EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of the 12th day of August 2004, by and
between MediaBay, Inc., a Florida corporation, with offices at ▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, residing at c/o Safer ▇▇▇▇▇▇▇, 437 Madison Avenue, 20th Floor, New
York, New York 10022 (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 employ the Executive and the Executive
is willing to commit himself 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 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 August 12, 2004 and end on the second (2nd)
anniversary of such commencement (the "Term"), subject, however, to the other
termination provisions contained herein.
(4) Position and Duties. The Executive shall be employed by the Company
as Chairman. His power and authority shall be and remain subject to the
direction and control of the Board of Directors. The Executive shall perform the
duties and responsibilities and have the powers of Chairman, as set forth in the
Company's By-laws. During the Term, the Executive shall devote his time on
matters relating to the operation of Company's and its subsidiaries' 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, a monthly salary of
$7,500 in bi-monthly installments.
(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) Stock Options. The Executive will receive stock options (the
"Options") to acquire Four Hundred Thousand (400,000) shares of the Company's
common stock, no par value per share ("Common Stock"), pursuant to and in
accordance with the Company's [2001 Stock Incentive Plan] (the "Plan"). The
Options shall vest as to 25% of the shares covered thereby on the date hereof
and 25% of the shares covered thereby on each of November 12, 2004, February 12,
2005 and May 12, 2005. The Options shall be exercisable at a price per share
equal to the closing sale price of the Common Stock on the date hereof, shall
terminate five years from the date hereof, and shall be granted pursuant to the
terms and conditions as more specifically provided for in the Plan and a
Non-Qualified Stock Option Agreement dated as of the date hereof between the
Company and the Executive in the form of Exhibit A hereto.
(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 Chairman, (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 a majority of the directors then in
office (excluding the vote of the Executive if he is also a director), terminate
the Executive without cause upon thirty (30) 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.
(7) Executive Termination. The Executive may terminate his employment
hereunder for any reason upon thirty (30) days prior written notice to the
Company.
(8) Non-Competition and Confidentiality Covenant. 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 expense, use his best efforts to prevent or limit any
such disclosure by means of a protective order or a request for confidential
treatment.
(9) Indemnification. To the maximum extent permitted under the corporate
laws of the State of Florida, (a) the Executive shall be indemnified and held
harmless by the Company, as provided under such corporate laws 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.
(10) 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, devisees 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.
(11) 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.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice Chairman
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.
(12) 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.
(13) Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York (except to the extent that the Florida
Business Corporation Act applies to Section 8 hereof) and any action brought by
either party shall be commenced in the courts of the State of New York. The
Executive and the Company hereby irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the courts of the State of New York
located in ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ located in the
Southern District of New York 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.
(14) 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.
(15) 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. Facsimile signatures shall
be effective and binding as original signatures.
(16) 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.
Date Signed: August 12, 2004 MEDIABAY, INC., a Florida corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice Chairman and
Chief Financial Officer
"EXECUTIVE"
Date Signed: August 12, 2004 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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