EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 30 day of October 2002, by and between
MediaBay, Inc., a Florida corporation, with offices at 0 Xxxxxxxxx Xxxxxx, Xxxxx
Xxxxxx, Xxx Xxxxxx 00000, (the "Company"), and Xxxxxx Xxxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive have previously entered into an
employment agreement which became effective as of June 1, 2000 (the "Prior
Agreement"); and
WHEREAS, the Company recognizes the Executive's substantial contribution to
the growth and success of the Company and desires to provide for his continued
employment by reinforcing and encouraging his continued attention and dedication
to the Company; and
WHEREAS, the Executive is willing to commit himself to continue to serve
and to establish a minimum period during which he will serve the Company on the
terms and conditions herein provided.
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, in consideration of
the Executive's services and value to the Company over and beyond his
obligations as an employee, and intending to be legally bound hereby, the
parties agree as follows:
1. Recitals. The Whereas clauses recited above are hereby incorporated by
reference as though they were fully set forth herein.
2. Employment. The Company shall employ the Executive and the Executive
shall serve the Company, on the terms and conditions set forth herein.
3. Term. The employment of the Executive by the Company as provided in
paragraph 2 shall commence on the date of this Agreement and end on December 31,
2005, subject however, to the other termination provisions contained herein.
4. Position and Duties. (a) The Executive shall be employed by the Company
as an Executive Vice President and as the Editor-in-Chief of the Company's Audio
Passages - A Christian Audio Book Club. The scope of his duties and the extent
of his responsibilities shall be substantially the same as the duties and
responsibilities that the Executive currently performs. The Executive shall be
required to devote substantially all of his business time to the Company's
business and affairs.
5. Compensation and Related Matters.
(a) Salary. During the term of this Agreement, the Company shall pay
to the Executive, as basic compensation for his services, an annual salary of
$175,000 (subject to increase as provided below) in equal monthly installments
during the first year of the term of this Agreement; thereafter, the Executive's
salary shall increase at the rate of four percent (4%) per
year. In addition, the Executive shall be entitled to participate in the
Company's incentive stock option and stock plans. The Executive shall receive a
performance-based bonus, the amount of which shall be determined by the Board of
Directors in its sole and absolute discretion, provided that the Executive shall
receive a minimum bonus of $30,000 on each December 1st (beginning on December
1, 2003) on which the Executive is still employed by the Company. Each such
bonus shall be paid to the Executive on or before December 31st of each calendar
year. The Executive's salary and bonus shall be reconsidered at least once each
fiscal year of the Company and shall not necessarily be limited to such
increases granted other officers.
(b) Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable travel and business expenses in connection with
services performed hereunder in accordance with normal Company policy, as the
same may be determined from time to time.
(c) Insurance and Employee Benefits. The Executive shall be entitled
to receive insurance and employee benefits applicable to all officers of the
Company.
(d) Vacation. The Executive shall receive, prorata during each full
year of his employment, three (3) weeks paid vacation approved one (1) month in
advance. The Executive will make every effort to schedule the vacation time at a
time most convenient for the Company, with the Company recognizing that the
Executive's flexibility is limited by school calendars. The Executive shall not
take more than fourteen (14) consecutive days of vacation, including weekends.
(e) Stock Options. The Executive will receive stock options to acquire
an additional one hundred thousand (100,000) shares of Common Stock in the
Company pursuant to and in accordance with the Company's Stock Option Plan.
Options with respect to one hundred thousand (100,000) shares shall vest at the
end of the first year of the Term of this Agreement, provided that the Executive
is an employee of the Company at that time. Such options shall be exercisable at
a price per share of $1.00 and will be on the terms and conditions as more
specifically provided for in the Company's Stock Option Plan and will be
exercisable for a period of ten (10) years commencing immediately upon vesting.
6. Termination by the Company. The Executive's employment hereunder may be
terminated by the Company without any breach of this Agreement only under the
circumstances described below.
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, as determined by a physician mutually chosen by the
Executive and the Company, the Executive shall have been absent from his duties
hereunder for a consecutive period of one hundred eighty (180) days and after
notice of termination is given (which may be given before or after the end of
such 180 day period but which will in no event be effective until, at the
earliest, the day following the one hundred eightieth (180th) day of the period)
shall not have returned to the performance of his duties hereunder, as that
concept is contemplated in this Agreement,
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within thirty (30) days after the notice of termination is given, the Company
may terminate the Executive's employment hereunder.
(c) Cause. The Company may terminate the Executive's employment under
this Agreement at any time for cause. For purposes of this Agreement, the term
"cause" shall include one or more of the following: (i) willful misconduct and
continued failure by the Executive in the performance of his duties, as
contemplated in this Agreement, as Executive Vice President and Editor-in-Chief
of Audio Passages, A Christian Audio Book Club (other than through disability as
defined in paragraph 6(b), above), or (ii) conviction of a crime involving moral
turpitude, theft, embezzlement or continuing alcohol or drug abuse to the extent
that he is unable to perform the duties of his office. The termination shall be
evidenced by written notice thereof to the Executive, which shall specify the
cause for termination.
(d) Without Cause. In addition to any other rights the Company has to
terminate the Executive's employment under this Agreement, the Company may, at
any time, by a vote of not less than sixty percent (60%) of the directors then
in office (excluding the vote of the Executive if he is also a director),
terminate the Executive without cause upon ninety (90) days' prior written
notice to the Executive setting forth the reasons, if any, for the termination.
For purposes of this Agreement, the term "without cause" shall mean termination
by the Company on any grounds other than those set forth in paragraphs 6(a), (b)
or (c) hereof.
(e) Severance Pay. In the event that the Company has terminated the
Executive's employment under this Agreement "without cause" or at any time after
a "Change of Control" (as defined below) has occurred, then the Executive will
be entitled to receive severance pay equal to the greater of Five Hundred Twenty
Five Thousand and 00/100 U.S. Dollars ($525,000.00) or three (3) times the total
compensation received by the Executive from the Company during the twelve (12)
months prior to the date of termination. In the event there is a "Change of
Control" (as defined below), the Executive will have six (6) months following
the event which constituted the "Change of Control" to elect to resign (unless
in connection with such event the Executive was terminated) at which time the
Executive will then receive the aforementioned severance pay.
(f) Change of Control. For purposes of this Agreement, a "Change of
Control" shall be deemed to occur, unless previously consented to in writing by
the Executive, upon (i) the actual acquisition or the execution of an agreement
to acquire twenty percent (20%) or more of the voting securities of the Company
by any person or entity not affiliated with the Executive (other than pursuant
to a bona fide underwriting agreement relating to a public distribution of
securities of the Company), (ii) the commencement of a tender or exchange offer
for more than twenty percent (20%) of the voting securities of the Company by
any person or entity not affiliated with the Executive, (iii) the commencement
of a proxy contest against the management for the election of a majority of the
Board of Directors of the Company if the group conducting the proxy contest
owns, has or gains the power to vote at least twenty percent (20%) of the voting
securities of the Company, (iv) a vote by the Board of Directors to merge,
consolidate, sell all or substantially all of the assets of the Company to any
person or entity not affiliated with the Executive, or (v) the election of
directors constituting a majority of the Board of Directors who have not been
nominated or approved by the Executive.
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(g) The Executive shall not be required to mitigate the amount of any
payment provided for in this paragraph 6 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this paragraph 6
be reduced by any compensation earned by the Executive as the result of
employment by another employer or business or by profits earned by the Executive
from any other source at any time before and after the date of termination. The
amounts payable to the Executive under this Agreement shall not be treated as
damages, but as severance pay to which the Executive is entitled by reason of
his employment and the circumstances contemplated by this Agreement.
(h) The severance pay which the Executive will be entitled to receive
as a result of the termination of his employment under this Agreement, shall not
be the Executive's exclusive remedy in the event of such termination, and the
Executive will continue to be entitled to all other damages to which the
Executive may be entitled as a result to the termination of his employment under
this Agreement, including all legal fees and expenses incurred by him in
contesting or disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement.
7. Non-Competition Covenant. The Executive hereby covenants and agrees that
he will not serve as an officer of or perform any equivalent functions for any
other audio book company during the term of his employment under this Agreement.
Nothing in the immediately preceding sentence is intended to be construed as
otherwise preventing the Executive from (i) engaging in other business
activities, (ii) holding positions in charitable organizations, (iii)
purchasing, holding or owning interests in other entities and/or serving as a
director and/or officer of other corporations, or serving as a manager of
limited liability companies or a general partner of partnerships, or (iv) having
any other interest in other businesses. In addition, during the term of this
Agreement and for a period of two (2) years immediately following the
termination of his employment, whether said termination is occasioned by the
Company, the Executive or a mutual agreement of the parties, the Executive shall
not, for himself or on behalf of any other person, persons, firm, partnership,
corporation or company, engage or participate in any activities which are in
direct conflict with the interests of the Company or solicit or attempt to
solicit the business or patronage of any person, firm, corporation, company or
partnership, which had previously been a customer of the Company, for the
purpose of selling products and services similar to those provided by the
Company.
8. Indemnification. To the maximum extent permitted under the corporate
laws of the State of Florida or, if more favorable, the Articles of
Incorporation and/or By-Laws of the Company as in effect on the date of this
Agreement, (a) the Executive shall be indemnified and held harmless by the
Company, as provided under such corporate laws or such Articles of Incorporation
and/or By-Laws, as applicable, for any and all actions taken or matters
undertaken, directly or indirectly, in the performance of his duties and
responsibilities under this Agreement or otherwise on behalf of the Company, and
(b) without limiting clause (a), the Company shall indemnify and hold harmless
the Executive from and against (i) any claim, loss, liability, obligation,
damage, cost, expense, action, suit, proceeding or cause of action
(collectively, "Claims") arising from or out of or relating to the Executive's
acting as an officer, director, employee or agent of the Company or any of its
affiliates or in any other capacity, including, without limitation, any
fiduciary capacity, in which the Executive serves at the request of the Company,
and (ii) any cost or expense (including, without limitation, fees and
disbursements of
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counsel) (collectively, "Expenses") incurred by the Executive in connection with
the defense or investigation thereof. If any Claim is asserted or other matter
arises with respect to which the Executive believes in good faith the Executive
is entitled to indemnification as contemplated hereby, the Company shall pay the
Expenses incurred by the Executive in connection with the defense or
investigation of such Claim or matter (or cause such Expenses to be paid) on a
monthly basis, provided that the Executive shall reimburse the Company for such
amounts, plus simple interest thereon at the then current Prime Rate as in
effect from time to time, compounded annually, if the Executive shall be found,
as finally judicially determined by a court of competent jurisdiction, not to
have been entitled to indemnification hereunder.
9. Binding Agreement. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, divisees and legatees. In addition, this Agreement and the
obligations and rights of the Company hereunder shall be binding on any person,
firm or corporation which is a successor-in-interest to the Company.
10. Notice. For the purpose of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally, or by private
overnight courier or mail service, postage prepaid or (unless otherwise
specified) mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Xxxxxx Xxxxxxx
0 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
(000) 000-0000
If to the Company: MediaBay, Inc.
0 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
(000) 000-0000
or to such other address as the parties may furnish to each other in writing.
Copies of all notices, demands and communications shall be sent to the home
addresses of all members of the Board of Directors of the Company.
11. Miscellaneous.
(a) No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by the parties hereto, provided, however, that this Agreement may be
modified, waived or discharged by mutual agreement in writing.
(b) No delay, waiver, omission or forbearance (whether by conduct or
otherwise) by any party hereto at any time to exercise any right, option, duty
or power arising out of breach or default by the other party of any of the
terms, conditions or provisions of this Agreement to be performed by such other
party shall constitute a waiver by such party or a
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waiver of such party's rights to enforce any right, option or power as against
the other party or as to subsequent breach or default by such other party, and
no explicit waiver shall constitute a waiver of similar or dissimilar terms,
provisions or conditions at the same time or at any prior or subsequent time.
(c) In the event of a dispute between the Executive and the Company
concerning any of the provisions of this Agreement or the enforcement of the
terms hereof, should the Executive prevail in any settlement or final,
unappealable judgment of a court of competent jurisdiction, the Company shall
pay the Executive's costs incurred therein, including reasonable attorneys'
fees.
12. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of New Jersey and any action brought by either party shall be
commenced in the courts of the State of New Jersey. The Executive and the
Company hereby irrevocably and unconditionally consent to submit to the
exclusive jurisdiction of the courts of the State of New Jersey located in
Xxxxxx County and the courts of the United States of America located in Essex
County, New Jersey for any and all actions, suits or proceedings arising out of
or resulting from or relating to this Agreement and the transactions
contemplated hereby and the parties agree not to commence any action, suit or
proceeding relating thereto except in such courts. The parties hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any such action, suit or proceeding arising out of, resulting from or relating
to this Agreement or the transactions contemplated hereby in such courts and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
13. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
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 will constitute one and the same instrument.
15. Entire Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to his employment by the Company.
This Agreement supersedes all prior agreements and understandings whether
written or oral between the Executive and the Company, including the Prior
Agreement; and there are no restrictions, agreements, promises, warranties or
covenants other than those stated in this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
shown below effective as of the date first written above.
"COMPANY"
Date Signed: October 30, 2002 MEDIABAY, INC., a Florida corporation
By: /s/ Xxxx X. Xxxx
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Printed Name: Xxxx X. Xxxx
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Title: Executive Vice President/
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Chief Financial Officer
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"EXECUTIVE"
/s/ Xxxxxx Xxxxxxx
Date Signed: October 30, 2002 Xxxxxx Xxxxxxx
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Printed Name:
