Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
22nd day of June, 1998 by and between NORTHERN RADIO NETWORK CORP. ("Company")
and Xxxx Xxxxxx ("Xxxxxx").
WHEREAS, the Company desires to employ Xxxxxx as the "President and Chief
Operating Officer" of the Company;
WHEREAS, Xxxxxx has agreed to provide such services in accordance with the
terms and conditions of this Agreement;
NOW THEREFORE, in consideration of the mutual promises herein made and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Employment. Company shall employ Xxxxxx as the President and Chief
Operating Officer during the term of this Agreement and Xxxxxx hereby accepts
such employment. Xxxxxx shall be responsible for all of the day-to-day
operational aspects of the Company; shall supervise all other officers and
employees of the Company except the Chief Executive Officer; and shall have such
other duties regarding the Company as shall be determined from time to time by
the Chief Executive Officer or the Board of Directors of the Company ("Board").
Xxxxxx agrees to devote his full business time to providing services to the
Company as herein provided and shall perform his duties faithfully and
diligently.
2. Term of Employment. The term of employment of Xxxxxx shall be for a term
of three (3) years from the date of this Agreement ("Initial Term") and shall
automatically extend for additional terms of one (1) year ("Renewal Term")
unless this Agreement is terminated as of the last day of the Initial Term or as
of the last day of any Renewal Term upon not less than ninety (90) days prior
written notice by either party to the other, subject to earlier termination as
provided in paragraphs 4, 5, and 6 hereof.
3. Compensation.
(a) Base Salary. Commencing as of the date of this Agreement, Xxxxxx shall
be paid an initial base salary at the annual rate of $108,000 ("Initial Base
Salary"), payable in equal installments semi-monthly, until the date that
Xxxxxx' increased base salary becomes effective (as defined herein). Commencing
on the date that the Company completes full funding of the $7.5 million offering
of its common stock, which offering is being made pursuant to the Company's
Registration Statement on form SB-2 to be filed with the Securities and Exchange
Commission on or about June 23, 1998 (the "Offering"), or the Company otherwise
increases its paid in capital to such a level during the term of this Agreement,
whichever event occurs first ("Minimum Capitalization"), Xxxxxx' Initial Base
Salary shall be increased retroactively to January 1, 1998 to an annual rate of
$125,000 ("Increased Base Salary").
(b) Cash Bonus. Xxxxxx shall be paid a cash bonus, if any, within the sole
discretion of the Board of Directors of the Company. Such bonus shall be paid
within a reasonable
period of time after the Board of Directors in its discretion awards such cash
bonus, but not to exceed a period of ninety (90) days of the end of the
Company's accounting period during which the cash bonus was declared. In
addition, Xxxxxx shall be entitled to receive a one-time cash bonus payable no
later than 30 days after closing of the Company's Offering, in the amount of
$25,000, assuming the Offering raises at least $7.5 million in aggregate gross
proceeds, or in the amount of $20,000 if the Offering raises less than $7.5
million but more than $5.0 million in gross aggregate proceeds. No one-time cash
bonus shall be payable in the event that the aggregate gross Offering proceeds
are less than $5.0 million.
(c) Stock Bonus. Xxxxxx shall receive a stock bonus, if any, within the sole
discretion of the Board of Directors of the Company. Such stock bonus shall be
implemented within a reasonable period of time after the Board of Directors in
its discretion awards such stock bonus, but not to exceed a period of ninety
(90) days of the end of the Company's accounting period during which the stock
bonus was declared. In addition, assuming the Offering raises at least $5.0
million in aggregate gross proceeds, Xxxxxx shall be entitled to receive a
one-time stock bonus issuable no later than 30 days after closing of the
Company's Offering, in an amount of the Company's $.001 par value unregistered
(restricted) Common Stock equal to the greater of 10,000 shares of such Common
Stock, or a number of such shares equal to .04% of the total shares of Common
Stock outstanding after the Offering is complete . No one-time stock bonus shall
be payable in the event that the aggregate gross Offering proceeds are less than
$5.0 million.
(d) Vacation. Xxxxxx shall be entitled to paid vacation and paid Federal and
state holidays in accordance with the vacation policy of the Company then in
effect, but no less than three (3) weeks of vacation each year.
(e) Other Benefits. Xxxxxx shall be entitled to participate in all benefit
programs made generally available to other management employees of the Company,
on the same terms and conditions as they are offered to others, including but
not limited to medical, dental, and term life insurance benefits. Xxxxxx shall
also be provided, at Company expense, with a vehicle equipped with a cellular
telephone for business use, including all transportation and insurance costs
associated therewith.
(f) Severance Payment. In the event of the termination of Xxxxxx'x
employment hereunder prior to the end of the Initial Term, or any Renewal Term,
by the Company without cause (except termination upon death or total and
permanent disability) including any deemed termination by the Company as set
forth in paragraph 4(b) hereof, the Company shall pay Xxxxxx liquidated damages
equal to the Base Salary (less withholding and payroll taxes) Xxxxxx would
otherwise be entitled to receive for the unexpired term of this Agreement, or
for a period of one year, whichever is the lesser amount, which sum is payable
at the time that Xxxxxx' periodic salary payments would be made, but reduced
from the date of termination by the amount of other income received by Xxxxxx
from any other employment for that time period. Such payments shall be in full
settlement of any and all claims Xxxxxx may have against the Company for such
termination.
(g) Stock Option Grants/Employee Stock Ownership Plan. Xxxxxx shall be
entitled to participate and receive stock option grants from the Company's
Employee Stock Option Plan ("ESOP") during his employment with the Company, at
the discretion of the Board of Directors or committee of the Board responsible
to administer the ESOP, in amounts which are proportional to and at the same
time as option grants are made to other members of the Company's senior
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management and according to terms and conditions which are comparable to such
ESOP option grants received by other members of the Company's senior management.
4. Termination of Employment.
(a) Termination For Cause. The Company may terminate the employment of
Xxxxxx at any time for cause (as hereinafter defined) upon written notice. The
term "for cause" shall mean:
(i) the continued failure by Xxxxxx to substantially perform his
primary duties as President and Chief Operating Officer of the Company in a
reasonable professional manner other than due to temporary or total
disability or death, after a written demand for such substantial
performance is delivered to Xxxxxx by the Board of Directors of the
Company;
(ii) the unauthorized dissemination of significant trade secrets or
other proprietary property of the Company;
(iii) the commission of a felony or commission of a crime involving
dishonesty or moral turpitude;
(iv) the commission of any act or acts of dishonesty which acts are
intended to result or do result directly or indirectly in gain or personal
enrichment of Xxxxxx or a related person or affiliated company or when such
acts are intended to cause harm or damages to the Company;
(v) the illegal use of controlled substances;
(vi) the continued use of alcohol so as to have an adverse effect on
the performance of his duties;
(vii) the misappropriation or embezzlement of Company assets;
(viii) the knowingly furnishing of material false reports or
information to the directors or officers of the Company; or
(ix) the making of serious disparaging remarks regarding the Company
publicly or to suppliers and/or customers or potential customers of the
Company.
(b) Default. Either party may terminate this Agreement upon the breach of
any material provision of this Agreement by the other party upon thirty (30)
days prior written notice; provided, however, that such termination notice shall
not be effective if the defaulting party corrects such default prior to the date
of termination. Termination by Xxxxxx of his employment hereunder by reason of
the default of the Company shall be deemed for all purposes of this Agreement a
termination by the Company without cause.
5. Disability. The Company may terminate the employment of Xxxxxx under this
Agreement by written notice upon the total and permanent disability of Xxxxxx.
Total and
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permanent disability shall mean the inability of Xxxxxx to substantially perform
the essential functions of his position, with or without reasonable
accommodations, due to sickness or other physical or mental disability, for
ninety (90) days in any one hundred twenty (120) day period or a period of time
which exceeds the time for medical leave provided by law, whichever period is
longer. The Company shall give Xxxxxx written notice of any termination
hereunder.
6. Death. The employment of Xxxxxx under this Agreement automatically
terminates upon the death of Xxxxxx.
7. Expense Reimbursement. Xxxxxx shall be reimbursed, upon a proper
accounting, for all expenses reasonably incurred in connection with this
employment hereunder, including all reasonable travel and entertainment expenses
pursuant to Company policy.
8. Confidential Information. During the Initial Term or any Renewal Term of
this Agreement, Xxxxxx shall not use or disclose to others, without the prior
written consent of the Company, any customer lists, trade secrets, secret
know-how, or other confidential information relative to the business of the
Company obtained by Xxxxxx in the course of rendering services pursuant to this
Agreement. The obligation of Xxxxxx with respect to any item of such information
shall terminate if that item of information becomes disclosed in published
literature or otherwise becomes publicly available, provided that such public
disclosure did not result, directly or indirectly, from any act or omission of
Xxxxxx. Upon the leaving the employ of the Company for any reason, Xxxxxx shall
continue to be bound by this Paragraph 8 for a period of two (2) years, and
shall not take with him any customer lists, confidential data, or other
documents and instruments which are the property of the Company. All such data,
documents and instruments and all copies thereof shall be surrendered by Xxxxxx
to the Company on or prior to the termination of his employment.
9. Notices. All notices, requests, demands and other communications required
or permitted hereunder shall be in writing and shall be deemed to have been
given when delivered by hand or upon delivery to the address set forth below, if
delivered by any other means, addressed to the party and delivered to the
address set forth below or to such other address as such party gives written
notice in substitution therefor:
(i) if to Company:
Northern Radio Network Corporation
0000 XX-00 Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Chairman and
Chief Executive Officer
(ii) if to Xxxxxx:
Xxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
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10. Limitations.
(a) Non-Compete. Xxxxxx agrees that during the term of his employment with
the Company hereunder and for a period of two (2) years thereafter he shall
refrain, directly and indirectly, jointly and severally, from managing,
operating, financing, participating in the ownership, management or operation of
or be employed by, consult with, advise or be otherwise engaged in any manner
with, any business engaged in the providing of radio broadcast services
competitive to those provided by the Company in any of the locations where the
Company provides such radio broadcast services, which locations are defined to
include all areas within a radius of 75 miles from any existing sales or tower
facility utilized in the Company's business as of the date that Xxxxxx leaves
the Company's employment. Ownership of less than 5% of companies whose
securities are publicly traded and which compete with the Company's business is
not prohibited by this Agreement.
(b) Non-solicitation of Customers. Xxxxxx agrees that during the term of his
employment with the Company hereunder and for a period of two (2) years
thereafter he shall not, on his own behalf, or on behalf of another, directly or
indirectly, solicit, contact, call upon, communicate with or attempt to
communicate with any customer or prospective customer of the Company with a view
to the providing of services or products which are competitive with those that
are marketed or provided by the Company as of the date that Xxxxxx leaves the
Company's employment, provided that these restrictions shall apply only to
customers or prospects of the Company which have been customers or prospects
with whom Xxxxxx has had contacts on behalf of the Company.
(c) Non-solicitation of Employees. Xxxxxx agrees that during the term of his
employment hereunder and for a period of two (2) years thereafter, Xxxxxx will
not directly or indirectly solicit or in any other manner encourage employees of
the Company to leave its employ for an engagement in any capacity with any other
company or entity.
(d) Limitations. Notwithstanding the foregoing, the covenants of Xxxxxx
pursuant to this paragraph 10 shall terminate upon the termination of Xxxxxx'x
employment by the Company without cause or by Xxxxxx by reason of the Company's
breach of its obligations hereunder.
11. Dispute Resolution. Any dispute regarding the interpretation, breach,
damages or otherwise related to the interpretation or construction of this
Agreement shall be resolved by binding arbitration before one or more
arbitrators appointed by the American Arbitration Association ("AAA") in the
city of Alpena, Michigan, pursuant to the AAA's Commercial Arbitration Rules.
Either party may institute the action by notice to the AAA and to the other
party. Prior to the filing of any complaint with the AAA, the parties shall meet
and attempt to resolve the dispute. The cost of such arbitration shall be borne
equally by the parties. Any decision or award by said arbitrator(s) shall be
binding on the parties. Notwithstanding the foregoing, any party hereto may
apply to any court for a temporary or permanent injunction or restraining order
to specifically enforce any provision hereof.
12. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon Xxxxxx and his estate and personal representatives and upon the
Company and its successors and assigns. This Agreement may not be assigned,
pledged or otherwise hypothecated by Xxxxxx.
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13. Successors and Assigns. The Company shall cause any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the assets or outstanding securities of the Company, by
written agreement in form and substance reasonably satisfactory to counsel to
Xxxxxx to perform the obligations of the Company pursuant to this Agreement in
the same manner and to the same extent that the Company would be required to
perform if no such succession had taken place. In the event the Company has a
parent, the parent shall guaranty the obligations of the Company hereunder. The
rights and obligations of the Company under this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company
regardless of whether such successor or assign consents in writing thereto. The
rights of Xxxxxx hereunder shall inure to the benefit of and be enforceable by
Xxxxxx and his estate and legal representative.
14. Severability. In the event of the invalidity, in whole or in part, of
any term or provision of this Agreement, the parties agree that such invalidity
shall not affect the validity of any other term or provision of this Agreement
and that such provision shall be subject to partial enforcement to the extent
permitted under applicable law.
15. Entire Agreement. This Agreement constitutes the entire understandings
of the parties with respect to the employment of Xxxxxx by the Company and
supersedes all prior agreements and understandings, oral or written.
16. Amendments. This Agreement may not be amended or modified except in a
writing signed by both parties.
17. Waiver. The failure by a party to insist upon strict performance of any
provision hereof shall not constitute a waiver of such provision. All waivers
must be in writing to be enforceable hereunder.
18. Governing Law. This Agreement shall be made and in all respects shall be
interpreted, construed and governed by and in accordance with the laws of the
State of Michigan, without giving effect to the rules governing conflicts of
law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
NORTHERN RADIO NETWORK CORP.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Chairman and Chief
Executive Officer
Xxxx Xxxxxx
/s/ Xxxx Xxxxxx
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