of interest with Executive's
loyalty to or duties for the Company.
(E) Notification of Materials or Documents from Other Employers.
Executive further warrants that Executive has not brought and will not bring to
the Company or use in the performance of Executive's responsibilities at the
Company any materials or documents of a former employer that are not generally
available to the public, unless Executive has obtained express written
authorization from the former employer for their possession and use.
(F) Notification of Other Post-Employment Obligations. Executive
also understands that, as part of Executive's employment with the Company,
Executive is not to breach any obligation of confidentiality that Executive has
to former employers, and Executive agrees to honor all such obligations to
former employers during Executive's employment with the Company. Executive
warrants that Executive is subject to no employment agreement or restrictive
covenant preventing full performance of Executive's duties under this Agreement.
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(G) Indemnification for Breach; Survival. In addition to other
remedies which the Company might have for breach of this Agreement, Executive
agrees to indemnify and hold the Company harmless from any breach of the
provisions of this Section 6. The terms of this Section 6 shall survive any
termination of this Agreement.
7. Termination by the Company.
(A) General. The Company shall have the right to terminate this
Agreement with or without Cause at any time during the term of this Agreement by
giving written notice to the Employee. The termination shall become effective on
the date specified in the notice, which termination date shall not be a date
prior to the date fourteen (14) days following the date of the notice of
termination itself, provided, however, that the termination of Executive may
become effective on the date of the notice or on any date during the fourteen
(14) day period following the notice provided that the Company continues to pay
the Employee's Base Salary during the fourteen-day period following the date of
the notice.
(B) Cause. In the event that the Executive is terminated for Cause
(as defined below), the Company shall pay the Executive any unpaid base salary
due Executive through the date of termination and notice pay, if any, as
provided in subparagraph (a) above. Executive shall not be entitled to any
additional salary, bonus payments, severance, or other compensation.
(C) Without Cause. In the event that the Executive is terminated
Without Cause, pursuant to this Section 7(c), in addition to paying the
Executive through the date of termination and, if applicable, complying with
subparagraph (a) above, provided Executive executes a full, general release of
claims against the Company, the Company shall pay to the Executive severance
compensation equal to a certain number of months (as defined below) of the
Employee's Base Salary as of the date of termination, payable on the Company's
regular payroll dates in accordance with normal payroll practices and subject to
deductions as required by law. The number of months of severance shall be
determined as follows: (i) if the termination occurs within the first
twenty-four (24) months of this Agreement, then the number of months of
severance shall be the number of months worked by Executive hereunder subtracted
from twenty-four (24); and (ii) if the termination occurs after the first
twenty-four (24) months of this Agreement, then the number of months of
severance shall be the number of months worked by Executive hereunder subtracted
from thirty six (36).
(D) Cause Defined. For purposes of this Section 7, "Cause" shall
mean that the Board of Directors has determined in its sole discretion that the
Executive has engaged in any of the following: (i) any act or omission which
constitutes a material breach of, or material failure or refusal to perform
duties under, this Agreement and any covenant or condition thereof, after notice
of such and failure to cure the same within fifteen business days; (ii) any act
constituting dishonesty, fraud, immoral or disreputable conduct which is harmful
to the Company or its reputation; (iii) any conduct which constitutes a felony
under applicable law; (iv) any act of gross misconduct which is injurious to the
Company; (v) refusal to abide by or implement a directive of the Board of
Directors after notice of such and failure to cure the same within five business
days; (vi) negligence or incompetence in the performance of Employee's duties;
(vii) breach of fiduciary duty; or (viii) threats or acts of violence in the
workplace or in the course and scope of any business activity, unlawful
harassment, actual or attempted misappropriation or embezzlement of or
intentional damage to any property of the Company.
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8. Termination by the Employee.
(A) General. The Executive may terminate this Agreement at any time,
with or without Good Reason (as defined below), by giving at least fourteen
days' written notice to the Company. Any such termination shall become effective
on the date specified in such notice, provided that if the Executive gives more
than fourteen days written notice the Company may elect to have such termination
become effective on any date on or after the fourteenth (14th) day after the
date of the notice and prior to the date specified in the notice.
Notwithstanding the foregoing, at the option of the Company, the termination of
Executive's employment may become effective on any date on or after the date of
the notice upon notice to the Executive by the Company and the payment by the
Company of the Executive's base salary during the fourteen-day period following
the date of Executive's notice of termination of employment.
(B) Without Good Reason. In the event that the Executive terminates
his employment without Good Reason (as defined below), the Company shall pay the
Executive any unpaid base salary due Executive through the date of termination
and notice pay, if any, as provided in subparagraph (a) above. Executive shall
not be entitled to any additional salary, bonus payments, severance, or other
compensation.
(C) Good Reason. In addition to any unpaid base salary due Executive
through the date of termination and notice pay, if any, as provided in
subparagraph (a) above, if such termination is for Good Reason, provided
Executive executes a full, general release of claims against the Company, the
Company shall pay to the Executive severance compensation equal to a certain
number of months (as defined below) of the Employee's base salary as of the date
of termination, payable on the Company's regular payroll dates in accordance
with normal payroll practices and subject to deductions as required by law. The
number of months of severance shall be determined as follows: (i) if the
termination occurs within the first twenty-four (24) months of this Agreement,
then the number of months of severance shall be the number of months worked by
Executive hereunder subtracted from twenty-four (24), which sum shall then be
divided by two (2); and (ii) if the termination occurs after the first
twenty-four (24) months of this Agreement, then the number of months of
severance shall be the number of months worked by Executive hereunder subtracted
from thirty six (36), which sum shall then be divided by two (2). (D) Good
Reason Defined. For purposes of this Agreement, "Good Reason" shall mean:
(i) a material reduction in the Employee's Base Salary not
agreed to by the Employee, except for any reduction which is a part of a general
reduction or other concessionary arrangement affecting all employees or
affecting all executive level employees; or
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(ii) a material adverse change made by the Company in the
Executive's core functions, duties or responsibilities that would constitute a
demotion and that is not agreed to by the Employee; or
(iii) a requirement that the Executive relocate to an office
more than 75 miles from the office of the Company at which the Executive spends
the majority of his time on the date of relocation without Executive's consent.
provided however, that any actions taken by the Company to accommodate a
disability of the Executive or pursuant to the Family and Medical Leave Act
shall not be a Good Reason for purposes of this Agreement and provided further,
in each such event listed in (i) through (iii) above, the Executive shall give
the Company notice thereof which shall specify in reasonable detail the
circumstances constituting Good Reason, and there shall be no Good Reason with
respect to any such circumstances if cured by the Company within thirty (30)
days after such notice.
9. Termination by Death or Disability of the Executive.
(A) Death. In the event of the Executive's death during the term of
this Agreement, all obligations of the parties hereunder shall terminate
immediately, and the Company shall pay to the Executive's legal representatives
the Base Salary (and any earned bonuses) due the Executive through the day on
which Executive's death shall have occurred.
(B) Disability. Subject to applicable state and federal law, the
Company shall at all times have the right, upon written notice to the Executive,
to terminate this Agreement based on the Executive's Disability (as defined
below). Upon any termination pursuant to this Section, the Company shall pay to
the Executive any unpaid Base Salary through the effective date of termination
specified in such notice. The Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior to
the date of termination, subject, however to the provisions hereof). Termination
by the Company of the Executive's employment based on "Disability" shall mean
termination because the Executive is unable to perform the essential functions
of Executive's position with or without accommodation due to a disability (as
such term is defined in the Americans with Disabilities Act) for six months in
the aggregate during any twelve month period. This definition shall be
interpreted and applied consistent with the Americans with Disabilities Act, the
Family and Medical Leave Act and other applicable law.
10. Termination by Mutual Consent. If at any time during the term of this
Agreement the parties by mutual consent decide to terminate this Agreement, they
shall do so by separate agreement setting forth the terms and conditions of such
termination.
11. Non-Competition and Confidentiality Covenant. As a condition of
employment and a material term of this Agreement, the Executive hereby agrees to
execute and abide by the Confidential Information, Inventions Assignment,
Non-Solicitation and Non-Competition Agreement attached hereto as EXHIBIT A. The
provisions of the Confidential Information, Inventions Assignment,
Non-Solicitation and Non-Competition Agreement are intended by the parties to
survive and do survive termination or expiration of this Agreement.
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12. Indemnification. To the maximum extent permitted under the corporate
laws of the State of New Jersey or, if more favorable, the Articles of
Incorporation and/or By-Laws of the Company as in effect on the date of this
Agreement, and provided the Executive acted in good faith, did not act wantonly
or recklessly, was not grossly negligent or engaged in willful misconduct, and
acted in a manner he reasonably believed to be in or not opposed to the best
interests if the Company, and, with respect to any criminal proceedings, had no
reasonable cause to believe his conduct was unlawful, 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, when and as incurred, 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 tune,
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.
13. Arbitration Agreement. The parties hereto have simultaneously entered
into an Arbitration Agreement attached hereto as EXHIBIT B which may be amended
by the parties from time to time without regard to this Agreement. The parties
expressly agree that disputes arising out of or relating to the Executive's
employment, including any disputes under or relating to this Employment
Agreement, will be resolved by arbitration under the Arbitration Agreement;
provided however, that any dispute arising out of or relating to Section 11 of
this Agreement will not be subject to arbitration.
14. Governing Law. Except as preempted by federal law, this Agreement
shall be executed, construed and performed in accordance with the laws of the
State of New Jersey without reference to conflict of laws principles. The
parties agree that the venue for any dispute hereunder will be the state or
federal courts in New Jersey and the parties hereby agree to the exclusive
jurisdiction thereof:
15. Binding Agreement. This Agreement and all rights and obligations
hereunder shall inure to the benefit of and be enforceable by the parties and
their personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees and assigns, including without
limitation any successor to the Company whether by merger, consolidation, sale
of stock or otherwise.
16. 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 Stares registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
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If to the Executive: To his home address as listed in Company records
at the time notice is given
If to the Company: To its corporate headquarters at the time notice
is given, "Attention: Board of Directors"
or to such other address as the patties may furnish to each ether 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.
17. Waiver and Modification.
(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.
18. Severability. 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, and, in the event that any one or more of
the words, phrases, sentences, clauses, provisions, sections or articles
contained in this Agreement shall be declared invalid, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, provisions or provisions, section or sections or
article or articles had not been inserted and the remainder of this Agreement
shall remain in full force and effect.
19. 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.
20. Entire Agreement. This Agreement and the Confidential Information,
Inventions Assignment, Non-Solicitation and Non-Competition Agreement attached
hereto contains the entire understanding of the Company and the Executive with
respect to the subject matter hereof. This Agreement supersedes all prior
agreements and understandings whether written or oral between the Executive and
the Company with respect to such subject matter, and there are no restrictions,
agreements, promises, warranties or covenants other than those stated in this
Agreement.
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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: January 28, 2004 MEDIABAY, INC., a Florida corporation
By: /s/ Xxxx Xxxx
-----------------------------
Printed Name: Xxxx Xxxx
-------------------
Title: Chairman
--------------------------
"EXECUTIVE"
Date Signed: January 28, 2004 /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
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EXHIBIT A
[CONFIDENTIAL INFORMATION, INVENTIONS ASSIGNMENT,
NON-SOLICITATION AND NON-COMPETITION AGREEMENT]
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EXHIBIT B
[ARBITRATION AGREEMENT]
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