June 19, 1997
EMPLOYMENT AGREEMENT
This document will constitute the Employment Agreement ("Agreement")
between The Xxxx-XX Corporation ("Xxxx-XX") and Xxxx Xxxxxxx ("you").
1. EMPLOYMENT AND SERVICES: The Company hereby agrees to employ you as
Vice President of The Xxxx-XX Corporation and President and co- CEO of
Xxxx-XX/Hollywood Digital, Inc. a successor in interest to Hollywood Digital
Limited, a Partnership ("the Company"), and you agree, commencing July 1, 1997
("the commencement date"), to perform your exclusive and full-time services in
this capacity for the Company upon the terms and conditions herein set forth.
As co-CEO and President, you will have full power to hire and fire all employees
of the Company, other than officers, and to manage and conduct all business of
the Company subject to policies set by the Board or its designated
representatives. You shall report directly to Xxxxx X. Xxxxxxxxx or his
successor. You and Xxxxx Xxxxxxxxx shall be co-Chief Executive Officers of the
Company.
2. TERM: The term of this Agreement shall be for a period of three and
one-half years, commencing July 1, 1997 and terminating January 1, 2001 subject
to Section 6. This Agreement will be effective the date the purchase and sale
of assets between The Xxxx-XX Corporation, Xxxx-XX HD, Inc. and Hollywood
Digital Limited Partnership and its partners is consummated.
3. COMPENSATION: As full compensation for your services rendered under
this Agreement, the Company shall pay you an annual salary as follows:
1) First 12-month period: $275,000
2) Second 12-month period: $300,000
3) Third 12-month period: $325,000
4) The last six-month period $350,000 (annualized)
The salary shall be paid on the Company's regular paydays during the Term
subject to the usual and required employee payroll deductions and withholding
for federal, state and local taxes, social security and similar payments.
4. BENEFITS: During the Term of this Agreement you shall be entitled to
such fringe benefits as are made available to all eligible employees of the
Company, including the following:
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June 19, 1997
Page 2
a. BUSINESS EXPENSES: The Company shall reimburse you for your
reasonable and necessary business expenses in accordance with its then
prevailing policy (which shall include appropriate itemization and
substantiation of expenses incurred); you shall submit your expenses to Sy Cross
or his successor;
b. VACATION: Vacation time shall accrue and you shall be entitled
to 4 weeks paid vacation each year which can be taken at mutually agreed upon
times;
c. GROUP INSURANCE AND PENSION: You shall be entitled to
participate in any group insurance plan the Company may provide under the same
terms and conditions as all eligible employees of the Company;
d. OTHER BENEFITS: You shall be entitled to participate in any
pension plan or other fringe benefits which the Company may provide from time to
time for all eligible employees of the Company; and
e. STOCK OPTION: A condition of this Agreement is that Xxxxxxx
shall receive the stock options as set forth below. Xxxx-XX will present to the
Compensation Committee of the Board of Directors of Xxxx-XX a request that you
be granted stock options of 10,000 shares of Xxxx-XX Corporation stock. You
shall be entitled to stock options of 10,000 shares, which shall vest in 2,000
options commencing September 1, 1997 and each September 1 thereafter. In the
event your contract is not renewed, you shall receive the difference between the
exercise price and the midpoint between the buy and sell price at the close of
business on the day of termination for the last segment of 2,000 options.
5. TERMINATION: The Company may terminate your services in the event of:
a. DEATH: In the event of your death;
b. DISABILITY: Your having suffered a disability, total or partial,
mental or physical, by reason of which you have not performed your obligations
hereunder for six (6) consecutive months or shorter periods aggregating more
than six (6) months in any twelve (12) month period;
c. FOR CAUSE: (1) If you engage in a willful act which constitutes
a fraud, and which results in a material injury to the Company or its
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June 19, 1997
Page 3
reputation; (2) If you are convicted of or plead guilty to a felony; and/or (3)
Your breach of any of the material terms or provisions of this Agreement,
provided you shall receive at least 30 days' written notice and an opportunity
to cure said breach; or
d. WITHOUT CAUSE: In the event the Company terminates this
Agreement prior to the expiration of this Agreement, other than for cause as set
forth in Section 5c, the Company shall provide you the remaining sum due under
this Agreement and benefits as set forth in Section 4(c), (d) and (e).
6. COMPENSATION UPON TERMINATION: If your employment is terminated by
the Company pursuant to Section 5(c) above, you shall be entitled to receive
compensation through the date of such termination and shall receive any incurred
but not reimbursed business expenses, and accrued and unused vacation time as of
the date of termination.
7. INTELLECTUAL PROPERTY: For purposes of this Agreement, "Included
Inventions" shall mean all patents, developments, designs, creations,
improvements, original works of authorship, copyrights, formulas, processes,
know how, techniques and/or inventions made or conceived or reduced to practice
during the Term of this Agreement or reduced to practice within 12 months after
termination of this Agreement, that relate in any way to computer graphics,
visual effects, audio and visual production and post production, film,
television, cable, CD ROM, multi-media, or any other business now or hereafter
conducted by the Company or its affiliates. Excluded from the foregoing
definitions of "Included Inventions" are any inventions developed entirely on
your own time without using the Company's equipment, supplies, facilities or
Proprietary Information (as hereafter defined).
a. DISCLOSURE AND OWNERSHIP: You agree to promptly disclose all
"Included Inventions" to the Company. All "Included Inventions" shall be the
sole and exclusive property of the Company and you hereby assign to the Company
all of your right, title and interest in such "Included Inventions."
b. FURTHER ASSURANCES: You will assist the Company in applying for
and obtaining patents, copyrights and/or other protection for the "Included
Inventions" (during the Term of this Agreement and thereafter) provided that you
will be reasonably compensated if the Company requests your assistance after
termination of this Agreement.
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June 19, 1997
Page 4
8. BUSINESS CODE OF CONDUCT: Attached hereto and made a part of this
Agreement is the Company's Business Code of Conduct. You confirm that you have
read, understand and will comply with the terms of such and any reasonable
amendments which you receive thereto. You will be reasonably compensated if
the Company requests your assistance after termination of this Agreement, and
such assistance is not in conflict with any new employment agreements.
9. PROPRIETARY INFORMATION: In the course of your service to the Company
you may have access to confidential specifications, know-how, strategic or
technical data, programs, computer software, processes, business documents or
information, marketing data, confidential customer lists and sources of supply
and trade secrets all of which are confidential and may be proprietary. For
purposes of this Agreement, "Proprietary Information" shall include all items
enumerated in the preceding sentence to which you have access, whether conceived
or developed by third parties, by you alone and/or with others, during normal
working hours or thereafter. Proprietary Information shall not include
information which is in the public domain unless as a consequence of
unauthorized disclosure.
a. NONDISCLOSURE: During the Term of your employment and for a
period of three (3) years thereafter, you will not use Proprietary Information
in a manner adverse to the Company's interests nor disclose Proprietary
Information, directly or indirectly, to any person other than the Company or
authorized employees thereof at the time of such disclosure, or as otherwise
specifically instructed by the Company, and in each case only to the extent
reasonably required.
b. AGREEMENTS WITH THIRD PARTIES: You will individually observe the
confidentiality provisions of any Nondisclosure or similar agreement entered
into by the Company and known to you with respect to information received by the
Company which may be proprietary to third parties.
c. RETURN OF INFORMATION: Upon termination of your employment, you
shall deliver to the Company all embodiments of Proprietary Information
(including without limitation notes, letters, documents, computer files and
other records) which are then in your possession or control and shall not retain
any copies of summaries thereof.
10. PROTECTIVE COVENANTS: You acknowledge that you are a key employee
whose specialized skills, abilities and contacts are important to the
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June 19, 1997
Page 5
success of the Company, and agree that you will faithfully and strictly adhere
to the following covenants:
a. NONSOLICITATION OF EMPLOYEES: In the event you voluntarily
terminate your employment during the Term, or your employment is terminated by
the Company for cause, as that term is defined in Section 6, subsection c, of
this Agreement, you covenant and agree that you shall not, within one (1) year
after the date of such termination of employment, divert, solicit or recruit, or
attempt to divert, solicit or recruit, directly or by assisting others, any
other employee of the Company or any person who is an employee of the Company,
whether or not such employee is a full-time employee or a temporary employee of
the Company and regardless of whether such employment is pursuant to written
agreement, for a determined period, or at will.
11. REMEDIES: It is specifically understood and agreed that any breach of
the provisions of Section 10 of this Agreement is likely to result in
irreparable injury to the Company and that the remedy at law alone will be an
inadequate remedy for such breach, and that in addition to any other remedy it
may have, the Company shall be entitled to enforce the specific performance of
this Agreement by you and seek both temporary and permanent injunctive relief
(to the extent permitted by law) without the necessity of proving actual
damages.
12. ARBITRATION: Any controversy or claim arising out of or relating to
this Agreement or the breach hereof, other than matters pertaining to injunctive
relief including, without limitation, temporary restraining orders, preliminary
injunctions, and permanent injunctions, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitration shall be
and may be entered in any court having jurisdiction thereof. The dispute shall
be submitted to an arbitrator agreed to by the parties to the dispute or, if
such parties cannot agree upon an arbitrator, an arbitrator selected for the
parties by the American Arbitration Association. Each party shall bear their
own costs and attorneys' fees. The arbitrator's fee shall be divided equally
between the parties. Such arbitration shall take place in Los Angeles,
California, unless otherwise agreed to in writing by the parties.
13. ATTORNEYS' FEES: Except as provided in Section 12 Arbitration, if a
party to this Agreement (or any successor in interest to either party) based on
the performance, breach or interpretation of this Agreement, each of the parties
shall pay for their own respective costs and attorneys' fees regardless of the
outcome of any litigation or proceeding.
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June 19, 1997
Page 6
14. NOTICES: All notices, requests, consents and other communications
required or permitted to be given hereunder shall be deemed to have been duly
given if written and delivered personally or sent by prepaid telegram, or mailed
first-class, postage prepared, as follows:
You Xxxx Xxxxxxx
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The Company The Xxxx-XX Corporation
Attn: Xxxx Xxxx
000 X. Xxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
or at such other addresses as either party may specify by written notice to the
other.
15. GENERAL:
a. ENTIRE AGREEMENT AND MODIFICATION: This Agreement and the
attached Memorandum of Understanding sets forth the entire agreement and
understanding of the parties hereto, and effective on the commencement date
hereof supersedes all prior agreements, arrangements and understandings. No
representation, promise or inducement has been made by either party that is not
embodied in this Agreement. This Agreement may only be modified by an agreement
in writing executed by both parties hereto.
b. SUCCESSORS: This Agreement shall be binding upon, and shall
inure to the benefit of the successors and assigns of the Company.
c. GOVERNING LAW: This Agreement shall be construed under and
governed by the laws of the State of California.
d. SECTION HEADINGS: The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
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June 19, 1997
Page 7
e. SEVERABILITY: In the event that any provisions, or portions
thereof, of this Agreement are held to be unenforceable or invalid by any court
of competent jurisdiction, the validity and enforceability of the remaining
provisions or portions thereof shall not be affected thereby.
THE XXXX-XX CORPORATION
DATED: By:
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XXXXX X. XXXXXXXXX
President and CEO
AGREED:
DATED: By:
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XXXX XXXXXXX
MEMORANDUM OF UNDERSTANDING
XXXX XXXXXXX (Xxxxxxx) and XXXXX XXXXXXXXX (Xxxxxxxxx), President and CEO
of The Xxxx-XX Corporation, have entered into an employment agreement dated June
16, 1997.
In addition to the terms set forth in the Employment Agreement, the above
parties have agreed to the following:
1. Xxxxxxx will report directly to Xxxxxxxxx and not to anyone else in the
organization.
2. Xxxxxxx may attend the annual NAB Convention, along with management and
talent selected by Xxxxxxx, at company expense. The number of attendees
shall be consistent with Xxxxxxx'x past practice.
3. Xxxxxxx may attend the annual I.T.S. Presidents' Retreat and
Post-Production Retreat at Company expense.
4. Xxxxxxx shall receive an automobile allowance of $5,500 per year, payable
in monthly installments.
5. Xxxxxxx shall be provided a cellular telephone by the Company. All costs
and expenses incurred in connection with the use of said phone shall be
paid for by the Company.
6. All employment agreements between Xxxx-XX/Hollywood Digital, Inc. and any
individual shall be subject to final approval by Xxxxx Xxxxxxxxx, or his
successor.
DATED: , 1997
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XXXXX X. XXXXXXXXX
DATED: , 1997
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XXXX XXXXXXX
