EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of the 10th day of November, 2001, by and between
MediaBay, Inc., a Florida corporation, with offices at 0 Xxxxxxxxx Xxxxxx, Xxxxx
000, Xxxxx Xxxxxx, Xxx Xxxxxx 00000 (the "Company"), and Xxxx X. Xxxx, residing
at 000 Xxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the spoken audio business including
audiobooks, old-time radio shows and downloadable spoken audio products; and
WHEREAS, the Company desires to continue to employ the Executive beyond the
expiration date of the current Employment Agreement between the Company and the
Executive; and
WHEREAS, the Executive is willing to commit himself to continue to serve
and to establish a minimum period during which he will continue to 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 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 November 10, 2001 and end on the second (2nd)
anniversary of such commencement, subject, however, to the other termination
provisions contained herein.
4. Position and Duties. The Executive shall be employed by the Company as
an Executive Vice President and Chief Financial Officer. His power and authority
shall be and remain subject to the direction and control of the Board of
Directors and all officers senior to him including but not limited to the Chief
Executive Officer, Xxxxxxx Xxxxxxx and Chairman, Xxxxxx Xxxxxxx. The Executive
shall have responsibility for the financial oversight of the business and
affairs of the Company, including without limitation responsibility for all
filings with the Securities and Exchange Commission, the Internal Revenue
Service and all other agencies (federal, state or local) and/or stock exchanges
to which the Company must
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report, subject to appropriate review and approval of the Board of Directors and
senior officers and such further revisions as the Executive deems necessary. The
scope of his duties and the extent of his responsibilities shall be
substantially the same as the duties and responsibilities of other chief
financial officers of public companies. The Executive shall be required to spend
his full time and attention, without other outside business interests, in the
performance of his duties and 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 compensation for his services, an annual salary of
$180,000 in bi-monthly installments during the first year of the term of
this Agreement; and $190,000 during the second year of the term of this
Agreement. In addition, the Executive may receive a performance-based bonus
to be determined by the Chief Executive Officer in his sole and absolute
discretion with a minimum bonus at the end of year one, provided the
Executive is still employed by the Company at that time, of Twenty-Seven
Thousand and 00/100 U.S. Dollars ($27,000.00) and a minimum bonus at the
end of year two, provided the Executive is still employed by the Company at
that time, of Thirty Thousand and 00/100 U.S. Dollars ($30,000.00); such
bonuses shall be paid within forty-five (45) days after the end of each
year.
(b) Expenses. The Executive shall 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 receive
employee benefits applicable to all officers of the Company except the
executive will not receive medical insurance unless his wife is no longer
employed at a position which provides family coverage. In addition, the
Executive shall be reimbursed for reasonable costs associated with up to
twenty-four (24) hours of continuing education courses with respect to
topics germane to his duties, including reasonable local travel costs to
attend such courses and reasonable fees for such courses. In addition, the
Company will reimburse the Executive for his dues to the AICPA and ISCPA
and the Executive can continue to use during the Term the portable computer
and cellular phone already provided to him by 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. Notwithstanding the foregoing, the Executive shall not be
entitled to vacation during the three (3) week period prior to the date on
which the Company's Annual Report on Form 10-KSB (or Form 10-K) or
Quarterly Report on Form 10-QSB (or Form 10-Q) are required to be filed
with the Securities and Exchange Commission. In addition, the Executive
will receive normal Company holidays, plus two (2) days off for Rosh
Hashanah and one (1) day off for Yom Kippur unless such holy days fall on a
weekend.
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(e) Stock Options. The Executive is hereby granted stock options to
acquire Fifty Thousand (50,000) shares of Common Stock in the Company
pursuant to and in accordance with the Company's Stock Option Plan. Options
with respect to Seventeen Thousand (17,000) shares shall vest on January 2,
2002 at a price per share equal to One Dollar ($1.00); options with respect
to Seventeen Thousand (17,000) shares will vest on November 10, 2002 at a
price per share equal to One Dollar Fifty Cents ($1.50), provided that the
Executive is still employed by the Company at that time and options with
respect to Sixteen Thousand (16,000) shares will vest on November 10, 2003
at a price per share equal to Two Dollars ($2.00), provided that the
Executive is still employed by the Company at that time. Such options will
be on the terms and conditions as more specifically provided for in the
Company's Stock Option Plan.
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 forty-five (45) days and
after notice of termination is given (which may be given before or after
the end of such 45 day period but which will in no event be effective
until, at the earliest, the day following the forty-fifth day of the
period) shall not have returned to the performance of his duties hereunder,
as that concept is contemplated in this Agreement, within ten (10) 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, (ii) continued failure by the Executive to perform his duties,
as contemplated in this Agreement, as Chief Financial Officer (other than
through disability as defined in paragraph 6(b), above), (iii) conviction
of a crime or alcohol or drug abuse, or (iv) the Executive's breach of this
Agreement. The termination shall be evidenced by written notice thereof to
the Executive.
(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
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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. It shall also be a
termination without cause, at the election of the Executive, if the
Executive is asked to work at a business location of the Company which is
more than fifty (50) miles from Westfield, New Jersey. Notwithstanding the
foregoing, it is understood that travel in connection with the performance
of Executive's duties shall not be deemed to be termination without cause.
(e) Severance Pay. In the event that the Company has terminated the
Executive's employment under this Agreement (i) "without cause" or (ii) in
the event there is a "Change of Control" (as defined below), then the
Executive will be entitled to receive severance pay of One Hundred Thousand
Dollars ($100,000) paid in twelve equal payments of $8,333.33 commencing
thirty (30) days from such termination of the Executive's employment.
(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, and only if the Executive is not offered
continued employment, upon (i) the actual acquisition of fifty percent
(50%) or more of the voting securities of the Company by any company or
entity or affiliated group of companies or entities (other than pursuant to
a bona fide underwriting agreement relating to a public distribution of
securities of the Company), (ii) the completion of a tender or exchange
offer for more than fifty percent (50%) of the voting securities of the
Company by any company or entity or affiliated group of companies or
entities not affiliated with the Executive, (iii) the completion 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 fifty percent (50%) of the voting
securities of the Company, or (iv) a merger or consolidation in which the
Company is not the surviving entity or a sale of or substantially all of
the assets of the Company.
(g) Change of Control Compensation. In the event of a completion of a
tender or exchange offer for more than fifty percent (50%) of the voting
securities of the Company by any company or entity or affiliated group of
companies or entities not affiliated with the Executive, the stock options,
described in paragraph 5(e), shall immediately be exercisable and any
unvested shall immediately vest.
(h) 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
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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.
(i) The severance pay which the Executive will be entitled to receive
as a result of the termination of his employment under this Agreement,
shall be the Executive's exclusive remedy in the event of such termination.
7. Non-Competition and Confidentiality Covenant. The Executive hereby
covenants and agrees that he will not serve as an officer of or perform any
functions for any other company during the term of his employment under this
Agreement, except that the Executive shall be permitted to serve as a board
member of the Israel Histradrut Group Foundation, a not-for-profit entity,
provided serving as a board member for such entity does not interfere with the
performance of the Executive's duties under this Agreement. 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 or indirect 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.
Furthermore, the Executive acknowledges and agrees that: all mailing lists;
customer, member and prospect names; license or arrangement; front-end and
back-end marketing performance; financial statements; operating system, database
and other computer software, specific to the Company; and all information which
is known by the Executive to be subject to a confidentiality agreement or
obligation of confidentiality, even without a confidentiality agreement between
the Company and another person or party, shall be maintained by the Executive in
a confidential manner and the Executive agrees that the Executive will not use
such information to the detriment of the Company or disclose such information to
any third party, except as may be necessary in the course of performing the
Executive's job responsibilities. The Executive further agrees that these
obligations of confidentiality with respect to such information shall continue
after the Executive ceases to be employed by the Company. Disclosure of the
aforementioned information shall not be prohibited if such disclosure is
directly pursuant to a valid and existing order of a court or other governmental
body or agency within the United States; provided, however, that (i) the
Executive shall first have given prompt notice to the Company of any such
possible or prospective order (or proceeding pursuant to which any such order
may result), (ii) the Company shall have been afforded a reasonable opportunity
to review such disclosure and to prevent or limit any such disclosure, and (iii)
the Executive shall, if requested by the Company and at the Company's cost and
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expense, use his best efforts to prevent or limit any such disclosure by means
of a protective order or a request for confidential treatment.
The Executive further acknowledges that the Executive will not disclose any
information with respect to the Company, its operations or its officers and
directors, whether or not such information is confidential, to Xxxxxxx Xxxx or
any entity or company in which Xxxxxxx Xxxx has an ownership interest or is a
director, officer or employee or to any attorneys, accountants, agents or
representatives of Xxxxxxx Xxxx or any of the aforementioned companies or
entities.
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,
provided the Executive did not act wantonly or recklessly or was not grossly
negligent or engaged in willful misconduct, 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 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, at its election, to
be determined in its sole and absolute discretion, either assume the defense or
investigation of such Claim or matter or pay the Expenses incurred by the
Executive in connection with the defense or investigation of such Claim or
matter, 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
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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: To the address at the head of this Agreement
If to the Company: MediaBay, Inc.
0 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
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 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.
12. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Florida and any action brought by either party shall be
commenced in the courts of the State of Florida. The Executive and the Company
hereby irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the courts of the State of Florida and the United States of
America located in Palm Beach
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County, Florida 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, and there are no
restrictions, agreements, promises, warranties or covenants other than those
stated in this Agreement.
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:_________________, 2002 MEDIABAY, INC., a Florida corporation
By:
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Printed Name:
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Title:
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"EXECUTIVE"
Date Signed:_________________, 2001
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Printed Name:
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