EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of March 25, 2002,
is entered into by and between Liberty Livewire Corporation, a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxx ("Executive").
INTRODUCTION
The Company and its operating subsidiaries ("Affiliates") are engaged in
the business of providing technical and creative services to the entertainment
industry. The Company desires to employ Executive, and Executive desires to
accept such employment, under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
EMPLOYMENT; TERM; DUTIES
1.1 Employment. Upon the terms and conditions hereinafter set forth, the
Company hereby employs Executive, and Executive hereby accepts employment, as
President or Managing Director of the Company's Consulting Group and Executive
Vice President, Business Development of the Company.
1.2 Term. Subject to Article IV below, Executive's employment hereunder
shall be for a term of five (5) years commencing as of March 25, 2002, and
expiring at the close of business on March 24, 2007 (the "Term").
1.3 Duties. During the Term, Executive shall perform such executive
duties for the Company and/or its Affiliates, consistent with his position
hereunder, as may be assigned to him from time to time by the Chief Executive
Officer of the Company. Executive shall devote his entire productive business
time, attention and energies to the performance of his duties hereunder.
Executive shall use his best efforts to advance the interests and business of
the Company and its Affiliates. Executive shall abide by all rules, regulations
and policies of the Company, as may be in effect from time to time.
Notwithstanding the foregoing, Executive may act for his own account in
passive-type investments as provided in Section 5.3, or as a member of boards of
directors of other companies or of charitable organizations, where the time
allocated for those activities does not materially interfere with or create a
conflict of interest with the discharge of his duties for the Company.
1.4 Reporting. Executive shall report directly to the Chief Executive
Officer of the Company.
1.5 Exclusive Agreement. Executive represents and warrants to the
Company that there are no agreements or arrangements, whether written or oral,
in effect which would prevent Executive from rendering his exclusive services to
the Company during the Term.
ARTICLE II
COMPENSATION
2.1 Compensation. For all services rendered by Executive hereunder and
all covenants and conditions undertaken by him pursuant to this Agreement, the
Company shall pay, and Executive shall accept, as full compensation, the amounts
set forth in this Article II.
2.2 Base Salary. The base salary shall be an annual salary of $375,000
(the "Base Salary"), payable by the Company in accordance with the Company's
normal payroll practices applicable to senior executives but no less frequently
than monthly.
2.3 Bonus.
(a) Target Bonus. In addition to the Base Salary, Executive may earn
additional bonus compensation payable on an annual basis, with a target of fifty
percent (50%) of Executive's Base Salary for such period (the "Target Bonus"),
provided that specific economic performance objectives established for Executive
to achieve for such year (the "Benchmarks") have been equaled or exceeded. The
Benchmarks for the Target Bonus shall be established in writing on an annual
basis by the Company's Chief Executive Officer and Chief Financial Officer after
consultation with Executive. For the avoidance of any doubt, the term "Target
Bonus" in this Section 2.3 shall refer to the total amount of the bonus for
which Executive is eligible in a given year of the Term, rather than the amount
of the bonus, if any, actually earned by Executive for such period.
(b) Executive Incentive Plan. In addition to the Base Salary and the
Target Bonus, Executive may also be eligible to participate in an incentive
bonus plan, if any, to be established and administered by the Compensation
Committee of the Board of Directors (the "Bonus Plan"). The criteria on which
awards under any such Bonus Plan are based shall be set by the Board or the
Compensation Committee of the Board.
In order for Executive to be eligible to participate in the Bonus
Plan during a particular year of the Term, the annual target bonus set under the
Bonus Plan for Executive (disregarding the existence of the Target Bonus) for
that year (the "Plan Target") must exceed fifty percent (50%) of his Base
Salary. If, in fact, the Plan Target for a given year exceeds fifty percent
(50%) of Executive's Base Salary, then Executive's total possible bonus
compensation for that year shall be equal to (i) the Target Bonus, plus (ii) the
difference between the Plan Target and the Target Bonus (the "Incremental
Bonus"), with the Target Bonus based on the
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Benchmarks, and the Incremental Bonus based on the criteria set by the Board of
Directors or the Compensation Committee under the Bonus Plan. If the Plan Target
for a given year is equal to or less than fifty percent (50%) of Base Salary,
then Executive's total possible bonus compensation for that year shall be equal
to the Target Bonus alone, and Executive shall not be eligible to receive any
additional bonus compensation under, or participate in, the Bonus Plan for that
year.
By way of illustration, and not as a limitation, if the Plan
Target for a given year during the Term was set at seventy-five percent (75%) of
Base Salary, then Executive would be eligible to earn, in the aggregate, bonus
compensation for the applicable year in an amount of up to seventy-five percent
(75%) of Executive's Base Salary for such period (i.e., 50% + (75% - 50%) =
75%), two-thirds of which would be based on the Benchmarks, and one-third of
which would be based on the criteria set by the Board of Directors or the
Compensation Committee under the Bonus Plan. If the Plan Target was set at
forty-five percent (45%) of Base Salary, then Executive would be eligible to
earn only the Target Bonus (i.e., up to fifty percent (50%) of Executive's Base
Salary for such period) and would not be eligible to receive any additional
bonus compensation under, or participate in, the Bonus Plan.
2.4 Deductions. The Company shall deduct from the compensation described
in Sections 2.2 and 2.3 any federal, state or local withholding taxes, social
security contributions and any other amounts which may be required to be
deducted or withheld by the Company pursuant to any federal, state or local
laws, rules or regulations.
2.5 Disability Adjustment. Any compensation otherwise payable to
Executive pursuant to Sections 2.2 and 2.3 in respect of any period during which
Executive is disabled (as contemplated in Section 4.4) shall be reduced by any
amounts payable to Executive for loss of earnings or the like under any
insurance plan or policy sponsored by the Company.
ARTICLE III
BENEFITS; EXPENSES
3.1 Benefits. During the Term, Executive shall be entitled to
participate in such group life, health, accident, disability or hospitalization
insurance plans, pension plans and retirement plans as the Company may make
available to its other senior executive employees as a group, subject to the
terms and conditions of any such plans. Executive's participation in all such
plans shall be at a level, and on terms and conditions, that are commensurate
with his positions and responsibilities at the Company.
3.2 Expenses. The Company agrees that Executive is authorized to incur
reasonable expenses in the performance of his duties hereunder and in promoting
the business of the Company. The Company shall from time to time pay or
reimburse Executive for the reasonable and necessary expenses incurred by
Executive in connection with the performance of his duties hereunder if such
expenses have been previously approved by the Company or if reimbursement is
otherwise appropriate in accordance with the Company's established policies and
if the
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Company receives such verification thereof as the Company may require in order
to qualify such expenses as deductible business expenses. The Company agrees
that Executive's reasonable business expenses shall include, without limitation,
Executive's monthly membership dues at Sports Club Los Angeles.
3.3 Vacation. Executive shall accrue a total of one hundred sixty (160)
hours of vacation per year following the date of this Agreement. If, at any time
during the Term, Executive accumulates two hundred forty (240) hours of earned
but unused vacation time, Executive will cease to be covered by the Company's
vacation policy and will not earn, vest or accrue additional vacation time until
he has taken the previously earned vacation. Executive will again be covered by
the Company's vacation policy and will earn, vest and accrue paid vacation time
to the extent he uses the previously earned vacation. Upon termination of
Executive's employment, any accrued but unused vacation time will be paid to
Executive.
3.4 Key Man Insurance. The Company may secure in its own name or
otherwise, and at its own expense, life, health, accident and other insurance
covering Executive alone or with others, and Executive shall not have any right,
title or interest in or to such insurance other than as expressly provided
herein. Executive agrees to assist the Company in procuring such insurance by
submitting to the usual and customary medical and other examinations to be
conducted by such physicians as the Company or such insurance company may
designate and by signing such applications and other written instruments as may
be required by the insurance companies to which application is made for such
insurance. Executive's failure to submit to such usual and customary medical and
other examinations shall be deemed a material breach of this Agreement.
3.5 Stock Options. Subject to approval by the Board of Directors of the
Company (or any duly empowered Committee thereof), the Company shall grant to
Executive an option (the "Option") to purchase 225,000 shares of the Company's
Class A common stock, par value $.01 per share, pursuant to the Liberty Livewire
Corporation 2001 Incentive Plan (as the same may be amended from time to time,
the "Plan"). The exercise price shall be an amount equal to the closing market
price of the Company's Class A common stock on the date of the grant, but in no
event less than Seven Dollars ($7.00) per share. The terms and conditions of the
Option shall be set forth in a stock option agreement (the "Stock Option
Agreement") in the form customarily utilized by the Company for the grant of
options to similarly situated executives. Except as otherwise set forth in the
Stock Option Agreement and this Agreement, the Option shall vest in accordance
with the terms of the Plan.
Notwithstanding the foregoing, the following shall apply:
(a) Subject to Section 4.6 below, and subject to approval by the Board
of Directors of the Company (or any duly empowered Committee thereof), upon the
occurrence of a Termination Without Cause (as defined in Section 4.2 below), or
a Termination With Good Reason (as defined in Section 4.3 below), the shares
covered by the Option shall vest and become exercisable in accordance with the
following schedule:
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(i) If the termination takes place on or prior to December 31,
2002, then twenty-five percent (25%) of the shares covered
by the Option shall be deemed vested. All unvested shares
shall terminate.
(ii) If the termination takes place after December 31, 2002,
but on or prior to June 30, 2004, then fifty percent (50%)
of the shares covered by the Option shall be deemed
vested. All unvested shares shall terminate.
(iii) If the termination takes place at any point thereafter
(i.e., after June 30, 2004), then the greater of (A)
seventy-five percent (75%) of the shares covered by the
Option or (B) such amount as otherwise would be deemed
vested pursuant to the terms of the Plan, shall be deemed
vested. All unvested shares shall terminate.
(b) Subject to Section 4.6 below, and subject to approval by the Board
of Directors of the Company (or any duly empowered Committee thereof), in the
event that Executive incurs a termination of employment pursuant to (i) a
Termination Without Cause, or (ii) a Termination With Good Reason, then any
portion of the Option that has become vested on or before the date of such
termination (including, without limitation, any portion that becomes exercisable
due to such termination) shall remain exercisable for eighteen (18) months
following the date of such termination; provided, however, that the Board of
Directors shall have the discretion to determine that the Option must be
exercised prior to consummation of an Approved Transaction (as such term is
defined in the Plan).
(c) In the event that (i) Executive incurs a Termination With Cause (as
defined in Section 4.1 below), (ii) Executive incurs a termination for death or
Disability (as defined in Section 4.4 below), or (iii) Executive resigns without
"Good Reason" prior to the expiration of the Term, then the Option shall be
governed by the terms of the Plan.
(d) Notwithstanding anything else to the contrary provided herein, the
Option shall terminate on the expiration date provided in the Stock Option
Agreement, if not already expired.
ARTICLE IV
TERMINATION; DEATH; DISABILITY
4.1 Termination of Employment With Cause. In addition to any other
remedies available to the Company at law, in equity or as set forth in this
Agreement, the Company shall have the right, upon written notice to Executive,
to terminate his employment hereunder without any further liability or
obligation to him in respect of his employment (other than its obligation to pay
Base Salary and vacation time accrued but unpaid as of the date of termination
and reimbursement of expenses incurred prior to the date of termination in
accordance with Section 3.2 above) if Executive: (a) breaches any material
provision of this Agreement; or (b) has committed an act of gross misconduct in
connection with the performance of his duties hereunder, as determined in good
faith by the Chief Executive Officer of the Company; or (c)
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demonstrates habitual negligence in the performance of his duties, as determined
by the Chief Executive Officer of the Company; or (d) is convicted of or pleads
nolo contendere to any felony; or (e) is convicted of or pleads nolo contendere
to any misdemeanor involving moral turpitude and the conduct underlying such
misdemeanor has an adverse or detrimental effect on the Company, its reputation,
or its business, as determined by the Chief Executive Officer of the Company; or
(f) has committed any act of fraud, misappropriation of funds or embezzlement in
connection with his employment hereunder (a "Termination With Cause").
Notwithstanding the foregoing, no purported Termination With
Cause pursuant to (a), (b) or (c) of this Section 4.1 shall be effective unless
all of the following provisions shall have been complied with: (i) Executive
shall be given written notice by the Chief Executive Officer of the intention to
effect a Termination With Cause, such notice to state in detail the particular
circumstances that constitute the grounds on which the proposed Termination With
Cause is based; and (ii) Executive shall have ten (10) business days after
receiving such notice in which to cure such grounds, to the extent such cure is
possible, as determined in the sole discretion of the Chief Executive Officer.
4.2 Termination of Employment Without Cause. During the Term, the
Company may at any time, in its sole discretion, terminate the employment of
Executive hereunder for any reason (other than those set forth in Section 4.1
above) upon written notice (the "Termination Notice") to Executive (a
"Termination Without Cause"). In such event, the Company shall pay Executive an
amount equal to the sum of the following:
(a) any Base Salary and vacation time accrued but unpaid as of
the date of termination;
(b) subject to Section 4.6 below, an amount (the "Severance
Payment") equal to Executive's monthly Base Salary in
effect on the date of termination for the lesser of (i)
eighteen (18) months or (ii) the remainder of the Term,
payable as and when Executive's monthly Base Salary would
have been due and payable hereunder had such termination
not occurred (the "Severance Period"); and
(c) any reimbursement for expenses incurred in accordance with
Section 3.2.
In addition, subject to Section 4.6 below, the Company shall use
its best efforts to arrange for the continuation, through the Severance Period,
of such health and/or medical benefits or plans as are in effect with respect to
Executive as of the date of termination, if and only if permissible under such
plans, such benefits and plans to be continued on the same terms and conditions
as were in effect with respect to Executive as of the date of termination. If
not so permissible, the Company shall pay to Executive an amount sufficient to
enable Executive to arrange for substantially equivalent health and/or medical
coverage during the Severance Period.
Executive acknowledges that the payments and benefits referred to
in both Section 3.5 and this Section 4.2, together with any rights or benefits
under any written plan or agreement which have vested on or prior to the
termination date of Executive's employment
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under this Section 4.2, constitute the only payments which Executive shall be
entitled to receive from the Company hereunder in the event of any termination
of his employment pursuant to this Section 4.2, and the Company shall have no
further liability or obligation to him hereunder or otherwise in respect of his
employment; provided, however, that notwithstanding the foregoing, following
such termination of employment, Executive shall be entitled to full
indemnification as an officer of the Company as provided under Delaware law and
the Company's Certificate of Incorporation, Bylaws, policies and directors' and
officers' liability insurance.
4.3 Termination of Employment With Good Reason. In addition to any other
remedies available to Executive at law, in equity or as set forth in this
Agreement, Executive shall have the right during the Term, upon written notice
to the Company, to terminate his employment hereunder upon the occurrence of any
of the following events without the prior written consent of Executive: (a) a
reduction in Executive's then current Base Salary; (b) the relocation by the
Company of Executive's principal place of employment to a location more than 50
miles from such principal place of employment; or (c) a breach by the Company of
any material provision of this Agreement (a "Termination With Good Reason").
Notwithstanding the foregoing, no purported Termination With Good
Reason pursuant to this Section 4.3 shall be effective unless all of the
following provisions shall have been complied with: (i) the Company shall be
given written notice by Executive of the intention to effect a Termination With
Good Reason, such notice to state in detail the particular circumstances that
constitute the grounds on which the proposed Termination With Good Reason is
based and to be given no later than ninety (90) days after Executive first
learns of such circumstances; and (ii) the Company shall have fifteen (15) days
after receiving such notice in which to cure such grounds, to the extent such
cure is possible.
In the event that a Termination With Good Reason occurs, then,
subject to Section 4.6 below, Executive shall have the same entitlement to the
amounts and benefits as provided under Section 4.2 for a Termination Without
Cause.
Executive acknowledges that the payments and benefits referred to
in both Section 3.5 and this Section 4.3, together with any rights or benefits
under any written plan or agreement which have vested on or prior to the
termination date of Executive's employment under this Section 4.3, constitute
the only payments which Executive shall be entitled to receive from the Company
hereunder in the event of any termination of his employment pursuant to this
Section 4.3, and the Company shall have no further liability or obligation to
him hereunder or otherwise in respect of his employment.
4.4 Death; Disability. In the event that Executive dies or becomes
Disabled (as defined herein) during the Term, Executive's employment shall
terminate when such death or Disability occurs and the Company shall pay
Executive (or his legal representative, as the case may be) as follows:
(a) any Base Salary and vacation time accrued but unpaid as of
the date of death or termination for Disability;
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(b) any reimbursement for expenses incurred in accordance with
Section 3.2.; and
(c) an amount equal to Executive's monthly Base Salary in
effect on such termination date for the lesser of (i) six
(6) months or (ii) the remainder of the Term, payable as
and when such amounts would have been due and payable
hereunder had such termination not occurred (the
"Disability Severance Period").
For the purposes of this Agreement, Executive shall be deemed to
be "Disabled" or have a "Disability" if, because of Executive's physical or
mental disability, he has been substantially unable to perform his duties
hereunder for twelve (12) work weeks in any twelve (12) month period. Executive
shall be considered to have been substantially unable to perform his duties
hereunder only if he is either (a) unable to reasonably and effectively carry
out his duties with reasonable accommodations by the Company or (b) unable to
reasonably and effectively carry out his duties because any reasonable
accommodation which may be required would cause the Company undue hardship. In
the event of a disagreement concerning Executive's perceived Disability,
Executive shall submit to such examinations as are deemed appropriate by three
practicing physicians specializing in the area of Executive's Disability, one
selected by Executive, one selected by the Company, and one selected by both
such physicians. The majority decision of such three physicians shall be final
and binding on the parties. Nothing in this paragraph is intended to limit the
Company's right to invoke the provisions of this paragraph with respect to any
perceived Disability of Executive.
Notwithstanding the foregoing, to the extent and for the period
required by any state or federal family and medical leave law, upon Executive's
request (i) he shall be considered to be on unpaid leave of absence and not
terminated, (ii) his group health benefits shall remain in full force and
effect, and (iii) if Executive recovers from any such Disability, at that time,
to the extent required by any state or federal family and medical leave law,
upon Executive's request, he shall be restored to his position hereunder or to
an equivalent position, as the Company may determine, and the Term of
Executive's employment hereunder shall be reinstated effective upon such
restoration. The Term shall not be extended by reason of such intervening leave
of absence or termination, nor shall any compensation or benefits accrue in
excess of those required by law during such intervening leave of absence or
termination. Upon the expiration of any such rights, unless Executive has been
restored to a position with the Company, he shall thereupon be considered
terminated.
Executive acknowledges that the payments referred to in both
Section 3.5 and this Section 4.4, together with any rights or benefits under any
written plan or agreement which have vested on or prior to the termination date
of Executive's employment under this Section 4.4, constitute the only payments
which Executive (or his legal representative, as the case may be) shall be
entitled to receive from the Company hereunder in the event of a termination of
his employment for death or Disability, and the Company shall have no further
liability or obligation to him (or his legal representatives, as the case may
be) hereunder or otherwise in respect of his employment.
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4.5 No Mitigation by Executive. Except as otherwise expressly provided
herein, Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for herein be reduced by any
compensation earned by Executive as the result of employment by another
employer; provided, however, that if Executive becomes employed with another
employer and is eligible to receive health and/or medical benefits under such
other employer's plans, Executive's continued benefits and/or plan coverage as
set forth in Section 4.2 or 4.3, as the case may be, shall be reduced to the
extent that comparable benefits and/or coverage is provided under such other
employer's plans.
4.6 Severance Agreement and Release. In the event that Executive incurs
a termination of employment pursuant to (i) a Termination Without Cause (as
defined in Section 4.2 above), or (ii) a Termination With Good Reason (as
defined in Section 4.3 above), payment by the Company of the amounts described
in said sections shall be subject to the execution by Executive of the Company's
standard severance agreement and release (the "Release").
The Release shall be delivered to Executive, in the case of a
Termination Without Cause, at the time of delivery of the Termination Notice,
and, in the case of a Termination With Good Reason, upon delivery of written
notice by the Executive to the Company. Executive shall have a period of thirty
(30) days after the effective date of termination of this Agreement (the
"Consideration Period") in which to execute and return the original, signed
Release to the Company. If Executive delivers the original, signed Release to
the Company prior to the expiration of the Consideration Period, then the
Severance Period shall be deemed to have commenced as of the first day of the
Consideration Period and Executive shall be entitled to the amounts and benefits
set forth in Section 4.2 or 4.3, as the case may be.
If Executive does not deliver the original, signed Release to the
Company prior to the expiration of the Consideration Period, then:
(a) the Company shall pay Executive an amount equal to the sum
of (i) any Base Salary and vacation time accrued but
unpaid as of the date of termination, plus (ii) any
reimbursement for expenses incurred in accordance with
Section 3.2;
(b) the Company shall have no obligation to (i) pay to
Executive the Severance Payment (as that term is defined
in Section 4.2(b) above), (ii) arrange for the
continuation, through the Severance Period, of health
and/or medical benefits or plans in effect with respect to
Executive as of the date of termination, or (iii) pay to
Executive an amount sufficient to enable Executive to
arrange for substantially equivalent health and/or medical
coverage during the Severance Period; and
(c) any portion of the Option (as that term is defined in
Section 3.5 above) that has become vested on or before the
date of such termination shall be exercisable in
accordance with the terms of the Plan (as that term is
defined in Section 3.5 above), and all unvested shares
shall terminate.
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4.7 Continued Compliance. Executive and the Company hereby acknowledge
that the amounts or benefits payable by the Company under Sections 4.2(b), 4.3,
and 4.4(c) are part of the consideration for Executive's undertakings under
Article V below. Such amounts and benefits are subject to Executive's continued
compliance with the provisions of Article V. If Executive violates the
provisions of Article V, then the Company will have no obligation to make any of
the payments that remain payable by the Company under Sections 4.2(b), 4.3, and
4.4(c) on or after the date of such violation.
ARTICLE V
OWNERSHIP OF PROCEEDS OF EMPLOYMENT; NON-DISCLOSURE;
NON-COMPETITION
5.1 Ownership of Proceeds of Employment. The Company shall be the sole
and exclusive owner throughout the universe in perpetuity of all of the results
and proceeds of Executive's services, work and labor during the Term in
connection with Executive's employment by the Company, free and clear of any and
all claims, liens or encumbrances. All results and proceeds of Executive's
services, work and labor during the Term shall be deemed to be
works-made-for-hire for the Company within the meaning of the copyright laws of
the United States and the Company shall be deemed to be the sole author thereof
in all territories and for all purposes.
5.2 Non-Disclosure of Confidential Information. As used herein,
"Confidential Information" means any and all information affecting or relating
to the business of the Company and its Affiliates, including without limitation,
financial data, customer lists and data, licensing arrangements, business
strategies, pricing information, product development, intellectual, artistic,
literary, dramatic or musical rights, works, or other materials of any kind or
nature (whether or not entitled to protection under applicable copyright laws,
or reduced to or embodied in any medium or tangible form), including without
limitation, all copyrights, patents, trademarks, service marks, trade secrets,
contract rights, titles, themes, stories, treatments, ideas, concepts,
technologies, art work, logos, hardware, software, and as may be embodied in any
and all computer programs, tapes, diskettes, disks, mailing lists, lists of
actual or prospective customers and/or suppliers, notebooks, documents,
memoranda, reports, files, correspondence, charts, lists and all other written,
printed or otherwise recorded material of any kind whatsoever and any other
information, whether or not reduced to writing, including ideas, concepts,
research, processes, and plans. "Confidential Information" does not include
information that is in the public domain, information that is generally known or
becomes known in the trade, or information that Executive can show he acquired
wholly independently of his employment with the Company. Executive shall not, at
any time during the Term or thereafter, directly or indirectly, disclose or
furnish to any other person, firm or corporation any Confidential Information,
except in the course of the proper performance of his duties hereunder or as
required by law (in which event Executive shall give prior written notice to
Company and shall cooperate with Company and Company's counsel in complying with
such legal requirements). Promptly upon the expiration or termination of
Executive's employment hereunder for any
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reason or whenever the Company so requests, Executive shall surrender to the
Company all documents, drawings, work papers, lists, memoranda, records and
other data (including all copies) constituting or pertaining in any way to any
of the Confidential Information.
5.3 Non-Competition. Executive shall not, for so long as he is entitled
to compensation under or pursuant to this Agreement (whether or not he is
actively employed by the Company hereunder), directly or indirectly: (a) compete
with the Company; or (b) have an economic interest in, or be employed by,
engaged in or participate in the ownership, management, operation or control of,
or act in any advisory or other capacity for, any Competing Entity which
conducts its business within the Territory (as such terms are hereinafter
defined) (the activities described in the foregoing subsections (a) and (b)
shall be collectively referred to hereinafter as "Competition with the
Company"); provided, however, that notwithstanding the foregoing, Executive may
make solely passive investments in any Competing Entity the common stock of
which is "publicly held," and of which Executive shall not own or control,
directly or indirectly, in the aggregate securities which constitute more than
one (1%) percent of the voting rights or equity ownership of such Competing
Entity; or (c) solicit or divert any business or any customer from the Company
or assist any person, firm or corporation in doing so or attempting to do so; or
(d) cause or seek to cause any person, firm or corporation to refrain from
dealing or doing business with the Company or assist any person, firm or
corporation in doing so or attempting to do so.
For purposes of this Section 5.3, (i) the term "Competing Entity"
shall mean any entity which presently or during the period referred to above
engages in any business activity the Company is then engaged in or proposes to
be engaged in; and (ii) the term "Territory" shall mean any geographic area in
which the Company conducts business during such period.
Without limiting the foregoing, in the event that Executive
desires, during the Severance Period or the Disability Severance Period (as
those terms are defined in Section 4.2(b) and Section 4.4(c), respectively), to
directly or indirectly engage in Competition with the Company, the Company and
Executive hereby acknowledge and agree that Executive shall be free to engage in
such Competition with the Company, provided that (A) Executive shall immediately
inform the Company in writing (the "Competition Notice") that he intends to
engage in Competition with the Company, and (B) as of the date Executive first
engages in Competition with the Company, the Company shall have no obligation to
make any of the payments that remain payable by the Company under Section
4.2(b), 4.3, or 4.4(c) above. Until such time (if any) as the Competition Notice
is delivered to the Company, Executive covenants that he shall not compete with
the Company in violation of this Section 5.3.
5.4 Non-Solicitation.
5.4.1 Executive shall not, for a period of one (1) year from the
date of any termination or expiration of his employment hereunder, directly or
indirectly: (a) acquire any financial interest in or perform any services for
himself or any other entity in connection with a business in which Executive's
interest, duties or activities would inherently require Executive to reveal any
Confidential Information; or (b) solicit or cause to be solicited the disclosure
of or disclose any Confidential Information for any purpose whatsoever or for
any other party.
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5.4.2 Executive shall not, for a period of one (1) year from the
date of any termination or expiration of his employment hereunder, solicit,
directly or indirectly, or cause or permit others to solicit, directly or
indirectly, any person employed by the Company (a "Current Employee") to leave
employment with the Company. The term "solicit" includes, but is not limited to
the following (regardless of whether done directly or indirectly): (i)
requesting that a Current Employee change employment, (ii) informing a Current
Employee that an opening exists elsewhere, (iii) assisting a Current Employee in
finding employment elsewhere, (iv) inquiring if a Current Employee "knows of
anyone who might be interested" in a position elsewhere, (v) inquiring if a
Current Employee might have an interest in employment elsewhere, (vi) informing
others of the name or status of, or other information about, a Current Employee,
or (vii) any other similar conduct, the effect of which is that a Current
Employee leaves the employment of the Company.
5.5 Breach of Provisions. In the event that Executive shall breach any
of the provisions of this Article V, or in the event that any such breach is
threatened by Executive, in addition to and without limiting or waiving any
other remedies available to the Company at law or in equity, the Company shall
be entitled to immediate injunctive relief in any court, domestic or foreign,
having the capacity to grant such relief, without the necessity of posting a
bond, to restrain any such breach or threatened breach and to enforce the
provisions of this Article V. Executive acknowledges and agrees that there is no
adequate remedy at law for any such breach or threatened breach and, in the
event that any action or proceeding is brought seeking injunctive relief,
Executive shall not use as a defense thereto that there is an adequate remedy at
law.
5.6 Reasonable Restrictions. The parties acknowledge that the foregoing
restrictions, the duration and the territorial scope thereof as set forth in
this Article V, are under all of the circumstances reasonable and necessary for
the protection of the Company and its business.
5.7 Definition. For purposes of this Article V, the term "Company" shall
be deemed to include any subsidiary of, affiliate of, predecessor to, or
successor of the Company.
ARTICLE VI
MISCELLANEOUS
6.1 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, distributees, successors and assigns; provided that the rights and
obligations of Executive hereunder shall not be assignable by him.
6.2 Notices. Any notice provided for herein shall be in writing and
shall be deemed to have been given or made when personally delivered or three
(3) days following deposit for mailing by first class registered or certified
mail, return receipt requested, or if delivered by facsimile transmission, upon
confirmation of receipt of the transmission, to the address of the
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other party set forth below or to such other address as may be specified by
notice given in accordance with this Section 6.2:
(a) If to the Company:
Liberty Livewire Corporation
000 Xxxxxxxx, 0xx Xxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Chief Executive Officer
Fax No.: (000) 000-0000
With a copy to:
Liberty Livewire Corporation
000 Xxxxxxxx, 0xx Xxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Legal Department
Fax No.: (000) 000-0000
(b) If to Executive:
Xxxxx X. Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
6.3 Severability. If any provision of this Agreement, or portion
thereof, shall be held invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision or portion thereof, and shall not in any manner affect or render
invalid or unenforceable any other provision of this Agreement or portion
thereof, and this Agreement shall be carried out as if any such invalid or
unenforceable provision or portion thereof were not contained herein. In
addition, any such invalid or unenforceable provision or portion thereof shall
be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and
enforceable.
6.4 Confidentiality. The parties hereto agree that they will not, during
the Term or thereafter, disclose to any other person or entity the terms or
conditions of this Agreement without the prior written consent of the other
party or as required by law, regulatory authority or as necessary for either
party to obtain personal loans or financing. Approval of the Company and of
Executive shall be required with respect to any press releases regarding this
Agreement and the activities of Executive contemplated hereunder.
6.5 Arbitration. If any controversy, claim or dispute arises out of or
in any way relates to this Agreement, the alleged breach thereof, Executive's
employment with the Company or termination therefrom, including without
limitation, any and all claims for employment discrimination or harassment,
civil tort and any other employment laws, excepting only claims
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which may not, by statute, be arbitrated, both Executive and the Company (and
its directors, officers, employees or agents) agree to submit any such dispute
exclusively to binding arbitration. Both Executive and the Company acknowledge
that they are relinquishing their right to a jury trial in civil court.
Executive and the Company agree that arbitration is the exclusive remedy for all
disputes arising out of or related to Executive's employment with the Company.
The arbitration shall be in accordance with the Employment
Dispute Resolution Rules of the American Arbitration Association, except as
provided otherwise in this Agreement. The arbitration shall be commenced and
heard in Los Angeles County, California. The arbitrator(s) shall apply the
substantive law (and the law of remedies, if applicable) of California or
federal law, or both, as applicable to the claim(s) asserted. In any
arbitration, the burden of proof shall be allocated as provided by applicable
law. Either party may bring an action in court to compel arbitration under this
Agreement and to enforce an arbitration award. Discovery, such as depositions or
document requests, shall be available to the Company and Executive as though the
dispute were pending in California state court. The arbitrator shall have the
ability to rule on pre-hearing motions, as though the matter were in a
California state court, including the ability to rule on a motion for summary
judgment.
The fees of the arbitrator and any other fees for the
administration of the arbitration that would not normally be incurred if the
action were brought in a court of law (e.g., room rental fees, etc.) shall be
paid by the Company. Fees which would normally be incurred if the action were
brought in a court of law (e.g., filing fees, court reporter fees, etc.) shall
be split evenly between the parties. The arbitrator must provide a written
decision which is subject to limited judicial review consistent with applicable
law. If any part of this arbitration provision is deemed to be unenforceable by
an arbitrator or a court of law, that part may be severed or reformed so as to
make the balance of this arbitration provision enforceable.
6.6 Waiver. No waiver by a party hereto of a breach or default hereunder
by the other party shall be considered valid unless in writing signed by such
first party, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or any other nature.
6.7 Controlling Nature of Agreement. To the extent any terms of this
Agreement are inconsistent with the terms or provisions of the Company's
Employee Manual or any other personnel policy statements or documents, the terms
of this Agreement shall control. To the extent that any terms and conditions of
Executive's employment are not covered in this Agreement, the terms and
conditions set forth in the Employee Manual or any similar document shall
control such terms.
6.8 Entire Agreement. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
any and all prior agreements or understanding between the Company and Executive,
whether written or oral, fully or partially performed relating to any or all
matters covered by and contained or otherwise dealt with in this Agreement.
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6.9 Amendment. No modification, change or amendment of this Agreement or
any of its provisions shall be valid unless in writing and signed by the party
against whom such claimed modification, change or amendment is sought to be
enforced.
6.10 Authority. The parties each represent and warrant that they have
the power, authority and right to enter into this Agreement and to carry out and
perform the terms, covenants and conditions hereof.
6.11 Applicable Law. This Agreement, and all of the rights and
obligations of the parties in connection with the employment relationship
established hereby, shall be governed by and construed in accordance with the
substantive laws of the State of California without giving effect to principles
relating to conflicts of law.
6.12 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"COMPANY"
LIBERTY LIVEWIRE CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
"EXECUTIVE"
/s/ Xxxxx X. Xxxxx
-----------------------------------------
Xxxxx X. Xxxxx
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