EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement"), dated as of May 1, 1997, is by and
between THE RECOVERY NETWORK, INC., a Colorado corporation ("Company"), and
XXXXXXX XXXXXXX ("Employee").
WITNESSETH
WHEREAS, Company desires to employ Employee to manage and supervise all of its
production activities on the terms and conditions set forth herein; and
WHEREAS, as an inducement to Company to offer such employment, Employee desires
to enter into certain covenants, including without limitation a covenant not to
compete with Company if his employment is terminated under certain circumstances
set forth below.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:
1. Employment. Company shall employ Employee, and Employee shall be
employed by Company, on the terms and conditions set forth herein for the period
commencing as of the date hereof and (unless sooner terminated pursuant to
Section 4) ending on November 30, 1998.
2. Position and Duties. Employee shall manage and supervise all of the
production operations and activities of Company. Employee shall report and be
responsible directly to the Chief Operating Officer of Company or his designee
and shall have and perform such duties and responsibilities relating to the
business and operations of Company as may be appropriate to Employee's position
and as the Chief Operating Officer of Company or his designee from time to time
may assign to him, which are not inconsistent therewith. Without limiting the
generality of the foregoing, Employee shall have the following duties:
(a) To develop programming and programming concepts for
Company consistent with the guidelines and goals of Company as articulated by
its President, its Chief Executive Officer, its Chief Operating Officer and its
board of directors.
(b) To produce all programming that Company elects to produce
other than through third-party contractors.
-1-
(c) To serve as executive producer when Company elects to
produce programming through third-party contractors, including without
limitation retaining and supervising contractors.
(d) To identify and acquire suitable existing programming,
including without limitation through the negotiation of fees for and the
reformatting of such programming.
(e) To identify and develop program formats.
(f) To identify, develop and monitor the "look and feel" of
Company programming by first utilizing in-house resources and, if those are not
sufficient, by the retention and supervision of third-party contractors.
(g) To retain and supervise all production of music including
third-party providers and, under the supervision of Company's senior legal
officer, to obtain all proper copyright permission and any other rights
necessary for all music used in Company programming.
(h) To produce or executive produce all promotional material
used by Company whether produced in-house or by third-party providers or
vendors.
(i) To act as liaison with local cable operators and
programmers on "Recovery America" and other Company programming.
(j) To screen and evaluate programming submitted by members of
the National Recovery Partnership.
(k) To obtain proper copyright permission and negotiate fees
and all other rights for programming accepted from members of the National
Recovery Partnership under the supervision of Company's senior legal officer.
(l) To evaluate and establish a "master control" procedure and
monitor its daily functioning.
(m) To manage and control departmental budgets and provide to
Company's comptroller all information necessary to produce variance reporting on
a monthly basis as directed.
During the term of his employment, Employee shall devote his
full time, attention, and best efforts to Company and to the furtherance of its
interests and shall not directly or indirectly engage in, or enter into the
employment of, or otherwise render services to or for, or act as a manager,
member or officer of, any other business (other than established trade
associations of which Company is a
-2-
member) except for non-remunerative participation in charitable organizations
and service as a director of non-competitive businesses.
3. Compensation.
(a) Company shall pay to Employee an annual base salary of
$120,000, payable $10,000 per month in equal semi-monthly installments during
the term of his employment.
(b) Employee shall be entitled to participate in and receive
benefits under any employee benefit plans and arrangements from time to time
made available to the employees of Company generally, when and as implemented
and subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Amounts paid to Employee under
any such plan or arrangement shall not be deemed to be made in lieu of any other
compensation payable to Employee hereunder.
(c) Employee shall be entitled to ten business days of paid
vacation and additional holidays in accordance with Company policy, as
determined by the Chief Operating Officer of Company from time to time. Vacation
days shall accrue at the rate of 0.833 days per month commencing as of November
1, 1996. The timing of vacation days is subject to the reasonable advance
approval of the Chief Operating Officer of the Company.
(d) Subject to the standard expense reimbursement policies of
Company, Company shall reimburse Employee for all reasonable expenses incurred
by Employee in connection with the performance of his duties and the discharge
of his responsibilities hereunder. Employee shall submit to the Chief Financial
Officer of the Company, not more than thirty (30) days following the end of each
calendar month during the term of his employment, such information on such forms
as Company may request, which may include, but need not be limited to, an
itemized list of all expenses incurred by him during the preceding calendar
month, setting forth dates, the purposes for which incurred and the amounts
thereof, together with such receipts as Employee may reasonably be able to
obtain and such other documentation as may be required from time to time to
enable Company to deduct such expenses under the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
4. Termination. The term of this Agreement and of Employee's employment
hereunder may be terminated before November 30, 1998, on the following terms and
conditions:
(a) By Employee for any reason, upon at least 30 days' advance
written notice, or upon Employee's death, with Company's only liability being
the
-3-
payment of base salary, reimbursement for accrued and unpaid expenses and
vacation compensation earned and unpaid as of Employee's last day of work;
(b) By mutual agreement of Company and Employee, on such terms
and with such compensation as may be mutually agreed upon; provided, however,
that such severance compensation shall not exceed the amount payable under
Section 4.(d) hereof;
(c) By Company for "good cause" (as hereinafter defined), such
termination to be effective immediately upon notice of such termination from
Company to Employee, with Company's only liability being the payment of base
salary, reimbursement for accrued and unpaid expenses and vacation compensation
earned and unpaid through the date of such termination; or
(d) By Company without "good cause," upon not less than 30
days' prior written notice, with reimbursement for accrued and unpaid expenses
plus severance compensation equal to base salary and vacation compensation for
90 days following the effective date of such termination; which Company shall
pay to Employee ratably during such 90 day period and otherwise in accordance
with its ordinary payroll procedures.
For purposes of this Section 4, "good cause" shall mean any
act or omission of Employee constituting gross negligence or willful misconduct
in the conduct of his duties for Company; any breach by Employee of the terms of
his Non-Disclosure and Inventions Agreement; Employee's conviction (which
conviction, through lapse of time or otherwise is not subject to appeal) in a
court of law of a felony or a crime involving moral turpitude; Employee's taking
or failing to take any action, or engaging or failing to engage in any conduct
or activity, which taking or engaging or failing to do so (i) has, or could
reasonably be expected to have, a material adverse effect on the business,
operation or condition (financial or other) of Company or (ii) subjects, or
could reasonably be expected to subject, Company to public disrepute or to
statutory or tort liability; or (given the nature of Company's mission as a
disseminator of information, programs and the culture of recovery from such
abuse) alcohol or substance abuse.
5. Competitive Activity.
(a) During the term of this Agreement and for one year after
the termination of this Agreement for any reason set forth in Sections 4(a) or
(c) above only, Employee shall not directly or indirectly (as an officer,
director, employee, consultant, owner, shareholder, adviser, joint venturer or
otherwise), engage in any activities that could be deemed a conflict of interest
or in any way compete with Company or its affiliates within the United States in
(i) the development or provision of television, radio, interactive and other new
media programming
-4-
services primarily offering information, direction or support to people
afflicted with or affected by alcoholism, chemical dependency, eating disorders
and other behavioral health problems ("Recovery Media Business"), (ii) any other
line of Recovery Media Business in which Company or its affiliates shall be
engaged, or shall have formed an intention to engage with the active
participation of Employee in planning or evaluation, at any time during the term
of Employee's employment, including without limitation sales and merchandising
of recovery related material. Employee shall not be precluded from owning less
than one percent of the securities of any competitor of Company or its
affiliates if such securities are publicly traded on a national securities
exchange or are quoted on an automated quotation system. Employee represents and
warrants that he is under no competitive restrictions or obligations to third
parties that affect his performance hereunder.
(b) During the term of this Agreement and for one year after
the termination of this Agreement for any reason, whether or not such
termination shall be alleged or later found to be unlawful, wrongful or in
breach of contract. Employee shall not contact, directly or indirectly, any
customer of Company or supplier of programming or production services to Company
with whom Employee had contact during the term of this Agreement unless such
contact by Employee is not related to the Recovery Media Business.
(c) Employee acknowledges that, through his employment with
Company, he will acquire access to information suited to immediate application
by a business in competition with Company. Employee acknowledges that he has
executed concurrently with this Agreement a Non-Disclosure and Inventions
Agreement, the terms of which are incorporated herein by reference as if set
forth herein verbatim, that imposes obligations on Employee with respect to
information about Company. Employee considers the restrictions on his future
employment or business activities contained in this Section 5 to be in all
respects reasonable and necessary. Employee acknowledges that Company and its
affiliates and competitors operate throughout the United States, expressly
consents to the geographic restriction on competition contained in this Section
5, and believes that such restriction is reasonable given the nature of
Company's business.
(d) Employee acknowledges the possibility that his standard of
living may be reduced during the one year following the termination of this
Agreement and assumes the risk associated with that possibility.
(e) Employee acknowledges that, upon a breach of this Section
5, Company will suffer immediate and irreparable harm and damage for which money
damages alone cannot fully compensate. Employee therefore agrees that, upon such
breach or threat thereof, Company shall be entitled to a temporary restraining
order, preliminary injunction, permanent injunction and all other injunctive
relief, without posting any bond or other security, to bar employee from
violating this
-5-
Agreement. Nothing in this section shall be construed as an election of remedies
or waiver of any right available to Company under this Agreement or by law,
including without limitation the right to seek damages from Employee for breach
of this Agreement.
(f) To the extent possible or required under applicable law,
including, without limitation, the U.S. Copyright Act, the results and proceeds
of any and all services and materials (collectively "Materials") written,
produced or created by Employee during the term of his employment hereunder
relating to the Recovery Media Business, and the content and use thereof, shall
be considered Works Made For Hire or, if not legally capable of being considered
as such, then and in such event Employee hereby assigns to Company in perpetuity
all right, title and interest, including copyright, he may have in or to such
Materials throughout the universe free and clear of any and all claims for
royalties or other compensation other than that specified herein. Should
Employee develop ideas, scripts, concepts or other creative properties which do
not relate to the Recovery Media Business during the term of his employment,
Employee shall give Company the first right of negotiation and last matching
right to develop such property.
6. Successors and Assigns. This Agreement and all rights hereunder
shall inure to the benefit of and be enforceable by Employee's personal and
legal representatives, executors, administrators, heirs, distributees, devisees
and legatees and by Company's successors and assigns. This Agreement is personal
in nature, and neither party shall, without the prior written consent of the
other, assign or transfer this Agreement or any right or obligation hereunder.
7. Notice. Any notice or other communication hereunder to either party
shall be in writing and shall be deemed to have been duly given when delivered
personally or mailed by certified mail, return receipt requested, postage
prepaid, addressed (a) if to Company at 0000 0xx Xxxxxx, Xxxxx 000, Xxxxx
Xxxxxx, XX 00000 and (b) if to Employee at his address sent forth on the
personnel records of Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith.
8. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of California
applicable to agreements made and to be performed entirely in such state without
giving effect to the conflicts of laws and principles thereof. Venue for any
action arising out of this Agreement shall be proper in Los Angeles County,
California.
9. Severability. If any court of competent jurisdiction shall declare
any provision of this Agreement to be invalid or unenforceable, the remainder of
this Agreement shall remain fully enforceable. To the extent that any court
shall
-6-
conclude that any provision of this Agreement is void or voidable, the court
shall reform such provision only to the extent necessary to render the provision
enforceable with a view to the parties' desire that Company be protected to the
greatest extent possible under applicable law from improper competition and the
disclosure of its trade secrets.
10. Integration. This Agreement constitutes the entire agreement of the
parties and a complete merger of prior negotiations and agreements. This
Agreement may be modified only in a writing signed by the parties.
11. Arbitration. Should the parties have a dispute regarding matters
which are the subject matter of this Agreement which they cannot resolve between
themselves, such dispute shall be submitted to binding arbitration pursuant to
local rules in Los Angeles County in either Superior or Municipal Court. The
prevailing party in such an arbitration shall be entitled to legal fees and
costs of such arbitration.
12. Waiver. No term or condition of this Agreement shall be deemed to
have been waived nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by a written instrument signed by both
parties. No written waiver shall be deemed a continuing waiver unless
specifically stated therein, and a written waiver shall operate only as to the
specific term or condition waived and not for the future or as to any act other
than specifically waived.
13. Construction. The parties have reviewed this Agreement in its
entirety and acknowledge that each has had a full opportunity to negotiate its
terms and to consult concerning this Agreement with counsel of its own choosing.
The parties expressly waive any and all applicable common law and statutory
rules of construction to the effect that any provision of a contract should be
construed against the drafter. This Agreement and all provisions hereof shall in
all cases be construed as a whole, according to the fair meaning of the language
used. Any party contesting the validity, existence, adequacy, or terms of this
Agreement shall have the burden of proof as to fraud, concealment, the failure
to disclose material information, unconscionability, misrepresentation, mistake
of fact or law and any other matters. The headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
-7-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE RECOVERY NETWORK, INC.
BY: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
/s/ Xxxxxxx Xxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxx
-8-
