Exhibit 10.31
WARNER MUSIC INC.
75 Rockefeller Plaza
New York, New York 10019
November 4, 2005
Alex Zubillaga
Dear Alex:
This letter, when signed by you and
countersigned by us (“Company”), shall constitute our
agreement (the “Agreement”) with respect to your
employment with Company.
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1.
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Position : Effective on the date hereof, Executive Vice
President, Digital Strategy and Business Development.
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2.
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Term :
The term of this Agreement shall commence on August 8, 2005
and end on August 7, 2008 (the “Term”).
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(a) Salary : During the Term,
Company shall pay you a salary at the rate of $600,000 per
annum.
(b) Annual Discretionary
Bonus : With respect to each fiscal year of the Term
(commencing with the fiscal year ending September 30, 2005),
Company shall consider granting to you an annual bonus (or a pro
rata portion of such annual bonus for a portion of such year
provided that the bonus for the fiscal year ended
September 30, 2005 will cover the 10 months ending
September 30, 2005 consistent with other senior executive
bonuses). The amount of each annual bonus shall be determined by
Company at its sole discretion; provided, that, your Target bonus
for each fiscal year of the Term shall be $350,000 (or a pro rata
portion of such amount for a portion of a year), based on the
strength of your performance and on the performance of Company. The
amount of each annual bonus awarded to you may be higher or lower
than the Target amount, and shall be determined by Company using
criteria consistent with the criteria used in determining the
annual bonuses of other senior corporate executives of Company
(i.e., the officers reporting directly to the Chairman and CEO of
Company (other than the Chairman of the US recorded music
operations of the Warner Recorded Music Business)).
(c) Payment of Compensation :
Compensation accruing to you during the Term shall be payable in
accordance with the regular payroll practices of Company for
employees at your level. You shall not be entitled to additional
compensation for performing any services for Company’s
subsidiaries or affiliates.
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4.
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Exclusivit y: Your employment with Company shall be
full-time and exclusive. During the Term you will not render any
services for others, or for your own account, in the field of
entertainment or otherwise; provided, however, that to the extent
that such activities do not interfere with the performance of your
duties hereunder, you may (a) serve on corporate boards or
committees with the prior written consent of the CEO of Company,
(b) serve on civic, educational, philanthropic or charitable boards
or committees, (c) passively own not more than three percent
(3%) of the outstanding capital stock of any corporation whose
stock is publicly traded and manage such investments, and
(d) own and manage real estate and securities portfolio
investments.
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5.
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Reporting : You shall at all times work under the
supervision and direction of the Chairman and CEO of Company, or to
such senior executive officer of Company as the Chairman and CEO of
Company may designate; provided that such officer holds the title
of President, COO or Vice Chairman, and shall perform such duties
as you shall reasonably be directed to perform by such senior
officers.
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6.
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Place of
Employment : The greater
New York metropolitan area. You shall render services at the
offices established for Company at such location. You also agree to
travel on temporary trips to such other place or places as may be
required from time to time to perform your duties
hereunder.
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7.
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Travel and
Entertainment Expenses :
Company shall promptly pay or reimburse you for reasonable expenses
(including first class travel and first class accommodations)
actually incurred or paid by you during the Term in the performance
of your services hereunder in accordance with Company’s
policy for employees at your level upon presentation of expense
statements or vouchers or such other supporting information as
Company may customarily require.
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8.
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Benefits : While you are employed hereunder, you shall be
entitled to all fringe benefits generally accorded to employees of
Company at your level from time to time, including, but not limited
to, medical health and accident, group life and disability
insurance and similar benefits, provided that you are eligible
under the general provisions of any applicable plan or program and
Company continues to maintain such plan or program during the Term.
During the Term, you shall be entitled to no less paid vacation for
each year commencing with the Effective Date as is made available
generally to other senior executives of the Company; provided,
that, such paid vacation shall be no less than four weeks per
year.
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9.
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Disability/Death : If you shall become physically or mentally
incapacitated from performing your duties hereunder, and such
incapacity shall continue for a period of six (6) consecutive
months or more or for shorter periods aggregating six months or
more in any twelve-month period, Company shall have the right
(before the termination of such incapacity), at its option, to
terminate your employment hereunder upon paying to you the Basic
Termination Payments (as defined below), including any applicable
disability benefits under benefit plans, policies or arrangements
of the Company. In the event of your death, this Agreement shall
automatically terminate except that Company shall pay to your
estate or as you may otherwise designate (to the extent permitted
under applicable law) any accrued but unpaid salary through the
last day of the month of your death and any other Basic Termination
Payments, including any applicable death benefits under benefits
plans, policies or arrangements of the Company.
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10.
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Termination
by Company : Company may
at any time during the Term, by written notice, terminate your
employment for “Cause” (as defined below), such Cause
to be specified in the notice of termination. The following acts
shall constitute “Cause” hereunder: (a) the
willful and continued failure or refusal by you to perform
substantially your material duties with the Company (other than any
such failure resulting from your incapacity due to physical or
mental illness); (b) conviction of, or plea of guilty to, a felony
or misdemeanor involving moral turpitude or dishonesty; (c) the
willful and continued breach by you of material covenants contained
in this Agreement; and (d) the willful engaging by you in
gross misconduct which is demonstrably and materially injurious to
the Company or its affiliates. Notice of termination given to you
by Company shall specify the reason(s) for such termination, and in
the case where a cause for termination described in clause
(a) or (c) above shall be susceptible of cure, and such
notice of termination is the first notice of termination given to
you for such reason, if you fail to cure such cause for termination
within ten (10) business days after the date of such notice,
termination shall be effective upon the expiration of such ten-day
period, and if you cure such cause within such ten-day period, such
notice of termination shall be ineffective. In all other cases,
notice of termination shall be effective on the date thereof. Upon
termination for “Cause” you shall be entitled to the
Basic Termination Payments.
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11.
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Termination
by Employee .
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(a) For purposes of this Paragraph
11, Company shall be in breach of its obligations to you hereunder
if there shall have occurred any of the following events (each such
event being referred to as a “Good Reason”):
“Good Reason” shall mean: (i) any adverse change
in your title; (ii) any failure by the Company to comply with
any of the provisions of Paragraph 3 of this Agreement;
(iii) the
Company requiring you to be based at
any office or location other than at an office commensurate with
your position at the headquarters of the Company in the Borough of
Manhattan, New York; or (iv) any change in reporting
inconsistent with Paragraph 5 above.
(b) You may exercise your right to
terminate the Term of this Agreement for Good Reason pursuant to
this Paragraph 11 by notice given to Company in writing specifying
the Good Reason for termination within sixty (60) days after
the occurrence of any such event constituting Good Reason,
otherwise your right to terminate this Agreement by reason of the
occurrence of such event shall expire and shall be deemed to have
permanently lapsed. Any such termination in compliance with the
provisions of this Paragraph 11 shall be effective thirty (30) days
after the date of your written notice of termination, except that
if Company shall cure such specified cause within such thirty-day
period, you shall not be entitled to terminate the term of this
Agreement by reason of such specified Good Reason and the notice of
termination given by you shall be null and void and of no effect
whatsoever.
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12.
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Consequences
of Breach by Company or Non-renewal :
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(a) In the event of a “Special
Termination” (as defined below) of your employment or your
resignation for “Good Reason” (as defined in Paragraph
11 (a)), your sole remedy shall be that, upon your execution of a
Release (as defined below) Company shall pay to you
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