Exhibit 10.15
EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“ Agreement ”) is entered into as of
September 13, 2005, and shall become effective on the closing of
the Merger (as defined below) (the “ Effective
Date ”), between Digital Music Group, Inc., a
Delaware corporation with its principal offices located at 1545
River Park Drive, Suite 210 Sacramento, CA 95815 (the “
Company ”), and Anders Brown, a resident of
Washington (the “ Executive
”).
In consideration of the promises and
the terms and conditions set forth in this Agreement, the parties
agree as follows:
1. Position .
On the Effective Date and during
the term of this Agreement, Company will employ Executive, and
Executive will serve Company as the Company’s Chief Operating
Officer and will have such responsibilities and authority as may
from time to time be assigned to Executive by the Company’s
Chief Executive Officer and the Board of Directors of the Company.
Executive will report directly to the Chief Executive
Officer.
2. Duties .
Beginning on the Effective Date,
Executive will have day-to-day responsibility for the
Company’s operations, including responsibility for music
content processing and managing the Company’s sales and
marketing efforts and shall also serve the Company in such
capacities and with such duties and responsibilities as the Chief
Executive Officer of the Company and the Board of Directors of the
Company may from time to time determine. Executive will comply with
and be bound by Company’s operating policies, procedures, and
practices from time to time in effect during Executive’s
employment. Executive will perform his duties under this Agreement
at Executive’s home in Seattle, Washington. Executive hereby
represents and warrants that he is free to enter into and fully
perform this Agreement and the agreements referred to herein
without breach of any agreement or contract to which he is a party
or by which he is bound.
3. Exclusive Service
. Beginning on the
Effective Date, Executive shall devote his full time and efforts
exclusively to this employment and apply all his skill and
experience to the performance of his duties and advancing the
Company’s interests in accordance with Executive’s
experience and skills. In addition, Executive will not engage in
any consulting activity except with the prior written approval of
Company, or at the direction of Company, and Executive will
otherwise do nothing inconsistent with the performance of his
duties hereunder.
4. Term of Agreement
. This Agreement will
commence on the Effective Date, and will continue until the earlier
of two (2) years after the Effective Date or when terminated
pursuant to Section 7 hereof.
5. Compensation and
Benefits .
5.1 Base Salary
. Upon the closing of the
merger of Digital Musicworks International, Inc. with and into the
Company (the “Merger”), the Company shall begin paying
Executive an initial minimum salary of one hundred and thirty
thousand dollars ($130,000) per year (“Base Salary”).
At such time, Executive’s salary will be payable as earned in
accordance with Company’s customary payroll practice. The
parties agree this salary shall be applicable only to periods
starting immediately after the Effective Date and that no
compensation will begin to accrue or be due or payable until
immediately after the Effective Date.
5.2 Additional Benefits
. Beginning on the
Effective Date, Executive will be eligible to participate in
Company’s employee benefit plans of general application,
including without limitation those plans covering pension and
profit sharing, executive bonuses, stock purchases, and those plans
covering life, health, and dental insurance in accordance with the
rules established for individual participation in any such plan and
applicable law. Once Executive is eligible for health and dental
insurance coverage hereunder, Executive’s spouse and
dependents shall also be eligible for such coverage at
Company’s sole expense. In addition, beginning on the
Effective Date, Executive will receive such other benefits,
including vacation, holidays and sick leave, as the Company
generally provides to its employees holding similar positions as
that of Executive.
5.3 Cash Bonus
. Subject to the terms of
the Company’s bonus plan once created and as amended from
time to time (the “Plan”), Executive will earn bonuses,
payable as required under the Plan, but not until such time as the
Compensation Committee of the Board of Directors of the Company
determines the targets and milestones to be met each year. Such
bonuses will be between 30% and 50% of Executive’s salary if
Executive’s performance is below the targets for the period
in question but exceeds certain defined milestones, 50% to be paid
if performance meets or exceeds the targets for such period and 75%
if performance exceeds the targets for such period in accordance
with additional defined milestones, provided that such bonuses are
approved by the Compensation Committee of the Company in accordance
with its charter and applicable law.
5.4 Expenses .
The Company will reimburse Executive
for all reasonable and necessary expenses incurred by Executive in
connection with the Company’s business, provided that such
expenses are deductible to the Company, are in accordance with the
Company’s applicable policy and are properly documented and
accounted for in accordance with the requirements of the Internal
Revenue Service.
5.5 Vacation .
Executive will be entitled to paid
vacation as set forth in the Company’s policies and/or
employee manual (as they may be applicable to the Company’s
officers and key employees), as approved by the Board of
Directors.
6. Proprietary Rights
. Executive hereby agrees
to execute, on the Effective Date, an Employee Invention Assignment
and Confidentiality Agreement with the Company in substantially the
form attached hereto as Exhibit A .
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7. Termination
.
7.1 Events of Termination
. Executive’s
employment with the Company shall terminate upon any one of the
following:
(a) the Company’s
determination made in good faith that it is terminating Executive
for “cause” as defined under Section 7.2 below (“
Termination for Cause ”) provided , that
if the “Cause” for termination is a curable failure by
Executive to properly perform his assigned duties (as determined in
good faith by the Board of Directors of the Company), then the
Company will give Executive written notice of such failure (a
“ Cause Notice ”), and if Executive fails
to cure such failure to the reasonable satisfaction of the Board of
Directors within sixty (60) days after the Company gives the Cause
Notice, then the Company may immediately terminate
Executive’s employment, and such termination will be
conclusively deemed to be for “cause” hereunder;
or
(b) the effective date of a written
notice sent to Company from Executive stating that Executive is
electing to terminate his employment with the Company for
“good reason” as defined under Section 7.3 below
(“ Termination for Good Reason ”); or
(c) thirty (30) days after the
effective date of a written notice sent to Executive stating that
the Company is terminating his employment, without cause, which
notice can be given by the Company at any time after the Effective
Date at the Company’s sole discretion, for any reason or for
no reason (“ Termination Without Cause
”); or
(d) the effective date of a written
notice sent to the Company from Executive stating that Executive is
electing to terminate his employment with the Company (“
Voluntary Termination ”).
7.2 “Cause”
Defined . For
purposes of this Agreement, “cause” for
Executive’s termination shall be as defined as set forth in
Executive’s Restricted Stock Purchase Agreement with the
Company dated August 26, 2005.
7.3 “Good Reason”
Defined . For
purposes of this Agreement, Executive’s “good
reason” to terminate his employment with the Company shall be
as defined as set forth in Executive’s Restricted Stock
Purchase Agreement with the Company dated August 26,
2005.
8. Effect of Termination
.
8.1 Termination for Cause or
Voluntary Termination . In the event of any termination of this
Agreement pursuant to Sections 7.1(a) or 7.1(d), the Company shall
pay Executive the compensation and benefits otherwise payable to
Executive under Section 5 through the date of termination.
Executive’s rights under the Company’s benefit plans of
general application shall be determined under the provisions of
those plans.
8.2 Termination Without Cause
or for Good Reason . In the event of any termination of this
Agreement pursuant to Section 7.1(b) or 7.1(c),
(a) the Company shall pay Executive
the compensation and benefits otherwise payable to Executive under
Section 5 through the date of termination, and
(b) for a period of six (6) months
after the Effective Date, the Company shall continue to pay
Executive his base salary under Section 5.1 above at
Executive’s then-current salary, his benefits under Section
5.2 and any bonus due to Executive pursuant to Section 5.3, less
applicable withholding taxes, payable on the Company’s normal
payroll dates
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during that period, provided
, however , that if Executive secures other employment
during the period that Section 5.1, Section 5.2 and 5.3 remains in
effect pursuant to this Section 8.2, the Company will be entitled
to set off, dollar for dollar, whatever is earned in such
employment against the amount owed to Executive hereunder;
provided , that if the total amount of the benefits
available to Executive under this Section 8.2, either alone or
together with other payments which Executive has the right to
receive from the Company, would constitute a “parachute
payment” as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the “ Code ”), then
the Company shall pay to Executive at the time of termination an
additional amount such that the net amount retained by Executive,
after deduction of the excise tax imposed by Section 4999 of the
Code and any federal, state and local income tax and excise tax
imposed on such additional amount, shall be equal to the amount
payable to the Executive under this Section 8.2 as originally
determined prior to the deduction of the excise tax, and
(c) Executive’s rights under
the Company’s benefit plans of general application shall be
determined under the provisions of those plans.
9. Executive Solicitation
. So long as Executive is
an employee of the Company and for one (1) year thereafter,
Executive shall not, directly or indirectly, either for himself or
for any other person or entity, directly or indirectly, solicit,
induce or attempt to induce any employee of the Company to
terminate his or her employment with the Company.
10. Miscellaneous
.
10.1 Arbitration
. Executive and the
Company shall submit to mandatory binding arbitration in any
controversy or claim arising out of, or relating to, this Agreement
or any breach hereof, provided , however , that the
Company retains its right to, and shall not be prohibited, limited
or in any other way restricted from, seeking or obtaining equitable
relief from a court having jurisdiction over the parties. Such
arbitration shall be conducted in accordance with the commercial
arbitration rules of the American Arbitration Association in effect
at that time, and judgment upon the determination or award rendered
by the arbitrator may be entered in any court having jurisdiction
thereof.
10.2 Severability
. If any provision of
this Agreement shall be found by any arbitrator or court of
competent jurisdiction to be invalid or unenforceable, then the
parties hereby waive such provision to the extent that it is found
to be invalid or unenforceable and to the extent that to do so
would not deprive one of the parties of the substantial benefit of
its bargain. Such provision shall, to the extent allowable by law
and the preceding sentence, be modified by such arbitrator or court
so that it becomes enforceable and, as modified, shall be enforced
as any other provision hereof, all the other provisions continuing
in full force and effect.
10.3 Remedies .
The Company and Executive
acknowledge that the service to be provided by Executive is of a
special, unique, unusual, extraordinary and intellectual character,
which gives it peculiar value the loss of which cannot be
reasonably or adequately compensated in damages in an action at
law. Accordingly, Executive hereby consents and agrees that for any
breach or violation by Executive of any of the provisions of this
Agreement including, without limitation, Section 3, a restraining
order and/or injunction may be issued against Executive, in
addition to any other rights and remedies the Company may have, at
law or equity, including without limitation the recovery of money
damages.
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10.4 No Waiver
. The failure by either
party at any time to require performance or compliance by the other
of any of its obligations or agreements shall in no way affect the
right to require such performance or compliance at any time
thereafter. The waiver by either party of a breach of any provision
hereof shall not be taken or held to be a waiver of any preceding
or succeeding breach of such provision or as a waiver of the
provision itself. No waiver of any kind shall be effective or
binding, unless it is in writing and is signed by the party against
whom such waiver is sought to be enforced.
10.5 Assignment
. This Agreement and all
rights hereunder are personal to Executive and may not be
transferred or assigned by Executive at any time. The Company may
assign its rights, together with its obligations hereunder, to any
parent, subsidiary, affiliate or successor, or in connection with
any sale, transfer or other disposition of all or substantially all
of its business and assets, provided , however , that
any such assignee assumes the Company’s obligations
hereunder.
10.6 Withholding
. All sums payable to
Executive hereunder shall be reduced by all federal, state, local
and other withholding and similar taxes and payments required by
applicable law.
10.7 Entire Agreement
. This Agreement
constitutes the entire and only agreement between the parties
relating to employment of Executive with the Company, and this
Agreement supersedes and cancels any and all previous contracts,
arrangements or understandings with respect thereto.
10.8 Amendment
. This Agreement may be
amended, modified, superseded, cancelled, renewed or extended only
by an agreement in writing executed by both parties
hereto.
10.9 Notices .
All notices and other communications
required or permitted under this Agreement shall be in writing and
hand delivered, sent by telecopier, sent by certified first class
mail, postage pre-paid, or sent by nationally recognized express
courier service. Such notices and other communications shall be
effective upon receipt if hand delivered or sent by telecopier,
five (5) days after mailing if sent by mail, and one (l) day after
dispatch if sent by express courier, to the following addresses, or
such other addresses as any party shall notify the other
parties:
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If to the Company:
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Digital Music
Group, Inc.
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1545 River Park
Drive, Suite 210
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Sacramento, CA
95815
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Phone:
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916-239-6010
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Fax:
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916-239-6018
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Attention:
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Chief Executive
Officer
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If to Executive:
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Anders
Brown
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________________________________
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________________________________
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Phone:
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________________________________
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Fax:
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________________________________
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10.10 Binding Nature
. This Agreement shall be
bin