EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of February 17,
2003, between Xxxxxxx Xxxxxx, an individual (the "Executive"), and New Frontier
Media, Inc. ("NFM"), a Colorado corporation, recites and provides as follows:
WHEREAS, NFM desires to retain the services of Executive, and Executive
desires to be employed by NFM, all on the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, NFM and Executive agree as follows:
1. EMPLOYMENT PERIOD. NFM hereby agrees to employ Executive, and
Executive hereby agrees to accept employment by NFM, in accordance with the
terms and provisions of this Agreement, for the period commencing on February
17, 2003 ("the Effective Date") and ending at midnight on March 31, 2005 (the
"Employment Period").
2. TERMS OF EMPLOYMENT.
(A) POSITION AND DUTIES.
(i) During the Employment Period, Executive shall perform
such duties, and have such title, as NFM, through its Board of Directors or the
Board's designee (collectively "the Board"), in its sole discretion, shall
determine. The Board has determined that, for the period February 17, 2003
through February 16, 2004, Executive shall serve as President of NFM, with
duties commensurate with that position. The Board may, in its sole discretion,
change these duties and title at any time after February 16, 2004, but Executive
shall not be required to serve in a non-senior management capacity. In addition,
the Board may withdraw Executive's appointment as President prior to February
16, 2004, in which case Executive shall not be required to accept any title or
perform any services for NFM during the remainder of the Employment Period
although this Agreement shall remain in full force and effect.. Executive's
services shall be performed principally at NFM's headquarters in Boulder,
Colorado. However, from time to time, Executive may also be required by his job
responsibilities to travel on NFM business, and Executive agrees to do so.
Executive shall not be required to relocate from the Boulder, Colorado area
unless NFM relocates its corporate headquarters, in which event Executive may be
required to relocate to such location.
(ii) During the Employment Period, Executive agrees to
devote his full-time attention to the business and affairs of NFM. Executive's
employment under this Agreement shall be Executive's exclusive employment during
the term of this Agreement.
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(B) COMPENSATION.
(i) Base Salary. During the Employment Period, Executive
shall receive a base salary ("Base Salary"), which shall be paid in equal
installments on a biweekly basis, at the rate of Three Hundred Fifteen Thousand
Dollars ($315,000.00) per annum.
(ii) Bonus. In addition to Executive's Base Salary,
Executive may be granted bonus(es) in the sole discretion of the compensation
committee of the Board of Directors of NFM.
(iii) Expenses. During the Employment Period, Executive
shall be entitled to receive reimbursement for all employment-related expenses
incurred by Executive in accordance with the policies, practices and procedures
of NFM as in effect generally from time to time after the Effective Date with
respect to executives of NFM.
(iv) Vacation. During the Employment Period, Executive shall
be entitled to four weeks paid vacation, which may be used in accordance with
the policies, programs and practices of NFM, which are in effect generally from
time to time after the Effective Date with respect to other executives of NFM.
(v) Sick Leave. During the Employment Period, Executive
shall be entitled to be paid sick leave in accordance with the policies,
programs and practices of NFM, which are in effect generally from time to time
after the Effective Date with respect to other executives of NFM.
(vi) Car Allowance. During the Employment Period, Executive
shall be entitled to a car allowance of $850 per month, in accordance with NFM's
car allowance policy, in lieu of expenses associated with the operation of his
automobile.
(vii) Other Benefits. During the Employment Period,
Executive shall be entitled to such health insurance and other benefits, as are
provided generally to other executives at NFM, in accordance with the policies,
programs and practices of NFM which are in effect from time to time after the
Effective Date.
3. EARLY TERMINATION OF EMPLOYMENT
(A) DEATH OR DISABILITY. Executive's employment shall terminate
automatically upon Executive's death during the employment period.
In the event that Executive is disabled, as a result of mental or
physical condition or illness, to perform the material functions
of his job, even with reasonable accommodation, for a total of 90
days out of any six-month period, Executive's employment may be
terminated after such 90 days by NFM's reasonable and good faith
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determination that Executive is so disabled. In the event that NFM
intends to terminate the employment of Executive because of
disability, NFM shall give to Executive 30 days' notice of NFM's
intention to terminate Executive's employment. In the event that
Executive denies that he is disabled from performing the material
functions of his job, Executive may, within 30 days of the date of
notice of NFM's intention to terminate, request that his
disability be determined by a physician selected by NFM or its
insurers and acceptable to Executive, Executive's acceptance of
the physician not to be unreasonably withheld. Promptly following
such request by Executive, NFM shall arrange for an examination of
Executive and Executive shall cooperate fully in such examination.
Executive shall remain employed until the physician determines
whether Executive is disabled. In the event that the physician
determines that Executive is not disabled from performing the
material functions of his job, Executive shall continue with his
employment. In the event that the physician determines that
Executive is disabled from performing the material functions of
his job, Executive's employment shall terminate upon such
determination.
(B) CAUSE. NFM may terminate Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean
and be limited to (i) the conviction of Executive for committing an act of
fraud, embezzlement, theft or other act constituting a crime, or the guilty or
nolo contendere plea of Executive to such a crime; (ii) Executive's performance
of any act or his failure to act, for which if he were prosecuted and convicted,
would amount to a crime or offense involving money or property of NFM or its
subsidiaries, or which would constitute a felony in the jurisdiction where the
act or failure to act has occurred; (iii) material violation of any NFM policy
instituted to protect NFM or its employees; (iv) material failure, neglect, or
refusal by Executive properly to discharge, perform or observe any or all of
Executive's job duties, provided Executive has been given written notice of such
failure, neglect or refusal, and has not cured such within 10 days thereafter;
(v) material breach of any of the representations, warranties or covenants set
forth in Sections 6 or 7 of this Agreement.
(C) TERMINATION FOR OTHER REASONS. NFM may terminate the employment of
Executive without Cause by giving notice to Executive at least thirty(30) days
prior to the Date of Termination. Executive may resign from his employment
without Good Reason hereunder by giving notice to NFM at least thirty (30) days
prior to the Date of Termination.
(D) GOOD REASON. Executive may terminate his employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean, in the absence
of the consent of Executive, a reasonable determination by Executive that any of
the following has occurred:
(i) a material breach by NFM of the terms of this Agreement,
which breach is not remedied promptly after notice thereof from Executive; or
(ii) a Change of Control (as defined in Section 5(A))
occurs.
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(E) NOTICE OF TERMINATION. Any termination shall be communicated by
Notice of Termination to the other party. For purposes of this Agreement, a
"Notice of Termination" means a notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date (which
date shall be not more than fifteen (15) days after the giving of such notice,
unless otherwise required by Section 3(F)). The failure by Executive or NFM to
set forth in the Notice of Termination any fact or circumstance shall not waive
any right of Executive or NFM hereunder or preclude Executive or NFM from
asserting such fact or circumstance in enforcing Executive's or NFM's rights
hereunder.
(F) DATE OF TERMINATION. "Date of Termination" shall mean (i) if
Executive's employment is terminated by NFM for Cause, or by Executive for Good
Reason, (a) the date of delivery, if by personal delivery; (b) the next day
after the date of transmission, if transmitted by facsimile or email; or (c)
three calendar days after the date of mailing, if transmitted by first class
mail or any permitted later date specified therein; (ii) if Executive's
employment is terminated by reason of Executive's death or disability, the date
of death, or the effective date of disability as provided herein above; (iii) if
Executive' s employment is terminated by NFM other than for Cause or Disability
or by Executive other than for Good Reason, the Date of Termination shall be the
thirtieth (30th) day following the transmission of Notice of Termination as
specified in (a), (b), or (c) of this section
4. OBLIGATIONS OF NFM UPON EARLY TERMINATION.
(A) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during
the Employment Period, NFM shall terminate Executive's employment other than for
Cause, death or Disability or Executive shall terminate employment for Good
Reason:
(i) NFM shall pay to Executive, within thirty days after the Date of
Termination, any accrued base salary, vacation pay, expense reimbursement and
any other entitlements accrued by Executive under Section 2(B), to the extent
not previously paid (the sum of the amounts described in this subsection shall
be hereinafter referred to as the "Accrued Obligations").
(ii) NFM shall continue to pay to Executive, in regular bi-weekly
installments Executive's Base Salary under the Agreement for the duration of the
Employment Period. If Executive commences employment with another employer, or
if Executive engages in other work for compensation, then NFM's obligation to
pay bi-weekly installments shall be reduced or eliminated to the extent
Executive receives compensation from the other employer or work.
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(iii) NFM shall continue to provide benefits to Executive at least
equal to those which would have been provided to him in accordance with the
plans, programs, practices and policies which are generally applicable to other
peer executives, for the duration of the Employment Period (the "Welfare Benefit
Continuation"). If Executive commences employment with another employer and is
eligible to receive medical or other welfare benefits under another
employer-provider plan, the medical and other welfare benefits to be provided by
NFM as described herein shall terminate.
(B) DEATH. If Executive's employment is terminated by reason of
Executive's death during the Employment Period, this Agreement shall terminate
without further obligation to Executive's legal representatives under this
Agreement, other than for payment of Accrued Obligations (which shall be paid to
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
thirty (30) days of the Date of Termination).
(C) CAUSE; OTHER THAN FOR GOOD REASON. If Executive's employment shall
be terminated for Cause or Executive terminates his employment without Good
Reason during the Employment Period, this Agreement shall terminate without
further obligations to Executive other than the obligation to pay to Executive
the Accrued Obligations and the amount of any compensation previously deferred
by Executive, in each case to the extent theretofore unpaid, all of which shall
be paid in cash within thirty (30) days of the Date of Termination.
(D) DISABILITY. If Executive's employment shall be terminated by
reason of Executive's Disability during the Employment Period, this Agreement
shall terminate without further obligation to Executive, other than for payment
of Accrued Obligations and the timely payment or provision of the Welfare
Benefit Continuation. Accrued Obligations shall be paid to Executive in a lump
sum in cash within thirty (30) days of the Date of Termination. Executive shall
be entitled after the Disability Effective Date to receive disability and other
benefits as in effect at the Disability Effective Date with respect to other
peer executives of NFM and their families. In addition, NFM shall continue to
pay to Executive in regular biweekly installments, Executive's base salary under
the Agreement for a period of six months following termination.
(E) In the event that NFM is obligated hereunder to pay Welfare Benefit
Continuation to Executive following termination of Executive's employment, NFM
may satisfy its obligation to pay the medical insurance component of the Welfare
Benefit Continuation by advancing COBRA payments for the benefit of Executive.
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5. CHANGE IN CONTROL.
(A) DEFINED. For purposes of this Agreement, a "Change in Control" of
NFM shall be deemed to have occurred as of the first day that any one or more of
the following conditions shall have occurred:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Act"), becomes
the "beneficial owner" (as defined in Rule 13-d under the Act) directly or
indirectly, of securities representing more than fifty percent (50%) of the
total voting power represented by NFM's then outstanding voting securities; or
(ii) A change in the composition of the Board, as a result
of which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (a) are directors of NFM
as of the date hereof, or (b) are elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connect with an actual or
threatened proxy contest relating to the election of directors of NFM).
(iii) NFM merges with any other corporation after which a
majority of the shares of the resulting entity are not held by the shareholders
of NFM prior to the merger.
(B) BONUS TO EXECUTIVE. In the event of a change of control based on
the acquisition of shares in the public market at a price of $5.00 per share or
higher, or in the event of a merger based on a valuation of NFM stock at a price
of $5.00 per share or higher, then Executive shall receive, in addition to any
other benefits hereunder, a bonus in the amount one year of base salary, to be
paid in bi-weekly installments over a period of one year, following the end of
the Employment Period.
6. CONFIDENTIAL INFORMATION.
(A) CONFIDENTIAL INFORMATION. As used in this Agreement, "Confidential
Information" includes, without limitation, design information, manufacturing
information, business, financial, and technical information, sales and
processing information, product information, customers, customer lists, vendors,
vendor lists, pricing information, corporation and personal business contact and
relationships, corporation and personal business opportunities, software,
computer disks or files, or any other electronic information of any kind,
Rolodex cards or other lists of names, addresses or telephone numbers, financial
information, projects, potential projects, current projects, projects in
development and future projects, forecasts, plans, contracts, releases, and
other documents, materials, writings or information, including those which are
prepared, developed or created by Executive, or which come into the possession
of Executive by any means or manner, and which relate directly or indirectly to
NFM or any of its owners, predecessors, successors, subsidiaries, affiliates,
and all of its shareholders, directors and officers (all of the above
collectively referred to as "Confidential Information"). Confidential
Information includes information developed by Executive in the course of
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Executive's services for NFM, as well as other Confidential Information to which
Executive may have access in connection with Executive's services. Confidential
Information also includes the confidential information of other individuals or
entities with which NFM has a business relationship. Confidential Information
shall not include any information (a) which is in the public domain or which
enters the public domain through no act of omission of Executive or (b) which
was in the possession of Executive prior to the commencement of his employment
with NFM. For purposes of this section 6, the term "NFM" shall include all of
its predecessors, subsidiaries and affiliates.
(B) DUTY OF CONFIDENTIALITY. Executive will maintain in confidence and
will not, directly or indirectly, disclose or use (or allow others working with
or related to Executive to disclose or use), either during or after the term of
this Agreement, any Confidential Information belonging to NFM, whether in oral,
written, electronic or permanent form, except solely to the extent necessary to
perform services on behalf of NFM. Upon termination of this Agreement, or at the
request of NFM prior to its termination, Executive shall deliver forthwith to
NFM all original Confidential Information (and all copies thereof) in
Executive's possession or control belonging to NFM and all tangible items
embodying or containing Confidential Information.
(C) DOCUMENTS, RECORDS, ETC. All documents, records, data, equipment
and other physical property, whether or not pertaining to Confidential
Information, which are furnished to Executive by NFM or are produced by
Executive in connection with Executive's services will be and remain the sole
property of NFM. Executive will return to NFM forthwith all such materials and
property upon the termination of this Agreement o r sooner if requested by NFM.
(D) ASSIGNMENT OF RIGHTS. Executive shall make full and prompt
disclosure to NFM of any and all designs, intellectual property, software,
inventions, discoveries, or improvements (individually and collectively,
"Inventions") made by Executive as a result or product of his employment
relationship with NFM. Executive hereby assigns to NFM without additional
compensation the entire worldwide right, title and interest in and to such
Inventions, and related intellectual property rights and without limitation all
copyrights, copyright renewals or reversions, trademarks, trade names, trade
dress rights, industrial design, industrial model, inventions, priority rights,
patent rights, patent applications, patents, design patents and any other rights
or protections in connection therewith or related thereto, for exploitation in
any form or medium, of any kind or nature whatsoever, whether now known or
hereafter devised. To the extent that any work created by Executive can be a
work for hire pursuant to U.S. Copyright Law, the parties deem such work a work
for hire and Executive should be considered the author thereof. Executive shall,
at the request of NFM, without additional compensation from time to time
execute, acknowledge and deliver to NFM such instruments and documents as NFM
may require to perfect, transfer and vest in NFM the entire right, title and
interest in and to such inventions. In the event that Executive does not timely
perform such obligations, Executive hereby makes NFM and its officers his
attorney in fact and gives them the power of attorney to perform such
obligations and to execute such documents on Executive's behalf. Executive shall
cooperate with NFM upon NFM's request and at NFM's cost but without additional
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compensation in the preparation and prosecution of patent, trademark, industrial
design and model, and copyright applications worldwide for protection of rights
to any Inventions.
(E) INJUNCTIVE RELIEF. Executive acknowledges that a
violation or attempted violation on Executive's part of any agreement in this
Section 5 will cause irreparable damage to NFM, and accordingly, Executive
agrees that NFM shall be entitled as a manner of right to an injunction from any
court of competent jurisdiction restraining any violation or further violation
of such agreement by Executive; such right to an injunction, however, shall be
cumulative and in addition to whatever other remedies that NFM may have. Terms
and agreements set forth in this Section 6 shall survive the expiration or
termination of this Agreement for any reason. The existence of any claim of
Executive, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by NFM of the covenants contained in
this Agreement.
7. NON-COMPETE; NON-SOLICITATION
(A) NON-COMPETE. Except as set forth below, for a period
commencing on the Effective Date hereof and ending one year after the date
Executive ceases to be employed by NFM (the "Non-Competition Period"), Executive
shall not, directly or indirectly, either for himself or any other person, own,
manage, control, materially participate in, invest in, permit his name to be
used by, act as consultant or advisor to, render material services for (alone or
in association with any person, firm, corporation or other business
organization) or otherwise assist in any manner any business which is a
competitor of a substantial portion of NFM's business or of the business of any
subsidiary of NFM (collectively, a "Competitor"). For purposes of this
Agreement, the term "Competitor" includes, but is not limited to, Playboy
Enterprises, Private Media, and their affiliates and subsidiaries. Nothing
herein shall prohibit Executive from being a passive owner of not more than five
percent of the equity securities of a Competitor which is publicly traded, so
long as he has no active participation in the business of such Competitor.
(B) NON-SOLICITATION. During the Non-Competition Period,
Executive shall not, directly or indirectly, (i) induce or attempt to induce or
aid others in inducing anyone working at NFM to cease working at NFM, or in any
way interfere with the relationship between NFM and anyone working at NFM except
in the proper exercise of Executive's authority or (ii) in any way interfere
with the relationship between NFM and any customer, supplier, licensee or other
business relation of NFM.
(C) SCOPE. If, at the time of enforcement of this Section 7,
a court shall hold that the duration, scope, area or other restrictions stated
herein are unreasonable under circumstances then existing, the parties agree
that the maximum duration, scope, area or other restrictions reasonable under
such circumstances shall be substituted for the stated duration, scope, area or
other restrictions.
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(D) INDEPENDENT AGREEMENT. The covenants made in this
Section 7 shall be construed as an agreement independent of any other provisions
of this Agreement, and shall survive the termination of this Agreement.
Moreover, the existence of any claim or cause of action of Executive against NFM
or any of its affiliates, whether or not predicated upon the terms of this
Agreement, shall not constitute a defense to the enforcement of these covenants.
8. ARBITRATION.
No dispute between NFM (or any of its officers, directors, employees,
subsidiaries or affiliates) and Executive, which is in any way related to the
employment of Executive (including but not limited to claims of wrongful
termination; racial, sexual or other discrimination or harassment; defamation;
and other employment-related claims or allegations) shall be the subject of a
lawsuit filed in state or federal court. Instead, any such dispute shall be
submitted to binding arbitration before the American Arbitration Association
("AAA") or any other individual or organization on which the parties agree or
which a court may appoint.1 It is understood that both sides are hereby waiving
the right to a jury trial.
The arbitration shall be initiated in Boulder, Colorado and shall be
administered by AAA under its commercial arbitration rules before a single
arbitrator that shall be mutually agreed upon by the parties hereto. If the
parties cannot agree on a single arbitrator, then an arbitrator shall be
selected in accordance with the rules of AAA. The arbitration must be filed
within six months of the act or omission which gives rise to the claim. Each
party shall be entitled to take one deposition, and to take any other discovery
as is permitted by the Arbitrator. In determining the extent of discovery, the
Arbitrator shall exercise discretion, but shall consider the expense of the
desired discovery and the importance of the discovery to a just adjudication.
The Arbitrator shall render an award which conforms to the facts, as
supported by competent evidence (except that the Arbitrator may accept written
declarations under penalty of perjury, in addition to live testimony), and the
law as it would be applied by a court sitting in the state of Colorado. The cost
of arbitration shall be advanced equally by the parties; however, the Arbitrator
shall have the power, in his discretion, to award some or all of the costs of
arbitration and reasonable attorneys' fees to the prevailing party. Any party
may apply to a court of competent jurisdiction for entry of judgment on the
arbitration award.
9. NO CONFLICTING OBLIGATIONS OF EXECUTIVE.
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1 Notwithstanding the above, either NFM or Executive may file with an
appropriate state or federal court a claim for injunctive relief in any case
where the filing party seeks provisional injunctive relief or where permanent
injunctive relief is not available in arbitration. The filing of a claim for
injunctive relief in state or federal court shall not allow either party to
raise any other claim outside of arbitration.
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Executive represents and warrants that he is not subject to any duties
or restrictions under any prior agreement with any previous employer or other
person or entity, and that he has no rights or obligations which may conflict
with the interests of NFM or with the performance of Executive's duties and
obligations under this Agreement. Executive agrees to notify NFM immediately if
any such conflicts occur in the future.
10. SUCCESSORS.
(A) This Agreement is personal to Executive and shall not be
assignable by Executive.
(B) This Agreement shall inure to the benefit of NFM and its
successors and assigns. NFM may assign this Agreement to any successor or
affiliated entity, subsidiary, sibling, or parent company.
11. MISCELLANEOUS
(A) This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, without reference to the
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement contains
the full and complete understanding between the parties hereto and supersedes
all prior understandings, whether written or oral pertaining to the subject
matter hereof. This Agreement may not be amended or modified otherwise than by
written agreement executed by Executive and by the designated representative of
the Board.
(B) All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, or by facsimile, or by email, or by
hand delivery to such address as either party shall have furnished to the other
in writing in accordance herewith. Notice may be given to NFM or Executive as
follows:
Executive: NFM:
00000 Xxxxx 00xx Xxxxxx 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000
Notice to NFM also must be given to:
Xxxx X. Xxxxxxxx
Xxxxxxxx, Xxxxxxx & Xxxxxxx
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Fax: 323/000-0000
Email: xxxxxxxx@xxxxxx.xxx
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(C). The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(D) NFM may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(E) The failure of either party to insist upon strict
compliance with any provision of this Agreement, or the failure to assert any
right either party may have hereunder, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.
IN WITNESS WHEREOF, Executive has hereunto set Executive's
hand and, pursuant to the authorization from its Board of Directors, NFM has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
NEW FRONTIER MEDIA, INC. EXECUTIVE
A Colorado Corporation
By /s/ Xxxxx Xxxxxx /s/ Xxxxxxx Xxxxxx
----------------------- ------------------------
Xxxxxxx Xxxxxx
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