EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of December, 1997, by and between
Paradise Music Entertainment, Inc. ("Paradise") having offices at 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, X.X. 00000 and XXXXXX XXXXX, an individual with an address at
00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is currently employed as the Senior Vice President
and Chief Financial Officer of Paradise under the terms of a Memorandum of
Understanding effective October 1, 1997 ("Prior Memorandum").
WHEREAS Paradise and the Executive wish to set forth the terms and
conditions of the Executive's employment by Paradise effective as of December 1,
1997 ("Effective Date") and wish to terminate the Prior Memorandum as of the
Effective Date.
NOW, THEREFORE, the parties hereto agree as follows:
1. Employment. The Company agrees to employ the Executive for the Term
specified in Section 2 and in the capacities set forth in Section 3 and the
Executive agrees to accept such employment, upon the terms and conditions
hereinafter set forth.
2. Term. This Agreement shall be for a term commencing on the Effective
Date and expiring on November 30, 1998 unless otherwise sooner terminated as
provided in this Agreement (the "Term"). This Agreement shall automatically be
extended for additional one year periods unless either party advises the other,
in writing delivered not less than 90-days prior to the expiration of the Term
then in effect, of its intention not to be extend this Agreement. If this
Agreement is so extended, then the "Term" shall also be deemed to include such
extensions. If the Term is not extended by Paradise at any time other than as
provided in Section 7 (as to which no severance shall be payable), the Executive
shall be entitled to a one time severance payment equal to 50% of his annual
salary.
3. Duties and Responsibilities.
(a) During the Term, the Executive shall serve Senior Vice President
and Chief Financial Officer of Paradise and shall be responsible for the
direction and control of all financial reports and controls of Paradise
including without limitation the preparation of all financial information
necessary to support internal management requirements, tax requirements,
requirements of Paradise's outside auditors and required reports for the
Securities and Exchange Commission.
(b) The Executive shall devote substantially all his business
efforts to the affairs of Paradise. The Executive will (i) devote his best
efforts, skill and ability to promote the Paradise's interests; (ii) carry out
his duties in a competent and professional manner; and (iii) work with other
employees of the Paradise in a competent and professional manner.
4. Compensation.
(a) As compensation for services rendered hereunder the Company
shall pay the Executive during the Term, in accordance with the Company's normal
payroll practices, compensation at an annual rate of $125,000 ("Annual Salary").
(b) The Executive shall also be entitled to bonuses including cash,
stock and/or stock options, if any, awarded to him by the Board of Directors or
the Compensation Committee of Paradise.
(c) The Executive will be granted effective as of December 1, 1997,
in lieu of any prior obligations under the Prior Memorandum to grant options to
Executive, a five year option to purchase 25,000 shares of Paradise Common Stock
under its Incentive Stock Option Plan at the average of the bid and the asked
price of Paradise Common Stock as of the close of business on December 1, 1997
("A Option") and a five year option to purchase an additional 25,000 shares of
Paradise Common Stock at $1.00 above the average of the bid and the asked price
of Paradise Common Stock as of the close of business on December 1, 1997 ("B
Option"). Each of the A and B Options will vest in three segments of 8,333,
8,333 and 8,334 shares respectively at the end of each of the first three years
of Executive's continuous employment, giving Executive credit for continuous
service commencing October 1, 1997.
5. Benefits.
(a) During the Term, the Executive shall be entitled to participate
in the benefit plans established by Paradise for the benefit of its key
executives including a health benefit plan. If in the future no health benefit
plan is then in effect, the Executive shall be entitled to either purchase
health coverage reasonably acceptable to the Company and be reimbursed for such
purchase or the Company shall directly purchase such coverage. All of the
foregoing assumes no pre-existing condition which would make such coverage
either impossible or prohibitively expensive to obtain0.
(b) The Executive shall be entitled to three (3) weeks of paid
vacation.
(c) The Executive shall be entitled to participate in the retirement
plan of Paradise (the "Plan") qualified under Sections 401(a) and 501(a) of the
Internal Revenue Code of
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1986, as amended (the "Code"). The Plan shall provide for a contribution by
Paradise to the retirement account for Executive established under the Plan.
(d) Paradise hereby agrees to indemnify, release and hold harmless
the Executive when and if: (i) he is the subject of any claim or is or becomes a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, administrative,
investigative or criminal by reason of the fact that he is or was an officer,
director, employee, consultant or agent to Paradise, or by reason of any action
alleged to have been taken or omitted in such capacity; (ii) against any and all
costs, charges and expenses, including, without limitation, reasonable
attorneys' and other fees and expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by the Executive in connection
therewith and any appeal therefrom if the Executive acted in good faith and in a
manner he reasonably believed to be in the best interests of the Company, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any civil action, suit or
proceeding by settlement or consent decree shall not, of itself, create a
presumption that the Executive did not satisfy the foregoing standard of conduct
to the extent applicable thereto.
6. Key Man Insurance. Paradise shall have the right to obtain key man life
insurance for the benefit of Paradise on the life of the Executive. If requested
by Paradise, the Executive shall submit to such physical examination and
otherwise take such actions and execute and deliver such documents as may be
reasonably necessary to enable Paradise to obtain such life insurance. The
Executive has no reason to believe that his life is not insurable with a
reputable insurance company at rates now prevailing in the City of New York for
healthy men of his age.
7. Discharge by Paradise. Paradise shall be entitled to immediately
terminate the Term and to discharge the Executive for cause, which shall be
limited to the following grounds:
(a) Conviction of a felony; or
(b) Commission of a willful or intentional act which could
materially injure the reputation, business or business relationships of Paradise
including the violation of the terms of Sections 10 hereof.
8. Disability, Death.
(a) If the Executive shall be unable to perform his duties hereunder
by virtue of illness or physical or mental incapacity or disability (from any
cause or causes whatsoever) in substantially the manner and to the extent
required hereunder prior to the commencement of such disability as determined by
a competent medical doctor (all such causes being herein referred to as
"Disability") and the Executive shall fail to have performed substantially such
duties for 90 consecutive days or for periods aggregating 180 days, whether or
not continuous, in any
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continuous period of one year (such 90th or 180th day to be known as the
"Disability Date"), Paradise shall have the right to terminate the Executive's
employment hereunder as at the end of any calendar month thereafter upon written
notice to him. The Executive shall be entitled to his Annual Salary for the
remainder of the Term for the year of the Term in which the Disability Date
occurred plus any bonuses earned through the Disability Date.
(b) In case of the death of the Executive, this Agreement shall
terminate and Paradise shall be obligated to pay to the Executive's estate or as
otherwise directed by the Executive's duly appointed and authorized legal
representative, the Annual Salary for the remainder of the Term and any bonuses
earned through the date of death.
9. Voluntary Termination. If the Executive voluntarily terminates his
employment prior to the end of the Term, he shall only be entitled to receive
compensation accrued through the date of termination;
10. Confidential Information. The Executive recognizes that he will occupy
a position of trust with respect to business and technical information of a
secret or confidential nature which is the property of Paradise, or any of its
affiliates, and which has been and will be imparted to him from time to time in
the course of his employment with Paradise. In light of this understanding, the
Executive agrees that:
(a) the Executive shall not at any time knowingly use or disclose,
directly or indirectly, any of the confidential information or trade secrets
which is the property of Paradise, or any of its affiliates, to any person,
except that he may use and disclose to authorized Paradise personnel, licensees
or franchisees in the course of his employment; and
(b) within five (5) days from the date upon which his employment
with Paradise is terminated, for any reason or for no reason, or otherwise upon
the request of Paradise, he shall return to Paradise any and all documents and
materials which constitute or contain the confidential information or trade
secrets of Paradise, or any of its affiliates.
For purposes of this Agreement, the terms "confidential information" or "trade
secrets" shall include all information of any nature and in any form which is
owned by Paradise, or any of its affiliates, and which is not publicly available
or generally known to persons engaged in businesses similar to that of Paradise,
or any of its affiliates. Notwithstanding the foregoing, when the Executive's
employment with Paradise is terminated, for whatever reason, the limitations
provided in this Section 10 shall not prevent the Executive from using for his
own benefit any information which he acquired prior to the Effective Date.
11. Resolution of Disputes. Any dispute by and among the parties hereto
arising out of or relating to this Agreement, the terms, conditions or a breach
thereof, or the rights or obligations of the parties with respect thereto, shall
be arbitrated in the City of New York, New York before and pursuant to then
applicable commercial rules and regulations of the American
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Arbitration Association, or any successor organization. The arbitration
proceedings shall be conducted by a panel of three arbitrators, one of whom
shall be selected by Paradise, one by the Executive (or his legal
representative) and the third arbitrator by the first two so chosen. The parties
shall use their best efforts to assure that the selection of the arbitrators
shall be completed within 30 days and the parties shall use their best efforts
to complete the arbitration as quickly as possible. In such proceeding, the
arbitration panel shall determine who is a substantially prevailing party and
shall award to such party its reasonable attorneys', accountants' and other
professionals' fees and its costs incurred in connection with the proceeding.
The award of the arbitration panel shall be final, binding upon the parties and
nonappealable and may be entered in and enforced by any court of competent
jurisdiction. Such court may add to the award of the arbitration panel
additional reasonable attorneys' fees and costs incurred by the substantially
prevailing party in attempting to enforce such award.
12. Enforceability. The failure of either party at any time to require
performance by the other party of any provision hereunder shall in no way affect
the right of that party thereafter to enforce the same, nor shall it affect any
other party's right to enforce the same, or to enforce any of the other
provisions of this Agreement; nor shall the waiver by either party of the breach
of any provision hereof be taken or held to be a waiver of any subsequent breach
of such provision or as a waiver of the provision itself.
13. Assignment. This Agreement is a personal contract and the Executive's
rights and obligations hereunder may not be sold, transferred, assigned, pledged
or hypothecated by the Executive. The rights and obligations of Paradise
hereunder shall be binding upon and run in favor of the successors and assigns
of Paradise. If any assignment or transfer of rights hereunder is attempted by
the Executive contrary to the provisions hereof, Paradise shall have no further
liability for payments hereunder.
14. Modification. This Agreement may not be canceled, changed, modified or
amended orally, and no cancellation, change, modification or amendment shall be
effective or binding, unless it is in writing, signed by both parties to this
Agreement.
15. Severability; Survival. If any provision of this Agreement is held to
be void and unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement nevertheless shall be binding upon the parties with
the same effect as though the void or enforceable part has been severed and
deleted.
16. Notice. Notices given pursuant to the provisions of this Agreement
shall be sent by certified mail, postage prepaid, or by overnight courier, or by
telex, telecopier or telegraph, charges prepaid, to the following address:
To the Employer: Paradise Music & Entertainment, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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with a copy to: Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
To the Executive: Xxxxxx Xxxxx
c/o Paradise Music & Entertainment, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
17. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
18. No Conflict. The Executive represents and warrants that he is not
subject to any agreement, instrument, order, judgment or decree of any kind, or
any other restrictive agreement of any character, which would prevent him from
entering into this agreement or which would be breached by the Executive upon
his performance of his duties pursuant to this agreement.
19. Entire Agreement. This agreement represents the entire agreement
between Paradise and the Executive with respect to the subject matter hereof,
and all prior agreements relating to the employment of the Executive, written or
oral, are nullified and superseded hereby.
IN WITNESS WHEREOF, the parties have set their hands and seals on and as
of the day and year first above written.
PARADISE MUSIC & ENTERTAINMENT, INC.
By:
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Name:
Title:
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
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