EMPLOYMENT AGREEMENT
THIS EMPLOYMENT Agreement (the "Agreement") is made and entered into on
the 16th day of November, 2000 by and between MCY Music World, Inc., a Delaware
corporation with offices at 0000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Company"), and P. Xxxxxxx Xxxxx, an individual residing at 000 Xxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx 00000 ("Executive").
W I T N E S S E T H:
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WHEREAS, the Company desires to employ Executive as its Chief
Financial Officer; and
WHEREAS, Executive desires to gain employment with the Company
as its Chief Financial Officer under the terms and conditions herein stated;
NOW, THEREFORE, in consideration of the mutual premises,
covenants and agreements hereinafter set forth, the parties hereby agree as
follows:
1. TERM. The Company hereby employs Executive, and Executive hereby
accepts employment hereunder, for a term of thirty-six months (the "Term")
commencing on the date hereof, subject to prior termination as provided in
Section 8 herein. The Term may be extended by mutual agreement of the Company
and the Executive on a month to month basis after the initial thirty-six month
period.
2.POSITION AND DUTIES. Executive shall serve as the Chief Financial
Officer of the Company and of its corporate parent, XXX.xxx, Inc. ("MCY"), shall
devote 100% of his working time to the Company, shall serve at the direction of
and report to the Chief Executive Officer of the Company and MCY, or such other
officer of the Company as the Chief Executive Officer shall from time to time
designate and shall perform the following duties, in addition to those which may
from time to time be prescribed by the Board of Directors or bylaws of the
Company and MCY:
(i) Creation and implementation of an overall group wide
accounting structure, financial plan and financial reporting
structure for the Company and MCY;
(ii) Advice to the Board of the Company and MCY with respect to
cash flow, budget and financial analysis;
(iii) Assist in the preparation of internal financial statements and
financial reports for the Company and MCY;
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(iv) Assist in the preparation of 1934 Exchange Act Reports;
(v) Analyze and advise the Board with respect to investments,
strategic alliances, joint ventures, mergers and acquisitions;
(vi) Prepare financial reports, projections and presentations for
Investment Bankers, Shareholders and the Public; and
(vii) Form relationships with and introduce the Company and MCY to
Investment Banking firms, Hedge Funds and Strategic and
Non-Strategic investment and business partners.
3. COMPENSATION.
3.1 BASE SALARY. For Executive's services hereunder, the
Company shall pay to Executive an initial salary which, when annualized, would
be equal to $205,000 per annum (such amount is referred to herein as the "Base
Salary"). The Base Salary shall be payable in equal installments in conformity
with the Company's normal payroll period. The Base Salary shall increase to
$225,000 per annum commencing on March 1, 2001, to $250,000 commencing March 1,
2002 and to $275,000 commemcing March 1, 2003. Notwithstanding the foregoing,
nothing herein shall require the Company to employ the Executive during the
entire Term of the Agreement or limit the Company's ability to terminate the
Executive's employment as provided herein.
3.2 BONUS. The Executive shall be eligible to receive bonus
compensation if and when granted by the Board of Directors. The Company shall
not be obligated to pay Executive bonus compensation. Any such bonus
compensation shall be at the sole discretion of the Board of Directors of the
Company.
3.3 STOCK OPTIONS. In connection with the execution of this
Agreement, the Company shall cause MCY to issue to Executive options to purchase
up to 500,000 shares of MCY's common stock, par value $.001 per share, at an
exercise price of $6.00 per share, pursuant to MCY's 1999 Stock Incentive Plan
(the "Plan"). These options shall vest over a period of thirty-six months
commencing on the date of this Agreement as set forth on the annexed Stock
Option Agreement.
4. EXECUTIVE BENEFITS.
4.1 OTHER BENEFITS. During the Term, Executive shall be
entitled to receive other perquisites and fringe benefits in accordance with the
plans and policies of the Company, including, without limitation, medical
insurance, disability and life insurance,
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participation in retirement and savings plans, and other such perquisites and
fringe benefits generally made available by the Company to its executives and
key management Executives, subject to and on a basis consistent with the terms,
conditions, and overall administration of such plans and policies.
4.2 VACATION. Executive shall be entitled to two weeks paid
vacation per annum as is consistent with the Company's policies for its senior
management. The Executive shall additionally be paid for up to five (5) sick
days and all traditional holiday vacation days in accordance with Company policy
and US Law.
5. INSURANCE. The Company shall have the right to apply for and take
out, in the Company's own name or otherwise, at the Company's expense, life,
health, accident, or other insurance covering Executive, in any amount the
Company deems necessary to protect the Company's interest hereunder, and
Executive shall have no right, title or interest in or to any such insurance.
Executive shall assist the Company in obtaining such insurance by submitting to
usual and customary medical and other examinations and by signing such
applications, statements and other instruments as may be reasonably required by
any insurance company. The Executive shall be covered by the Company's Officer
and Director Liability Insurance Plan.
6. EXPENSES. During the Term, Executive shall be entitled to receive
reimbursement for all reasonable business expenses incurred by him (in
accordance with the policies and procedures from time to time adopted by the
Board of Directors of the Company for its senior executives) in performing
services hereunder, provided that Executive properly accounts therefor in
accordance with such policy and procedures. All expenses over $5,000 in any
calendar month shall be pre-approved in writing by the Chief Executive Officer
of the Company. In the event that Executive inadvertently exceeds such limit in
any given month, same shall not constitute a default hereunder.
7. DEDUCTIONS AND WITHHOLDINGS. All amounts payable or which become
payable under any provision of this Agreement shall be subject to any deductions
authorized by Executive and any deductions and withholdings required by law.
8. TERMINATION.
8.1 DEATH. This Agreement shall terminate immediately upon
Executive's death, unless sooner terminated hereunder, subject to Section 8.6
(a) below.
8.2 TERMINATION BY THE COMPANY WITH CAUSE. The Company shall
have the right to terminate Executive's employment hereunder for Cause, subject
to Section 8.6 (c) and (d) below, which Cause is not cured within thirty (30)
days after receipt of written notice thereof by the Executive from the Company.
For purposes of this Agreement, "Cause" means (a) the failure by Executive
substantially to perform his
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duties or obligations hereunder; (b) Executive engaging in misconduct which is
materially injurious to the Company; (c) Executive's conviction of a crime of
moral turpitude; or (d) Executive's conviction by, or entry of a plea of guilty
or nolo contendere in, a court of competent jurisdiction of a crime constituting
a felony.
8.3 TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may
terminate Executive's employment hereunder without Cause at any time during the
Term of this Agreement, subject to Section 8.6 (b) and (d) below.
8.4 DISABILITY. If Executive shall be unable to perform his
services hereunder by reason of illness or other incapacity, his failure so to
perform his duties will not be grounds for terminating his employment for Cause
by the Company; provided, however, should the period of such incapacity exceed
six months, or if on 50% or more of the normal working days throughout six (6)
consecutive months Executive is unable to perform his duties fully due to such
incapacity, then the Company may terminate his employment hereunder, subject to
Section 8.6 (a) and (d) below.
8.5 TERMINATION BY THE EXECUTIVE. In the event that the
Executive terminates this Agreement, all rights and obligations of the Company
hereunder shall thereupon immediately terminate, as set forth in Section 8.6 (c)
and (d) below.
8.6 EFFECT OF TERMINATION.
(a) Upon termination of this Agreement or
Executive's employment hereunder pursuant to
Sections 8.1 or 8.4 hereof, all compensation
and benefits payable by the Company
hereunder subsequent to the date of death or
disability shall be immediately terminated;
provided, however, Executive or his estate,
as the case may be, shall be entitled to
receive any payments under any applicable
life or disability insurance plans. Such
payments, if any, shall be made at the time
and in accordance with the terms and
conditions of such plans.
(b) Upon termination of Executive's employment
pursuant to Section 8.3 hereof, within 10
days after such termination Executive shall
be entitled to receive a payment equal to
equal to six (6) months of the Executive's
Base Salary if such termination occurs
within the first six (6) months following
the date of this Agreement or equal to the
lesser of one (1) year or the remainder of
the Employment Term if said termination
pursuant to Section 8.3 occurs after six
months from the date of this Agreement.
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(c) Upon termination of Executive's employment
pursuant to Sections 8.2 or 8.5 hereof,
Executive shall not be entitled to receive
any payment subsequent to the date of such
termination.
(d) Notwithstanding the termination of this
Agreement or any provision herein to the
contrary, the Executive shall in all events
be subject to the Confidentiality Agreement
(as hereinafter defined) after the
termination of this Agreement pursuant to
its terms.
9. GENERAL PROVISIONS.
9.1 NOTICES. All notices required to be given under the terms
of this Agreement shall be in writing and shall be deemed to have been duly
given only if delivered to the addressee in person or mailed by certified mail,
return receipt requested, to the address as included in the Company's records or
to any such other address as the party to receive the notice shall advise by due
notice given in accordance with this paragraph. Any party hereto may change its
or his address for the purpose of receiving notices, demands and other
communications as herein provided, by a written notice given in the manner
aforesaid to the other party hereto.
9.2 BENEFIT OF AGREEMENT AND ASSIGNMENT. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective executors, administrators, successors and assigns; provided, however,
that Executive may not assign any of his rights or duties hereunder except upon
the prior written consent of the Board of Directors of the Company.
9.3 APPLICABLE LAW. This Agreement is made in and is to be
governed by and construed under the laws of the State of New York.
9.4 CAPTIONS. The captions appearing at the commencement of
the sections hereof are descriptive only and for convenience of reference only
and are not intended to be part of or to effect the meaning or interpretation of
this Agreement.
9.5 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
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9.6 ENTIRE AGREEMENT. This Agreement and the annexed Stock
Option Agreement contain the entire Agreement of the parties, and supersede any
and all other Agreements, either oral or in writing, between the parties hereto
with respect to the subject matter hereof. Each party to this Agreement
acknowledges that no representations, inducements, promises, or Agreements, oral
or otherwise, have been made by either party, or anyone acting on behalf of
either party, which are not embodies herein, and that no other Agreement,
statement or promise not contained in this Agreement shall be valid or binding.
9.7 AMENDMENTS. This Agreement may be modified or amended only
by an Agreement in writing signed by the Company and Executive.
9.8 WAIVER. No waiver of any provision hereof shall be valid
unless made in writing and signed by the party making the waiver. No waiver of
any provision of this Agreement shall constitute a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver.
9.9 REPRESENTATIONS AND WARRANTIES. Each party hereto
represents and warrants that it or he has the power and authority to execute and
deliver this Agreement and to perform its or his obligations hereunder.
9.10 COMPLIANCE WITH LAWS AND POLICIES. Executive agrees that
he will at all times comply strictly with all applicable laws and all current
and future policies of the Company, including but not limited to those set forth
in Section 10 below.
9.11 ARBITRATION. Any dispute or controversy arising under or
in connection with this Agreement, other than matters pertaining to injunctive
relief, including, without limitation, temporary restraining orders, preliminary
injunctions and permanent injunctions, shall, upon the written demand of either
party served upon the other party, be submitted to arbitration. Such arbitration
shall be held in the City of New York, New York, and conducted in accordance
with the Rules of the American Arbitration Association.
10. RESTRICTIONS RESPECTING CONFIDENTIAL INFORMATION, COMPETING
BUSINESSES, ETC.
10.1 The Executive acknowledges and agrees that by virtue of
the Executive's position and involvement with the business and affairs of the
Company and MCY, the Executive will develop substantial expertise and knowledge
with respect to all aspects of the business, affairs and operations of the
Company and MCY and will have access to significant aspects of the business and
operations of the Company and MCY and to Confidential and Proprietary
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Information (as such term is hereinafter defined). The Executive acknowledges
and agrees that the Company will be damaged if the Executive were to breach any
of the provisions of this Section 10 or if the Executive were to disclose or
make unauthorized use of any Confidential and Proprietary Information.
Accordingly, the Executive expressly acknowledges and agrees that the Executive
is voluntarily entering into this Agreement and that the terms, provisions and
conditions of this Section 10 are fair and reasonable and necessary to
adequately protect the Company and its interests and those of its shareholders.
10.2 For purposes of this Agreement, the term "Confidential
and Proprietary Information" shall mean any and all (i) confidential or
proprietary information or material not in the public domain about or relating
to the business, operations, assets, financial condition, plans and/or prospects
of the Company or MCY or any of their respective subsidiaries or any of their
respective trade secrets, including, without limitation, research and
development plans or projects; computer materials such as programs, instructions
and printouts and any source codes, object codes and algorithms; formulas;
product testing information; business improvements, processes, marketing and
selling strategies; strategic business plans (whether pursued or not); budgets;
unpublished financial statements; licenses; pricing, pricing strategy and cost
data; information regarding the skills and compensation of executives; the
identities of clients and potential clients; intellectual property rights and
strategies regarding intellectual property including any work on any patents,
trademarks, tradenames or universal resource locators, prior to any filing or
the use thereof in commerce; financing terms and strategies; the terms of
contractual concepts with artists and other third parties, pricing, timing,
sales terms, methods, practices, strategies, forecasts; and (ii) any other
information, documentation or material not in the public domain by virtue of any
action by or on the part of the Executive, the knowledge of which gives or may
give the Company, MCY or any of their respective subsidiaries a competitive
advantage over any entity not possessing such information. For purposes hereof,
the term Confidential and Proprietary Information shall not include any
information or material (i) that is known to the general public other than due
to a breach of this Agreement by the Executive or (ii) was disclosed to the
Executive by a person or entity who the Executive did not reasonably believe was
bound to a confidentiality or similar agreement with the Company.
10.3 The Executive hereby covenants and agrees that, while the
Executive is employed by the Company and thereafter, unless otherwise authorized
by the Company in writing, the Executive shall not, directly or indirectly,
under any
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circumstance: (i) disclose to any other person or entity any Confidential and
Proprietary Information (other than in the regular course of the Executive's
duties to the Company for the benefit of the Company), other than pursuant to
applicable law, regulation or subpoena or with the prior written consent of the
Company; (ii) act or fail to act so as to impair the confidential or proprietary
nature of any Confidential and Proprietary Information; (iii) use any
Confidential and Proprietary Information other than for the sole and exclusive
benefit of the Company; or (iv) offer or agree to, or cause or assist in the
inception or continuation of, any such disclosure, impairment or use of any
Confidential and Proprietary Information. Following the Employment Term, the
Executive shall return all documents, records and other items containing any
Confidential and Proprietary Information to the Company (regardless of the
medium in which maintained or stored), without retaining any copies, notes or
excerpts thereof, or at the request of the Company, shall destroy such
documents, records and items (any such destruction to be certified by the
Executive to the Company in writing). Following the Employment Term, the
Executive shall return to the Company any property or assets of the Company in
the Executive's possession.
10.4 The Executive covenants and agrees that, while the
Executive is employed by the Company and for any period that the Company is
paying severance to the Executive hereunder or for a period of one (1) year if
the Executive's employment hereunder is terminated for Cause, if applicable, the
Executive shall not, directly or indirectly, manage, operate or control, or
participate in the ownership, management, operation or control of, or otherwise
become interested in (whether as an owner, stockholder, partner, lender,
consultant, executive, officer, director, agent, supplier, distributor or
otherwise) any business which is competitive with the business of the Company,
MCY or any of their respective subsidiaries or, directly or indirectly, induce
or influence any Person that has a business relationship with the Company, MCY
or any of their respective subsidiaries, to discontinue or reduce the extent of
such relationship. For purposes of this Agreement, the Executive shall be deemed
to be directly or indirectly interested in a business if he is engaged or
interested in that business as a stockholder, director, officer, executive,
agent, partner, individual proprietor, consultant, advisor or otherwise, but not
if the Executive's interest is limited solely to the ownership of not more than
five percent (5%) of the securities of any class of equity securities of a
corporation or other Person whose shares are listed or admitted to trade on a
national securities exchange or are quoted on NASDAQ or a similar means if
NASDAQ is no longer providing such information.
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10.5 While the Executive is employed by the Company and for
one (1) year after the Executive ceases to be an employed by the Company, the
Executive shall not, directly or indirectly, solicit to employ or employ for
himself or others any Executive of the Company or MCY or any subsidiary of the
Company or MCY who was an Executive of the Company or any subsidiary of the
Company or MCY as of the date of the termination of the Executive's employment
with the Company or during the preceding six (6) month period, or solicit any
such Executive to leave such Executive's employment or join the employ of
another, then or at a later time.
10.6 The parties agree that nothing in this Agreement shall be
construed to limit or negate the common law of torts, confidentiality, trade
secrets, fiduciary duty and obligations where such laws provide the Company with
any broader, further or other remedy or protection than those provided herein.
10.7 Because the breach of any of the provisions of this
Section 10 may result in immediate and irreparable injury to the Company for
which the Company may not have an adequate remedy at law, the Company shall be
entitled, in addition to all other rights and remedies available to it at law,
in equity or otherwise, to a decree of specific performance of the restrictive
covenants contained in this Section 10 and to a temporary and permanent
injunction enjoining such breach (without being required to post a bond or
furnish other security or to show any damages).
10.8 In the event the Executive challenges this Agreement and
an injunction is issued staying the implementation of any of the restrictions
imposed by Section 10 hereof, the time remaining on the restrictions shall be
tolled until the challenge is resolved by final adjudication, settlement or
otherwise.
IN WITNESS WHEREOF, this Agreement is executed on the day and year
first above written.
MCY MUSIC WORLD, INC. EXECUTIVE
By:/s/ Xxxxxxxx Xxxxxxx By: /s/ P. Xxxxxxx Xxxxx
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Xxxxxxxx Xxxxxxx, President P. Xxxxxxx Xxxxx
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