Chief Operating Officer Employment Agreement

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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2 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 empl ...