Executive Employment Agreement - BAM! Entertainment Inc. and Raymond C. Musci
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement, dated as of October 1,1999 (the "Effective Date"), is
between BAM! Entertainment, Inc., a Delaware corporation, (the "Company") and
Raymond C. Musci, an individual ("Employee").
1. Term
a. Basic Term: The Company shall employ Employee for the period
commencing on the Effective Date and ending upon the earlier of (i) two (2)
year(s) from the Effective Date (the "Term Date"), as extended under Section
1(b); or (ii) the date upon which the employment is terminated in accordance
with Section 4 or 5.
b. Renewal: Employee's employment will be renewed automatically
for an additional one (1) year period (without any action by either party) on
the Term Date and on each anniversary thereof, unless one party gives to the
other written notice sixty (60) days in advance of the beginning of any one-year
renewal period that the employment is to be terminated. Either party may elect
not to renew this Agreement with or without cause, in which case Employee shall
not be entitled to any Severance. Nothing stated in this Agreement or
represented orally or in writing to either party shall create an obligation to
renew this Agreement.
2. Position and Responsibilities
a. Position: Employee is employed by the Company to render
services to the Company in the position of President & Chief Operating Officer.
Employee shall perform such duties and responsibilities as are normally related
to such position in accordance with the standards of the industry and any
additional duties now or hereafter assigned to Employee by the Board of
Directors. Employee shall abide by the Company's rules, regulations, and
practices as they may from time-to-time be adopted or modified.
b. Other Activities: Except upon the prior written consent of the
Company, Employee will not, during the term of this Agreement, (i) accept any
other employment, or (ii) engage, directly or indirectly, in any other business
activity (whether or not pursued for pecuniary advantage) that might interfere
with Employee's duties and responsibilities hereunder or create a conflict of
interest with the Company.
c. No Conflict. Employee represents and warrants that Employee's
execution of this Agreement, his or her employment with the Company, and the
performance of his or her proposed duties under this Agreement shall not violate
any obligations Employee may have to any other employer, person or entity,
including any obligations with respect to proprietary or confidential
information of any other person or entity.
3. Compensation and Benefits
a. Base Salary: In consideration of the services to be rendered
under this Agreement, the Company shall pay Employee a salary at the rate of
$225,000 Dollars per year ("Base Salary"). The Base Salary shall be paid in
accordance with the Company's regularly
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established payroll practices. Employee's Base Salary will be reviewed at least
annually in accordance with the Company's established procedures for adjusting
salaries for similarly situated employees and may be increased in the sole
discretion of the Company's Compensation Committee. The Base Salary may not be
decreased, except upon a mutual written agreement between the parties.
b. Bonus. Employee shall be eligible for any bonus program or
plan that is established by the Company for similarly situated employees. The
Company's Compensation Committee, in its sole discretion, may establish a bonus
program or plan for Employee.
c. Stock and Stock Options: Employee currently owns Common Stock
and/or Preferred Stock in the Company. The Company's Compensation Committee, in
its sole discretion, may grant Employee one or more stock options or other
equity rights.
d. Benefits: The Company will provide Employee with medical,
dental, eye-care, disability and life insurance benefits in accordance with the
benefit plans established by the Company for similarly-situated executives (as
may be amended from time to time in the Company's sole discretion) and will pay
all premiums for coverage of Employee and his family. The Company shall also
provide Employee with at least five weeks of paid vacation leave annually, which
shall accrue monthly (i.e., 2 1/12th days shall accrue each month) and shall be
governed by the Company's regular policies and practices regarding vacation
leave (as may be amended from time to time in the Company's sole discretion).
Employee shall also be eligible to participate in any additional benefits made
generally available by the Company to similarly-situated employees, in
accordance with the benefit plans established by the Company, which may be
amended or terminated at any time in the Company's sole discretion.
e. Expenses: The Company shall reimburse Employee for all
reasonable business expenses incurred in the performance of his or her duties
hereunder in accordance with the Company's expense reimbursement guidelines.
f. Indemnification. The Company agrees to defend and indemnify
Employee against any liability that Employee incurs within the scope of his
employment with the Company to fullest extent permitted by the Company's
articles and by-laws and Delaware corporation's law. The Company agrees to
defend and indemnify Employee and hold Employee harmless against any liability
caused by all personal guarantees or other personal obligations that Employee
made during his employment with respect to any debts of the Company.
4. Terminations By Company
a. At-Will Termination By Company. The Company may terminate
Employee's employment with the Company at any time, without any advance notice,
for any reason, including no reason at all, notwithstanding anything to the
contrary contained in or arising from any statements, policies, or practices of
the Company relating to the employment, discipline, or termination of its
employees, subject to any severance payment required by Section 4(b).
Thereafter, all obligations of the Company under this Agreement shall cease,
except as provided in Section 6.
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b. Severance: Except in situations where Employee's employment is
terminated For Cause or By Disability (as defined below), in the event that the
Company terminates Employee's employment at any time, Employee will be eligible
to receive the following: (i) an amount equal to twenty-four (24) months of
Employee's then-current Base Salary ("Severance") payable as follows: 50% of the
Severance shall be paid as a lump sum within a reasonable period following the
termination date (but not more than sixty (60) days unless agreed by Employee)
and 50% of the Severance will be paid as salary continuation for twelve (12)
months following the termination date; and (ii) reimbursement for any COBRA
payments made by Employee for COBRA coverage during the twelve (12) months
following the termination date. Employee shall not be entitled to any severance
payments or benefit continuation if Employee's employment is terminated For
Cause or By Disability (as defined in below) of if Employee's employment is
terminated by Employee for any reason (except as provided in Section 5 below).
c. Termination For Cause: For purposes of this Agreement, "Cause"
shall mean: (i) Employee commits a crime involving dishonesty, breach of trust,
or physical harm to any person; (ii) Employee willfully engages in conduct that
is in bad faith and materially injurious to the Company, including but not
limited to, misappropriation of trade secrets, fraud or embezzlement; (iii)
Employee commits a material breach of this Agreement, which breach is not cured
within twenty (20) days after written notice to Employee from the Company; (iv)
Employee willfully fails to implement or follow a reasonable and lawful policy
or directive of the Company, which breach is not cured within twenty (20) days
after written notice to Employee from the Company; or (v) Employee engages in a
pattern of failure to perform job duties diligently and professionally, which
pattern is not cured within twenty (20) days after written notice to Employee
from the Company. Prior to the date of any termination for Cause, the Company's
Board of Directors shall meet and the Employee shall have an opportunity to
present to the Board any information relevant to the event constituting Cause,
unless waived by Employee. The Company may terminate Employee's employment For
Cause at any time, without any advance notice. The Company shall pay to Employee
all compensation to which Employee is entitled up through the date of
termination, and thereafter, all of the Company's obligations under this
Agreement shall cease, except as provided in Section 6.
d. By Disability: If Employee becomes eligible for the Company's
long term disability benefits or if, in the reasonable opinion of the Company's
Board of Directors, Employee shall be unable to carry out the responsibilities
and functions of the position held by Employee by reason of any physical or
mental impairment for more than ninety (90) consecutive days or more than one
hundred and twenty (120) days in any twelve-month period, then, to the extent
permitted by law, the Company may terminate Employee's employment. The Company
shall pay to Employee all compensation to which Employee is entitled up through
the date of termination, and thereafter, all of the Company's obligations under
this Agreement shall cease, except as provided in Section 6. Nothing in this
Section shall affect Employee's rights under any disability plan in which he or
she is a participant.
5. Termination By Employee
a. At-Will Termination By Employee. Employee may terminate
his/her employment with the Company at any time for any reason, including no
reason at all, upon sixty
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(60) days advance written notice. The Company shall have the option, in its sole
discretion, to make Employee's termination effective at any time prior to the
end of such notice period as long as the Company provides Employee with all
compensation to which he is entitled up through the last day of the sixty (60)
day notice period. Thereafter, all obligations of the Company under this
Agreement shall cease, except as provided in Section 6.
b. By Death: Employee's employment shall terminate automatically
upon his or her death. The Company shall pay to Employee's beneficiaries or
estate, as appropriate, any compensation then due and owing. Thereafter, all
obligations of the Company under this Agreement shall cease, except as provided
in Section 6. Nothing in this Section shall affect any entitlement of Employee's
heirs to the benefits of any life insurance plan or other applicable benefits.
c. Termination for Good Reason. Employee's termination shall be
for "Good Reason" if Employee provides written notice to the Company of the Good
Reason within six (6) months of the event constituting Good Reason and provides
the Company with a period of twenty (20) days to cure the Good Reason and the
Company fails to cure the Good Reason within that period. For purposes of this
Agreement, "Good Reason" shall mean any of the following events if the event is
effected by the Company without Employee's consent : (i) a change in Employee's
position with employer which materially reduces Executive's level of
responsibility, except for any reduction for Cause (as defined above) or any
reduction following a Change in Control (as defined below) caused by the
transition of the Company into a new company or a division of a new company;
(ii) a material reduction in Employee's Base Salary, except for reductions that
are comparable to reductions generally applicable to senior executives of the
Company; or (iii) a relocation of Employee's principal place of employment by
more than fifty (50) miles. Employee may terminate his/her employment at any
time for Good Reason, in which case Employee will be eligible to receive the
Severance and benefit continuation provided by Section 4(b) above. Thereafter,
all obligations of the Company under this Agreement shall cease, except as
provided in Section 6.
d. Change in Control. For purposes of this Agreement, "Change of
Control" shall mean a change in ownership or control of the Company effected
through a merger, consolidation or acquisition by any person or related group of
persons (other than an acquisition by the Company or by a Company-sponsored
employee benefit plan or by a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities.
6. Termination Obligations
a. Employee agrees that all property, including, without
limitation, all equipment, tangible proprietary information, documents, records,
notes, contracts, and computer-generated materials provided to or prepared by
Employee incident to his or her employment belong to the Company and shall be
promptly returned to the Company upon termination of Employee's employment.
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b. Upon termination of Employee's employment, Employee shall be
deemed to have resigned from all offices and directorships then held with the
Company. Following any termination of employment, Employee shall cooperate with
the Company in the winding up or transferring to other employees of any pending
work and shall also cooperate with the Company in the defense of any action
brought by any third party against the Company that relates to Employee's
employment by the Company.
c. Employee agrees that following termination of his or her
employment, Employee shall not access or use any of the Company's computer
systems, e-mail systems, voicemail systems, intranet system or other system,
except as authorized by the Company in writing.
d. The Company agrees that immediately following termination of
Employee's employment, the Company will take all steps reasonably necessary to
release Employee from all personal guarantees or other personal obligations that
Employee made with respect to any debts of the Company.
e. The Company and Employee agree that their obligations under
this Section as well as Sections 3(f), 7 (including Exhibit A) and 8 shall
survive the termination of employment and the expiration of this Agreement.
7. Inventions and Proprietary Information
a. Employee agrees to execute and be bound by the terms of the
Company's Proprietary Information and Inventions Agreement, which is attached as
Exhibit A.
b. Employee acknowledges that because of his/her position in the
Company, Employee will have access intellectual property and confidential
information. During the term of his or her employment (plus any period in which
the Company is paying the Employee Severance) and for one (1) year thereafter,
Employee shall not, for Employee or any third party, directly or indirectly, (i)
interfere with any business of any kind in which the Company (or any affiliate)
is engaged, including, without limitation, diverting or attempting to divert any
of its suppliers or customers, or (ii) solicit, induce, recruit or encourage any
person employed by the Company to leave their employment.
8. Dispute Resolution
a. The parties agree that any suit, action, or proceeding between
Employee (and his or her attorneys, successors, and assigns) and the Company
(and its affiliates, shareholders, directors, officers, employees, members,
agents, successors, attorneys, and assigns) relating in any manner whatsoever to
Employee's employment or termination that employment shall be brought in either
the United States District Court for the Northern District of California or in a
California state court in the County of Santa Clara and that the parties shall
submit to the jurisdiction of such court. The parties irrevocably waive, to the
fullest extent permitted by law, any objection the party may have to the laying
of venue for any such suit, action or proceeding
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brought in such court. If any one or more provisions of this Section shall for
any reason be held invalid or unenforceable, it is the specific intent of the
parties that such provisions shall be modified to the minimum extent necessary
to make it or its application valid and enforceable.
b. Employee acknowledges that he/she is obligated under this
Agreement to render services of a special, unique, unusual, extraordinary and
intellectual character, thereby giving this Agreement peculiar value so that the
loss thereof cannot be reasonably or adequately compensated in damages in an
action at law. Accordingly, in addition to other remedies provided by law, the
Company shall have the right during the term of this Agreement to compel
specific performance by the Employee.
9. Entire Agreement
This Agreement is intended to be the final, complete, and exclusive
statement of the terms of Employee's employment by the Company and may not be
contradicted by evidence of any prior or contemporaneous statements or
agreements, except for agreements specifically referenced herein (including the
Company's Proprietary Information and Inventions Agreement, attached as Exhibit
A, and any agreements related to the stock currently held by Employee).
10. Amendments; Waivers
This Agreement may not be amended except by a writing signed by Employee
and by a duly authorized representative of the Company other than Employee.
Failure to exercise any right under this Agreement shall not constitute a waiver
of such right.
11. Assignment
Employee agrees that Employee will not assign any rights or obligations
under this Agreement. Nothing in this Agreement shall prevent the consolidation,
merger or sale of the Company or a sale of all or substantially all of its
assets.
12. Severability
If any provision of this Agreement shall be held by a court or
arbitrator to be invalid, unenforceable, or void, such provision shall be
enforced to fullest extent permitted by law, and the remainder of this Agreement
shall remain in full force and effect. In the event that the time period or
scope of any provision is declared by a court or arbitrator of competent
jurisdiction to exceed the maximum time period or scope that such court or
arbitrator deems enforceable, then such court or arbitrator shall reduce the
time period or scope to the maximum time period or scope permitted by law.
13. Taxes
All amounts paid under this Agreement (including, without limitation,
Base Salary and Severance) shall be paid less all applicable state and federal
tax withholdings. To the extent Employee is or may be subject to one or more
foreign tax obligations, the Company agrees to reasonably cooperate with
Employee to maximize Employee's after tax income.
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14. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
15. Interpretation
This Agreement shall be construed as a whole, according to its fair
meaning, and not in favor of or against any party. Captions are used for
reference purposes only and should be ignored in the interpretation of the
Agreement.
16. Binding Agreement
Each party represents and warrants to the other that the person(s)
signing this Agreement below has authority to bind the party to this Agreement
and that this Agreement will legally bind both the Company and Employee. This
Agreement will be binding upon and benefit the parties and their heirs,
administrators, executors, successors and permitted assigns. To the extent that
the practices, policies, or procedures of the Company, now or in the future, are
inconsistent with the terms of this Agreement, the provisions of this Agreement
shall control. Any subsequent change in Employee's duties or compensation will
not affect the validity or scope of the remainder of this Agreement.
17. Employee Acknowledgment
Employee acknowledges Employee has had the opportunity to consult legal
counsel concerning this Agreement, that Employee has read and understands the
Agreement, that Employee is fully aware of its legal effect, and that Employee
has entered into it freely based on his or her own judgment and not on any
representations or promises other than those contained in this Agreement.
18. Date of Agreement
The parties have duly executed this Agreement as of the date first
written above.
BAM! Entertainment, Inc.,
a Delaware corporation: EMPLOYEE:
By: /s/ RAYMOND C. MUSCI /s/ RAYMOND C. MUSCI
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Name: Raymond C. Musci Raymond C. Musci
Title: President
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