Document:

May 31,
2005

 

Wm.
Christopher Gorog

Napster,
Inc.

9044
Melrose Ave.

Los
Angeles, CA 90069

 

Dear
Chris:

 

You and
Napster, Inc. (the “Company”) are parties to that certain employment agreement
effective as of August 15, 2003 (the “Agreement”). The Agreement provides for
the acceleration of outstanding options to purchase the Common Stock of the
Company held by you in the event of a Change of Control (as such term is defined
in the Agreement). Recently, the Compensation Committee of the Board of
Directors of the Company has approved the granting of restricted stock to the
employees of the Company. At the time of the Agreement, there were no restricted
stock grants outstanding under any of the Company’s equity incentive plans. The
Company and the Compensation Committee, on behalf of the Company’s Board of
Directors, agree that all equity compensation should be treated similarly under
the Agreement. Therefore, on behalf of the Company and its Board of Directors,
this letter will confirm that, for purposes of the acceleration provisions of
the Agreement, any restricted stock granted to you by the Company will be
treated the same as outstanding stock options. All other provisions of the
Agreement will remain in full force and effect.

 

 

Sincerely,

 

/S/
WILLIAM E. GROWNEY, JR.

William
E. Growney, Jr.

Secretary

 

 

 

Accepted:  
/S/ WM. CHRISTOPHER GOROG      
Date: 
May 31, 2005EMPLOYMENT AGREEMENT
                              --------------------

      This Agreement is made effective June 1, 2005, by and between Ovation
Products Corporation, a Delaware corporation having its principal place of
business at 395 E. Dunstable Road, Nashua, New Hampshire (hereinafter,
"Company"), and Robert R. MacDonald (hereinafter, "Employee") (together, the
"Parties").

                                    RECITALS

      WHEREFORE, Company desires the employment of Employee as one of its key
officers, and Employee desires employment with Company subject to the terms and
provisions of this Agreement.

      NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:

      1. Term. Company hereby agrees to employ Employee and Employee hereby
accepts employment upon execution of this Agreement and continuing until
terminated in accordance with this Agreement, upon the terms and conditions
hereinafter set forth (hereinafter, the "Term," ).

      2. Duties. During the Term, Employee shall serve as Chief Executive
Officer of Company and shall report to and carry out those duties reasonably
assigned him from time to time by the Board of Directors of Company, consistent
with his title and position. Employee shall devote such time, attention,
knowledge and skills as necessary, in Employee's judgment, to execute his
duties. During the Term, Employee shall refrain from engaging in any activity
that in his judgment is or may be contrary to the welfare, interests, or benefit
of Company.

      3. Salary. In consideration of the services to be rendered by Employee
hereunder and for all rights and covenants granted herein, Company shall pay to
Employee a salary in the gross amount of $150,000.00 per year, with reasonable
increases annually based upon Employee's and Company's performance (hereinafter,
the "Salary"). In no event shall Employee's Salary be decreased during the Term.

      4. Cash Bonus. Employee shall be eligible to receive a discretionary
incentive or other cash bonus, which shall be awarded by Company's Board of
Directors, in its sole discretion. When the Company achieves profitability, the
Board of Directors will establish a cash bonus for Employee targeted at not less
than 30% of Employee's Salary and based on achieving objectives established in
advance by the Board of Directors.

<PAGE>

      5. Stock Incentive Bonus. To compensate Employee for the growth of the
business of Company, Employee shall be eligible for stock option incentive
bonuses, in accordance with the 1999 Ovation Products Corporation Stock Option
Plan. The Board of Directors shall have the power to award any discretionary
stock options or stock grants. In the event of an Initial Public Offering, or a
change in control (representing a change in ownership of more than 50% of the
Company's voting securities) or the sale of all or substantially all of the
Company's assets, all stock options awarded hereunder, or awarded under any
other plan or agreement, shall vest immediately. The Employee, or his heirs if
Employee is deceased, may exercise vested options at any time until the sooner
of (a) 5 years after termination of employment or (b) 10 years after date of
option grant. At a minimum, the following incentive stock options will be
granted to Employee during the Term:

            (i)   options to purchase 100,000 shares of common stock at an
                  exercise price of $5.00 per share to be granted effective the
                  date of this Agreement. These options will vest 25%
                  immediately and the balance vesting monthly over 48 months.

            (ii)  Options to purchase 20,000 shares of common stock at an
                  exercise price determined at time of grant by the Board of
                  Directors to be fair market value and to be granted upon the
                  Company raising $3 million of equity or debt capital or
                  corporate partner funding after the date of this Agreement.
                  These options will vest 50% immediately and the balance
                  monthly over 24 months.

            (iii) Options to purchase 30,000 shares of common stock at an
                  exercise price determined at time of grant by the Board of
                  Directors to be fair market value and to be granted upon the
                  Company raising $5 million of cumulative equity or debt
                  capital or corporate partner funding after the date of this
                  Agreement. These options will vest 50% immediately and the
                  balance monthly over 24 months.

            (iv)  Options to purchase 50,000 shares of common stock at an
                  exercise price determined at time of grant by the Board of
                  Directors to be fair market value and to be granted upon the
                  earlier of (a) the Company raising $10 million of cumulative
                  equity or debt capital or corporate partner funding after the
                  date of this Agreement, or (b) the Company achieving annual
                  profitability over a period consisting of four consecutive
                  financial quarters. These options will vest 50% immediately
                  and the balance monthly over 24 months.

                                     - 2 -
<PAGE>

      6. Termination. This Agreement may be terminated as provided in this
Section 6. Any termination of this Agreement (other than termination pursuant to
Section 6(a) of this Agreement) shall be communicated by written Notice of
Termination to the other Party. For purposes of this Agreement, "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination.

            a. Death of Employee. This Agreement shall terminate automatically
upon Employee's death.

            b. Inability of Employee to Perform. If during the Term, Employee
becomes unable to perform any material duties assigned to him by reason of
mental or physical incapacity for a period of longer than ninety consecutive
days, Company may terminate this Agreement immediately. The inability of
Employee to perform his duties by reason of mental or physical incapacity shall
be determined by Employee's treating physician or a licensed physician or
physicians designated jointly by Company and Employee to examine Employee.

            c. Termination by Company for Cause. At any time during the Term,
Company may terminate this Agreement for Cause upon written notice to Employee,
provided that Company has given Employee written notice specifying in detail the
alleged cause and a period of thirty days from receipt of the notice within
which to cure the alleged Cause or to commence a cure if cure is not possible
within thirty days, and Employee fails to cure or commence curing the alleged
Cause. For purposes hereof, "Cause" shall be defined as: (i) the commission by
Employee of a felony, either in connection with the performance of his
obligations to the Company or which adversely affects Employee's ability to
perform such obligations; (ii) Employee's gross negligence or breach of
fiduciary duty; or (iii) the commission by Employee of an act of fraud or
embezzlement which results in damage to the Company.

            d. Termination by Company without Cause. Company may terminate this
Agreement for any reason upon ninety days' written notice to Employee.

            e. Termination by Employee for Good Reason. Employee may terminate
this Agreement immediately upon the occurrence of an event that constitutes
"Good Reason." For purposes of this Agreement, "Good Reason" means (i) the
assignment to Employee of any duties inconsistent with his position; (ii) any
material breach by Company of its obligations under this Agreement that is not
cured within thirty days of receipt by Company of written notice from Employee
specifying the alleged breach; or (iii) a change in Employee's status such that
he must report to anyone other than directly to Company's Board of Directors.

                                     - 3 -
<PAGE>

            f. Termination by Employee without Good Reason. Employee may
terminate this Agreement for any reason upon ninety days' written notice to
Company.

      7. Obligations upon Termination.

            a. Death. If this Agreement is terminated by reason of Employee's
death pursuant to Section 6(a) of this Agreement, the Term shall end on the date
of death, and Employee's then-current Salary and any other amounts due and owing
through the date of death, as determined by Company in its sole discretion, less
applicable withholdings and deductions (the "Accrued Obligation") shall be paid
to Employee's legal representatives in a lump sum. All unvested stock options or
stock grants whose vesting periods have not been achieved or stock incentive
shares that have not been earned that are scheduled to vest within one year
after the date of death shall vest immediately and accrue to Employee upon the
occurrence of incapacity.

            b. Inability to Perform. If this Agreement is terminated by reason
of Employee's inability to perform pursuant to Section 6(b) of this Agreement,
the Agreement shall terminate immediately, and Company shall pay to Employee the
Accrued Obligation in a lump sum in cash within thirty days. Company further
shall continue to pay Employee his then-current Salary until the earliest date
of eligibility to receive payments under Company's short-term or long-term
disability plans. Employee's rights under any short-term or long-term disability
plan shall be determined in accordance with the provisions of the respective
plan. All unvested stock options or stock grants whose vesting periods have not
been achieved or stock incentive shares that have not been earned that are
scheduled to vest within one year after the date of physical or mental
incapacity as defined by Section 6(b) shall vest immediately and accrue to
Employee upon the occurrence of incapacity.

            c. Termination by Company for Cause or by Employee without Good
Reason. If this Agreement shall be terminated by Company for Cause pursuant to
Section 6(c) of this Agreement or by Employee without Good Reason pursuant to
Section 6(f) of this Agreement, this Agreement shall terminate on the effective
date of termination, and Company shall pay the Accrued Obligation to Employee in
a lump sum within thirty days after termination, and Company shall have no
further obligations under this Agreement.

            d. Termination by Company without Cause or by Employee for Good
Reason. If this Agreement shall be terminated by Company without Cause pursuant
to Section 6(d) of this Agreement or by Employee for Good Reason pursuant to
Section 6(e) of this Agreement, this Agreement shall terminate on the effective
date of termination, and Company shall pay to Employee a lump sum amount equal
to one month of Employee's then-current Salary for each full year of employment,
and Employee shall have no further obligations or duties to Company, except as
provided in Sections 10, 11 and 12. All unvested stock options or stock grants
whose vesting periods have not been achieved or stock incentive shares that have
not been earned and that are scheduled to vest, or would have been granted,
within three months after the date of termination shall be granted and shall
vest immediately and accrue to Employee immediately upon termination by Company
without Cause or by Employee for Good Reason.

                                     - 4 -
<PAGE>

      8. Employee Benefits. Employee shall receive at least such long-term
disability insurance, health and dental insurance, pension and 401(k) plan
participation, seminar and educational support, and other fringe benefits, as
are offered to any executive employee of Company. Company shall promptly
reimburse Employee for all reasonable expenses incurred furthering the business
of Company, including, but not limited to travel, entertainment, lodging and
incidentals.

      9. Vacations. Employee shall be entitled to twenty days of vacation with
pay each calendar year. Such vacation may be taken at Employee's discretion and
at such time or times as are not inconsistent with the reasonable business needs
of Company.

      10. Restrictive Covenants. (a) During the Term, Employee shall devote the
majority of his working time, attention and energies to the business of Company
and shall not be engaged in any activity that shall unreasonably interfere with
the performance of his duties hereunder. Company acknowledges that Employee is
President , CEO, Chairman and sole remaining employee of BiosGroup, Inc. which
he is operating on a part-time basis as a holding company for the equity
interests of BiosGroup in seven companies, including several for which he serves
as a Board member. Neither BiosGroup nor its seven companies compete directly or
indirectly with the Company. Company acknowledges that Employee's participation
in these activities does not unreasonably interfere with the performance of his
duties hereunder and that the Company is not entitled to any compensation or
equity received by Employee from BiosGroup or its seven companies.

            (b) During the Term and continuing subsequent to any termination or
expiration of this Employment Agreement, Employee shall maintain Information, as
defined in Section 10(c) below, as secret and confidential unless Employee is
required to disclose Information pursuant to the terms of a valid and effective
order issued by a court of competent jurisdiction or a governmental authority or
as Employee reasonably believes to be appropriate to further the interests of
Company. Employee shall use Information solely for the purpose of carrying out
those duties assigned to him as an employee of Company and not otherwise. The
disclosure of Information to Employee shall not be construed as granting to
Employee any license under any copyright, trade secret or any right of ownership
or right to use Information whatsoever.

            (c) For the purposes of this Section 10, "Information" shall mean
confidential information that is related to Company's business. Information
shall include, but shall not be limited to: (1) any financial business,
planning, operations, services, potential services, products, potential
products, technical information, intellectual property, trade secrets and/or
know-how, formulas, production, purchasing, marketing, sales, personnel,
customer, supplier, or other information of Company; (2) any papers, data,
records, processes, methods, techniques, systems, models, samples, devices,
equipment, compilations, invoices, customer lists, or documents of Company; (3)
any confidential information or trade secrets of any third party provided to
Company in confidence or subject to other use or disclosure restrictions or
limitations; and (4) any other information, written, oral or electronic, whether
existing now or at some time in the future, whether pertaining to current or
future developments, and whether accessed prior to Employee's tenure with
Company or to be accessed during his future employment or association with
Company, which pertains to Company's affairs or interests or with whom or how
Company does business. Company acknowledges and agrees that Information shall
not include information in the public domain.

                                     - 5 -
<PAGE>

            (d) Employee shall promptly notify Company if he has reason to
believe that the unauthorized use, possession, or disclosure of any Information
has occurred or may occur.

            (e) All physical items containing Information, including, without
limitation, the business plan, know-how, collection methods and procedures,
advertising techniques, marketing plans and methods, sales techniques,
documentation, contracts, reports, letters, notes, any computer media, client
lists and all other information and materials of Company's business and
operations, shall remain the exclusive and confidential property of Company's
business and operations, shall remain the exclusive and confidential property of
Company and shall be returned, along with any copies or notes of Employee made
thereof or therefrom, to Company when Employee ceases his employment with
Company.

            (f) Employee hereby covenants and agrees that at no time during
Employee's employment with Company and for a period of 1 year immediately
following termination of Employee's employment with Company, whether voluntary
or involuntary, shall Employee (i) develop, own, manage, operate, or otherwise
engage in, participate in, represent in any way or be connected with, as
officer, partner, owner, employee, agent, independent contractor, consultant,
proprietor, stockholder (except for ownership of a less than 5% stock interest
in a publicly traded company), or otherwise any business or activity competing
with Company or its affiliates within the United States in a capacity that
materially influences or controls the design, research, manufacture, marketing,
sale, or distribution of products or services competitive with any products or
services of Company; (ii) act with the purpose of soliciting, diverting or
taking away any business, customer, client or any supplier of Company; or (iii)
otherwise compete with Company in the sale or licensing of any products
competitive with the products, or services competitive with the services,
developed or marketed by Company within the United States during Employee's
employment.

            (g) Employee hereby covenants and agrees that at no time during
Employee's employment with Company and for a period of one year immediately
following termination of Employee's employment with Company will Employee act in
any way with the purpose or effect of soliciting any of Company's employees to
leave the employ of Company. Notwithstanding the foregoing, it shall not be a
breach of this Agreement for Employee to interview, recruit, hire or retain any
employee of Company if that person, upon his or her own independent initiative,
responds to a public advertisement for employment or services, or if that person
contacts Employee, or any entity Employee is employed by or associated with, for
employment or services, provided Employee has taken no action prior to the
contact, directly or indirectly, to solicit, induce or persuade the person to do
so.

                                     - 6 -
<PAGE>

      11. Discoveries, Inventions, Trade Secrets, Trade Names, Copyrights, and
Patents. As part of the rights granted herein to Company, Employee agrees that
all right, title and interest of any kind and nature whatsoever in and to any
inventions, product, know-how, trade secrets, patents, trademarks, methods,
procedures, copyrights, seminars, discoveries, improvements, ideas, creations,
and other technical properties, whether or not patentable or subject to rights
of copyright and/or trademark, which are conceived or made by Employee during
the Term of this Agreement and which are relevant to the business of Company ,
and any other lines of business which Company subsequently pursues in any form
to include but not be limited to a strategic plan, research, feasibility
studies, development, manufacturing, and customer contact (including but not
limited to intellectual property, know-how, trade secrets, and patents in
process or granted) or the performance by Employee of his services hereunder,
shall be and become the sole and exclusive property of Company for all purposes.
Employee shall promptly disclose to Company any such conception or other work
product of the type as is generally described in the immediately preceding
sentence. Employee agrees to execute any and all applications, assignments, and
other written instruments that Company may deem necessary and appropriate to
confirm the title and interest of Company therein and thereto. The obligations
of Employee under this Section 11 shall be binding upon the assignees,
employers, other corporate or research affiliates, executors, administrators and
heirs. This grant, transfer and assignment to Company by Employee of rights to
intellectual properties shall remain effective for such periods of time as
applicable law may permit with respect to the ownership of any such intellectual
property or materials.

      12. Enforcement. Employee understands and agrees that he will provide
unique services to Company and that the restrictions contained in Sections 10
and 11 of this Agreement are reasonable, fair and equitable in scope, terms, and
duration, may be necessary to protect the legitimate business interests, trade
secrets, and good will of Company, and are a material inducement to Company to
enter into this Agreement, and that any breach or threatened breach of the
restrictions stated in Sections 10 and 11 may cause Company substantial and
irreparable harm for which there may be no adequate remedy in law. Nothing
contained in this Section 12 shall invalidate or waive any other rights or
remedies that Company may have at law or in equity.

      13. Directors' and Officers' Insurance. Company agrees to provide to
Employee and keep current at all times during Employee's employment, at its
expense, director's and officer's liability insurance, with Employee named as
the beneficiary, with such coverage limits as are customary in Company's
industry, including tail insurance as appropriate. Company shall indemnify and
reimburse Employee on an ongoing, monthly basis for all costs, including the
attorneys fees of counsel of Employee's choice, in defending himself against
claims arising from his employment by Company, including the enforcement of this
contract.

                                     - 7 -
<PAGE>

      14. Survivability. The provisions of Sections 5, 10, 11, 12 and 13 of this
Agreement shall survive its termination.

      15. Section Titles. The titles of the Sections of this Agreement are for
convenience only and shall not affect the interpretation of any Section hereof.

      16. Waiver. A waiver by either party hereto of any of the terms or
conditions of this Agreement in any instance shall not be deemed or construed to
be a waiver of such term or condition for the future, or of any subsequent
breach thereof. All remedies, rights, undertakings, obligations, and agreements
contained in this Agreement shall be cumulative and none of them shall be in
limitation of any other remedy, right, undertaking, obligation or agreement of
either party hereto.

      17. Severability. If any provision of this Agreement is found by any court
of competent jurisdiction to be invalid or unenforceable, the invalidity or
unenforceability of such provision shall not affect the other provisions of this
Agreement, and they shall remain in full force and effect.

      18. Assignment. This Agreement requires the personal services of Employee
only, and Employee shall not be entitled to assign any portion of his duties or
obligations hereunder. Company may not assign its rights or obligations under
this Agreement except to a successor in interest to substantially all of
Company's assets and liabilities.

      19. Notices. All notices given hereunder shall be given in writing, either
by personal delivery or overnight courier to the respective addresses of the
parties set forth below the signatures to this Agreement, or to such other
address or addresses as may be hereafter be designated in writing by either
Employee or Company for the receipt of the notices. Notices given by mail shall
be deemed given on the date of receipt thereof.

      20. Governing Law. The agreement has been made and executed in the State
of New Hampshire and shall be governed by the laws of New Hampshire applicable
to contracts fully to be performed therein.

      21. Entire Agreement. This Agreement constitutes the entire agreement of
the parties and supersedes any and all previous agreements between the Parties.
This Agreement may not be modified orally, but only by an agreement in writing
supplied by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.

                                     - 8 -
<PAGE>

      IN WITNESS WHEREOF, Employee and Company have executed this Employment
Agreement.

COMPANY:                                    EMPLOYEE:

OVATION PRODUCTS CORPORATION                ROBERT R. MACDONALD

By: /s/ William Lockwood                    /s/ Robert R. MacDonald
   ----------------------------------       ------------------------------------

 Title: President and Director

Address: 395 E. Dunstable Road              Address: 2558 Atalaya Hill Road
         Nashua, NH  03062                           Santa Fe, NM  87505

Date: 6/1/05                                Date: 6/1/05
     --------------------------------            -------------------------------

                                     - 9 -

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