AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement") is entered
into as of the 29th day of October, 2001, by and between Integrity Incorporated,
a Delaware corporation, ("Employer") and Xxxxx XxXxxxxx ("Employee").
In consideration of the promises, covenants and conditions set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Employee and Employer agree as
follows:
1. Employment.
Employer hereby employs Employee, and Employee hereby accepts
employment in the position of Senior Vice President and Chief Marketing Officer
(the "Position") upon the terms and conditions hereinafter set forth.
2. Services.
During the term of employment hereunder, Employee shall devote his full
professional time and energy to the performance of his duties as Senior Vice
President and Chief Marketing Officer and shall use his best efforts in the
performance of the same. Employer and Employee agree that Employee's duties in
the Position shall be determined by Employer and may be altered by Employer from
time to time at its sole discretion. Employer and Employee acknowledge and agree
that Employee's initial duties in the Position shall consist of, among other
things, general oversight of retail sales, marketing and packaging, special
markets, direct response marketing and sales, and internet marketing and sales.
3. Compensation.
For, and in consideration of, the promises and covenants made herein
and the services to be provided hereunder, Employer agrees to compensate
Employee as follows:
(a) Base Compensation. Employer shall pay to Employee an annual
base salary in the amount of One Hundred Seventy-Five Thousand
Dollars and No Cents ($175,000.00), less taxes and other
normal withholdings. Said salary shall be paid to Employee in
equal semi-monthly installments. Employer shall pay to
Employee a minimum annual bonus in the amount of Ten Thousand
Dollars and No Cents ($10,000.00), less taxes and other normal
withholdings. Said bonus shall be paid to Employee in equal
quarterly installments. The annual base salary and annual
bonus referred to in this Section 3(a) shall hereinafter be
referred to as the "Annual Base Compensation." The Annual Base
Compensation may be increased for merit or cost of living
during the term of this Agreement at the discretion of
Employer.
(b) Covenant Not to Compete Payment. For, and as additional
consideration for, the covenant not to compete contained in
Section 10 hereof, Employer shall make a one time payment to
Employee of Fifty Thousand Dollars and No Cents ($50,000.00),
less taxes and other normal withholdings, on the date that
Employee executes this Agreement.
(c) Retention Bonus. In addition to the Annual Base Compensation
set forth in Section 3(a), Employer shall pay Employee a
retention bonus in the total aggregate amount of Seventy
Thousand Dollars and No Cents ($70,000.00), less taxes and
other normal withholdings, beginning on August 1, 2003 and
continuing through August 1, 2006, and to be paid as follows,
if he remains employed on the following dates:
Date of Payment Amount of Payment
--------------- -----------------
August 1, 2003 $10,000.00
August 1, 2004 $10,000.00
August 1, 2005 $10,000.00
August 1, 2006 $40,000.00
(d) Benefits. Employee shall be entitled to receive or participate
in all employment benefits or benefit plans as generally made
available by Employer to its employees, if any, to the same
extent and under the same conditions as other covered
employees.
(e) Vacation. Employee shall be entitled to four weeks of paid
vacation per fiscal year.
(f) Bonus. As long as Employee holds an executive officer position
with Employer, Employee shall be eligible to receive cash
bonuses under the executive cash bonus compensation system
established from time to time by the Employer. Under such
system, cash bonuses are awarded in the judgment of the
Compensation Committee of the Board of Directors of the
Employer based on the achievement of budgeted targets and the
individual performance of the Employee.
(g) Options. Employer shall have granted, as part of the original
offer letter dated December 20, 1996, incentive stock options
to purchase 50,000 shares of the Employer's Class A Common
Stock pursuant to the Employer's Incentive Stock Option Plan.
In addition, Employer shall have granted incentive stock
options to purchase 50,000 shares of the Employer's Class A
Common Stock pursuant to the Employer's Incentive Stock Option
Plan on August 6, 1999.
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(h) Restricted Stock Award. Employer shall grant Employee 50,000
shares of Employer's Class A Common Stock pursuant to
Employer's 2001 Long Term Incentive Plan ("2001 LTIP") on the
later of (i) the date of the adoption of the 2001 LTIP by the
Board of Directors or (ii) the date of the execution of this
Agreement. The shares received in the grant shall be
restricted shares of Class A Common Stock and shall be
scheduled to vest on the seventh anniversary of this
Agreement.
4. Term and Termination.
Employee's employment with Employer began on the 1st day of January,
1997. The term of this Agreement, however, shall begin on the date hereof and
shall continue until terminated as provided in this Agreement. Employee
acknowledges and agrees that this Agreement, and his employment with Employer,
shall be terminated upon the occurrence of any of the following events:
(a) Employee's death;
(b) Employee becoming or remaining Disabled for substantially
continuous period of six months. For purposes of this
Paragraph, the term "Disabled" shall mean Employee's inability
to perform the essential functions of his position with or
without reasonable accommodation;
(c) Mutual written agreement between Employer and Employee to
terminate;
(d) Upon six (6) months prior written notice of termination from
Employer to Employee for any reason or no reason at all.
Provided: Employer, at its sole discretion, may elect to pay
to Employee an amount equal to Employee's salary for six (6)
months in lieu of providing the notice set forth in this
subparagraph; or
(e) Immediately upon written notice of termination from Employer
"for cause." For purposes of this Agreement, a termination
shall be considered to be "for cause" if it occurs in
conjunction with a determination by Employer that Employee has
committed or engaged in either (i) any act that constitutes,
on the part of Employee, fraud, dishonesty, breach of
fiduciary duty or (ii) conduct by Employee in his office with
the Employer that is grossly inappropriate and demonstrably
likely to lead to material injury to Employer, as determined
by the Board of Directors of Employer acting reasonably and in
good faith; provided, that in the case of (ii) above, such
conduct shall not constitute "cause" unless Employer's Board
of Directors shall have delivered to Employee notice setting
forth with specificity (A) the conduct deemed to qualify as
"cause", (B) reasonable action that would remedy such
objection, and (C) a reasonable time (not less than thirty
(30) days) within which Employee may take such remedial action
within the specified time.
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5. Severance.
(a) Subject to the restrictions set forth below in this Section
5(a), if Employee's employment with Employer is terminated
pursuant to Section 4(d), Employee shall be entitled to
receive as a severance benefit aggregate severance payments in
an amount equal to the amount of the Employee's annual salary
under this Employment Agreement at the time of termination
multiplied by 2 [less any amount paid in lieu of termination
notice under Section 4(d)] (the "Severance Payments"). The
Severance Payments may be made by the Employer as semi-monthly
salary continuation payments or as a lump sum payment within
ninety (90) days after termination of Employee's employment
with Employer, as determined by the Employer in its sole and
absolute discretion. Notwithstanding the foregoing, Employee
shall not be entitled to receive any further Severance
Payments, and any right to such Severance Payments shall be
forfeited, upon the occurrence of any of the following events:
(i) the second anniversary of the Employee's date of
termination from Employer, or (ii) the date of Employee's
violation of the terms of Xxxxxxx 0, 0, 0 xx 00 xxxxxx.
(x) In addition to the Severance Payments outlined in paragraph
(a), if Employee's employment with Employer is terminated
pursuant to Section 4(d), Employee shall be entitled to be
reimbursed for the cost of COBRA health insurance continuation
benefits until the earlier of (i) eighteen (18) months from
the date of the Employee's termination with Employer, or (ii)
the date of Employee's violation of the terms of Section 7, 8,
9 or 10 hereof. Employee's rights to the foregoing health
insurance benefits shall terminate as to any benefit for which
he becomes eligible that provides substantially similar
benefits on substantially similar terms through a program of a
subsequent employer or otherwise (such as through coverage
obtained by Employee's spouse).
(c) If Employee is entitled to severance benefits upon termination
of employment under the terms of a Key Employee Change in
Control Agreement with the Employer, the Employee shall not be
entitled to any severance benefits under this Agreement.
6. Change in Control.
Contemporaneously with their execution of this Agreement, Employer and
Employee have agreed to and executed a separate agreement entitled Key Employee
Change in Control Agreement ("Change in Control Agreement"). The Change in
Control Agreement, which is attached hereto as Exhibit A, is hereby expressly
incorporated into and made a part of this Agreement as if its terms were set
forth in full herein.
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7. Non-disclosure of Confidential Information.
(a) Definitions.
The following definitions shall apply to this Agreement:
(i) "Trade Secrets" means all secret,
proprietary or confidential information regarding Employer or
its business, including any and all information not generally
known to, or ascertainable by, persons not employed by
Employer, the disclosure or knowledge of which would permit
those persons to derive actual or potential economic value
therefrom or to cause economic or financial harm to Employer.
Such information shall include, but not be limited to,
financial information, strategic plans and forecasts,
marketing plans and forecasts, customer lists, mailing lists,
computer software (including without limitation, source code,
object code and manuals), customer billing or order
information, technical information regarding Employer's
products or services, prices offered to or paid by customers,
purchase and supply information, current and future
development and expansion or contraction plans of Employer,
sales and marketing plans and techniques, information
concerning personnel assignments and operations of Employer
and matters concerning the financial affairs, future plans and
management of Employer. "Trade Secrets" shall not include
information that has become generally available to the public
by the act of one who has the right to disclose such
information without violating a legal right of Employer.
(ii) "Confidential Information" means
information, other than Trade Secrets, which relates to
Employer, Employer's activities, Employer's business or
Employer's suppliers or customers that is not generally known
by persons not employed by Employer and which is or has been
disclosed to Employee or of which Employee became aware as a
consequence of or through his relationship to Employer.
"Confidential Information" shall not include information that
has become generally available to the public by the act of one
who has the right to disclose such information without
violating any legal right of Employer.
(iii) "Documents" means originals or copies of
handbooks, manuals, files, memoranda, correspondence, notes,
photographs, slides, overheads, audio or visual tapes,
cassettes, or disks, and records maintained on computer or
other electronic media.
(b) Covenant Regarding Non-disclosure of Trade Secrets or
Confidential Information.
Employee covenants and agrees that: (i) during his employment
with Employer he will not use or disclose any Trade Secrets or
Confidential Information of Employer other than as necessary
in connection with the
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performance of his duties as an employee of Employer; and (ii)
for a period of two (2) years immediately following the
termination of his employment with Employer, Employee shall
not, directly or indirectly, transmit or disclose any Trade
Secret or Confidential Information of Employer to any person
and shall not make use of any such Trade Secret or
Confidential Information, directly or indirectly, for himself
or others, without the prior written consent of Employer,
except for a disclosure that is required by any law or order,
in which case Employee shall provide Employer prior written
notice of such requirement and an opportunity to contest such
disclosure. However, to the extent that such information is a
"trade secret" as that term is defined under a state or
federal law, this subparagraph is not intended to, and does
not, limit Employer's rights or remedies thereunder and the
time period for prohibition on disclosure or use of such
information is until such information becomes generally known
to the public through the act of one who has the right to
disclose such information without violating a legal right of
Employer.
(c) Return of Information.
Employee agrees that he shall return all Trade Secrets,
Confidential Information or other property of Employer
immediately upon the termination of his employment with
Employer, including all handbooks, training materials,
reports, policy statements, programs, customer lists, mailing
lists and other documents provided by Employer or acquired by
Employee as a result of his employment with Employer, and all
copies thereof.
8. Inventions and Other Developments.
All inventions, formulas, techniques, processes, concepts, systems and
programs, mailing lists and customer lists and compilations, whether or not
patented or patentable, or subject to copyright, made or conceived, individually
or in conjunction with others, by Employee during the term of his employment
with Employer that relate to activities or proposed activities of Employer or
that result from work performed by Employee for Employer are the sole and
exclusive property of Employer; provided, that Employee shall retain all rights
to, and may copyright in his name, all songs written by Employee. Employee
further agrees that, subject to the proviso in the immediately preceding
sentence, upon request by Employer, he will assign title to any such inventions,
formulas, techniques, processes, concepts, systems and programs, and lists and
compilations to Employer and will sign any and all documents necessary to effect
such assignment.
9. Non-recruitment or Interference Covenant.
Employee agrees that he will not, for so long as he is employed by
Employer, and for a period of two (2) years immediately following the
termination of his employment: (a) solicit or induce, or attempt to solicit or
induce, any employee of the Employer to terminate his or her relationship with
Employer or to enter into an employment or agency
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relationship with Employee or with any other person or entity other than
Employer; or (b) solicit or induce, or attempt to solicit or induce, any artist
or songwriter with whom Employee had business contact on behalf of Employer
during his employment to terminate or reduce his or her relationship with
Employer or its subsidiaries.
10. Covenant Not to Compete.
Employee expressly covenants and agrees that during the term of his
employment with Employer and for a period of two (2) years immediately following
the termination of said employment for any reason, he will not, directly or
indirectly, seek, obtain or accept a "Competitive Position" in the "Restricted
Territory" with a "Competitor" of Employer. For purposes of this Agreement, a
"Competitor" of Employer is any business, individual, partnership, joint
venture, association, firm, corporation or other entity engaged, wholly or in
part, in the production, publishing or distribution of Christian music products,
such as videos, compact discs, cassette tapes, trax and songbooks; a
"Competitive Position" is any ownership of or employment or consulting with a
"Competitor" of Employer in a position in which Employee will use or is likely
to use any Confidential Information or Trade Secrets (as those terms are defined
in Paragraph 7 of this Agreement), or in which Employee will have direct or
indirect responsibility for, or supervision of, any position for such Competitor
which is the same or substantially similar to any position of Employer over
which Employee had direct or indirect responsibility or supervisory authority;
and "Restricted Territory" is the geographical area in which Employee directly
or indirectly oversees the performance of his duties on behalf of Employer, as
specifically set forth in Exhibit B to this Agreement. Notwithstanding anything
to the contrary contained in this paragraph 10, during the period of two (2)
years immediately following the termination of Employee's employment, Employee
may be retained as a consultant for Christian music companies, other than
companies whose business is primarily based on "praise and worship" music
products, so long as employee's consulting activities are confined to rendering
assistance with non-"praise and worship" special products and non-"praise and
worship" special markets. As used in the preceding sentence, the term "praise
and worship" has the meaning assigned to such term by SoundScan in its
definition of the products eligible for listing on its praise and worship sales
chart on the date of this agreement and "special products" and "special markets"
refer to the area of the music business which involves recompiling previously
recorded music tracks into "repurposed" albums for sale in various markets.
Nothing contained in this Paragraph is intended to prevent Employee from
investing in stock or other securities listed on a national securities exchange
or actively traded on the over the counter market of any Competitor; provided,
however, that Employee shall not hold more than a total of five percent (5%) of
all issued and outstanding stock or other securities of any such corporation.
The Employee acknowledges in light of the Severance Payments provided in Section
5(a), that the restrictions contained herein are reasonable and will not cause
the Employee an undue hardship.
11. Relief.
Employee acknowledges that the covenants and promises contained in this
Agreement are reasonable and necessary means of protecting and preserving
Employer's
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goodwill and its interest in the confidentiality and proprietary value of its
Trade Secrets and Confidential Information. Employee further acknowledges that
the same are reasonable and necessary means of protecting Employer from unfair
competition by Employee. Employee agrees that any breach of the covenants or
promises contained in paragraphs 7, 8, 9 or 10 will leave Employer with no
adequate remedy at law and may cause Employer to suffer irreparable damage and
injury. Employee further agrees that any breach of these covenants or promises
will entitle Employer to injunctive relief in any court of competent
jurisdiction without the necessity of posting any bond. Employee also agrees
that any such injunctive relief shall be in addition to any damages that may be
recoverable by Employer as a result of such breach. Employer agrees that
Employee will be entitled to seek a declaratory judgment as to the
enforceability of any of the covenants or promises contained in paragraphs 7, 8,
9 or 10.
Employee further agrees that no failure or delay by Employer in
exercising, enforcing or asserting any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise of any such right, power or privilege.
12. Severability.
Except as expressly provided by the terms of this Agreement, the
covenants and other provisions set forth in this Agreement shall be considered
and construed as separate and independent covenants and provisions. Should any
covenant or provision, or any part thereof, be held invalid, void or
unenforceable in any court of competent jurisdiction, such invalidity, voidness
or unenforceability shall not render invalid, void or unenforceable any other
part, covenant or provision of this Agreement. If any portion of the foregoing
covenants or provisions is found to be invalid or unenforceable by a court of
competent jurisdiction because its duration, territory, definition of activities
or definition of information covered is invalid or unreasonable in scope, the
invalid or unreasonable term shall be eliminated, redefined, or replaced with a
new enforceable term such that the intent of Employer and Employee in agreeing
to the covenants and provisions of this Agreement will not be impaired and the
covenant or provision in question shall be enforceable to the fullest extent of
the applicable laws.
13. Disputes and Governing Law.
Employer and Employee agree that, except as provided in paragraph 11
hereof, any dispute arising in connection with, or relating to, this Agreement
or the termination of this Agreement, to the maximum extent allowable by
applicable law, shall be subject to resolution through informal methods and,
failing such efforts, through arbitration. Either party may notify the other
party of the existence of a dispute by written notice. The parties shall
thereafter attempt in good faith to resolve their differences within the thirty
(30) days after the receipt of such notice. If the dispute cannot be resolved
within the thirty (30) day period, either party may file a written demand for
arbitration with the other party. The arbitration shall proceed in accordance
with the terms of the Federal Arbitration Act and the rules and procedures of
the American Arbitration Association. The parties will attempt to choose an
arbitrator acceptable to the Employer and Employee,
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but if agreement on an arbitrator cannot be reached within ten (10) days after
either party files a written demand for arbitration, a single arbitrator shall
be appointed through the American Arbitration Association's procedures to
resolve the dispute.
Employer and Employee agree that in the event that arbitration is
necessary, the arbitrator shall apply the substantive laws of the state of
Alabama and any applicable federal law. The place for the arbitration shall be
Mobile, Alabama.
The award of the arbitrator shall be binding and conclusive upon the
parties. Either party shall have the right to have the award made the judgment
of a court of competent jurisdiction in the state of Alabama.
14. Assignment.
This Agreement may not be assigned by Employee to any other person or
entity but may be assigned by Employer at its discretion to any successor to
all, or any part, of the stock or assets of Employer or to any lender of
Employer.
15. Titles.
The titles, headings and captions used in this Agreement are for
convenience of reference only and shall in no way limit, define, expand, or
otherwise affect the meaning or construction of any provision of this Agreement.
16. Entire Agreement.
This Agreement is intended by the Parties hereto to be the final
expression of their agreement with respect to the subject matter hereof and
represents the complete and exclusive statement of the terms of their agreement,
notwithstanding any representations, statements or agreements to the contrary
heretofore made. Except as expressly noted herein, this Agreement supersedes any
former agreements between the Parties governing the same subject matter. This
Agreement may be modified only by a written instrument signed by each of the
Parties hereto.
[Signatures begin on next page.]
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IN WITNESS WHEREOF, the undersigned set their hands and seals as of the
29th day of October, 2001.
INTEGRITY INCORPORATED XXXXX XxXXXXXX
/s/ P. Xxxxxxx Xxxxxxx /s/ Xxxxx XxXxxxxx [SEAL]
------------------------------ -------------------------
Name: P. Xxxxxxx Xxxxxxx XXXXX XxXXXXXX
Title: President
ATTEST:
/s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Secretary
[CORPORATE SEAL]
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EXHIBIT A
Change in Control Agreement
EXHIBIT B
"Restricted Territory" shall mean
1. UNITED STATES AND U.S. TERRITORIES
