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EXHIBIT 10.38
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into this 15th day of
October, 1996, by and between Dove Audio, Inc., a California corporation
("Company" or "Dove"), and Xxxxxx Xxxxxxx ("Employee").
Whereas, Company desires to assure that it retains the services of
Employee, whose experience, knowledge and abilities with respect to the business
and affairs of Company are extremely valuable to Company;
Now, therefore, Company and Employee agree as follows:
1. Positions and Duties.
1. The Company hereby employs Employee as Executive Vice-President and
General Counsel (or other mutually agreed-upon title(s)) of Company
during the term of this Agreement, with powers and duties consistent
with such position. Employee shall report solely to the Board of
Directors and to the President of the Company. Employee shall, during
the term of this Agreement, perform such additional or different duties,
and accept the election or appointment to such other offices or
positions, as may mutually be agreeable to Employee and Company.
2. Employee shall devote his full working time and use his best efforts
to promote Company's business and welfare. During the term of his
employment with Company, Employee will not accept any other employment.
Employee shall perform such duties and responsibilities incidental to
his employment as may from time to time be requested by Company and
shall faithfully observe Company's policies and procedures.
2. Compensation and Benefits.
1. Generally; Base Salary. Beginning on the date of this Agreement,
during the term of employment, for the services to be rendered by
Employee hereunder, Employee shall receive the following compensation
and benefits, payable as earned, in the intervals indicated, and
prorated for any partial year:
i) An annual salary (the "Base Salary"), at the
rate of one hundred twenty-five thousand dollars
($125,000.00), payable from the period commencing as of
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the date of commencement of the Term. The Base Salary shall be
payable no less frequently than monthly. Company may deduct from
each installment of the Base Salary an amount sufficient to cover
applicable federal, state and/or local income tax withholdings,
old age and survivors and other social security payments, state
disability insurance premiums and any other amounts which Company
is required to withhold by applicable law. The Base Salary shall
be increased by a minimum of ten percent (10%) of the then
current Base Salary effective commencing upon each of the first
and second anniversaries of commencement of the Term of this
Agreement;
ii) A stock option grant of 30,000 shares (the "Option
Shares") of Dove common stock, pursuant to the Non-Qualified
Stock Option Agreement dated as of even date hereof between Dove
and Employee substantially in the form of Schedule I hereto (the
"Stock Option Agreement"); and
iii) An annual bonus, for each year of the Term of this
Agreement, of at least ten thousand dollars ($10,000.00), payable
at the end of each year of the Term, provided, however, that
Company shall forthwith advance to Employee, on a non-recoupable
and interest free basis, ten thousand dollars ($10,000.00)
representing the bonus for the first year of the Term of this
Agreement. In addition, Company shall also forthwith pay to
Employee the sum of ten thousand dollars ($10,000.00)
representing a bonus for Employee's services rendered prior to
the commencement of the Term of this Agreement (receipt of which
is hereby acknowledged by Employee.)
2. Fringe Benefits. Employee shall receive the following
fringe benefits from the Company during the Term:
i) three (3) weeks of paid vacation during each fiscal
year of Company (as used in this Paragraph, a "fiscal year" shall
be the date which is 12 months following the date of commencement
of the Term under this Agreement and each 12-month period
thereafter). Any such vacation shall be taken at times in
accordance with the vacation policies of Company, or if accrued
by Employee and not taken in any fiscal year shall be accrued and
carried forward to the subsequent fiscal year;
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ii) payment of the premium payable with respect to the
health insurance plan provided by Company for its executive
officers as from time to time in effect. In addition, Employee
shall be named as an additional insured under the Company's
Errors and Omissions insurance policy, and shall be permitted
during the term hereof, if and to the extent eligible, to
participate in any group life, hospitalization or disability
insurance plan, health program, pension plan, similar benefit or
other fringe benefits of Dove which may be available to executive
officers of Company;
iii) a monthly, non-reimbursable and non-taxable
automobile allowance of five hundred dollars($500.00), payable no
less frequently than monthly; and
iv) reimbursement to Employee for all reasonable costs
and expenses he incurs in connection with the performance of his
duties and obligations under this Agreement, and which are
consistent with the policies of Company for executive officers.
3. Term. The term of this Agreement (the "Term") shall commence on the
date hereof and shall terminate upon the first to occur of the following
events:
a) October , 1999;
b) The death or permanent disability of Employee as defined
herein;
c) The discharge of Employee for cause or special cause as
defined herein.
4. Termination.
a. Termination Due to Disability, etc. The Company may, by written
notice to Employee, terminate his employment under the Agreement as of
the date of that notice if Employee shall fail or be unable to perform
his duties as the result of any physical or mental disability for 180
consecutive days or during any 210 days in any 240-day period (a
"Permanent Disability"); Employees's employment under this Agreement
shall terminate automatically upon Employee's death or adjudication of
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incompetency.
b. Termination for Cause. By complying with the provisions hereof,
the Company may terminate Employee's employment under this Agreement for
"Cause."
1) For purposes of this agreement, "Cause" shall mean: (i) fraud,
embezzlement or conviction of or the pleading of guilty or no
contest to any felony or to any misdemeanor involving dishonesty,
ii) gross negligence or willful failure of Employee to perform
his duties hereunder, (iii) any material uncured breach by
Employee of his covenants or obligations under this Agreement, or
(iv) the occurrence of any matter relating to Employee of the
type set forth in Item 401(f) of Regulation S-K promulgated by
the Securities and Exchange Commission.
2) If any one or more of the events enumerated under Section
4(b)(1)above shall occur, the Company shall provide written
notice (the "Warning Notice") to Employee of its intention to
terminate this Agreement for Cause, the basis of such Cause, and
the steps which the Company believes should be taken by the
Employee to correct and cure the same. Unless Employee, within 30
days following receipt of the Warning Notice, substantially
corrects and cures or initiates steps to correct and cure all
matters delineated in the Warning Notice to Dove's reasonable
satisfaction or if the matters set forth in the Warning Notice
are not reasonably susceptible of being so cured or corrected,
the Company may terminate this Agreement so that the Company
shall have no further obligation to Employee except as set forth
herein, by delivering a notice of termination to Employee, which
notice of termination shall be effective as of the date of
delivery of such notice; provided however, that Employee shall
not be entitled to any notice or opportunity to cure a
termination arising as a result of the "Cause" set forth in
Section 4(b)(1)(i).
c. Payments Upon Termination.
1. In the event Employee is terminated for any reason whatsoever,
the Company shall pay to Employee all
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accrued and unpaid Base Salary, all accrued and unpaid vacation
and other accrued and unpaid benefits set forth herein to the
date of termination, reimbursement of expenses prior to the date
of termination in accordance with the provisions of this
Agreement; continued insurance benefits under such circumstances
and for such periods of time as are mandated by applicable state
or federal law; and such other benefits or entitlements that are
deemed to be vested pursuant to the provisions of Employee
Retirement Income Security Act of 1974, as from time to time
amended, and any regulations promulgated pursuant thereto. Such
benefits shall be payable in accordance with the provisions
therefor in this Agreement, or with regard to benefits for which
no provision is made, promptly following termination of
employment.
2. In the event Employee is terminated by the Company without
Cause, then, in addition to the payments due to Employee
hereunder, and as Employee's sole and exclusive rights and
remedies, the Company shall, for the remainder of the Term, be
obligated to continue to provide to the Employee his Base Salary
in accordance with the terms hereof, and all Option Shares as
defined herein shall automatically vest and be exercisable
pursuant to the Stock Option Agreement.
3. Employee shall have no duty to mitigate the amount of any
payment provided for in Section 4(c)(2) by seeking other
employment or otherwise, nor shall the amount of any payments
provided for in Section 4(c)(2) be reduced by any compensation
earned by Employee as the result of employment by Employee with
another employer after the date of termination.
5. Confidential Information. Employee acknowledges that the information,
observations and data obtained by him while employed by the Company
concerning the business or affairs of the Company or its Affiliates (the
"Confidential Information") are the property of the Company or such
Affiliate. Therefore, Employee agrees that Employee shall not disclose
to any unauthorized person or use for Employee's own account any
Confidential Information without the prior written consent of the Board,
unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a
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result of Employee's acts or omissions to act or unless such information
is required to be disclosed in connection with an administrative or
judicial proceeding, provided that in such case, Employee agrees to
notify the Company of the Confidential Information to be disclosed
sufficiently in advance of such disclosure, and agrees, if requested, to
use reasonable efforts to cooperate with the Company or an Affiliate in
seeking a protective order for such information. Employee shall deliver
to the Company at the termination of the Term, or at any other time the
Company or an Affiliate may request, all "documents" and "writings", as
defined in the California Evidence Code, and copies thereof, relating to
the Confidential Information, work product or the business of Dove, the
Company or any Affiliate which Employee may then possess or have under
his control. In the event of the breach or a threatened breach by
Employee of any of the provisions of this Section, the Company or any of
its Affiliates, in addition and supplementary to other rights and
remedies existing in its favor, may apply to any court of law or equity
of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce or prevent any violations of the
provisions hereof (without posting a bond or other security). Employee
acknowledges and agrees that the covenant under this Section 6 shall
apply during the Term and thereafter regardless of the reason for the
termination of Employee's employment.
6. Entire Agreement. This Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements
of the parties with respect to the subject matter hereof.
This Agreement may not changed or amended except in writing
signed by the parties.
7. Governing Law. This Agreement shall be subject to, and be
governed by, the laws of the State of California.
8. Assignment. Employee may not assign, transfer or convey
this Agreement or any interest therein. This Agreement and
all of the Company's rights and obligations hereunder may be
assigned or transferred by it, in whole but not in part, to
and shall be binding upon and inure to the benefit of any
successor of the Company, but Company shall require any
successor (whether direct or indirect, by purchase, merger,
consolidation, purchase of assets or otherwise) to all or
substantially all of the assets of the Company, by agreement
in form and substance reasonably satisfactory to Employee,
to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company
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would be required to perform it if no such succession had taken place.
Notwithstanding the foregoing, in the event of any such merger,
consolidation, purchase of assets or other transfer, other than to a
related company of Company, or the occurrence of any "Event" (as that
term is defined in the Company's 1994 Stock Incentive Plan as in effect
on the date hereof), then Employee may, at his sole election, by written
notice to Company, deem such event to be a Termination without Cause and
Company shall comply with all of its obligations under Section 4(c)(2)
hereof for the remainder of the Term, or for six months following such
written notice by Employee, whichever is longer.
9. Severability. If any provision of this Agreement as applied to either
party or to any circumstances shall be adjudged by a court of competent
jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or
enforceability of this Agreement.
10. Waiver. Waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach.
11. Counterparts. This Agreement shall be executed in a number of identical
counterparts, each of which shall be construed as an original for all
purposes, but all of which taken together shall constitute one and the
same Agreement.
12. Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and delivered in person or sent by
registered or certified Unites States mail, postage and fees prepaid, to
the addresses of the parties set forth below, or such other address as
shall be furnished by notice hereunder by any such party:
THE COMPANY DOVE AUDIO, INC.
0000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Att.: President
EMPLOYEE: Xxxxxx Xxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
DOVE AUDIO, INC.
By: /s/ XXXXXXX XXXXX
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Xxxxxxx Xxxxx
Employee
/s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
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