EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of April 1, 2001 (this "Agreement"), by
and between MCY MUSIC WORLD, INC., a Delaware corporation with an office located
at 0000 Xxxxxx xx xxx Xxxxxxxx, XX, XX 00000 (the "Company"), and XXXXXXXX
XXXXXXX, an individual residing at 00 Xxxxxx Xxx Xxxx, Xxxxxx, XX 00000 (the
"Executive").
WHEREAS, the parties hereto wish to terminate that certain Employment
Agreement dated July 11, 1999, and the amendment thereto dated May 2, 2000, by
and between the Company and the Executive (as amended, the "Prior Agreement"),
except to the limited extent incorporated herein;
WHEREAS, this Agreement shall constitute a new employment arrangement
between the Company and the Executive, pursuant to which the Company agrees to
employ the Executive as a Manager of Business Affairs of the Company from and
after the date hereof, and the Executive agrees to be employed in such capacity,
upon the terms and provisions and subject to the conditions set forth in this
Agreement; and
NOW, THEREFORE, for good and valuable consideration, the sufficiency
and receipt of which is hereby acknowledged, the Company and the Executive agree
as follows:
1. Partial Termination of Prior Agreement; Resignation as Officer.
1.1 (a) Except as otherwise provided in Section 1.1(b) hereof and
elsewhere in this Agreement, the Prior Agreement is hereby terminated and
rendered null and void, without further force and effect as to any party
thereto, effective as of April 1, 2001. Each of the Executive and the Company
hereby acknowledge and confirm that the Prior Agreement is being terminated as
provided herein voluntarily by the parties hereto and not as a result of any
dispute, controversy or claim under such Prior Agreement, as may be contemplated
by Article 8 thereof.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the restrictive covenants contained in Article 6 of the Prior
Agreement (the "Restrictive Covenants") are hereby incorporated into this
Agreement and made a part hereof, as if set forth herein in its entirety, which
Restrictive Covenants shall continue in full force and effect as to the parties
hereto and survive the expiration or earlier termination of this Agreement.
1.2 Effective as of April 1, 2001, the Executive shall
cease to be an officer of the Company.
2. Employment and Term. The Company hereby employs the Executive as a
Manager of Business Affairs and the Executive hereby accepts employment by the
Company in that capacity, upon the terms and conditions, and subject to the
terms, provisions and conditions, set forth herein. The Executive's employment
shall be for a term of one (1) year, commencing April 1, 2001 and terminating
March 31, 2002, unless earlier terminated pursuant to the provisions of Section
6 of this Agreement (the "Term").
3. Executive's Duties.
3.1 Description. The Executive shall perform such duties and
responsibilities as shall be generally proscribed to the position of the
Executive or shall be reasonably assigned by the Company's Chairman, Chief
Executive Officer or the Board of Directors of the Company (the "Board"), and
which duties and responsibilities are, subject to Section 3.3 hereof,
customarily incident to, and not inconsistent with, the legal services
associated with the operations of the Company and/or its subsidiaries.
3.2 Authority. When performing services for the Company during the
Term, the Executive shall report directly to the Company's Chairman, Chief
Executive Officer and the Board, and shall be responsible to the Company's
Chairman, Chief Executive Officer and the Board. The Executive shall not legally
bind the Company or any of its subsidiaries as to any third party absent the
express written approval of the Board.
3.3 Effort. The Executive shall be required under this Agreement to
provide services to the Company for eight (8) business days per month during the
Term (irrespective of the Company's vacation schedule), which services shall be
provided at the Company's principal executive offices. The Executive shall
coordinate the scheduling of such eight (8) business days with the Chairman and
the Chief Executive Officer of the Company and, on such days, the Executive
shall use his best efforts to be present at such offices for at least nine (9)
hours per working day, from 9 a.m. to 6 p.m., during which time he shall devote
his full working time, effort, skill and attention to the business, operations
and affairs of the Company and to the furtherance of the interests, business and
prospects of the Company. The Executive shall perform the Executive's duties and
responsibilities hereunder diligently, competently, faithfully and to the best
of his ability, judgment and skill. The parties acknowledge that during the Term
the Executive may engage in any activity during his non-working time, provided
that such activities and commitments are not in conflict with the business or
activities of the Company and its subsidiaries and are otherwise consistent with
Paragraph 6.1 of the Prior Agreement which is incorporated herein by reference;
provided, however, that subject to such other activities and commitments, the
Executive shall use his best efforts during such non-working time to be
available, by telephone to the Chairman, Chief Executive Officer and the Board.
4. Compensation.
4.1 Annual Salary. In consideration of the Executive's performance
of the duties and responsibilities and compliance with the terms hereunder, the
Company shall, commencing April 1, 2000 and during the continuance of the
Executive's employment hereunder, pay to the Executive, and the Executive agrees
to accept, in consideration of his services, a salary (the "Base Salary") equal
to an annual rate of $174,000, payable in two monthly installments of $7,250 on
approximately the 15th and 30th day of each month, less all withholdings and
other deductions required to be deducted in accordance with any applicable
federal, state, local or foreign law, rule or regulation in accordance with the
Company's regular payroll practices.
4.2 ADSX Transaction. As additional consideration for executing and
delivering this Agreement, the Executive shall receive from the Company shares
(the "Transaction Stock") of
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the capital stock of Applied Digital Solutions, Inc. ("ADSX") received by the
Company in connection with those various agreements dated October 25, 2000 with
ADSX, as amended and modified by that certain Amendment No. 1 to the Escrow
Agreement dated as of March 30, 2001 (the "Amendment No. 1") (the
"Transaction"), as follows:
(a) That number of shares of Transaction Stock having a value equal
to $200,000. Such shares of Transaction Stock shall be delivered to the
Executive within seven (7) business days from the date the shares of ADSX
capital stock are received by the Company in accordance with that certain Escrow
Agreement dated October 25, 2000, as amended by Amendment No. 1 (the "Escrow
Agreement") executed in connection with the Transaction. For purposes hereof,
the value of the Transaction Stock shall be calculated by taking the average
closing prices of ADSX common stock on April 3, 2001, as officially reported by
the principal securities exchange on which the securities are listed or admitted
to trading or as reported in the Nasdaq National Market System, or, if the
securities are not so listed or quoted on the National Market System of The
Nasdaq Stock Market, Inc. ("Nasdaq"), the closing bid price as furnished by the
National Association of Securities Dealers, Inc. through Nasdaq or similar
organization if Nasdaq is no longer reporting such information.
(b) That additional number of shares of Transaction Stock equal to
ten percent (10%) of any shares of the capital stock of ADSX beneficially owned
by the Company as of the date the Company satisfies in full the MCY Receivable
(as such term is defined in the Escrow Agreement). Such shares of Transaction
Stock shall be delivered to the Executive within seven (7) business days from
the date the MCY Receivable is satisfied in full by the Company. Notwithstanding
the foregoing, if the Company elects not to pay the MCY Receivable in cash but
rather uses its shares of ADSX capital stock to satisfy the MCY Receivable as
permitted by the Escrow Agreement, then the Executive shall not be entitled to
receive any additional Transaction Shares pursuant to this Section 4.2(b).
(c) The provisions of this Section 4 supersede and replace in their
entirety any prior understandings and/or agreements between the Company and the
Executive relating to the payment of a fee or other consideration to the
Executive in respect of the Transaction, including, among other things, a
payment to the Executive equal to five percent (5%) of the net proceeds received
by the Company from ADSX under a license of Netrax and other technology to ADSX.
The payment of any amount to the Executive pursuant to this Section 4 is
separate and distinct from any obligation by the Company to pay finder's fees to
any third parties.
(d) Subject to Section 6 hereof, the Company's obligation to deliver
shares of Transaction Stock to the Executive pursuant to this Section 4 shall
survive the termination of this Agreement.
5. Benefits. During the Term, the Company shall provide to the
Executive (i) the automobile provided to Executive under the Prior Agreement, on
the same terms and conditions as provided therein; (ii) such life, medical and
disability insurance plans as may be offered by the Company during the Term;
provided that the Executive meets all applicable eligibility requirements; and
(iii) to the extent the Executive is eligible, coverage under any D&O and
Attorney Malpractice
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insurance policy(ies) in effect for the Company and its affiliates during the
Term. Subject to the provisions of the Delaware law applicable to officer
indemnification, the Company and its affiliates shall indemnify and hold
harmless the Executive from any damages or liabilities in connection with his
work for the Company under this Agreement and the Prior Agreement.
6. Termination.
6.1 By the Company. Notwithstanding the provisions of Section 2
hereof, this Agreement may be terminated prior to the expiration of the Term by
the Company upon the occurrence of any of the following events:
(a) Upon the death of the Executive; provided that the Executive's
estate or legal representative, as the case may be, shall be entitled to
receive, and the Company shall pay, any accrued and unpaid Base Salary through
the date that is six (6) months after the Executive's death, together with any
benefit the Executive was entitled to receive under any life insurance policies
provided to the Executive by the Company, and shall deliver to such estate or
legal representative all of the shares of Transaction Stock deliverable to the
Executive pursuant to Section 4.2 hereof upon release of such shares from escrow
or upon satisfaction of the MCY Receivable;
(b) Upon the inability of the Executive to perform his duties during
the proscribed hours in any material respects on account of illness or other
incapacity for four (4) consecutive weeks during the Term ("Incapacity"), by
furnishing the Executive with written notice of termination; provided that the
Executive or the Executive's legal representative, as the case may be, shall be
entitled to receive, and the Company shall pay, any accrued and unpaid Base
Salary for a period of six (6) months following the termination of the
Executive's employment for disability, less any amounts received by the
Executive under any disability insurance policy maintained by the Company, and
shall deliver to the Executive or such legal representative all of the shares of
Transaction Stock deliverable to the Executive pursuant to Section 4.2 hereof
upon release of such shares from escrow or upon satisfaction of the MCY
Receivable. For purposes of this Section 6.1(b), the date of termination shall
be the last day of such four (4) consecutive week period;
(c) The Company may terminate the Executive's employment with the
Company for Cause. For purposes of this Agreement, the term "Cause" shall mean:
(i) the Executive's failure to perform any of the Executive's material duties or
responsibilities to the Company or the breach by the Executive of any of the
material covenants, agreements or obligations contained in this Agreement to be
observed or performed by the Executive or in any other written agreement between
the Executive and the Company unless such failure or breach is cured by the
Executive within twenty (20) days after the Executive's receipt of written
notice from the Company of such failure or breach; (ii) the Executive is found
guilty of any act of dishonesty, fraud, or embezzlement from, or any
misappropriation or diversion of any property, assets or corporate opportunity
of, the Company; or (iii) the conviction of, or admission by the Executive of,
or plea by the Executive of nolo contendere to, any felony or crime involving
moral turpitude. In the event the Executive's employment hereunder is terminated
by the Company for Cause, the Company shall only be obligated (i) to pay to the
Executive accrued and unpaid Base Salary through the date of termination and
(ii) to deliver to the Executive one-half (1/2) of the shares of Transaction
Stock
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deliverable to the Executive pursuant to Section 4.2 hereof upon release of such
shares from escrow or upon satisfaction of the MCY Receivable.
6.2 By the Executive. Notwithstanding the provisions of Section 2
hereof, this Agreement may be terminated prior to the expiration of the Term by
the Executive in the event that the Company fails to pay to the Executive any
compensation due and owing pursuant to Section 4 of this Agreement; provided,
however, that the Company shall have ten (10) days after written notice from the
Executive as to any such failure to pay such unpaid and accrued compensation. In
the event the Company fails to cure any nonpayment as provided hereunder, the
Executive shall be entitled to immediate payment of the entire Base Salary
amount set forth in Section 4.1 hereof and all amounts payable pursuant to
Section 4.2 hereof.
6.3 Continuing Obligations. The Executive acknowledges and agrees
that any termination of employment pursuant to the terms of Section 6.1 is not
intended, and shall not be deemed or construed, in any way (i) to affect, modify
or waive any of the Executive's obligations with respect to the Restrictive
Covenants, which obligations shall survive the termination of the Executive's
employment with the Company and shall continue in full force and effect or (ii)
to constitute a waiver or renunciation of any right or remedy available to the
Company based upon a termination For Cause, which rights and remedies shall be
cumulative and shall survive termination of the Executive's employment with the
Company. The Company shall also be entitled to offset from any payments to be
made to the Executive upon termination of the Executive's employment against any
amounts owing for expenses by the Executive to the Company.
6.4 Return of Materials. The Executive and the Company will deliver
promptly to the Company or the Executive or their respective designee(s), as the
case may be, at the termination of the Executive's employment, or at any other
time the Company or the Executive may so request, all memoranda, notes, records,
reports, and other documents (including, without limitation, drafts, whole or
partial copies, and information stored or maintained electronically,
magnetically, in a computer, or through any other medium invented in the future)
relating to the Company's business, which the Executive obtained while employed
by, or otherwise serving or acting on behalf of, the Company and which the
Executive may then possess or have under the Executive's control or which the
Company may have obtained from the Executive which were not generated or
developed by the Executive in connection with his employment by the Company.
7. Miscellaneous
7.1 Notices. Any notice, direction, instruction, consent or other
communication required or permitted to be given hereunder shall be given in
writing and may be given by telex, telegram, facsimile transmission or similar
method if confirmed by mail as herein provided; by mail if sent postage prepaid
by registered mail, return receipt requested; or by hand delivery to any party
at the address of the party first set forth above. If notice, direction or
instruction is given by telex, telegram or facsimile transmission or similar
method or by hand delivery, it shall be deemed to have been given or made on the
day on which it was given, and if mailed, shall be deemed to have been given or
made on the third (3rd) business day following the day after which it was
mailed. Any party may, from time to time, by like notice give notice of any
change of address and in such event, the address of such party shall be deemed
to be changed accordingly. A copy of any notice to the Company shall be sent to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP, The Chrysler Building, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000 (Attention: Xxxxxx Xxxx Xxxxxxxx, Esq.). Telecopier:
(000) 000-0000
7.2 Waivers. Waiver by either party of either breach of or failure
to comply with any provision of this Agreement by the other party shall not be
construed as, or constitute, a continuing waiver of such provision, or a waiver
of any other breach of, or failure to comply with, any other provision of this
Agreement, any such waiver must be in writing to be limited to the
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specific matter and instance for which it is given. No waiver of any such breach
or failure or of any term or condition of this Agreement shall be effective
unless in a written instrument and signed by the waiving party and delivered, in
the manner required for notices generally, to the affected party.
7.3 Specific Performance. Because the breach of any of the
provisions of the Restrictive Covenants incorporated herein will result in
immediate and irreparable injury to the Company for which the Company will not
have an adequate remedy at law, the Company shall be entitled, in addition to
all other rights and remedies, to seek a degree of specific performance of the
Restrictive Covenants and to a temporary and permanent injunction enjoining such
breach.
7.4 Severability. Each term and provision of this Agreement
(including, without limitation, the Restrictive Covenants contained in Section 6
of the Prior Agreement and incorporated herein) is severable; the invalidity,
illegality or unenforceability of any term or provision of this Agreement shall
not affect the validity, legality and enforceability of the other terms and
provisions of this Agreement, which shall remain in full force and effect. Since
it is the desire and intent of the parties that the provisions of this Agreement
be enforced to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought, should any
particular provision of this Agreement be deemed invalid, illegal or
unenforceable by a court of competent jurisdiction, the same shall be deemed
reformed and amended to delete that portion that is adjudicated to be invalid,
illegal or unenforceable and the deletion shall apply only with respect to the
operation of such provision and to the extent of such provision and, to the
extent that a provision of this Agreement would be deemed unenforceable by
virtue of its scope, but may be made enforceable by limitation thereon. Each
party agrees that this Agreement shall be reformed and amended so that the same
shall be enforceable to the fullest extent permissible under the laws and public
policies applied in the jurisdiction in which enforcement is sought.
7.5 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New York,
applicable to agreements made and to be performed in the State of New York,
without reference to any of its principles of conflicts of laws. This Agreement
shall be construed and interpreted without regard to any presumption against the
party causing this Agreement to be drafted. Each of the parties unconditionally
and irrevocably consents to the exclusive jurisdiction of the courts of the
State of New York located in New York County and the Federal District Court for
the Southern District of New York with respect to any suit, action or proceeding
arising out of or relating to this Agreement, and each of the parties waives any
right to contest the venue of said courts or to claim that said courts
constitute an inconvenient forum. Each of the parties unconditionally and
irrevocably waives the right to a trial by jury in any such action, suit or
proceeding.
7.6 Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter hereof, and
except as specifically provided herein with respect to those provisions of the
Prior Agreement incorporated herein, supersedes all prior agreements,
arrangements and understandings, written or oral, between or among the parties,
all of which are merged herein.
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7.7 Successors and Assigns. This Agreement, and the Executive's
rights and obligations hereunder, may not be assigned by the Executive, except
that the Executive may designate one or more beneficiaries to receive any
amounts that would otherwise be payable hereunder to the Executive's estate.
This Agreement shall be binding on any successor to the Company whether by
merger, consolidation, acquisition of all or substantially all of the Company's
assets or business or otherwise, as fully as if such successor were a signatory
hereto; and the Company shall cause such successor to, and such successor shall,
expressly assume the Company's obligations hereunder.
7.8 Amendments. This Agreement cannot be changed, modified or
amended except by an instrument in writing executed by each of the parties
hereto.
7.9 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original. It shall not be
necessary when making proof of this Agreement to account for more than one
counterpart.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
MCY MUSIC WORLD, INC.
By: /s/ Xxxxxxxx Xxxxxxx
----------------------
Name: Xxxxxxxx Xxxxxxx
Title: President
Executive:
/s/ Xxxxxxxx Xxxxxxx
----------------------
Xxxxxxxx Xxxxxxx
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