AGREEMENT
AGREEMENT made this 6th day of March, 1996, by and between
Communications and Entertainment Corp., a Nevada corporation having a principal
place of business at 0000 Xxxxxx xx xxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000
(the "Company"), and Xxxxxxx X. Xxxxxxxxx, having a principal place of business
at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Xxxxxxxxx").
WHEREAS, Xxxxxxxxx executed an agreement with the Company on October
1, 1995 (the "1995 Agreement"), pursuant to which Xxxxxxxxx agreed to serve as
one of three co-chairmen in the Office of the Chairman of the Company, and as
Chief Executive Officer of the Company, for a three year period commencing on
October 1, 1995 and terminating on October 1, 1998; and
WHEREAS, the Company and Xxxxxxxxx have agreed to terminate the 1995
Agreement and, in lieu thereof, to enter into this management agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. TERM. The term of this management agreement (the "Agreement") shall
commence as of April 1, 1996 (the "Effective Date") and shall continue in effect
until October 1, 1998, unless otherwise earlier terminated as provided herein
(the "Term").
2. SERVICES. During the Term, Xxxxxxxxx agrees to serve the Company in
the capacities of co-chairman in the Office of the Chairman of the Company, and
as Chief Executive Officer of the Company ("CEO"). Xxxxxxxxx agrees to provide
such services, and devote such time, as may be reasonably required by the Board
of Directors of the Company to perform his respective services of Co-Chairman of
the Board and CEO of the Company in connection with the performance of the
following duties, or such other duties and requirements as may be reasonably
promulgated by the Board of Directors of the Company from time to time:
(a) Working to create and develop a strategic plan to define and
implement the Company's objectives and, in connection therewith, to create
viable action, business and financial plans which will provide the Company with
a sound program to achieve its objectives;
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(b) Increasing the Company's film libraries through all manner of
acquisition including the purchase of existing libraries;
(c) Developing ancillary businesses to complement the Company's film
distribution business while achieving maximum sales of the Company's existing
library;
(d) With respect to the activities of the CEO, assuming the daily
overall organizational, business and operating responsibilities of the Company;
and
(e) Performing such other duties as may be reasonably requested by
the Board of Directors of the Company from time to time, including, but not
limited to, services on behalf of any subsidiary or affiliate of the Company.
Anything to the contrary contained or implied herein notwithstanding,
Xxxxxxxxx shall be free to engage in any other business activities which are not
in direct conflict or competition with the Company's principal business or
activities.
3. LOCATION. Xxxxxxxxx shall perform his duties hereunder primarily in
New York City; provided, however, that Xxxxxxxxx shall be available for travel
throughout the United States and the rest of the world at such times as such
travel shall appear in the reasonable judgment of Xxxxxxxxx and the Co-Chairmen
of the Company to be in the best interests of the Company. Any such travel shall
be for the benefit of the Company and at the Company's sole cost and expense.
Although Xxxxxxxxx shall be permitted to travel first class on all air travel
required in connection with the performance of his duties for the Company,
Xxxxxxxxx will make every reasonable effort to fly business class whenever
practical.
4. CONFIDENTIALITY. Xxxxxxxxx acknowledges that the services to be
rendered by him under this Agreement are special and unique, and that by reason
of such services he will acquire confidential information and trade secrets
relating to the Company. Xxxxxxxxx agrees that all information relating to the
business of the Company which is of a secret or confidential nature, including
the Company's data bases, proprietary programs, contractual terms, offers,
financial information, administrative procedures, negotiations with third
parties and strategic, financial and business plans, is and shall remain the
sole property of the Company, and that Xxxxxxxxx shall not, either during the
Term of this Agreement or thereafter, disclose or use for his benefit or for the
benefit of third parties, any such information so long as it is secret and non-
public or otherwise not in the public domain.
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5. COMPENSATION. In consideration of the services to be rendered by
Xxxxxxxxx hereunder, the Company shall pay to Xxxxxxxxx the following management
fees, incentive management fees, and additional compensation, and Xxxxxxxxx
agrees to accept the same as full compensation for his services:
5.1. MANAGEMENT FEE. Subject to the limitations, terms and conditions
set forth on Exhibit A hereto, the Company shall pay the following management
fee to Xxxxxxxxx:
(a) During the period between the date of this Agreement and
September 30, 1996, the sum of Fifteen Thousand ($15,000) Dollars per month,
payable monthly in advance on the first day of each month;
(b) During the period between October 1, 1996 and September 30,
1997, the sum of Twenty Thousand ($20,000) Dollars per month, payable monthly in
advance on the first day of each month; and
(c) During the period between October 1, 1997 and September 30,
1998, the sum of Twenty-Five Thousand ($25,000) Dollars per month, payable in
advance on the first day of each month.
5.2 INCENTIVE MANAGEMENT FEE. With respect to each twelve month period
during the Term of this Agreement (counting the period between October 1, 1995
and September 30, 1996 as the first twelve month period during the Term), an
incentive bonus plan shall be established and paid as follows: In the event the
annual budget and income projections as created by the Board of Directors and
the Office of the Chairman is met for a particular twelve month period, then
Xxxxxxxxx shall be entitled to receive one-third of two (2%) percent of the
budgeted gross income for such twelve month period, and an additional one-third
of five (5%) percent of the gross income, if any, in excess of the budgeted
gross income. Such incentive management fee, if any, shall be paid to Xxxxxxxxx
within thirty days after the end of the particular twelve month period for which
such incentive management fee was earned.
5.3 ADDITIONAL COMPENSATION. In addition to any warrants or options
which may have been granted to Xxxxxxxxx in his individual capacity as a member
of the Board of Directors of the Company, the Company hereby agrees to grant to
Xxxxxxxxx (or to his assignee, G&H Media, Ltd.) 1,200,000 pre-split (or 200,000
post-split) options to purchase common stock of the Company, par value $.01 per
share, at an exercise price of $.3125 per share (on a pre-split basis), or
$1.875 per share (on a post-split basis), exercisable for a five-year period
commencing on March 6, 1996 and
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terminating on March 5, 2001, such options to vest in full immediately and not
to be subject to dilution of any kind.
6. REIMBURSEMENT OF EXPENSES. Xxxxxxxxx shall be reimbursed for all
expenses reasonably incurred by him in connection with the performance of his
duties on behalf of the Company, upon presentation to the Company of appropriate
documentation and receipts therefor. The Company may, from time to time, advance
travel and related expenses to Xxxxxxxxx in connection with the performance of
his duties hereunder.
7. BENEFITS. Xxxxxxxxx shall be entitled to participate in any medical
and dental insurance, hospitalization, sick leave, disability insurance, and
401(k) tax savings benefits, upon the same terms and subject to the same
qualifications, as those presently available to the Company's other senior
officers.
8. VACATION. Xxxxxxxxx shall be entitled to four weeks of paid
vacation each year during the Term of this Agreement, to be taken at such time
or times as shall be mutually agreeable to Xxxxxxxxx and the Company.
9. EARLIER TERMINATION. Notwithstanding the provisions of Paragraph 1
hereof, the Term may be earlier terminated by the Company "for cause" upon the
occurrence of any of the following ("Earlier Termination"): (a) Xxxxxxxxx'x
death, (b) Xxxxxxxxx'x inability by reason of physical or mental disability to
continue to substantially perform his duties for a period of 120 consecutive
days or for an aggregate of 180 days in any consecutive twelve month period, (c)
Xxxxxxxxx'x conviction for a criminal act involving fraud, dishonesty or moral
turpitude, (d) Xxxxxxxxx'x commission of an act of embezzlement or
misappropriation of funds or property of the Company, (e) chronic alcoholism or
drug use after refusing treatment, (f) habitual absenteeism without medical
documentation, (g) engaging in conduct that is detrimental to the business or
reputation of the Company, its subsidiaries and affiliates after having been
provided written notice from the Company instructing Xxxxxxxxx to cease such
conduct, and/or (h) in the event of a material breach of this Agreement by
Xxxxxxxxx which is not cured within ten (10) days following the Company's
written notice to Xxxxxxxxx of such material breach. In the event of Earlier
Termination pursuant to subparagraph (a) or (b) of this Xxxxxxxxx 0, Xxxxxxxxx
or his estate shall be entitled to receive continued compensation hereunder for
the greater of twelve months following the date of such Earlier Termination or
the balance of the Term. In all other instances of Earlier Termination under
this Xxxxxxxxx 0, Xxxxxxxxx shall be entitled to receive continued compensation
hereunder for a period of ninety (90) days following the date of such Earlier
Termination.
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10. STATUS. At all times during the Term of this Agreement the
relationship between Xxxxxxxxx and the Company shall be one of independent
contractor and not one of employer and employee, provided, however, Xxxxxxxxx
shall have authority to bind the Company pursuant to authority granted to
Xxxxxxxxx by the terms of this Agreement or as otherwise granted to him by the
Board of Directors of the Company from time to time.
11. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be entirely performed in such State.
12. SEVERABILITY. In the event that any term or condition of this
Agreement shall for any reason be held by a court of competent jurisdiction to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not effect any other term or condition of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable term or condition had never been contained herein.
13. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties with respect to the subject matter hereof, and
supersedes all previous agreements, arrangements and understandings between the
parties including, but not limited to, the 1995 Agreement which shall be deemed
terminated in all respects upon the Effective Date. Any modification or
amendment to this Agreement will be effective only if in writing and signed by
the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties as of the date and year first above written.
Communications and Entertainment Corp.
By:
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Xxx X. Xxxxx, Co-Chairman
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Xxxxxxx X. Xxxxxxxxx
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