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EXHIBIT 10.32
PRODUCTION AGREEMENT
THIS AGREEMENT by and among THE PRODUCERS ENTERTAINMENT GROUP LTD. (the
"Company"), a Delaware corporation, and XXXXXXXX XXXXXXXX ASSOCIATES, INC.
("LJA") F/S/O XXXXXXXX X. XXXXXXXX ("EMPLOYEE") dated as of the _____ day of
October, 1997.
W I T N E S S E T H
WHEREAS, the Company wishes to engage LJA for the services of employee for
the period provided in this Agreement, and LJA is willing to provide the
services of the Employee to the Company on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties agree as follows:
1. Engagement. The Company hereby agrees to engage LJA, and the LJA
hereby agrees to render the Employee's services with the Company, on the terms
and subject to the conditions set forth herein. LJA acknowledges that it is of
the essence of this Agreement that LJA provide the services of Employee.
2. Term of Engagement. The term of the LJA's engagement under this
Agreement (the "Term") shall commence as of October ____, 1997, and shall end on
October 31, 2002, unless terminated earlier in accordance with Section 5.
3. Duties and Responsibilities.
(a) Responsibilities. Company hereby engages LJA to provide the
exclusive and full time services of Employee as producer and/or executive
producer to develop and produce motion picture and television programs and sell
such programs to financiers, distributors, television networks, syndicators,
cable systems, motion picture studios and other buyers or licensees of such
product throughout the world. Pursuant to the terms and conditions hereof, LJA
hereby accepts such engagement. LJA shall cause Employee to render all services
usually and customarily rendered by and required of executives similarly
employed in the entertainment industry and such other services as may reasonably
required by the Company.
(b) Place of Performance. During the Term, however, except for any
period
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where Employee is in production on a project, LJA's office shall be located at
the principal executive offices of the Company, which shall be in the New York
and Los Angeles metropolitan area, except for required business travel
consistent with the Employee's position.
(c) Business Time. During the Term, LJA agrees to require Employee
to devote his full business time during normal business hours to the business
and affairs of the Company and to use his best efforts to perform faithfully,
diligently and competently the responsibilities assigned to him hereunder, to
the extent necessary to discharge such responsibilities, except for (i) time
spent serving on corporate, civic or charitable boards or committees only if and
to the extent not substantially interfering with the performance of such
responsibilities, (ii) periods of vacation, disability and sick leave to which
he is entitled, and (iii) reasonable activities having a charitable, educational
or other public interest purpose.
4. Compensation.
(a) Annual Guarantee. During the Term, LJA shall receive a minimum
annual guarantee ("Annual Guarantee") equal to $450,000, payable in accordance
with the customary payroll procedures as in effect from time to time for senior
executives of the Company.
(b) Expenses. During the Term, LJA shall be entitled to receive
prompt reimbursement for all reasonable and required business-related expenses
incurred by LJA or Employee in accordance with the policies and procedures of
the Company as applicable to its senior executives.
(c) Housing & Automobile Reimbursement. During the Term, LJA shall
be entitled to receive a monthly automobile and housing reimbursement in the
total amount of $2,000, payable monthly on the first day of each month and
pro-rated for the month of August , 1997.
(d) Bonus. Provided that neither LJA nor Employee are in material
breach of this Agreement, Company shall pay to LJA a bonus as follows:
(i) $25,000, on or before October 30, 1997;
(ii) $25,000, on or before December 31, 1997, and
(iii) $50,000, on or before July 1, 1998.
5. Termination.
(a) Death or Disability. LJA's engagement pursuant to this
Agreement shall terminate automatically upon the Employees's death. The Company
may terminate this Agreement in the event of the Disability of Employee by
giving to the LJA notice of its intention in accordance with Section 5(e) unless
Employee returns to the performance of the essential
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functions of his employment within 30 days after receipt of such notice. For
purposes of this Agreement, "Disability" means any physical or mental condition
that renders the Employee unable to perform the essential functions of his
employment for 90 consecutive days or for a total of 180 days in any period of
360 consecutive days.
(b) Voluntary Termination After Change in Control. Notwithstanding
anything in this Agreement to the contrary, the LJA may voluntarily terminate
this Agreement at any time, after a Change in Control, (i) for any reason upon
six months' written notice to the Company, or (ii) if termination is for Good
Reason or on account of the Employee's serious illness, upon written notice
pursuant to Section 5(e) but without any notice period. In the event of any
termination pursuant to this Section 5(b), neither LJA nor Employee shall have
any further obligation to the Company under this Agreement, except as provided
in Section 9.
(c) Cause. The Company may terminate this Agreement for Cause. For
purposes of this Agreement, "Cause" means:
Employee's engaging in gross misconduct materially and demonstrably injurious to
the Company; material failure to perform the services required hereunder after
written notice and an opportunity to cure, if curable; or conviction by final
judgment of a felony constituting fraud, theft, embezzlement or homicide.
(d) Good Reason. LJA may terminate this Agreement for Good Reason.
For purposes of this Agreement, "Good Reason" means (i) a material reduction in
the nature or scope of the Employee's position, title, status, authority,
duties, powers or functions on the date of this Agreement; (ii) the assignment
to Employee of any material duties which are not commensurate with or at least
as prestigious as the Employee's duties and responsibilities as contemplated by
this Agreement; (iii) a material breach by the Company of any of the provisions
of this Agreement; or (iv) the failure by the Company to obtain an agreement,
reasonably satisfactory to LJA, from any successor to assume and agree to
perform this Agreement, as contemplated by Section 12(b). After a Change in
Control, in addition to items (i) through (iv), "Good Reason" shall include (v)
a determination by the Employee, in his sole discretion, during the 30-day
period commencing 180 days following a Change in Control, that due to the Change
in Control neither he nor LJA can any longer effectively perform their duties.
(e) Notice of Termination. Any termination by the Company for
Cause or Disability or by LJA for Good Reason shall be communicated by a written
notice (a "Notice of Termination") to the other party hereto given in accordance
with Section 13(d). A "Notice of Termination" shall set forth in reasonable
detail the events giving rise to such termination.
(f) Date of Termination. For purposes of this Agreement, the term
"Date of Termination" means (i) in the case of termination for Disability, 30
days after Notice of Termination is given (provided that the Employee shall not
have returned to the full-time performance of his duties during such 30-day
period); (ii) in the case of termination for Cause, a
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date specified in the Notice of Termination (which shall not be less than 30
days nor more than 60 days from the date such Notice of Termination is given);
(iii) in the case of any other termination for which a Notice of Termination is
required, the date of receipt of such Notice of Termination or, if later, the
date specified therein, as the case may be; and (iv) in all other cases, the
actual date on which this Agreement terminates during the Term.
6. Obligations of the Company Upon Termination.
(a) Death, Disability, Cause and Voluntary Termination. If at any
time before or after a Change in Control that this Agreement is terminated by
the Company during the Term by reason of the Employee's death, Disability or for
Cause, or is voluntarily terminated by LJA (other than for Good Reason), the
Company shall have no further obligation to either LJA or the Employee or the
Employee's legal representatives other than (i) those obligations earned for
Annual Guarantee and payments under any Company bonus plan that have accrued at
the Date of Termination (the "Accrued Obligations"), (ii) those obligations
expressly provided under any of the plans referred to in Section 4(e) (the
"Benefit Rights") and (iii) upon a termination of the Executive's employment by
reason of Employee's death, the payment provided in Section 6(a)(iii), if
applicable, shall be paid to LJA, in a lump sum in cash within 15 days of the
Date of Termination.
(b) Prior to Change in Control, Termination by the Company other
than for Cause or Disability and Termination by the LJA for
Good Reason.
(i) Lump Sum Payments. If during the Term and prior to a
Change in Control, the Company terminates this Agreement other than for Cause or
Disability, or if LJA terminates this Agreement for Good Reason, the Company
shall provide the Benefit Rights and shall pay to LJA in a lump sum in cash
within 15 days of the Date of Termination the sum of the following amounts: (A)
the Accrued Obligations; plus (B) an amount equal to the product of (1)
one-twelfth times (2) the sum of the Annual Guarantee plus the average bonus (if
any) for the three years ended before the Date of Termination, times (3) the
number full or partial of months remaining in the unexpired term of the Term,
but in no event less than twelve months (such period being the "Severance
Period").
(ii) Discharge of the Company's Obligations. The Company
shall have no further obligations to either LJA or the Employee in respect of
any termination described in this Section 6(b).
(c) Following Change in Control, Termination by the Company other
than for Cause or Disability and Termination by LJA for Good
Reason.
(i) Lump Sum Payments. If during the Term and following a
Change in
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Control, the Company terminates this Agreement other than for Cause or
Disability, or LJA terminates this Agreement for Good Reason, the Company shall
provide the Benefits Rights and shall pay to LJA in a lump sum in cash within 15
days of the Date of Termination the sum of the following amounts: (a) the
Accrued Obligations; and (B) an amount equal to 2.99 times the sum of the
amounts described in clause (2) of Section 6(b)(i)(B).
(ii) Discharge of the Company's Obligations. The Company
shall have no further obligations to either LJA or the Employee in respect of
any termination described in this Section 6(c).
(d) Change in Control. A Change in Control shall be deemed to have
occurred:
(1) the shareholders of the Company shall approve (i) any merger,
consolidation or recapitalization of the Company (or, if the
capital stock of the Company is affected, any subsidiary of
the Company) or any sale, lease, or other transfer (in one
transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or
substantially all of the assets of the Company (each of the
foregoing being an "Acquisition Transaction") where (x) the
shareholders of the Company immediately prior to such
Acquisition Transaction would not immediately after such
Acquisition Transaction beneficially own, directly or
indirectly, shares representing in the aggregate more than 65%
of (A) the then outstanding common stock of the corporation
surviving or resulting from such merger, consolidation or
recapitalization or acquiring such assets of the Company, as
the case may be (the "Surviving Corporation") (or of its
ultimate parent corporation, if any) and (B) the Combined
Voting Power (as defined below) of the then outstanding Voting
Securities (as defined below) of the Surviving Corporation (or
of its ultimate parent corporation, if any) or (y) the
Incumbent Directors at the time of the initial approval of
such Acquisition Transaction would not immediately after such
Acquisition Transaction constitute a majority of the Board of
Directors of the Surviving Corporation (or of its ultimate
parent corporation, if any) or (ii) any plan or proposal for
the liquidation or dissolution of the Company; or
(2) any Person (as defined below) shall become the beneficial
owner (as defined in Rule 13d-3 and 13-d-5 under the Exchange
Act), directly or indirectly, of securities of the Company
representing in the aggregate 20% or more of either (i) the
then outstanding shares of Stock, or (ii) the Combined Voting
Power of all then outstanding Voting Securities of the
Company; provided; however
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that notwithstanding the foregoing, a Change in Control of the
Company shall not be deemed to have occurred for purposes of
this subsection (2) solely as the result of:
(i) an acquisition of securities by the Company which, by
reducing the number of shares of Stock or other Voting
Securities outstanding, increases (i) the proportionate
number of shares of Stock beneficially owned by any
Person to 20% or more of the shares of Stock then
outstanding or (ii) the proportionate voting power
represented by the Voting Securities beneficially owned
by any Person to 20% or more of the Combined Voting
Power of all then outstanding Voting Securities; or
(ii) an acquisition of securities directly from the Company
except that this subsection (ii) shall not apply to:
(A) any conversion of a security that was not acquired
directly from the Company; or
(B) any acquisition of securities if the Incumbent
Directors at the time of the initial approval of
such acquisition would not immediately after (or
otherwise as a result of) such acquisition
constitute a majority of the Board;
provided, however, that if any Person referred to
in subsections (i) or (ii) of this clause (2)
shall thereafter become the beneficial owner of
any additional shares of Stock or other Voting
Securities of the Company (other than pursuant to
a stock split, stock dividend or similar
transaction or an acquisition exempt under such
subsection (ii), then a Change in Control shall be
deemed to have occurred for purposes of this
clause (2).
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For purposes of this Agreement:
(A) "Person" shall mean any individual, entity
(including, without limitation, any corporation,
partnership, trust, joint venture, association or
governmental body and any successor to any such
entity) or group (as defined in Sections 13(d)(3)
or 14(d)(2) of the Exchange Act and the rules and
regulations thereunder); provided, however, that
Person shall not include LJA, the Employee, the
Company, any of its majority-owned subsidiaries,
any executive benefit plan of the Company or any
of its majority-owned subsidiaries or any entity
organized, appointed or established by either LJA
or the Employee, the Company or any of its
majority-owned subsidiaries for or pursuant to the
terms of any such plan, or any of their
affiliates;
(B) "Voting Securities" shall mean all securities of a
corporation having the right under ordinary
circumstances to vote in an election of the board
of directors of such corporation; and
(C) "Combined Voting Power" shall mean the aggregate
votes entitled to be cast generally in the
election of directors of a corporation by holders
of then outstanding Voting Securities of such
corporation.
7. No Mitigation: No Offset. In no event shall either LJA and Employee
shall be obligated to seek other employment by way of mitigation of the amounts
payable to LJA under any of the provisions of this Agreement. Any amounts that
may be earned by either LJA or Employee other than from the Company after the
Date of Termination shall not reduce the Company's obligation to make any
payments hereunder. The amounts payable by the Company
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hereunder shall not be subject to any right of set-off that the Company may
assert against either LJA or Employee.
8. Noncompetition.
(a) Scope. In the case of the termination of this Agreement,
including due to the expiration of the Term, neither LJA nor Employee shall, for
one year following the Date of Termination, (a) divert to any competitor of the
Company in the business conducted by the Company (the "Designated Industry") any
active project of the Company; or (b) solicit or encourage any officer, employee
or consultant of the Company to leave their employ for employment by or with any
competitor of the Company in the Designated Industry. If at any time the
provisions of this Section 8 shall be determined to be invalid or unenforceable,
by reason of being vague or unreasonable as to area, duration or scope of
activity, this Section 8 shall be considered divisible and shall become and be
immediately amended to apply only to such area, duration and scope of activity
as shall be determined to be reasonable and enforceable by the court or other
body having jurisdiction over the matter; and both LJA and Employee agree that
this Section 8 as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein. Nothing in this Section 8
shall prevent or restrict either LJA or Employee from engaging in any business
or industry in the Designated Industry in any capacity.
(b) Irreparable Harm. LJA and Employee agree that the remedy at
law for any breach of this Section 8 shall be inadequate and that the Company
shall be entitled to injunctive relief.
(c) Covenant Regarding Confidentiality. All information about the
business and affairs of the Company which is not generally available to the
public or disclosed by the Company, and any information about the Company which
becomes generally available to the public as a result of a breach by any person
of any confidentiality obligation to the Company (including, without limitation,
its secrets and information about its business, financial condition and
performance, prospects, products, technology, know-how, merchandising and
advertising programs and plans, and the names of its suppliers, customers and
lenders and the nature of its dealings with them) constitute "Confidential
Information." Executive acknowledges that he will have access to, and knowledge
of, Confidential Information, and that improper use or revelation of same by
Executive, whether during or after the termination of his employment by the
Company, could cause serious injury to the business of the Company. Accordingly,
Executive agrees that, except as required to perform his duties under this
Agreement, or as required by law, rule, regulation or pre-existing contract, he
will forever keep secret and inviolate, and will not at any time, reveal,
divulge or make known, any Confidential Information, whether or not such
Confidential Information was developed, devised or otherwise created in whole or
in party by the efforts of Executive. Executive further agrees that he will not
use any Confidential Information for his own benefit or directly or indirectly
for the benefit or any person or organization other than the Company or its
affiliates.
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9. Indemnification. The Company shall indemnify and hold harmless LJA,
its officers, directors and shareholders, as well as, Employee his heirs and
personal representatives to the fullest extent permitted by applicable law, as
now or hereafter in effect, with respect to any acts, omissions or events that
occurred while either LJA or Employee was engaged to render services to the
Company or serves or served the Company or any other corporation or other
enterprise of any kind in any capacity at the request of the Company (an
"Enterprise"). Without limiting the generality of the foregoing, the Company
shall promptly pay, or reimburse LJA for, or advance to LJA amounts for the
payment of (a) all of the LJA's reasonable expenses, including attorneys' fees
and court costs, actually and reasonably incurred in connection with the defense
of any action, suit or proceeding, including any suit seeking recovery under any
Company director's and officer's liability policy, or in connection with any
appeal thereof, to which the either LJA or Employee may be a party by reason of
any action taken or failure to act under or in connection with his service for
the Company or an Enterprise; and (b) all amounts required to be paid in
settlement of or in satisfaction of a judgment in connection with any such
action, suit or proceeding; provided, however, that the Company shall not be
required to indemnify or hold harmless LJA, its officers directors or
shareholders, as well as, the Employee, his heirs or personal representatives in
any manner whatsoever in the event and to the extent there is a final and
nonappealable judgment by a court of competent jurisdiction that the liability
incurred by either LJA or Employee resulted from either of their gross
negligence, fraud or willful malfeasance.
10. Arbitration. If a dispute arises between the parties respecting the
terms of this Agreement or LJA's engagement with the Company, including, without
limitation, any dispute with respect to the validity of this Agreement or this
arbitration clause, such dispute shall be finally resolved by binding
arbitration as follows. Any party may require that the dispute be submitted to
binding arbitration, and in such event the dispute shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. If a matter is submitted to arbitration, each of the
parties shall choose one arbitrator. The arbitrators selected by the two parties
shall choose a third arbitrator who shall act as chairman and shall be an
attorney and a member of the panel of the American Arbitration Association. Each
party shall agree to a speedy hearing upon the matter in dispute and the
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The place of arbitration shall be Los Angeles,
California. Notwithstanding anything to the contrary contained herein, no
discovery shall be permitted in the arbitration proceeding.
11. Successors.
(a) This services provided to the Company pursuant to this
Agreement are personal to the Employee and, without the prior written consent of
the Company, shall not be assignable by either LJA or Employee otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the LJA's shareholder or their legal
representatives.
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(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors. The Company shall require any successor to
all or substantially all of the business and/or assets of the Company, whether
direct or indirect, by an agreement in form and substance reasonably
satisfactory to LJA, expressly to assume and agree to perform this Agreement.
12. Miscellaneous.
(a) Withholding. Any payments provided for hereunder shall be paid
net of any applicable withholding (if any) required under federal, state or
local law and any additional withholding to which LJA has agreed.
(b) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of California, applied without reference
to principles of conflict of laws.
(c) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(d) Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered or
mailed to the other party by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to LJA:
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
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If to the Company:
The Producers Entertainment Group Ltd.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx 0
Xxx Xxxxxxx, XX 00000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only when actually received by the addressee.
(e) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) Waiver. Waiver by any party hereto of any breach or default by
any other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived.
(g) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters referred to
herein, and no other agreement, verbal or otherwise, shall be binding as between
the parties unless it is in writing and signed by the party against whom
enforcement is sought. All prior and contemporaneous agreements and
understandings between the parties with respect to the subject matter of this
Agreement other than the Stock Purchase Agreement are superseded by this
Agreement.
(h) Survival. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
(i) Captions and References. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. References
in this Agreement to a section number are references to sections of the
Agreement unless otherwise specified.
(j) Consent to Jurisdiction. Each of the parties to this Agreement
hereby submits to the exclusive jurisdiction of the courts of the State of
California and the Federal courts of the United States of America located in
such state solely in respect of the interpretation and enforcement of the
provisions of this Agreement, and hereby waives, and agrees not to assert, as a
defense in any action, suit or proceeding for the interpretation and enforcement
of this Agreement, that it is not subject thereto; that such action, suit or
proceeding may not be brought or is not maintainable in said courts; that this
Agreement may not be enforced in or by said courts; that its property is exempt
or immune from execution; that the suit, action or proceeding is brought in an
inconvenient forum; or that the venue of the suit, action or proceeding is
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improper. Each of the parties agrees that service of process in any such action,
suit or proceeding shall be deemed in every respect effective service of process
upon it if given in the manner set forth in Section 13d).
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed in its name on its behalf all
as of the day and year first above written.
THE PRODUCERS ENTERTAINMENT GROUP LTD.
By: _________________________________
Its: ________________________________
XXXXXXXX XXXXXXXX ASSOCIATES, INC.
By:__________________________________
Its:_________________________________
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PERSONAL INDUCEMENT LETTER
In order to induce THE PRODUCERS ENTERTAINMENT GROUP LTD. ("Company") to
enter into the agreement ("the Agreement") dated as of October ____, 1997 with
XXXXXXXX XXXXXXXX ASSOCIATES, INC., ("Lender") for the services of Xxxxxxxx
Xxxxxxxx, and in consideration of the execution and delivery thereof by Company,
I hereby represent and warrant as follows:
1. I am familiar with each term and condition of the Agreement. I
hereby consent and agree to the execution and delivery of the Agreement by
Lender and hereby agree to render all of the services provided therein to be
rendered by me. I agree to be bound by and duly perform and observe each and all
of the terms and conditions of the Agreement requiring performance or compliance
on my part.
2. I hereby join in all warranties, representations, agreements and
indemnities made by Lender in the Agreement.
3. I agree that if Lender should be dissolved or should otherwise cease
to exist or, for any reason whatsoever, should fail, be unable, neglect or
refuse to duly perform and observe each and all of the terms and conditions of
the Agreement requiring performance or compliance on Lender's part, at Company's
election, I shall be deemed to be substituted as a direct party to the Agreement
by Lender.
4. I agree that, in the event of a breach or threatened breach of the
Agreement by Lender or by me, Company shall be entitled to seek legal and
equitable relief by way of injunction or otherwise against Lender or against me,
or against both Lender and me, at Company's discretion, without the necessity of
first exhausting any rights or remedies which Company may have against Lender.
5. All of the foregoing shall be to the same extent and with the same
force and effect as if I had agreed to render services to Company as an
employee.
6. I hereby waive any claim against Company for wages, salary or other
compensation of any kind under the Agreement, and I agree that I will look
solely to Lender for any and all compensation that I may become entitled to
receive for services rendered in connection with the Agreement.
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XXXXXXXX XXXXXXXX
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