EMPLOYMENT AGREEMENT dated as of the 1st day of November, 1995, by and between
Alliance Entertainment Corp., a Delaware corporation having its principal office
at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000, (the "Company"), and Xxxxxxx X.
Xxxxxxxx, residing at 00 Xxx Xxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx 00000 (the
"Executive").
RECITALS:
The Company desires to employ the Executive, and the Executive desires to accept
such employment by the Company, upon the terms and conditions hereinafter set
forth.
In consideration of the mutual covenants and agreements set forth herein, the
parties agree as follows:
1. Employment and Duties.
The Company agrees to employ the Executive as Senior Vice President / Deputy
Chief Financial Officer and Treasurer from the date hereof until February 2,
1996, and from and after February 2, 1996 as the Executive Vice President /
Chief Financial Officer and Treasurer of the Company, and the Executive accepts
such employment and agrees to perform all duties and services consistent with
the Executive's position. The Executive agrees to devote substantially all of
the Executive's business time, attention and energy to perform the Executive's
duties and services hereunder.
2. Term of Employment.
This Agreement shall commence on the date hereof and end on December 31, 2000,
unless sooner terminated as provided in Section 5 hereof (the "Employment
Period").
3. Consideration and Benefits.
3.1 Base Salary and Percentage Salary.
The Company shall pay the Executive a base salary per annum (the "Base Salary")
equal to the Executive's Base Salary being paid as of the date hereof. Beginning
on January 1, 1996, the Company shall pay the Executive a Base Salary of Two
Hundred Seventy Thousand Dollars ($270,000) per annum. The Base Salary for each
year after the year commencing January 1, 1996 may be increased from time to
time in the sole discretion of the Board and in any event will be increased
annually to reflect corresponding increases in the United States Department of
Labor, Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers,
United States City Average, all items (1982-88 = 100). Base Salary shall be
payable at such intervals as salaries are paid by the Company to its other
executive employees.
3.2 Bonus.
In addition to the Base Salary, with respect to each fiscal year during the
Employment Period, the Company shall pay the Executive a bonus (the "Bonus") in
an amount to be determined by the Board of Directors in its sole discretion.
3.3 Benefit Plans.
During the Employment Period, the Executive shall be entitled to participate in
all plans adopted for the general benefit of the Company's employees or
executive employees, such as pension plans, medical plans, investment plans and
group or other insurance plans and benefits (including disability and life
insurance plans), to the extent that the Executive is and remains eligible to
participate therein and subject to the eligibility provisions of such plans in
effect from time to time. The Executive shall be reimbursed for his reasonable
out-of-pocket expenses incurred in the performance of his duties upon submission
of appropriate evidence thereof in conformity with normal Company policy.
3.4 Officer Loan.
The Company agrees to forgive an officer loan in the amount of $12,500 over the
first two years of the employment period, at a rate of $6,250 per annum.
4. Vacation.
For each year during the Employment Agreement, the Executive shall be entitled
to paid vacation as follows: the greater of (a) three (3) weeks or (b) the
number of weeks vacation provided to executives pursuant to Company policy.
5. Automobile.
In order to enable Executive to carry out his duties, the Executive shall
receive an automobile allowance of Six Hundred Dollars ($600.00) per month for
every month during the Employment Period, in lieu of the use of a Company-owned
or leased vehicle.
6. Termination.
6.1 Death.
This Agreement shall automatically terminate upon the death of the Executive,
whereupon the Company shall be obligated to pay to the Executive's estate any
unpaid Base Salary through the date of death, and the Bonus, if any, as
determined by the Board of Directors. Amounts payable under this Section 6.1
shall be payable at the times and intervals set forth in Sections 3.1 and 3.2
hereof.
6.2 Disability.
The Company shall have the right to terminate this Agreement during the
continuance of any Disability of the Executive, as hereinafter defined, upon
fifteen (15) days prior notice to the Executive during the continuance of the
Disability. "Disability" for purposes of this Section 6.2 shall mean an
inability by the Executive to perform a substantial portion of the Executive's
duties hereunder by reason of physical or mental incapacity or disability for a
total of one hundred eighty (180) days or more in any consecutive period of
three hundred and sixty-five (365) days, as determined by the Board of Directors
in its good faith judgment. In the event of a termination by reason of the
Executive's Disability, the Company shall be obligated to pay the Executive any
unpaid Base Salary through the date of termination, and Bonus, if any, as
determined by the Board of Directors. Amounts payable under this Section 6.2
shall be payable at the times and intervals set forth in Sections 3.1 and 3.2
hereof.
6.3 Termination for Cause.
The Company may terminate this Agreement for cause. As used herein, cause shall
mean (i) the Executive shall have committed an act of fraud, embezzlement or
misappropriation against the Company or committed a material breach of fiduciary
duty owed to the Company; or (ii) the Executive shall have been convicted by a
court of competent jurisdiction of any felony or crime involving moral
turpitude, other than (a) violations of federal, state or local obscenity laws
relating to the distribution of prerecorded music, video cassettes and other
media products, or (b) criminal violations of federal antitrust or securities
laws arising out of the performance of the Executive's duties hereunder; or
(iii) the Executive shall have breached his obligations under Sections 7 and 8
of this Agreement; or (iv) the Executive's willful failure or refusal to timely
comply with a written directive of the Board of Directors of the Company,
provided that such directive is consistent with the Executive's position; and
provided further that such directive does not require the commission by the
Executive of an illegal act. Upon such termination, the Company shall only be
obligated to pay the Executive his Base Salary pre-rated to the date of
termination and any then accrued benefits.
6.4 Termination for Other Reason.
If the Executive's employment is terminated other than by reason of (i) death,
(ii) Disability, (iii) for cause, or (iv) the Executive's voluntary termination
of employment, then the Company shall pay the Executive severance pay equal to
the balance of the Base Salary payable hereunder for the term of this Agreement.
Such amount shall be payable at the times and intervals set forth in Sections
3.1 and 3.2 hereof. The Company's obligation to make payments hereunder to the
Executive shall immediately cease upon the Executive's subsequent death or
disability. In addition, the Company shall continue to provide Executive's
disability insurance coverage. The obligation of the Company to provide
disability insurance shall cease on the fifth anniversary of the date hereof.
7. Restrictions.
7.1 Confidentiality.
(i) The Executive recognizes that the Executive's position with the Company is
one of trust and confidence. The Executive acknowledges that, during the course
of the Executive's employment with the Company, the Executive will necessarily
become acquainted with confidential information relating to the customers
(including names, addresses and telephone numbers) of the Company, and trade
secrets, processes, methods of operation and other information, which the
Company regards as confidential and in the nature of trade secrets (collectively
"Confidential Information"). The Executive acknowledges and agrees that the
Confidential Information is of incalculable value to the Company and that the
Company would suffer damage if any of the Confidential Information was
improperly disclosed.
(ii) The Executive covenants and agrees that the Executive will not, at any time
during or after the termination of the Executive's relationship with the
Company, reveal, divulge, or make known to any person, firm or corporation, any
Confidential Information made known to the Executive or of which the Executive
has become aware, regardless of whether developed, prepared, devised or
otherwise created in whole or in part by the efforts of the Executive, except
and to the extent that such disclosure is necessary to carry out the Executive's
duties for the Company. The Executive further covenants and agrees that the
Executive shall retain all Confidential Information in trust for the sole
benefit of the Company, and will not divulge or deliver or show any Confidential
Information to any unauthorized person including, without limitation, any other
employer of the Executive, and the Executive will not make use thereof in an
independent business related to the business of the Company.
(iii) The Executive agrees that, upon termination of the Executive's employment
with the Company, for any reason whatsoever, or for no reason, and at any time,
the Executive shall return to the Company all papers, documents and other
property of the Company employment which relate to Confidential Information, and
the Executive will not retain copies of any such papers, documents or other
property for any purpose whatsoever.
7.2 Non-Competition.
The Executive agrees that during the Employment Period, and for a period of one
(1) year following the termination thereof, either voluntarily or by the Company
for any reason or no reason, the Executive shall not, (i) engage, directly or
indirectly, in North America, alone or as a shareholder, partner, officer,
director, employee or consultant of any other business organization, in the
business of the wholesale or independent distribution of prerecorded music,
music videos and accessories, including, without limitation, the development of
software, the sale, licensing or leasing of software and hardware and the
rendering of services in connection with such distribution business (the
"Business"), (ii) divert to any organization in the Business any customer of the
Company or any of its subsidiaries or business units, or (iii) hire, solicit or
encourage any officer, employee or consultant of the Company or any of its
subsidiaries to leave its employ for employment by or with any organization in
the Business; provided, however, that the Executive may own less than five (5%)
percent of the outstanding capital stock of any other corporation in the
Business and provided further that nothing herein contained shall prevent the
Executive from purchasing or otherwise beneficially owning, without restriction
on amount, any securities issued by the Company. If at any time the provisions
of this Section 7.2 shall be determined to be invalid or unenforceable, by
reason of being vague or unreasonable as to area, duration or scope of activity,
this Section 7.2 shall be considered divisible and shall become and be
immediately amended to only such area, duration and scope of activity as shall
be determined to be reasonable and enforceable by the court or other body having
jurisdiction over the matter; and the Executive agrees that this Section 7.2 as
so amended shall be valid and binding as though any invalid or unenforceable
provision had not been included herein.
8. Work Product.
The Executive agrees that all innovations, inventions, improvements,
developments, methods, designs, analyses, drawings, reports, and all similar or
related information which relates to the Company's actual business or product
lines or any business or product lines which the Company has taken significant
action to pursue, and which are conceived, developed or made by the Executive
while employed by the Company (any of the foregoing, hereinafter "Work
Product"), belong to the Company. The Executive will promptly disclose all such
Work Product to the Board of Directors and perform all actions reasonably
requested by the Board to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other
instruments).
9. Enforcement.
The Executive acknowledges that the Company will suffer substantial and
irreparable damages not readily ascertainable or compensable in terms of money
in the event of the breach of any of the Executive's obligations under Sections
7 and 8 hereof. The Executive therefore agrees that the provisions of Sections 7
and 8 shall be construed as an agreement independent of the other provisions of
this Agreement and any other agreement and that the Company, in addition to any
other remedies (including damages) provided by law, shall have the right and
remedy to have such provisions specifically enforced by any court having equity
jurisdiction thereof. The rights and remedies (including damages) provided by
law, shall have the right and remedy to have such provisions specifically
enforced by any court having equity jurisdiction thereof. The rights and
remedies set forth in this Section 9 shall be in addition to, and not in lieu
of, any other rights and remedies available to the Company under law or equity.
10. Miscellaneous Provisions.
10.1 Entire Agreement.
This Agreement sets forth the entire agreement and understanding between the
parties with respect to the subject matter hereof and supersedes all prior
agreements, arrangements, and understandings between the parties with respect to
the subject matter hereof.
10.2 Modification.
This Agreement may be amended, modified, superseded, canceled, renewed or
extended, and the terms or covenants hereof may be waived, only by a written
instrument executed by both of the parties or in the case of a waiver, by the
party waiving compliance.
10.3 Waiver.
The failure of either party at any time or times to require performance of any
provision hereof in no manner shall affect the right at a later time to enforce
the same. No waiver by either party of a breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such breach or a waiver of any other term or covenant contained in this
Agreement.
10.4 Notices.
All notices, demands, consents or other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been duly given) upon
the earlier of receipt, one business day after being sent by telecopier or three
business days after being sent by registered or certified mail to the parties at
the addresses set forth above or to such other address as either party shall
hereafter specify by notice to the other party. Irrespective of the foregoing,
notice of change of address shall be effective only upon receipt.
10.5 Governing Law.
This Agreement shall be construed in accordance with and governed by the laws of
the State of New York applicable to contracts made and to be performed wholly
within such state.
10.6 Arbitration.
Any controversy or claim arising out of or relating to this Agreement, the
making, interpretation or the breach thereof, other than a claim solely for
injunctive relief for any alleged breach of the provisions of Sections 7 or 8 as
to which the parties shall have the right to apply for specific performance to
any court having equity jurisdiction, shall be resolved by arbitration in New
York, New York, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof and any
party to the arbitration may, if such party so elects, institute proceedings in
any court having jurisdiction for the specific performance of any such award.
The powers for the arbitrator or arbitrators shall include, but not be limited
to, the awarding of injunctive relief. The arbitrator shall include in any award
in the prevailing party's favor the amount of his or its reasonable attorney's
fees and expenses and all other reasonable costs and expenses of the
arbitration. In the event the arbitrator does not rule in favor of the
prevailing party in respect of all the claims alleged by such party, the
arbitrator shall include in any award in favor of the prevailing party the
amount of his or its reasonable costs and expenses of the arbitration as he
deems just and equitable under the circumstances. Except as provided above, each
party shall bear his or its own attorney's fees and expenses and the parties
shall bear equally all other costs and expenses of the arbitration.
10.7 Assignability.
This Agreement, and the Executive's rights and obligations hereunder, may not be
assigned by the Executive. The Company may assign its rights, together with its
obligations hereunder, only to a successor by merger or by the purchase of all
or substantially all of the assets and business of the Company and such rights
and obligations shall inure to, and be binding upon, any such successor.
10.8 Binding Effect.
This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective legal representatives, heirs, permitted successors
and permitted assigns.
10.9 Headings and Word Meanings.
Headings and titles in this Agreement are for convenience of reference only and
shall not control the construction or interpretation of any provisions hereof.
The words "herein," "hereof," "hereunder" and words of similar import, when used
anywhere in this Agreement, refer to this Agreement as a whole and not merely to
a subdivision in which such words appear, unless the context otherwise requires.
The singular shall include the plural unless the context otherwise requires.
10.10 Separability.
Any term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
THE EXECUTIVE THE COMPANY
Alliance Entertainment Corp.
/s/Xxxxxxx Xxxxxxxx By:
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Xxxxxxx X. Xxxxxxxx
