EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 19th day of July 2001, by and between
MediaBay, Inc., a Florida corporation, with offices at 0 Xxxxxxxxx Xxxxxx, Xxxxx
Xxxxxx, Xxx Xxxxxx (the "Company"), and Xxxxxx Xxxx residing at 0 Xxxxxxx Xxxx,
Xxxxxxxxx, Xxx Xxxxxx 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 commit himself to serve and to
establish a minimum period during which he will 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 the effective date of this Agreement and end on
the second (2nd) anniversary of the effective date (the "Term"), subject,
however, to the other termination provisions contained herein.
4. Position and Duties. The Executive shall be employed by the Company as
Senior Vice President of Finance of MediaBay, Inc. and Chief Financial Officer
of Audio Book Club, Inc. 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 Chairman and Chief Executive Officer,
Norton and Xxxxxxx Xxxxxxx, respectively. 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 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 senior
vice presidents of finance and financial officers of public companies. The
Executive shall be required
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to spend his full time and attention, without other outside business interests
other than passive investment activities, 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 annual salary of
$170,000 in equal bi-monthly installments in arrears during the first year
of the Term of this Agreement; and an annual salary of $185,000 in equal
bi-monthly installments in arrears 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 Chairman or Chief Executive Officer in his
sole and absolute discretion with a minimum bonus at the end of each year
during the Term, provided the Executive is still employed by the Company at
such times, of Sixteen Thousand Five Hundred and 00/100 U.S. Dollars
($16,500.00) at the end of the first year of the Term of this Agreement and
a minimum bonus at the end of the second year of the Term of this
Agreement, provided the Executive is still employed by the Company at that
time, of Eighteen Thousand and 00/100 U.S. Dollars ($18,000.00); such
bonuses shall be paid within forty-five (45) days after each anniversary
date.
(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
insurance and employee benefits applicable to all officers of the Company.
In addition, the Executive shall be reimbursed for reasonable costs
associated with (up to 24 hours of continuing education courses) receiving
CPE credits for maintaining CPA licenses including reasonable land travel
cost to attend such courses. In addition, the Company will reimburse the
Executive for his dues to the AICPA and subscription to FASB Pronouncements
and other professional publications deemed necessary to perform the
Executive's duties.
(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-K or Quarterly Report on Form
10-Q are required to be filed with the Securities and Exchange Commission
unless it is agreed that filing deadlines will not be effected. In
addition, the Executive will receive normal Company holidays. The Executive
shall not take more than fourteen (14) consecutive days of vacation,
including weekends.
(e) Stock Options. The Executive will receive stock options to acquire
an additional forty thousand (40,000) shares of Common Stock in the Company
pursuant to and in accordance with the Company's Stock Option Plan. Options
with respect to twenty thousand (20,000) shares shall vest at the end of
the first year of the Term of this Agreement, provided that the
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Executive is an employee of the Company at that time and options with
respect to the remaining twenty thousand (20,000) shares shall vest at the
end of the second year of the Term of this Agreement, provided that the
Executive is an employee of the Company at that time. Such options shall be
exercisable at a price per share of $1.00 and will be on the terms and
conditions as more specifically provided for in the Company's Stock Option
Plan and will be exercisable for a period of five (5) years commencing
immediately upon vesting.
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.
(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) failure by the Executive to materially perform his duties,
as contemplated in this Agreement, as Senior Vice President of Finance of
MediaBay, Inc. or Chief Financial Officer of Audio Book Club, Inc. (other
than through disability as defined in paragraph 6(b), above), (iii)
indictment of a crime or alcohol or drug abuse, or (iv) the Executive's
material breach of this Agreement. The termination shall be evidenced by
written notice thereof to the Executive. As for (ii) above, Executive shall
have forty-eight (48) hours from receipt of written notice of termination
to cure any and all failures to perform. It will be in the sole discretion
of the Board of Directors of the Company whether a default of item (ii)
above has been cured by Executive to the satisfaction of the Board during
the forty-eight (48) hour period after Executive receives notice thereof.
(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 fifty percent (50%) of the
directors then in office (excluding the vote of the Executive if he is also
a director), terminate the Executive without cause upon thirty (30) 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.
(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
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Control" (as defined below), then the Executive will be entitled to receive
severance pay equal to one hundred percent (100%) 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 in equal monthly payments over the
remaining unexpired period of Executive's employment Term.
(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 under terms substantially similar to this Agreement,
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 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 all or substantially all
of the assets of the Company.
(g) Change of Control - Stock Options. 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) and all other stock options previously or
subsequently received, 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. 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 conflict with the interests
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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 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.
8. 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, (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 By-Laws, 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 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
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the Executive shall be found, as finally judicially determined by a court of
competent jurisdiction, not to have been entitled to indemnification hereunder.
9. Arbitration Agreement. The parties hereto have entered into an
Arbitration Agreement dated February 27, 2001, 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 7 and
Section 8 of this Agreement will not be subject to arbitration.
10. 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.
11. 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.
12. 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
If to the Company: MediaBay, Inc.
0 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
(000) 000-0000
or to such other address as the parties may furnish to each other in writing.
13. 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.
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(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.
14. 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.
15. 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.
16. 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. Notwithstanding the foregoing, and as stated
previously in this Agreement, the Arbitration Agreement between the parties
dated February 27, 2001 does and shall remain in full force and effect.
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:_________________, 2001 MEDIABAY, INC., a Florida corporation
By:
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Printed Name:
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Title:
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"EXECUTIVE"
Date Signed:_________________, 2001
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Printed Name:
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