Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of
June 2, 1997 (the "Effective Date"), by and between JAMTV CORPORATION, a
Delaware corporation (the "Company"), and XXXXXX X. XXXXXXX (the "Executive").
RECITALS:
A. The Company desires to obtain the benefit of the Executive's
knowledge, skills and experience and assure itself of the ongoing right to
Executive's services subject to the terms and conditions set forth in this
Agreement beginning on the Effective Date; and
B. The Executive is willing and able to render services to the
Company, beginning on the Effective Date, on the terms and conditions set forth
in this Agreement.
AGREEMENTS:
In consideration of the mutual agreements, provisions and covenants
contained in this Agreement, the Company and Executive hereby agree as follows:
1. EMPLOYMENT. Subject to all of the terms and conditions provided
in this Agreement, the Company hereby agrees to employ Executive and Executive
hereby accepts employment with the Company. Executive's title shall be Chief
Executive Officer of the Company and he shall possess such powers and perform
such duties as are normally incident to such office, as provided in the by-laws
of the Company and in accordance with the applicable corporate laws governing
the Company. Executive's initial duties shall be to direct and supervise on a
day-to-day basis those areas of the Company's business that correspond to
Executive's areas of expertise, which include the acquisition, development and
use of technology, investor relations, finance, legal, human resources,
management and operations, production and marketing, the development of
strategic technology related partnerships, and such other areas as may be
identified from time to time by the Board of Directors of the Company (the
"Board"). Executive shall report directly to the Board. Executive will perform
the duties of his employment hereunder diligently and faithfully and in
conformity with the directions of the Board, and shall at all times be subject
to and shall observe and carry out such reasonable rules, regulations, policies,
directions and restrictions as may be established from time to time by the
Company.
2. TERM OF EMPLOYMENT. Unless terminated as provided in Section 5
hereof, the term of this Agreement shall be for a period of three years (the
"Employment Period"), commencing on the Effective Date and continuing through
and including the day immediately preceding the third anniversary of the
Effective Date (the "Expiration Date"). Before the Expiration Date, the Company
and Executive shall negotiate, in good faith, an extension, modification or
amendment of this Agreement, or a new employment agreement, which would govern
the employment of Executive by the Company after the Expiration Date; provided,
however that neither party shall be bound by the non-surviving terms of any
employment agreement governing the employment of Executive after the Expiration
Date unless such parties shall have entered into a binding, written agreement
governing such employment.
3. COMPENSATION AND BENEFITS.
(a) BASE SALARY. As compensation for the services to be rendered by
Executive hereunder, the Company shall pay to Executive a base salary of $90,000
per year (the "Base Salary"), subject to increase on the first and second
anniversaries of the Effective Date as determined by the Compensation Committee
of the Board. The Base Salary shall be payable in periodic installments (but in
no event less frequently than semi-monthly) in accordance with the standard
payroll practices of the Company in effect from time to time, less income tax
withholdings and other required employee deductions.
(b) BUSINESS EXPENSES. In accordance with the Company's policies
established from time to time, the Company will pay or reimburse Executive for
all reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the presentation by
Executive of appropriate receipts and vouchers.
(c) DISCRETIONARY BONUS. For each fiscal year during the Employment
Period, the Company will set a target bonus for Executive of at least $25,000.
The amount of the bonus actually paid, if any, will be determined by the Board
(or the Compensation Committee of the Board, if one has been established) based
upon Executive's performance and the achievement of the Company's financial
objectives.
(d) STOCK OPTIONS. Executive may be granted an option or options to
purchase shares of the common stock of the Company ("Stock Option"), provided
that Executive shall be granted, as of the Effective Date, a Stock Option for
the purchase of __________ shares (the "Initial Option"), which shall vest and
become fully exercisable on December 31, 1997. The Initial Option and each
additional Stock Option granted to Executive (if any) shall be evidenced by a
Stock Option Agreement in the form attached hereto as EXHIBIT A, to be executed
by the Executive and the Company at the time of grant ("Stock Option
Agreement"). The applicable Stock Option Agreement shall set forth the date
that the Initial Option and any additional Stock Option (if any), as the case
may be, shall vest and become exercisable and shall set forth the exercise price
per share, which shall be equal to the per share fair market value of the common
stock of the Company determined as of the date of grant. All Stock
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Options granted to Executive shall be granted under the Company's 1997 Stock
Option Plan, and shall be subject to the terms and conditions of such plan
and the Stock Option Agreement.
(e) FRINGE BENEFITS. The Company shall make available to Executive,
throughout the Employment Period, such benefits and perquisites as are generally
provided by the Company to its executive employees. Without limiting the
foregoing, Executive shall be eligible to participate in the pension plan, group
life, health or accident insurance, or other such plan or policy which may
presently be in effect or which may hereafter be adopted by the Company for the
benefit of its executive Executives generally, in each case subject to the terms
and conditions of any such plan or policy.
(f) SEVERANCE PAY. In the event Executive's employment with the
Company is terminated by the Company, in consideration of the Executive's
covenants set forth in Section 7 hereof, and in consideration of his employment,
the Company shall pay to the Executive severance pay in an aggregate amount
equal to $45,000 (the "Severance Amount"), less income tax withholdings and
other required employee deductions. The Severance Amount shall be payable in
semi-monthly installments over a period of six months, subject to the terms of
Section 3(a).
4. VACATION. Throughout the Employment Period, Executive shall be
entitled to take, from time to time, on an annual basis, four weeks of vacation
with pay, at such times as shall be mutually convenient to Executive and the
Company.
5. TERMINATION.
(a) FOR CAUSE. At any time during the term of this Agreement, the
Company may terminate Executive's employment under this Agreement for Cause,
without any further liability hereunder except as noted in paragraph 3(f)
above. As used in this Agreement, "Cause" shall mean termination by action of
the Board because of any one or more of the following: (i) the Executive's
conviction of, or plea of nolo contendere to, a felony; (ii) the Executive's
breach of any legal duty of loyalty to the Company, misappropriation of the
Company's funds, or dishonest, fraudulent, illegal or unethical business
conduct; (iii) the failure of Executive to perform the duties provided in
Section 1, which failure to so perform shall continue after notice from the
Company; (iv) the Executive's breach of the obligations provided in Sections
6 and 7 of this Agreement; (v) the Executive's illegal use of controlled
substances; or (vi) any material breach of this Agreement by the Executive
(other than one identified above) which shall continue after notice from the
Company. Termination for Cause shall be effective immediately for those
events described in subparagraphs (i), (ii), (iv), and (v). Termination for
Cause shall be effective for the events in subparagraphs (iii) and (vi) 30
days after notice to Executive from the Company of the occurrence of such
events and Executive shall have failed to cure such events within such 30 day
period.
(b) DEATH OF EXECUTIVE. This Agreement shall terminate automatically
upon the death of Executive. Any Stock Option granted to Executive prior to his
death shall continue to be exercisable in accordance with the terms of the
Company's Stock Option Plan.
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(c) DISABILITY. This Agreement shall terminate upon a determination
by the Board based upon a written medical opinion that the Executive is unable
to perform the essential functions of his employment position, due to a
disability of Executive that cannot be reasonably accommodated by the Company.
(d) INSOLVENCY. Executive, at its option, may terminate this
Agreement if (i) the Company shall commence any proceeding in bankruptcy or for
relief of debtors seeking to have an order for relief entered with respect to it
or seeking to adjudicate it a bankrupt or insolvent; or (ii) there shall be
commenced against the Company any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order for
relief or any adjudication that it is bankrupt or insolvent or (B) remains
undismissed, undischarged, unstayed or unbounded for period of 90 days.
6. CONFIDENTIAL INFORMATION.
(a) CONFIDENTIAL INFORMATION DEFINED. "Confidential Information"
means any trade secret (as defined in 765 ILSC Section 1065/2(d)) of the Company
that contains, reflects or embodies the Company's business plans or the
Company's strategic, financial, technical, joint venture, or investor
information.
(b) DISCLOSURE AND USE. Executive shall not disclose or use at any
time, either during or after Executive's employment with the Company or any
other direct or indirect subsidiary of the Company (collectively referred to in
this paragraph as the "Company"), any Confidential Information, except that
Executive may disclose, subject to Section 7, Confidential Information solely to
the extent: (1) required for Executive to perform his employment duties with
the Company; (2) it has been disclosed to Executive by a third party who is not
subject to restriction on the disclosure of such information; (3) it has or
becomes generally available to the public other than as a result of a disclosure
by a party who is not subject to nondisclosure obligations with respect thereto;
(4) it must be disclosed as a result of a subpoena or other legal process, after
the Company has had the opportunity to request a suitable protective order for
such information; or (5) the Company has given Executive prior written
authorization to do so. Executive's obligations under this paragraph shall
survive the termination of this Agreement and Executive's employment with the
Company, and shall remain in effect and be enforceable against Executive for so
long as any Confidential Information retains economic value, whether actual or
potential, because it is not generally known to other persons who can obtain
economic value from its disclosure or use. Executive shall execute such
reasonable further agreements evidencing Executive's obligations to the Company
concerning nondisclosure of Confidential Information as the Company may require
from time to time.
(c) RETURN OF MATERIALS. Upon termination of his employment with the
Company, Executive shall promptly deliver to the Company all customer lists,
specifications, drawings, computer programs, listings, documentation, manuals,
letters, notes, note books, reports, and all
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other embodiments of Confidential Information (together with copies thereof)
in the possession or under the control of Executive.
7. RESTRICTIVE COVENANT.
(a) RESTRICTED ACTIVITIES. As conditions of his employment and in
consideration of his employment, Executive covenants and agrees as follows:
(i) subject to Section 7(c) below, beginning on the Effective
Date and continuing for 12 months after the termination of Executive's
employment with the Company (the "Restricted Period"), he will not, without the
prior written consent of the Board, directly or indirectly, as a stockholder
(except as a stockholder owning beneficially or of record less than 5% of the
outstanding shares of any class of publicly traded stock of any issuer), or as
an officer, director, employee, partner, joint venturer, proprietor or
otherwise, engage in, become interested in, consult with, lend to or borrow
from, advise or negotiate for or on behalf of, the "Restricted Business."
(ii) during the Restricted Period, he will not solicit (or
employ or cause to be employed other than by the Company) other employees of the
Company or any affiliate or subsidiary of the Company, directly or indirectly,
for the purpose of enticing them to leave their employment with the Company or
any affiliate or subsidiary of the Company;
(iii) during the Restricted Period, he will not attempt in any
manner to solicit any Restricted Business from any individual or entity who or
which is a client of the Company at any time within six months before the date
that Executive's employment by the Company terminates or to persuade any such
client to cease doing business with the Company or to reduce the amount of
business which such client has customarily done or contemplates doing with the
Company, whether or not the relationship between the Company and such client was
originally established in whole or in part through his efforts;
(iv) during the Restricted Period, he will make full and
complete disclosure of the existence of this Agreement and the content of this
Section 7 to all prospective employers with whom he may discuss possible
employment;
(v) he will refrain from any disparagement, direct or
indirect, through innuendo or otherwise, of the Company or any of its employees,
agents, officers, directors, shareholders or affiliates;
(vi) subject to Section 7(c) below, during his employment with
the Company, he will not, without the prior written consent in each case of the
Board, participate actively in any other business interests or investments which
would conflict with his responsibilities under this Agreement;
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(vii) during his employment with the Company, he will not,
without the prior written consent in each case of the Board: (a) exchange
goods, products or services of the Company in return for goods, products or
services of any individual or firm or (b) accept gifts or favors from any
outside organization or agency which, individually or collectively, may cause
undue influence in his selection of goods, products or services for the Company;
and
(viii) after the termination of his employment with the Company,
he will not secure, or attempt to secure, from any employee or former employee
of the Company or any affiliate or subsidiary of the Company, any information
relating to the Company or any affiliate or subsidiary of the Company or its
operations.
(b) RESTRICTED BUSINESS DEFINED. For the purposes of this Agreement,
"Restricted Business" means (a) the production, creation, compilation, support,
and programming of multimedia productions and content (including, without
limitation, live, streaming, and recorded audio, video, and graphics and news
and information from or about music, entertainment, artists, and performers) for
placement, broadcast, downloading, transmission, or distribution on or through
the Internet, World Wide Web, computer networks, CDs, CD-ROMs and DVDs, and
wireless interactive networks or devices, and (b) the distribution and sale by
the foregoing means of goods relating to the foregoing content (including,
without limitation, recorded music and video products, CDs, CD-ROMs, disks,
tapes, computer software, concert or theater merchandise, memorabilia, books,
and clothing).
(c) LIMITATIONS. Nothing contained in this Agreement shall prohibit
Executive from forming, investing or participating in any other entity or being
employed by any other entity so long as Executive and such other entity do not
compete with the Restricted Business of the Company as set forth in Section
7(a), and at no time shall Executive's employment hereunder be exclusive.
(d) REPRESENTATION AND WARRANTY. Executive represents and warrants
to the Company that, notwithstanding the operation of the covenants contained in
this Section 7, upon the termination of his employment hereunder, Executive will
be able to obtain employment for the purpose of earning a livelihood.
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8. SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable, either in its entirety or by virtue of its scope or
application to given circumstances, such provision shall thereupon be deemed
modified only to the extent necessary to render the same valid, or not
applicable to the given circumstances, or excised from this Agreement, as the
situation may require, and this Agreement shall be construed and enforced as if
such provision had been included herein as so modified in scope or application,
or had not been included herein, as the case may be. Should this Agreement, or
any one or more of its provisions hereof, be held to be invalid, illegal or
unenforceable within any governmental jurisdiction or subdivision thereof, the
Agreement or any such provision or provisions shall not as a consequence thereof
be deemed to be invalid, illegal or unenforceable in any other governmental
jurisdiction or subdivision thereof.
9. LEGAL REMEDIES. Executive hereby acknowledges that the
Company would suffer irreparable injury if the provisions of Sections 6 and 7
above, which shall survive the termination of the Agreement, were breached
and that the Company's remedies at law would be inadequate in the event of
such breach. Accordingly, Executive hereby agrees that any such breach or
threatened breach may, in addition to any and all other available remedies,
be preliminarily enjoined by the Company with bond or satisfactory security.
In the event of litigation under this Agreement, each of the Company and
Executive shall pay its own attorneys' fees and expenses, except that if
Executive is enjoined either preliminarily or permanently, after an
evidentiary hearing, then Executive shall pay the attorneys' fees and
expenses of the Company in connection with that evidentiary hearing and,
similarly, if such evidentiary hearing results in a court refusing a
permanent injunction, then the Company shall pay Executive's attorneys' fees
and expenses in connection with such hearing.
10. NON-ASSIGNABILITY. In light of the unique personal services to
be performed by Executive hereunder, it is acknowledged and agreed that any
purported or attempted assignment or transfer by Executive of this Agreement or
any of Executive's duties, responsibilities or obligations hereunder shall be
void. This Agreement shall not be assigned by the Company without the prior
written consent of Executive.
11. NOTICES. Any notice, request, demand or other communication
required or permitted under this Agreement shall be in writing and shall be
deemed to have been given when delivered personally or when mailed by certified
mail, return receipt requested, or by facsimile transmission with confirmation
of receipt thereof addressed as follows:
If to the Company:
JAMtv Corporation
000 X. XxXxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: 312.642.0616
Attn: Chief Executive Officer
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Attn: President
If to Executive:
Xxxxxx X. Xxxxxxx
0000 X. Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
or to such other address or addresses as may be specified from time to time by
notice; provided, however, that any notice of change of address shall not be
effective until its receipt by the party to be charged therewith.
12. GENERAL.
(a) AMENDMENTS. Neither this Agreement nor any of the terms or
conditions hereof may be waived, amended or modified except by means of a
written instrument duly executed by the parties hereto.
(b) CAPTIONS AND HEADINGS. The captions and paragraph headings used
in this Agreement are for convenience of reference only, and shall not affect
the construction or interpretation of this Agreement or any of the provisions
hereof.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original hereof, but all of
which together shall constitute one and the same instrument.
(e) ENTIRE AGREEMENT. Except as otherwise set forth or referred to
in this Agreement, this Agreement constitutes the sole and entire agreement and
understanding between the parties hereto as to the subject matter hereof, and
supersedes all prior discussions, agreements and understandings of every kind
and nature between them as to such subject matter.
(f) RELIANCE BY THIRD PARTIES. This Agreement is intended for the
sole and exclusive benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns, and no other person or entity shall have any right to rely on this
Agreement or to claim or derive any benefit therefrom absent the express written
consent of the party to be charged with such reliance or benefit.
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(g) GOVERNING LAW; JURISDICTION. This Agreement shall be construed
in accordance with and governed in all respects by the laws of the State of
Illinois (without giving effect to the conflicts of laws provisions thereof).
The parties hereto agree that all claims, disputes, or controversies between
them arising out of, connected with, related to, or incidental to the
relationship established between them in connection with this Agreement, whether
arising at law or equity in contract, tort, equity, or otherwise, if pursued in
court shall be resolved only by state or federal courts located in Xxxx County,
Illinois, but each party hereto acknowledges that any appeals from those courts
may have to be heard by a court located outside of Xxxx County, Illinois. Each
party hereto waives in all disputes any objection that it may have to personal
jurisdiction or the venue of the court considering the dispute.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on and as of the date first set forth above.
JAMtv CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Title: CEO
----------------------------
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
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EXHIBIT A
FORM OF STOCK OPTION AGREEMENT
[To be attached]
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