EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
31st day of October, 1996 between Xxxxxx X. Xxxxxx ("Employee") and Overseas
Filmgroup, Inc., a Delaware corporation (the "Company").
WHEREAS, pursuant to an Agreement of Merger, dated as of July 2, 1996
by and among Entertainment/Media Acquisition Corporation ("EMAC"), Overseas
Filmgroup, Inc. (the "Disappearing Corporation"), Xxxxxx X. Xxxxxx and Xxxxx
Xxxxxxxx Little, as amended by that certain Amendment to Agreement of Merger,
dated as of September 20, 1996 by and among the same parties (as so amended,
the "Merger Agreement"), the Disappearing Corporation has been merged with and
into EMAC (the "Merger") with EMAC being the surviving corporation, which was
renamed "Overseas Filmgroup, Inc." at the effective time of the Merger; and
WHEREAS, Employee was Chairman of the Board and Chief Executive
Officer of the Disappearing Corporation for numerous years; and
WHEREAS, a condition to consummation of the Merger was that the
Company, as the surviving corporation in the Merger, and Employee enter into
this Agreement as of the date that the Merger becomes effective; and
WHEREAS, Employee and the Company desire to enter into this Agreement
setting forth the terms and conditions for the employment relationship of
Employee with the Company during the Term (as defined below).
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties to this Agreement hereby agree as follows:
1. SERVICES.
1.1 Employment. During the Term (as defined below), the Company hires
Employee to perform such services as the Company may from time to time
reasonably request consistent with Employee's position with the Company (as set
forth in Section 1.5 hereof) and Employee's stature and experience in the
motion picture industry (the "Services"). The Services and authority of
Employee shall include management and supervision of (A) the general business,
affairs, management and operations of the Company, (B) the distribution of
motion pictures, and (C) other principal business activities of the Company and
its Affiliates. For purposes of this Agreement, "Affiliates" shall mean, as to
any person, any other person controlled by or under common control with (or,
where applicable, controlling), directly or indirectly, such person; and
"person" shall mean any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof, or
any other entity.
1.2 Location. During the Term, Employee's Services shall be performed
in Los Angeles, California or elsewhere in the western Metropolitan Los Angeles
area. The parties, however, acknowledge and agree that the nature of Employee's
duties hereunder may require domestic and international travel from time to
time.
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1.3 Term. The term of Employee's employment under this Agreement (the
"Term") shall commence at the effective time of the Merger on the date first
written above (the "Effective Date") and shall end on October 30, 2001 unless
sooner terminated in accordance with the provisions of this Agreement. For
purposes of this Agreement, "Employment Year" shall mean each twelve month
period during the Term commencing on October 31, and ending on October 30, of
the following year.
1.4 Exclusivity. During the Term, the Services shall be rendered on a
full-time basis during normal working hours. During the Term, all Services of
Employee shall be exclusive to the Company and its Affiliates. Notwithstanding
anything to the contrary stated in this Agreement, Employee may acquire and/or
retain, as an investment, and take customary actions (including the exercise or
conversion of any securities or rights) to maintain and preserve Employee's
ownership of any one or more of the following (provided such actions, other
than passive investment activities, do not unreasonably interfere with
Employee's Services hereunder): (i) securities of any corporation that are
registered under Sections 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and that are publicly traded as long as
Employee is not part of any control group of such corporation and, in the case
of public corporations in competition with the Company, such securities do not
constitute more than five percent of the voting power of that public company;
(ii) any securities of a partnership, trust, corporation or other person so
long as Employee remains a passive investor in that entity and so long as such
entity is not, directly or indirectly, in competition with the Company; (iii)
securities or other interests now owned or controlled, in whole or in part,
directly or indirectly, by Employee in any corporation or other person and
which are identified on Schedule 1.4 hereto; and (iv) securities of the Company
or any of its Affiliates. Nothing in this Agreement shall be deemed to prevent
or restrict Employee's ownership interest in the Company and its Affiliates or
Employee's ability to render charitable or community services. Any executive
producer or similar producer fees earned by Employee from a third party during
the Term in connection with the Services shall be assigned by Employee to the
Company, and the Company shall fully indemnify Employee with respect to any and
all taxes to be paid by Employee in connection therewith (i.e., Employee shall
be placed in the same after-tax position that he would have been in had such
fees not been paid to Employee). Nothing in this Agreement shall be deemed to
restrict Employee's ability to render ongoing consultation to the entities
listed on Schedule 1.4 hereto (provided such consultation does not unreasonably
interfere with Employee's Services hereunder) or to receive consulting fees in
connection therewith. Employee represents and warrants that through December
31, 1995 the aggregate amount of consulting fees earned by Employee from
consultation services rendered to NEO Motion Pictures, Inc. (and to which
Employee is entitled to be paid by such company) did not exceed $350,000.
1.5 Power and Authority.
1.5.1 During the Term, Employee shall be a member and Co-Chairman
of the Board of Directors of the Company (the "Board"), a member of the
executive or supervisory committee (or comparable committee) (the "Executive
Committee") of the Board, and Co-Chief Executive Officer of the Company. During
the Term, the only other Co-Chairman of the Board, President, or Co-Chief
Executive Officer of the Company shall be Xxxxx Xxxxxxxx Little (the
"Co-Executive"). In the event that the Co-Executive ceases at any time during
the Term to serve as Co-Chairman of the Board or Co-Chief Executive Officer of
the Company, (i) Employee shall become the sole Chairman of the Board or Chief
Executive Officer, as applicable, (ii) Employee shall no longer share any such
office and (iii) as applicable, all references herein to the joint authority of
Employee and Co-Executive to make certain
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decisions and take certain actions shall thereafter be deemed to be references
instead to the sole authority of Employee.
1.5.2 During the Term, all officers and employees of the Company
shall report to, and only to, Employee and the Co-Executive (directly or
through such channels as Employee and the Co- Executive shall designate).
During the Term, there shall be no officer or employee of the Company whose
title, position or authority with the Company is equal to Employee (other than
the Co-Executive) or superior to that of Employee. During the Term, there shall
be no President of the Company other than Xxxxx Xxxxxxxx Little. In the event
that Co-Executive ceases at any time during the Term to serve as President of
the Company, such office shall remain vacant unless Employee chooses, in his
sole discretion, to assume such additional office, in which case the Company
shall promptly appoint him to such office.
1.5.3 The Company may from time to time during the Term appoint
Employee to one or more additional offices of the Company. Employee agrees to
accept such offices if consistent with Employee's stature and experience and
with the type of offices with the Company held by Employee. The Company shall
not appoint the Co-Executive to any additional office without simultaneously
offering Employee the identical office and title which, if Employee accepts
such office, they shall hold as co- officers.
1.5.4 In addition to the other duties and authority of Employee
set forth herein, Employee and the Co-Executive (and no other person without
Employee's consent) shall have, subject to Section "V" of the Company's
Operating Guidelines attached hereto as Exhibit "A," the sole and ultimate
authority and responsibility to make all creative decisions for the Company
with respect to all motion pictures financed, produced or distributed by the
Company or its Affiliates. This authority shall include, without limitation,
the creative decisions for acquiring and developing properties, attaching all
creative elements, greenlighting films for acquisition, and approving the
motion pictures or other properties to be financed or acquired by the Company,
as well as by its Affiliates. In addition, Employee and the Co-Executive shall
have sole authority and responsibility to make all employment decisions
regarding Company personnel, including personnel of the Company's Affiliates.
1.6 Confidentiality. Employee acknowledges that in furnishing his
Services to the Company, he will, through the Term, come into close contact
(and through services provided to the Disappearing Corporation has come into
close contact) with many confidential affairs of the Company, including
confidential information about costs, profits, sales, pricing policies,
operational methods, and other confidential information not readily available
to the public (the "Confidential Materials"). In recognition of the foregoing,
Employee covenants and agrees that Employee will not intentionally disclose any
material Confidential Materials to anyone outside the Company and its
Affiliates during the Term except in the course of rendering the Services or
with the Company's written consent. For purposes of this Agreement, the term
"Confidential Materials" does not include information which at the time of
disclosure has previously been made generally available to the public by any
means other than the wrongful act of Employee (or Employee's spouse) in
violation of this Section 1.6. Employee may use and disclose Confidential
Materials to the extent necessary to assert any right or defend against any
claim arising under this Agreement, the Merger Agreement, the Overseas
Filmgroup, Inc. 1996 Special Stock Option Plan and Agreement dated October 31,
1996 by and among the Company, Employee and Xxxxx Xxxxxxxx Little (the "Option
Agreement"), the Tax Reimbursement Agreement dated as of October 31, 1996 by
and between Xxxxx Xxxxxxxx Little, Employee, Xxxxxxx X. Xxxxxxx and the Company
(the "Tax Agreement"), the Lock-up and Registration Rights Agreement dated as
of October 31, 1996 by
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and between the Company, Employee, Xxxxx Xxxxxxxx Little and Xxxxxxx X. Xxxxxxx
(the "Registration Rights Agreement"), the Secured Promissory Note of the
Company dated October 31, 1996, in favor of Xxxxx Xxxxxxxx Little and Employee
in the principal amount of $2,000,000 (the "Note"), the Security Agreement
dated as of October 31, 1996 by and among the Company, Employee and Xxxxx
Xxxxxxxx Little (the "Security Agreement"), the Stockholders Voting Agreement
dated as of October 31, 1996 by and among the Company, Employee, Xxxxx Xxxxxxxx
Little, Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx Xxxxx, the Xxxxxxxx
Family Trust Dated 9/18/92, Xxxx Xxxx, Sparta Partners III and Xxxxxxx X.
Xxxxxx, Xxxx X. Xxxxx and Xxxx X. Xxxxx (the "Stockholders Agreement"), and any
other documents entered into pursuant to or contemplated by the foregoing (this
Agreement, the Option Agreement, the Tax Agreement, the Registration Rights
Agreement, the Note, the Security Agreement, the Stockholders Agreement and any
other documents entered into pursuant to or contemplated by the foregoing are
collectively referred to herein as the "Transaction Documents"). Employee may
also use and disclose Confidential Materials to the extent necessary to assert
any right or defend against any claim pertaining to Confidential Materials or
their use, to the extent necessary to comply with any applicable statute,
constitution, treaty, rule, regulation, ordinance or order, whether of the
United States, any state thereof, or any other jurisdiction applicable to
Employee after giving prior notice to the Company (time permitting), or if
Employee receives a request to disclose all or any part of the information
contained in the Confidential Materials under the terms of a subpoena, order,
civil investigative demand or similar process issued by a court of competent
jurisdiction or by a governmental body or agency, whether of the United States
or any state thereof, or any other jurisdiction applicable to Employee after
giving prior notice to the Company (time permitting).
1.7 Indemnification. The Company shall indemnify Employee to the
fullest extent allowed by applicable law. Without limiting the foregoing,
Employee shall be entitled to the benefit of the indemnification provisions
contained on the date hereof in the Bylaws of the Company and any applicable
Bylaws of any Affiliate, notwithstanding any future changes therein, and
Employee shall also be entitled to the benefit of the Indemnification Agreement
attached hereto as Exhibit "B" which shall be entered into between the Company
and Employee concurrently with the execution of this Agreement.
1.8 Credits. With respect to any motion picture developed, distributed
or financed, in whole or in part, by the Company or its Affiliates which is set
for production during the Term, the Company shall accord presentation, producer
or executive producer credit, the type of credit to be chosen at Employee's
election, (and the Company shall direct its licensees, to the extent
reasonable, to accord such credit) to Employee on screen on a separate card in
the main titles and in paid advertising in which any other credit appears
(other than award, congratulatory, nomination or personal appearance
advertisements) in form and size to be determined by Employee consistent with
custom and practice in the entertainment industry.
2. COMPENSATION.
As compensation and consideration for the Services provided by
Employee during the Term pursuant to this Agreement, the Company agrees to pay
to Employee the compensation set forth below.
2.1 Fixed Annual Compensation. The Company shall pay to Employee
salary ("Fixed Annual Compensation") at the rate of $125,000 per annum. Fixed
Annual Compensation payable to Employee by the Company hereunder shall be paid
at such times and in such amounts as the Company may designate in accordance
with the Company's usual salary practices, but in no event less than once
monthly.
2.2 Bonus. During each Employment Year during the Term, Employee shall
be entitled to a bonus of $25,000 (the "Annual Bonus") if Employee attends at
least one foreign festival, market or
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other similar event, including, without limitation, the Cannes Film Festival,
the Berlin Film Festival, the Venice Film Festival, the "London Screenings,"
MIFED, MIP or MIPTV. The "Annual Bonus" shall be paid promptly after Employees'
attendance at the applicable festival, market or other event. If in any
Employment Year, Employee is prevented from earning the Annual Bonus due to
illness or disability, Employee shall nevertheless be entitled to the full
amount of the Annual Bonus for each such Employment Year. Employee shall also
be entitled to such additional bonus, if any, as may be granted to Employee by
the Company's Board of Directors (with Employee and Employee's spouse
abstaining from any vote thereon) or compensation or similar committee thereof
in the Board's (or such committee's) sole discretion based upon Employee's
performance of his Services under this Agreement.
3. EXPENSES; ADDITIONAL BENEFITS
3.1 Vacation. During the Term, Employee shall be entitled for each
Employment Year to an aggregate of four weeks of vacation with full pay.
Employee shall be entitled to accrue vacation (beginning with any vacation
after December 31, 1995) and/or be paid therefor in accordance with the
Company's policies with respect thereto applicable to the Company's general
employees.
3.2 Employee Business Expense Reimbursement. Employee shall be
entitled to reimbursement of all business expenses for which Employee makes an
adequate accounting to the Company, including, without limitation, all expenses
of a home office (consistent with the past practices of the Disappearing
Corporation in connection with the reimbursement of home office expenses). The
determination of the adequacy of the accounting of the foregoing expenses shall
be within the reasonable discretion of the Company's independent certified
accountants taking into consideration the substantiation requirements of the
Internal Revenue Code of 1986, as amended (the "Code").
3.3 Merger Expenses. Employee shall be entitled to reimbursement of
all reasonable legal and accounting fees and expenses incurred in connection
with the negotiation, execution and delivery of the Transaction Documents and
the transactions contemplated by each.
3.4 Directors and Officers Liability Insurance. Employee shall be
entitled to the protection of any insurance policies the Company or any of its
Affiliates may elect to maintain generally for the benefit of its directors and
officers against all costs, charges and expenses whatsoever incurred or
sustained by Employee or his legal representatives in connection with any
action, suit or proceeding to which Employee (or his legal representatives or
other successors) may be made a party by reason of Employee being or having
been a director or officer of the Company or any of its Affiliates or Employee
serving or having served any other enterprises as a director, officer or
employee at the request of the Company. The Company shall provide and maintain
at all times during the Term and for a period of six years thereafter such a
directors and officers insurance policy covering Employee and his legal
representatives, issued by a reputable and financially-sound insurance carrier
of national standing which is acceptable to Employee, and providing coverage in
the amount of at least $1,500,000.
3.5 Life Insurance Policy. The Company shall provide Employee with a
whole-life life insurance policy (from a reputable and financially-sound
insurance carrier of national standing which is acceptable to Employee) for his
benefit in the amount of not less than $1,000,000 (the "Life Insurance
Policy"). The Company agrees to make all premium payments under the Life
Insurance Policy; provided, however, that Employee reserves the right (either
before or after the Company obtains such life insurance policy) to require the
Company to pay directly to Employee the premiums for such policy (and to assign
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the policy to Employee if the Company has already obtained such policy) so that
Employee owns the policy and Employee makes the premium payments. Employee
shall be entitled to name the beneficiary or beneficiaries of such policy and,
upon expiration (or earlier termination) of the Term, Employee shall have the
right to require the Company to assign any rights it may have in such policy to
Employee. Employee agrees that the Company may secure additional insurance on
Employee's life for the benefit of the Company. Notwithstanding the foregoing,
the Company agrees to make all premium payments under the $3,000,000 term life
insurance policy described on Schedule 3.5 hereto during the term of such
policy, and such payments shall be deemed to satisfy the requirements of this
Section 3.5 during the term of such policy.
3.6 Disability Insurance. In addition to any disability benefits or
insurance coverage provided to Employee through any group disability plan of
the Company or its Affiliates, as well as in addition to any social security or
workers' compensation benefits provided to Employee, the Company shall provide
Employee with disability insurance with one or more substantial carriers
providing the maximum amount of disability benefits to Employee that are
available under a disability policy with an annual premium of $5,000. The
Company shall pay such annual premium of $5,000 directly to the insurance
company; provided, however, that Employee reserves the right (either before or
after the Company obtains such disability insurance policy) to require the
Company to pay directly to Employee the premiums for such policy (and to assign
the policy to Employee if the Company has already obtained such policy) so that
Employee owns the policy and Employee makes the premium payments. Employee may
supplement or increase such insurance coverage by paying additional premiums in
excess of the $5,000 annual premium to be paid by the Company. Upon expiration
(or earlier termination) of the Term, Employee shall have the right to require
the Company to assign any rights it may have in such disability insurance
policy to Employee. Notwithstanding the foregoing, the $5,000 annual premium to
be paid by the Company shall be increased by the amount of any disability
insurance premiums to be paid by the Company pursuant to the Company's
employment agreement with the Co-Executive but which are not utilized by the
Co-Executive.
3.7 Additional Benefits. In addition to the foregoing, Employee shall
receive and continue to receive such additional benefits ("Additional
Benefits") specified in this Section 3.7 and such additional and fringe
benefits as he now enjoys. Such Additional Benefits to be received by Employee
shall include without limitation (i) memberships (including initiation fees,
annual dues and other recurring expenses) for fraternal and business
organizations, country clubs, and any other clubs in an amount not to exceed
$5,000 in each year of the Term, (ii) first-class air travel for all trips
(domestic and foreign) made by Employee in connection with Employee's Services
to the Company or its Affiliates, (iii) reimbursement of Employee's personal
legal and accounting expenses (including the cost of a business manager) in an
amount not to exceed $15,000 in each year of the Term plus reimbursement of the
cost of preparation of the annual tax returns of Employee and his related
entities in an amount not to exceed $5,000 in each year of the Term, (iv)
customary health, medical and dental insurance for Employee and his spouse, and
(v) an automobile of Employee's choice and reimbursement of all expenses
incurred in connection with such automobile, including, without limitation,
lease or purchase payments (which at Employee's election shall be made directly
by the Company), taxes, fees, registration, insurance, gas, carphone,
maintenance and repairs. The aggregate amount of the automobile lease or
purchase payments hereunder shall not exceed $14,500 in any year of the Term.
Employee shall retain title to such automobile upon expiration or earlier
termination of the Term.
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3.8 Stock Option Plan and Agreement. Concurrently with the execution
of this Agreement and in consideration for the execution thereof, Employee and
the Company shall enter into the Overseas Filmgroup, Inc. 1996 Special Stock
Option Plan and Agreement attached hereto as Exhibit "C" which represents a
material inducement to Employee's willingness to enter into this Agreement.
3.9 Other Agreements. Concurrently with the execution of this
Agreement, Employee and the Company shall enter into the Registration Rights
Agreement, Tax Agreement, Stockholders Agreement, Note, Security Agreement (and
other Transaction Documents which have not been previously executed).
3.10 General. Employee shall be entitled to participate in any
profit-sharing, pension, health, insurance or other plans, benefits or policies
(not duplicative of the benefits provided hereunder) available to the employees
of the Company or its Affiliates on the terms generally applicable to such
employees.
3.11 No Reduction of Benefit or Payment. No payment or benefit made or
provided under this Agreement shall be deemed to constitute payment to Employee
or his legal representative or guardian in lieu of, or in reduction of, any
benefit or payment under an insurance, pension or other benefit plan, and no
payment under any such plan shall reduce any payment or benefit due under this
Agreement except as set forth in Section 5.2.
4. TERMINATION.
If any of the events described in this Section 4 shall occur, Employee
shall be entitled to the benefits provided in Section 5 hereof upon the
subsequent termination of Employee's employment during the Term of Employment.
As used in this Agreement, "Date of Termination" means (i) if employment is
terminated for Disability (as defined in Section 4.1 below), thirty (30) days
after Notice of Termination is given (provided that Employee shall not have
returned to the performance of his duties on a full-time basis during such
thirty (30) day period), and (ii) if employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the case of
termination for "cause" pursuant to Section 4.2 shall not be less than thirty
(30) days, and in the case of a termination for "Good Reason" pursuant to
Section 4.3 shall not be more than thirty (30) days, respectively, from the
date such Notice of Termination is given). If the Company acknowledges that it
has terminated Employee other than for "Cause" (as hereinafter defined), the
Date of Termination shall be the date upon which Employee receives payments due
to him under Section 5.4(A)(i), (ii) and (iii) hereof. "Notice of Termination"
means a written notice that shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
employment under the provision so indicated.
4.1 Employee Incapacity. If, as a result of Employee's incapacity
because of physical or mental illness, Employee shall have been absent from his
duties with the Company on a full-time basis for five consecutive months or for
more than an aggregate of six months in any Employment Year, and within thirty
days after written Notice of Termination is given he shall not have returned to
the full-time performance of his duties, the Company may terminate Employee's
employment for "Disability."
4.2 Termination by the Company "For Cause." The Company may terminate
Employee's employment only for Cause (solely as hereafter defined). Termination
by the Company of Employee's employment for "Cause" shall mean termination upon
the willful and continued failure by Employee
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substantially to perform his material duties with the Company in good faith
(other than any such failure resulting from his incapacity because of physical
or mental illness or any such actual or anticipated failure resulting from his
termination for Good Reason), after a demand for substantial performance is
delivered to him by the Board that specifically identifies the manner in which
the Board believes that Employee has not substantially performed his duties in
good faith. Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
Employee written Notice of Termination and a copy of resolutions duly adopted
by a majority of the authorized number of members of the Board (with Employee
and Employee's spouse abstaining from such vote) at a meeting called and held
for such purpose (after reasonable notice to Employee and an opportunity for
Employee, together with his counsel, to be heard before the Board) finding that
in the good faith opinion of the Board, (i) Employee was guilty of conduct set
forth above in the second sentence of this Section 4.2 and specifying the
particulars thereof in detail and (ii) Employee did not correct such conduct
after the Board's demand for substantial performance and after the Employee was
afforded a reasonable opportunity to do so.
4.3 Employee's Termination for "Good Reason." Employee shall be
entitled to terminate his employment for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean the commission or omission of any of the
following actions:
(A) the failure of the Company or any of its Affiliates to comply
with or perform a material term, condition or covenant of, or other
material breach by the Company or any of its Affiliates of or default
(or Event of Default) by the Company or any of its Affiliates under,
the Note, the Security Agreement, the Registration Rights Agreement,
or the Tax Agreement;
(B) the assignment to Employee of any duties inconsistent in any
material respect with his status set forth in Sections 1.1 and 1.5
hereof;
(C) a reduction by the Company in the Fixed Annual Compensation
set forth in Section 2.1, or a reduction in the Annual Bonus set forth
in Section 2.2.
(D) the failure by the Company to continue to provide Employee
with benefits substantially similar to those enjoyed by him under any
of the pension, retirement, dental, medical, health and accident plans
in which he is presently entitled to participate (provided that the
failure to provide any such benefits which individually and in the
aggregate are immaterial shall not constitute Good Reason), or the
taking of any action by the Company that would, directly or
indirectly, materially reduce any of such benefits or deprive Employee
of any fringe benefit presently enjoyed by him immediately prior to
the Effective Date or to which Employee is entitled at any time after
the Effective Date;
(E) any purported termination of Employee's employment that is not
effected pursuant to a Notice of Termination; and for purposes of this
Agreement, no such purported termination shall be effective;
(F) a Change in Control of the Company (as defined below);
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(G) any fundamental change to the business of the Company
effectuated without Employee's consent, so that the Company is no
longer principally involved in the distribution of motion pictures.
4.4 "Change in Control." For purposes of this Agreement, "Change in
Control of the Company" means a change in control (except changes in control
effected with the express consent of Employee or, during periods when there is
a Co-Executive, the Co-Executive) of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act, whether or not the Company is then subject to such
reporting requirement; provided that, without limitation, such a change in
control shall be deemed to have occurred if the individuals designated by
Employee to serve on the Board of Directors of the Company cease to constitute
(when considered with Employee and, during periods when there is a
Co-Executive, the Co-Executive) a majority thereof.
4.5 Notice of Termination.
(A) Any purported termination of employment by Employee pursuant
to Section 4.3 hereof shall be made, in addition to any other
requirements that may be set forth herein, by giving Notice of
Termination within six months of Employee receiving actual knowledge
of the action set forth above giving rise to the right to terminate
for Good Reason. The failure of Employee to give Notice of Termination
within such period shall not be construed to prevent the giving of
Notice of Termination upon the next occurrence of such action or upon
the occurrence of another action set forth in Section 4.3 hereof. The
Company shall have 30 days after receipt of the Notice of Termination
to cure the event giving rise to Employee's right to terminate for
Good Reason (or, in the case of termination for Good Reason in
accordance with Section 4.3(A), such other cure period expressly
provided for in such Transaction Document); provided, however, the
Company shall not have the right to cure the event if it is an event
set forth in Section 4.3(F) or (G). Employee's right to terminate his
employment pursuant to Section 4.3 hereof shall not be affected by his
incapacity due to physical or mental illness.
(B) Any purported termination by the Company or by Employee shall
be communicated by written Notice of Termination to the other party
hereto.
5. COMPENSATION UPON TERMINATION.
5.1 Death of Employee. Upon the death of Employee ("Death"), the
Company shall pay to Employee's estate (i) the Fixed Annual Compensation that
would otherwise be payable to Employee hereunder to the end of the month in
which such Death occurs, (ii) an amount equal to the product of two times the
sum of (x) the aggregate Fixed Annual Compensation that he was entitled to
receive pursuant to Section 2.1 hereof for the full Employment Year in which
Death occurs plus (y) an amount equal to the Annual Bonus, and (iii) any
amounts earned pursuant to the terms of this Agreement but unpaid at the time
of Death. The payments specified in this Section 5.1 shall be paid as soon as
practicable but in any event no later than one month after the date of Death.
Upon such payments, the Company shall have no further liability or obligation
hereunder to the deceased Employee's estate, his executors or administrators,
his heirs or assigns or any other person claiming under or through him.
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5.2 Disability of Employee. Upon the termination of Employee's
employment as a result of his Disability, Employee shall be entitled to receive
(i) an amount equal to the product of two times the sum of (x) the Fixed Annual
Compensation that he was entitled to receive pursuant to Section 2.1 hereof for
the full Employment Year in which the effective date of termination for
Disability hereunder occurs, plus (y) an amount equal to the Annual Bonus, and
(ii) any amounts earned pursuant to the terms of this Agreement but unpaid at
the Date of Termination. The payments specified in this Section 5.2 shall be
paid as soon as practicable but in any event no later than one month after the
Date of Termination.
Whenever compensation is payable to Employee hereunder during a
time when Employee is partially or totally disabled and such disability (except
for the provisions hereof) would entitle Employee to disability income or to
salary continuation payments from the Company according to the terms of any
plan now or hereafter provided by the Company or according to any policy of the
Company in effect at the time of such disability, the compensation payable to
Employee hereunder shall be inclusive of any such disability income or salary
continuation and shall not be in addition thereto. If disability income is
payable directly to Employee by an insurance company under an insurance policy
paid for by the Company, then any such disability income paid during the thirty
(30) months following the Date of Termination shall be considered to be part of
the payments to be made by the Company pursuant to this Section 5.2, and not in
addition thereto, and shall be paid to the Company, up to but not to exceed the
amount of payments actually made by the Company pursuant to this Section 5.2.
All disability income paid to Employee by said insurance company (i) during the
thirty (30) months following the Date of Termination in excess of the payments
actually made by the Company pursuant to this Section 5.2, and (ii) after
thirty (30) months following the Date of Termination shall be the sole property
of Employee as governed by said insurance policy and shall not be required to
be paid to the Company.
5.3 Termination for Cause. If Employee's employment shall be
terminated for Cause, the Company shall pay Employee his full Fixed Annual
Compensation, whatever amounts that have become due and payable to Employee on
or prior to the Date of Termination and other benefits to which Employee is
entitled through the Date of Termination at the rate in effect at the time
Notice of Termination is given. In addition, Employee shall receive an amount
equal to the Annual Bonus for such Employment Year, prorated through the Date
of Termination.
5.4 Termination Other Than for Cause, Retirement, Death or Disability
or For Good Reason.
(A) If Employee's employment by the Company shall be terminated
(i) by the Company other than for Cause, Death or Disability or (ii) by
Employee for Good Reason, then Employee shall be entitled to the benefits
provided below:
(i) The Company shall pay Employee, not later than the fifth day
fol- lowing the Date of Termination, a lump sum equal to 250% of the
greater of (x) the aggregate of all Fixed Annual Compensation payments
arising under Section 2.1 hereof to which Employee would otherwise
have been entitled under this Agreement through the balance of the
Term had Employee's employment not been so terminated or (y) an amount
equal to the Fixed Annual Compensation and Annual Bonus for one full
Employment Year.
(ii) The Company shall also pay Employee, not later than the fifth
day following the Date of Termination, a lump sum equal to 250% of the
aggregate of all Annual Bonuses to which Employee would otherwise have
been entitled under this Agreement through
10
the balance of the Term had Employee's employment not been so
terminated (assuming for such purposes that Employee would have
satisfied the attendance requirements set forth in Section 2.2).
(iii) Notwithstanding any provision of any benefit plan, the
Company shall pay to Employee not later than the fifth day following
the Date of Termination, a lump sum amount equal to the sum of (x)
Annual Bonuses, if any, to which Employee has become entitled but has
not yet been paid, (y) any additional compensation that the Board has
approved for any period that has closed prior to the Date of
Termination but has not yet been paid, and (z) a pro rata portion for
the period through the Date of Termination of the aggregate value of
all contingent awards, if any.
(B) If Employee's employment shall be terminated (i) by the
Company other than for Cause, Death or Disability, or (ii) by Employee for Good
Reason, then for the remaining period of the Term as set forth in Section 1.3
hereof (i.e., until October 30, 2001), the Company shall arrange to provide
Employee with life, disability, accident and health insurance and all other
benefits substantially similar to those which Employee is receiving immediately
prior to the Notice of Termination. In addition, all stock options issued
pursuant to the Option Agreement or otherwise shall become immediately
exercisable upon Notice of Termination whether or not then vested.
(C) In the event that this Agreement expires by its terms on
October 30, 2001, and the Term is not extended, the Company shall have no
obligation to Employee and Employee shall have no obligation to the Company
under this Agreement except as otherwise set forth herein.
5.5 No Mitigation. Employee shall not be required to mitigate the
amount of any payment provided for in this Section 5 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 5 be reduced by any compensation earned by
Employee as the result of employment by another employer or by retirement
benefits after the Date of Termination. The Company shall not be entitled to
any rights to offset, mitigate or otherwise reduce the amounts owing to
Employee by virtue of this Section 5 with respect to any rights, claims or
damages that the Company or its Affiliates may have against Employee,
including, without limitation, any claims by reason of any breach or alleged
breach of this Agreement by Employee.
5.6 Potential Excise Taxes. For purposes of this Section 5.6,
"Payment" shall mean any payment, benefit, compensation or transfer to Employee
arising or resulting from or relating to (i) the termination of Employee's
employment by the Company other than for Cause, Death or Disability, or (ii)
the termination of Employee's employment by Employee for Good Reason, and shall
include, without limitation, the benefits under Section 5.4 hereof. Should any
Payment be subject to excise tax pursuant to Section 4999 of the Code or any
successor or similar provision thereto, or comparable state or local tax laws,
the Company shall pay to Employee such additional compensation as is necessary
(after taking into account all Federal, state and local income taxes payable by
Employee as a result of receipt of such compensation) to place Employee in the
same after-tax position that he would have been in had no such excise tax (or
any interest or penalties thereon) been paid or incurred. The Company shall pay
such additional compensation upon the earlier of (i) the time at which the
Company is required to withhold such excise tax for any payments to Employee or
(ii) 30 days after Employee notifies the Company that Employee has filed a tax
return that takes the position that such excise tax is due and payable in
reliance on a written opinion of Employee's tax counsel that it is more likely
than not that such excise tax is due
11
and payable. If Employee makes any payment with respect to any such excise tax
as a result of an adjustment to Employee's tax liability by any Federal, state
or local authority, the Company will pay such additional compensation within 30
days after Employee notifies the Company of such payment. Without limiting the
obligation of the Company hereunder, Employee agrees, in the event Employee
makes any payment pursuant to the preceding sentence, to negotiate with the
Company in good faith with respect to procedures reasonably requested by the
Company that would afford the Company the ability to contest the imposition of
such excise tax; provided, however, that Employee will not be required to
afford the Company any right to contest the applicability of any such excise
tax to the extent that Employee reasonably determines that such contest is
inconsistent with the overall tax interests of Employee. The Company agrees to
hold in confidence and not to disclose, without Employee's prior written
consents, any information with regard to Employee's tax position that the
Company obtains pursuant to this Section 5.6.
6. GENERAL.
6.1 Applicable Law Controls. Nothing contained in this Agreement shall
be construed to require the commission of any act contrary to law and wherever
there is any conflict between the provisions of this Agreement and any material
statute, law, ordinance or regulation contrary to which the parties have no
legal right to contract, then the latter shall prevail; provided, however, that
in any such event the provisions of this Agreement so affected shall be
curtailed and limited only to the extent necessary to bring them within
applicable legal requirements, and provided further that if any obligation to
pay the Fixed Annual Compensation, Annual Bonus or any other amount due
Employee hereunder is so curtailed, then such compensation or amount shall be
paid as soon thereafter, either during or subsequent to the Term, as
permissible.
6.2 Waiver/Estoppel. Any party hereto may waive the benefit of any
term, condition or covenant in this Agreement or any right or remedy at law or
in equity to which any party may be entitled, but only by an instrument in
writing signed by the parties to be charged. No estoppel may be raised against
any party except to the extent the other parties rely on an instrument in
writing, signed by the party to be charged, specifically reciting that the
other parties may rely thereon. The parties' rights and remedies under and
pursuant to this Agreement or at law or in equity shall be cumulative and the
exercise of any rights or remedies under one provision hereof or rights or
remedies at law or in equity shall not be deemed an election of remedies; and
any waiver or forbearance of any breach of this Agreement or remedy granted
hereunder or at law or in equity shall not be deemed a waiver of any preceding
or succeeding breach of the same or any other provision hereof or of the
opportunity to exercise such right or remedy or any other right or remedy,
whether or not similar, at any preceding or subsequent time.
6.3 Attorneys' Fees and Costs. Subject to Section 6.12.4 hereof, in
any action, suit or proceeding brought by any party hereto with respect to this
Agreement, its subject matter or the actions, statements or conduct of any or
each of the parties in the negotiation, execution or performance of this
Agreement, the prevailing party shall be entitled to recover from the other
parties all reasonable costs and expenses incurred in connection therewith,
including but not limited to attorneys' fees, attorneys' costs and court costs.
6.4 Notices. Any notice that the Company is required or may desire to
give to Employee hereunder shall be in writing and may be served by delivering
it to Employee, or by sending it to
12
Employee by certified mail, return receipt requested (effective five days after
mailing) or overnight delivery of the same by delivery service capable of
providing verified receipt (effective the next business day), or facsimile
(effective twenty-four hours after receipt is confirmed by person or machine),
at the address set forth below, or such substitute address as Employee may from
time to time designate by notice to the Company. Any notice that Employee is
required or may desire to serve upon the Company hereunder shall be in writing
and may be served by delivering it personally or by sending it certified mail,
return receipt requested or overnight delivery, or facsimile (with receipt
confirmed by person or machine) to the address set forth below, or such other
substitute address as the Company may from time to time designate by notice to
Employee. Such notices by Employee shall be effective at the same times as
specified in this Section 6.4 for notices by the Company.
The Company: Overseas Filmgroup, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Employee: Xxxxxx X. Xxxxxx
00000 Xxxxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
6.5 Governing Law. This Agreement shall be governed by, construed and
enforced and the legality and validity of each term and condition shall be
determined in accordance with the internal, substantive laws of the State of
California applicable to agreements fully executed and performed entirely in
California.
6.6 Captions. The paragraph headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
6.7 No Joint Venture. Nothing herein contained shall constitute a
partnership between or joint venture by the parties hereto.
6.8 Assignability. Employee may assign all or any portion of his
rights to receive compensation hereunder to any corporation at least fifty
percent (50%) of the capital stock of which is owned or controlled by Employee,
to any other entity in which Employee owns or controls at least fifty percent
of the total ownership interests, to trusts for the benefit of the family of
Employee, to charitable trusts or to trusts for the benefit of any charitable
purpose, or to any charity or non-profit organization. Notwithstanding any
other provision hereof, Employee shall be permitted to establish loan-out
companies to provide his services to the Company and assign this Agreement
thereto, subject to the delivery by Employee of a customary personal adherence
letter. The Company may not assign this Agreement or any portion of its rights
or obligations hereunder. This Agreement shall be fully effective and binding
upon the successors in interest, assigns and Affiliates of the Company.
6.9 Modification/Entire Agreement. This Agreement may not be altered,
modified or amended except by an instrument in writing signed by all of the
parties hereto. No person, whether or not an officer, agent, employee or
representative of any party, has made or has any authority to make for or on
behalf of that party any agreement, representation, warranty, statement,
promise, arrangement or understanding not expressly set forth in this Agreement
or in any other document executed by the
13
parties concurrently herewith ("Parol Agreements"). This Agreement and all
other documents executed by the parties concurrently herewith constitute the
entire agreement between the parties and supersede all express or implied,
prior or concurrent, Parol Agreements and prior written agreements with respect
to the subject matter hereof. The parties acknowledge that in entering into
this Agreement, they have not relied and will not in any way rely upon any
Parol Agreements.
6.10 Severability. If any term, provision or covenant in this
Agreement is held to be invalid, void or unenforceable, (i) the remainder of
the terms, provisions and covenants in this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
(ii) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, all portions of any section of this Agreement
containing any such provision held to be invalid, void or unenforceable that
are not themselves invalid, void or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, void or
unenforceable.
6.11 No Mitigation; No Offset. Without limiting any other provision
hereof, the Company agrees that any income and other employment benefits
received by Employee from any and all sources (other than as set forth in
Section 5.2) before, during or after the expiration or termination of this
Agreement for any reason shall in no way reduce or otherwise affect the
Company's obligation to make payments and afford benefits hereunder. The
Company shall have no right to offset against any payments or other benefits
due to Employee under this Agreement the amount of any rights, claims or
damages it or its Affiliates may have against Employee, including, without
limitation, any claims by reason of any breach or alleged breach of this
Agreement by Employee.
6.12 Arbitration.
6.12.1 Company and Employee each hereby irrevocably agree to
submit any and all disputes between them arising under this Agreement to
binding, non-appealable arbitration, to be conducted in accordance with this
Section 6.12.1. The parties further agree irrevocably to submit themselves, in
any suit to confirm the judgment or finding of such arbitrator, to the
jurisdiction of the Superior Court for the County of Los Angeles, State of
California, and hereby waive and agree not to assert (by way of motion, as a
defense or otherwise) (a) any and all objections to jurisdiction that they may
have under the laws of the State of California or the United States, and (b)
any claim (i) that it or [he/she] is not subject personally to jurisdiction of
such court, (ii) that such forum is inconvenient, (iii) that venue is improper,
or (iv) that this Agreement or its subject matter may not for any reason be
arbitrated or enforced as provided in this Section 6.12.
6.12.2 The aggrieved party shall, upon written notice to the
other, submit any dispute or controversy respecting actual or alleged breach
of, or interpretation of, or enforcement of, this Agreement to binding
non-appealable arbitration before a retired judge of the Superior Court of the
State of California in and for the County of Los Angeles, to be conducted by
means of a reference pursuant to California Code of Civil Procedure Section
6381(1). Within ten (10) business days after receipt of the notice submitting a
dispute or controversy to arbitration, the parties shall attempt in good faith
to agree upon an arbitrator to whom the dispute will be referred and on a joint
statement of contentions. Failing agreement thereto within ten (10) business
days after receipt of such notice, each party shall name three (3) retired
judges and thereafter either party may file a petition seeking the appointment
of one of the persons named by the party as a referee by the presiding Judge of
the Superior Court, which petition shall recite in a clear and meaningful
manner the factual basis of the controversy between the parties and the
14
issues to be submitted to the referee for decision. Each party hereby agrees
that service of process in such action will be deemed accomplished and
completed when a copy of the documents is sent in accordance with the notice
provisions in Section 6.4 hereof.
6.12.3 The hearing before the referee shall be held within thirty
(30) days after the parties reach agreement as to the identity of the referee
(or within thirty (30) days after the appointment of a referee by the court).
Unless more extensive discovery is expressly permitted by the referee, each
party shall have only the right to two document production requests, shall
serve but two sets of interrogatories and shall only be entitled to depose
those witnesses which the referee expressly permits, it being the parties'
intention to minimize discovery procedures and to hold the hearing on an
expedited basis. The referee shall establish the discovery schedule promptly
following submission of the joint statement of contentions (or the filing of
the answer to the petition) which schedule shall be strictly adhered to. To the
extent the contentions of the parties relate to custom or practice in the film
business, or the entertainment industry generally, or to accounting matters,
the referee shall select an independent expert or accountant (as applicable)
with substantial experience in the industry segment involved to provide
recommendations to the referee. All decisions of the referee shall be in
writing and shall not be subject to appeal. The referee shall make all rulings
in accordance with California law and shall have authority equal to that of a
Superior Court judge, to grant equitable relief in an action pending in Los
Angeles Superior Court in which all parties have appeared.
6.12.4 Except as otherwise provided in this Agreement, the fees
and costs of the referee and of any experts retained shall be shared equally by
the parties to such dispute. The referee shall award legal fees, disbursements
and reimbursement of other expenses to the prevailing party for such amounts,
if any, as determined by the referee to be appropriate. Judgment upon the
referee's award may be entered as if after trial in accordance with California
law.
6.13 Contractual Nomenclature. All references herein to "Dollars" or
"$" shall mean Dollars of the United States of America, its legal tender for
all debts public and private. Wherever used herein and to the extent
appropriate, the masculine, feminine or neuter gender shall include the other
two genders, the singular shall include the plural, and the plural shall
include the singular.
15
6.14 Publicity. Neither party shall issue any press release or
announcement of or relating to the execution of, or any terms, provisions, or
conditions contained in this Agreement without the other party's prior approval
of the content and timing of any such announcement or announcements.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
OVERSEAS FILMGROUP, INC.
By: /s/ Xxxx X. Xxxxx
----------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
/s/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx
16
EXHIBIT "A"
The officers of the Corporation will submit the following actions to
the Board for its consideration (unless contemplated by the Annual Business
Plan of the Corporation):
(a) Any material amendments to the Annual Business Plan and
quarterly updates.
(b) The disposition of any asset or assets of the Corporation or
any subsidiary of the Corporation with an aggregate fair
market value in excess of $2,000,000; provided that the
Corporation may dispose of distribution and other rights to
motion pictures or other related properties or assets in the
ordinary course of business.
(c) Any acquisition by the Corporation or any subsidiary of the
Corporation of any business of another person, or any
property, securities, rights or other assets in a transaction
for a consideration in excess of $2,000,000; provided that
the Corporation may acquire distribution and other rights to
motion pictures or other related properties or assets in the
ordinary course of business.
(d) The creation, incurrence, assumption or guaranty by the
Corporation or any subsidiary of the Corporation of any
indebtedness obligation or liability in excess of $2,000,000,
except for (i) film financing incurred by the Corporation or
by special purpose subsidiaries of the Corporation, (ii) bank
financing used for general corporate purposes of the
Corporation or its subsidiaries, or (iii) as otherwise
permitted by the Operating Guidelines of the Corporation
(collectively, "Permitted Indebtedness").
(e) The creation, incurrence, or assumption of any lien,
mortgage, pledge, security interest, charge or encumbrance by
the Corporation or any subsidiary of the Corporation with
respect to any property, capital stock or asset of the
Corporation or any subsidiary of the Corporation, which
secures payment of indebtedness of the Corporation in excess
of $2,000,000, except (i) liens or pledges securing Permitted
Indebtedness, (ii) liens or pledges encumbering film
collateral necessary to secure film financing, or (iii) as
otherwise permitted by the Operating Guidelines of the
Corporation.
(f) Committing to finance in excess of $4,000,000 of the
Uncovered Amount of the budgeted negative costs of any motion
picture. For purposes hereof, the Uncovered Amount means the
budgeted negative costs of any motion picture not to be
financed by advances, guarantees, or bank or other third
party financing commitments.
(g) Committing to finance in excess of $3,000,000 of the
distribution costs of any motion picture which are not being
financed by other means.
(h) The declaration or payment by the Corporation or any
subsidiary of the Corporation (other than special purpose
subsidiaries) of any dividend on any class of its common
stock.
(i) Any other investments, or series of investments, by the
Corporation or any subsidiary of the Corporation in excess of
$1,500,000 other than (i) marketable direct obligations
A-1
issued or unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the
full faith and credit of the United States, (ii) marketable
direct obligations issued by any state of the United States
of America or any political subdivision of any such state or
any public instrumentality thereof, (iii) commercial paper or
other corporate obligations, (iv) repurchase agreements and
reverse repurchase agreements, (v) money market funds
organized under the laws of the United States of America or
any state thereof and administered by securities dealers of
recognized national standing, (vi) any investment in
subsidiaries of the Corporation, and (vii) negotiable
instruments endorsed for deposit or collection or similar
instruments in the ordinary course of business.
(j) Raising additional debt or equity capital including material
increases to existing bank facilities.
(k) Granting any bonus in excess of $50,000 per grant to any
employee or agent of, or consultant to the Corporation not
required by any employment, consulting or other agreement.
A-2
EXHIBIT "B"
INDEMNITY AGREEMENT
This AGREEMENT is made and entered into this ___ day of October, 1996,
by and between OVERSEAS FILMGROUP, INC., a Delaware corporation (hereinafter
called "Overseas"), and Xxxxxx X. Xxxxxx (hereinafter called "Indemnitee")
(sometimes collectively referred to herein as "the Parties hereto").
WHEREAS, there is a general awareness that competent and experienced
persons are becoming more reluctant to serve as directors and officers of a
corporation unless they are protected by comprehensive insurance or
indemnification, especially since stockholder class and derivative lawsuits
against publicly held corporations, their directors and officers for
line-of-duty decisions and actions have increased in number in recent years for
damages in amounts which are greatly in excess of the amount of compensation
received by the directors or officers from the corporations, and
WHEREAS, the vagaries of "public policy" and the interpretations of
ambiguous statutes, regulations and bylaws are too uncertain to provide
corporate officers and directors with adequate, reliable knowledge of legal
risks to which they may be exposed, with these indeterminables multiplied
substantially for officers and directors of corporations such as Overseas with
operations in many of the states in the United States and many foreign
jurisdictions, and
WHEREAS, damages sought by class action plaintiffs in some cases
amount to tens of millions of dollars and, whether or not the case is
meritorious, the cost of defending them is enormous with few individual
directors and officers having the resources to sustain such legal costs, not to
mention the risk of a judgment running into millions even in cases where the
defendant was neither culpable nor profited personally to the detriment of the
corporation, and
WHEREAS, the issues in controversy in such litigation are usually
related to the knowledge, motives and intent of the director or officer and
such person may be the only witness with first-hand knowledge of the essential
facts or of exculpating circumstances, who is qualified to testify in such
person's defense regarding matters of such subjective nature, and the long
period of time which normally and usually elapses before such suits can be
disposed of can extend beyond the normal time for retirement for a director or
officer with the result that such person, after retirement, or in the event of
such person's death, such person's spouse, heirs, executors or administrators,
as the case may be, may be faced with limited ability, undue hardship and an
intolerable burden in launching and maintaining a proper and adequate defense
of such director or officer or such person's estate against claims for damages,
and
WHEREAS, the Board of Directors, based upon their experience as
business managers, have concluded that unless Overseas enters into
indemnification agreements with its directors and officers, the continuation of
present trends in litigation against corporate directors and officers will
inevitably result in less effective direction and supervision of Overseas and
its subsidiaries and affiliates, their business affairs and the operation of
their facilities and the Board deems such
B-1
consequences to be so detrimental to the best interests of Overseas'
shareholders that it has concluded that its directors and officers should be
provided with maximum protection against inordinate risks in order to insure
that the most capable persons otherwise available will be attracted to such
positions; therefore, said directors have further concluded that it is not only
reasonable and prudent but necessary for Overseas to contractually obligate
itself to indemnify in a reasonable and adequate manner its directors and
officers and the directors and officers of its affiliates and to assume for
itself maximum liability for expenses and damages in connection with claims
lodged against them for their line-of-duty decisions and actions, and
WHEREAS, Section 145 of the General Corporation Law of the State of
Delaware, under which Overseas is organized, empowers corporations to indemnify
persons serving as a director, officer, employee or agent of the corporation or
a person who serves at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and further specifies that the indemnification set forth in
said section "shall not be deemed exclusive to any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise", and said section further
empowers a corporation to "purchase and maintain insurance" (on behalf of such
persons) "against any liability asserted against him or incurred by him in any
such capacity or arising out of status as such whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of" (said laws), and
WHEREAS, Overseas initiated an investigation to determine the type of
insurance available, the nature and extent of the coverage provided and the
cost thereof to Overseas to insure the directors and officers of Overseas and
of its affiliates against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
persons in connection with any action, suit or proceeding with which any such
director or officer is threatened or made a party by reason of such status
and/or such person's line-of-duty decisions or actions, and, upon receiving
such information, the directors of Overseas have determined that the coverage
available is inadequate for Overseas and its directors, officers and agents and
that its shareholders' best interests would be served by Overseas contracting
to indemnify such persons and to thereby effectively self-insure against such
potential liabilities not covered by insurance, and
WHEREAS, Overseas desires to have Indemnitee serve or continue to
serve as a director and/or officer of Overseas and/or of any other corporation,
partnership, joint venture, trust or other enterprise of which he has been or
is serving at the request of, for the convenience of, or to represent the
interests of Overseas (any such enterprise being hereinafter referred to as an
"Affiliate of Overseas") free from undue concern for unpredictable,
inappropriate or unreasonable claims for damages by reason of his being a
director, officer, employee and/or agent of Overseas or of an Affiliate of
Overseas or by reason of his decisions or actions on their behalf and
Indemnitee desires to serve or to continue to serve (provided that he is
furnished the indemnity provided for hereinafter), in one or more of such
capacities, NOW, THEREFORE,
B-2
W I T N E S S E T H
THAT for and in consideration of the premises and the covenants
contained herein, Overseas and Indemnitee do hereby covenant and agree as
follows:
1. DEFINITIONS.
"Litigation Costs" means all reasonable costs, charges, expenses,
including attorneys', accountants' and expert witnesses' fees, and obligations
paid or incurred in connection with investigating, defending (including
affirmative defenses and counterclaims), obtaining or attempting to obtain a
settlement, being a witness in, or participating in or preparing to defend, be
a witness in, or participate in, any Proceeding and any appeal therefrom and
the cost of appeal, attachment and similar bonds.
"Losses" means the total amount which Indemnitee becomes legally
obligated to pay in connection with any Proceeding including, without
limitation, Litigation Costs, judgments, fines and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Litigation Costs, judgments, fines and
amounts paid in settlement) of or with respect to that Proceeding.
"Proceeding" means any threatened, pending or completed action, suit
or proceeding (including, without limitation, securities laws actions, suits,
and proceedings), or any inquiry or investigation, formal or informal,
(including discovery), whether conducted by Overseas or any other party, that
Indemnitee in good faith believes might lead to the institution of any action,
suit, or proceeding, whether civil, criminal, administrative, investigative, or
other.
2. AGREEMENT TO SERVICE.
Indemnitee will serve and/or continue to serve, at the will
of Overseas or its stockholders or under separate contract, if such exists,
Overseas or an Affiliate of Overseas as a director, officer, employee and/or
agent faithfully so long as he is duly elected and qualified in accordance with
the provisions of the bylaws thereof or until such time as he tenders his
resignation in writing or is removed in accordance with applicable law (subject
to the terms of any separate contract, if such exists).
3. INDEMNIFICATION. Overseas shall indemnify Indemnitee:
(a) If Indemnitee is a person who was or is a party, or
witness in, or is threatened to be made a party to, or witness in, or otherwise
becomes involved in, any Proceeding (other than an action by or in the right of
Overseas or an Affiliate of Overseas) by reason of (or arising in part out of)
the fact that he is or was a director, officer, employee or agent of Overseas
or is or was serving at the request of Overseas as a director, officer,
employee or agent of an Affiliate of Overseas, or by reason of anything done or
not done by him in any such capacity, against Losses actually incurred by him
in connection with such Proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
B-3
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful,
or
(b) If Indemnitee is a person who was or is a party, or
witness in, or is threatened to be made a party to, or witness in or otherwise
becomes involved in, any Proceeding by or in the right of Overseas or an
Affiliate of Overseas to procure a judgment in its favor by reason of (or
arising in part out of) the fact that he is or was a director, officer,
employee or agent of Overseas or is or was serving at the request of Overseas
as a director, officer, employee or agent of an Affiliate of Overseas, or by
reason of anything done or not done by his in any such capacity, against
Litigation Costs actually incurred by him in connection with such Proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of Overseas and except that no indemnification
under this subsection shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to Overseas unless
and only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the relevant circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper, and
(c) The protections afforded Indemnitee by this Agreement
shall continue after Indemnitee ceases as a director, officer, employee or
agent of Overseas or an Affiliate of Overseas, and shall inure to the benefit
of the heirs, executors and administrators of such Indemnitee, except that no
indemnification shall be due under the provisions of this subsection to the
extent a court of competent jurisdiction shall have found in such Proceeding
that Indemnitee defrauded or stole from Overseas or an Affiliate of Overseas or
converted to his own personal use and benefit business or properties of
Overseas or an Affiliate of Overseas or was guilty of gross negligence or
willful misconduct of a culpable nature to Overseas or an Affiliate of
Overseas, and
(d) To the extent Indemnitee has been successful on the
merits or otherwise in defense of any Proceedings referred to in subsections
(a), (b) or (c) of this Section 3, or in the defense of any claim, issue or
matter described therein, Indemnitee shall be indemnified against Litigation
Costs actually incurred by him in connection with the investigation, defense or
appeal of such action, suit or proceeding. If Indemnitee is not wholly
successful in such Proceedings, but is successful on the merits or otherwise as
to one or more, but less than all, claims, issues or matters in such
Proceedings, Overseas shall indemnify Indemnitee against all Losses actually
incurred by Indemnitee or on his behalf in connection with the successfully
resolved claim, issue or matter.
For purposes of this Section 3 and without limitation, the
termination of any Proceedings by judgment order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself create a
presumption (1) that Indemnitee did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of
Overseas, or (2) with respect to any criminal action or proceeding, that
Indemnitee had reasonable cause to believe that his conduct was criminal.
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4. OVERSEAS' ASSUMPTION OF DEFENSE.
To the extent that it may wish, Overseas jointly with any
other indemnifying party similarly notified will be entitled to promptly assume
the defense of any such Proceeding, with counsel satisfactory to Indemnitee.
After notice from Overseas to Indemnitee of its election so to assume the
defense thereof, Overseas will not be liable to the Indemnitee under this
Agreement for any Litigation Costs subsequently incurred by Indemnitee in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have the right
to employ personal counsel in such Proceeding, but the fees and expenses of
such counsel incurred after notice from Overseas of its assumption of the
defense thereof shall be at the expense of Indemnitee, unless (i) the
employment of counsel by Indemnitee has been authorized by Overseas, (ii)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between Overseas and/or any Affiliate of Overseas and Indemnitee in
the conduct of the defense of such action, or (iii) Overseas shall not in fact
have promptly employed counsel to assume the defense of such action, in each of
which cases the fees and expenses of counsel shall be at the expense of
Overseas. Overseas shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of Overseas or an Affiliate of Overseas or
as to which Indemnitee shall have made the conclusion provided for in (ii)
above.
5. ASSUMPTION OF LIABILITY BY OVERSEAS. Subject to the other
terms and provisions hereof (including applicable limitations relating to
actions by or in the right of Overseas or Affiliates of Overseas), if
Indemnitee is deceased and is entitled to indemnification under any provision
of this Agreement, Overseas shall indemnify Indemnitee's estate and his spouse,
heirs, administrators and executors against, and Overseas shall, and does
hereby agree, to assume any and all Losses incurred by or for Indemnitee or his
estate in connection with the investigation, defense, settlement or appeal of
any such Proceeding. Further, when requested in writing by the spouse of
Indemnitee and/or the heirs, executors or administrators of Indemnitee's
estate, Overseas shall provide appropriate evidence of Overseas' Agreement set
out herein, to indemnify Indemnitee against and to itself assume such Losses.
6. NOTICE OF PROCEEDING. Promptly after receipt by Indemnitee of
notice of the commencement of any Proceeding but in no event later than twenty
days after receipt by Indemnitee of such notice, Indemnitee will, if a claim in
respect thereof is to be made against Overseas under this Agreement, notify
Overseas of the commencement thereof; provided, however, that any failure by
Indemnitee to so notify Overseas shall not relieve Overseas from its
obligations hereunder unless Overseas shall have been materially prejudiced by
the failure of Indemnitee to notify Overseas and then only to the extent of
such material prejudice.
7. REQUEST FOR INDEMNIFICATION. To obtain indemnification under
this Agreement, Indemnitee shall submit to Overseas a written request,
including therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification.
8. DETERMINATION OF RIGHT TO INDEMNIFICATION. Anything
contained elsewhere herein to the contrary notwithstanding, the determination
as to whether or not Indemnitee has met the
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standard of conduct required to qualify and entitle him partially or fully, to
indemnification under the provisions of any subparagraph of Paragraph 3 hereof
may be made either (1) by the Board of Directors by a majority vote of
directors who were not parties to such Proceeding even though less than a
quorum, (2) or if there are no such directors or if such directors so direct,
by independent legal counsel (selected and retained by Overseas in the manner
hereinafter set forth) in a written opinion, or (3) by the stockholders of
Overseas provided that the manner in which (and if applicable, the counsel by
which) the right to indemnification is to be determined shall be approved in
advance in writing by both the Board of Directors of Overseas and by
Indemnitee. In the event that such parties are unable to agree on the manner in
which the determination of the right to indemnity is to be made, such
determination may be made by independent legal counsel selected and retained by
Overseas especially for such purpose, provided that such counsel be approved in
advance in writing by both the Board of Directors and Indemnitee and provided
further, that such counsel shall not be outside counsel regularly employed by
Overseas. In the event that the Parties hereto are unable to agree on the
selection of such outside counsel, such outside counsel shall be selected by
lot by the outside counsel regularly employed by Overseas from among the Los
Angeles, California law firms having more than twenty (20) attorneys and having
a rating of "av" or better in the then current Xxxxxxxxxx-Xxxxxxx Law
Directory. Such selection by lot shall be made in the presence of Indemnitee
(and his legal counsel or either of them, as Indemnitee may elect). The outside
counsel regularly employed by Overseas and Indemnitee (and his legal counsel or
either of them as Indemnitee may elect) shall contact, in the order of their
selection by lot, such law firms, requesting each such firm to accept
engagement to make the determination required hereunder until one of such firms
accepts such engagement. The fees and expenses of counsel in connection with
making said determination contemplated hereunder shall be paid by Overseas,
and, if requested by such counsel, Overseas shall give such counsel an
appropriate written agreement with respect to the payment of their fees and
expenses and such other matters as may be reasonably requested by counsel.
Nothing contained in this Agreement shall require any determination under this
Section 8 to be made by the Board of Directors, independent legal counsel or
the stockholders prior to the disposition or conclusion of the Proceeding
against the Indemnitee; provided, however, that Advancements shall continue to
be made by Overseas pursuant to and to the extent required by Section 10
hereunder. Notwithstanding the foregoing, Indemnitee may, either before or
within two (2) years after a determination has been made as provided above,
petition the Court of Chancery of the State of Delaware or any other court of
competent jurisdiction to determine whether Indemnitee is entitled to
indemnification under the provisions hereof under which he claims the right to
indemnification, and such court shall thereupon have the exclusive authority to
make such determination, unless and until such court dismisses or otherwise
terminates such action without having made such determination. The
determination of the court, as petitioned, as to whether Indemnitee is entitled
to indemnification hereunder, shall be independent and irrespective of any
prior determination made by the Board of Directors, the stockholders or
counsel. If the Court shall determine that Indemnitee is entitled to
indemnification hereunder as to any claim, issue or matter involved in any
Proceeding with respect to which there has been no prior determination pursuant
hereto or with respect to which there has been a prior determination pursuant
hereto that Indemnitee was not entitled to indemnification hereunder, Overseas
shall pay all expenses (including attorneys' fees) actually incurred by
Indemnitee in connection with such judicial determination. If the person
(including
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the Board of Directors, independent legal counsel in a written opinion, the
stockholders, or a court) making the determination hereunder shall determine
that Indemnitee is entitled to indemnification as to some claims, issues or
matters involved in the Proceeding but not as to others, such person shall
reasonably prorate the Losses with respect to which indemnification is sought
by Indemnitee among such claims, issues or matters. If, and to the extent it is
finally determined by the Court that Indemnitee is not entitled to
indemnification, then Indemnitee agrees to reimburse (the "Indemnitee
Reimbursement Obligation"), without interest, Overseas (which agreement shall
be an unsecured obligation of Indemnitee) for all expenses advanced or prepaid
pursuant to Section 10 hereof, or the proper proportion thereof, other than the
expenses of obtaining the judicial determination referred to above. Anything
contained elsewhere herein to the contrary notwithstanding, Overseas shall not
be liable to indemnify Indemnitee under this Agreement for any amounts paid in
settlement of any Proceeding or claim effected without its written consent.
Overseas shall not settle any Proceeding or claim in any manner which would
impose any penalty or limitation on Indemnitee without Indemnitee's written
consent. Neither Overseas nor Indemnitee will unreasonably withhold their
consent to any proposed settlement.
9. LIMITATION OF ACTIONS AND RELEASE OF CLAIMS. No legal action shall
be brought and no cause of action shall be asserted by or on behalf of Overseas
or any Affiliate of Overseas against Indemnitee, his spouse, heirs, executors
or administrators after the expiration of two (2) years from the date
Indemnitee ceases (for any reason) to serve in any one or more of the
capacities covered by this Agreement, and any claim or cause of action of
Overseas or any Affiliate of Overseas shall be extinguished and deemed released
unless asserted by filing of a legal action within such two (2) year period;
provided, however, that nothing in this Section 9 shall be deemed to limit or
prevent any legal action (or to release any claim) based on fraud or criminal
misconduct of Indemnitee which is not discovered by Overseas or the applicable
Affiliate of Overseas until after the expiration of such two (2) year period.
10. ADVANCEMENT OF LITIGATION COSTS. If so requested in writing by
Indemnitee, Overseas shall pay any and all Litigation Costs incurred by
Indemnitee (or, if applicable, reimburse Indemnitee for any and all Litigation
Costs incurred by Indemnitee and previously paid by Indemnitee) and/or shall,
subject to the other terms and provisions hereof (including applicable
limitations relating to actions by or in the right of Overseas or Affiliates of
Overseas), pay any judgments, fines or amounts paid in settlement (or, if
applicable, reimburse Indemnitee for any such sums previously paid by
Indemnitee) in each case promptly, but in any event within 10 days, after such
request (an "Advancement"). Overseas shall be obligated to make or pay an
Advancement in advance of the final disposition or conclusion of any
Proceeding. Any request for an Advancement under this Agreement shall
reasonably evidence the Litigation Costs incurred by Indemnitee. In connection
with any request for an Advancement, if requested by Overseas, Indemnitee or
Indemnitee's counsel shall submit an affidavit stating that the Litigation
Costs incurred were reasonable, and Indemnitee shall submit at such time a
signed undertaking reflecting the terms of the Indemnitee Reimbursement
Obligation set forth in Section 8 hereof (i.e., that Indemnitee shall repay
such Advancement, without interest, if, and to the extent it is finally
determined by the Court that Indemnitee is not entitled to indemnification).
Any dispute as to the reasonableness of any Litigation Costs shall not delay an
Advancement by Overseas, and Overseas agrees that any such dispute shall be
resolved only upon the disposition or
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conclusion of the underlying Proceeding against the Indemnitee. If Indemnitee
has petitioned the Court of Chancery of the State of Delaware or any other
court of competent jurisdiction pursuant to Section 8 hereof to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Board of Directors, independent legal counsel or the
stockholders that Indemnitee would not be permitted to be indemnified under the
applicable law shall not be binding and Indemnitee shall not be required to
reimburse Overseas for any Advancements, and Overseas shall be obligated to
continue to make Advancements, until a final judicial determination is made
with respect thereto (as to which all rights of appeal therefrom have been
exhausted or have lapsed).
11. OTHER RIGHTS AND REMEDIES. The indemnification and advance payment
of expenses as provided by any provision of this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may be entitled under any
provision of law, the Certificate of Incorporation, any Bylaw, this or other
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his official capacity and as to action in another capacity
while occupying any of the positions or having any of the relationships
referred to in Section 3 of this Agreement, and shall continue after Indemnitee
has ceased to occupy such position, or have such relationship and shall inure
to the benefit of the heirs, executors and administrators of Indemnitee.
12. SEVERABILITY. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever
(i) the validity, legality and enforceability of the remaining provisions of
this Agreement (including, without limitation, all portions of any paragraphs
of this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
13. PRIOR AGREEMENTS. This Agreement shall be of no force and effect
with regard to the cost of settlement borne or paid by Indemnitee under the
provisions of any agreement executed by Overseas and/or Indemnitee prior to the
date hereof.
14. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument, but only one of
which need be produced.
15. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
16. USE OF CERTAIN TERMS. As used in this Agreement, the words
"herein", "hereto" and "hereunder", and other words of similar import refer to
this Agreement as a whole and not
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to any particular paragraph, subparagraph or other subdivision. When the
context so requires in this Agreement, the masculine gender includes the
feminine and/or neuter.
17. MODIFICATION AND WAIVER. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver. Any repeal
or modification of the relevant provisions of the Delaware General Corporation
Law in effect as of the date of execution of this Indemnity Agreement shall not
affect any right or obligation then existing with respect to any state of facts
then or previously existing or any action, suit or proceeding previously or
thereafter brought or threatened based in part or in whole on such state of
facts.
18. NOTICE TO OVERSEAS BY INDEMNITEE. Indemnitee agrees to promptly
notify Overseas in writing upon being served with any citation, complaint,
indictment or other document covered hereunder, either civil or criminal.
19. NOTICES. All notices, requests, demands and other communication
hereunder shall be in writing and shall be deemed to have been duly given if
(i) delivered by hand and receipted for by the party to whom said notice or
other communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid on the third business day after the date
on which it is so mailed.
(a) If to Indemnitee, at the address indicated on the signature
page hereof;
(b) If to Overseas to:
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
or to such other address as may have been furnished to Indemnitee by Overseas.
20. GOVERNING LAW. The Parties hereto agree that this Agreement shall
be construed and enforced in accordance with and governed by the laws of the
State of Delaware. Nothing in this Agreement is intended to eliminate the
requirement that Indemnitee satisfy the applicable standards of conduct for
indemnification required by Delaware law.
21. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
Overseas and its successors and assigns and shall inure to the benefit of
Indemnitee and his spouse, heirs, executors and administrators.
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ENTERED into on the day and year first above written.
ATTEST: OVERSEAS FILMGROUP, INC.
BY: BY:
-------------------------- ------------------------------
Name:
Title:
Indemnitee
Name: Xxxxxx X. Xxxxxx
Address: 00000 Xxxxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
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EXHIBIT "C"
OVERSEAS FILMGROUP, INC.
1996 SPECIAL STOCK OPTION PLAN AND AGREEMENT
This OVERSEAS FILMGROUP, INC. 1996 SPECIAL STOCK OPTION PLAN AND
AGREEMENT (the "Plan Agreement") is made and entered into this 31st day of
October, 1996 by and among XXXXXX X. XXXXXX, XXXXX XXXXXXXX LITTLE and OVERSEAS
FILMGROUP, INC., a Delaware corporation (the "Company"). Xxxxxx X. Xxxxxx and
Xxxxx Xxxxxxxx Little are each sometimes individually referred to herein as an
"Optionee" and they sometimes are collectively referred to herein as the
"Optionees."
RECITALS
A. The Company has entered into an Employment Agreement dated as of
October 31, 1996 with each Optionee (the "Employment Agreements").
B. As a term and condition of each Employment Agreement and as
consideration for the execution thereof, the parties have entered into this
Plan Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Representations and Warranties of the Company. The Company
represents and warrants that:
(a) This Plan Agreement has been approved by the affirmative vote of
the holders of the outstanding voting stock of the Company within the time
period, and pursuant to the procedures, required for compliance with the
provisions of Rule 16b-3 of the General Rules and Regulations ("Rule 16b-3")
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the
"Code");
(b) The grant of options under this Plan Agreement and the terms and
conditions of this Plan Agreement have been approved by a committee (the
"Committee") comprised solely of two or more Directors of the Company who are
(i) "outside directors" within the meaning of Section 162(m)(4)(C) of the Code
and (ii) "disinterested persons" within the meaning of Rule 16b-3(c)(2)(i)
under the Exchange Act; and
(c) This Plan Agreement complies in all respects with Rule 16b-3 in
connection with the options to be granted hereunder.
2. Registration; Reservation of Shares. The Company represents,
warrants, covenants and agrees that within fourteen calendar days of the date
hereof the Company shall have registered under the Securities Act of 1933, as
amended (the "Act"), this Plan Agreement and the shares of the Company's common
stock , $.001 par value per share ("Common Stock"), issuable upon exercise of
the options to be granted hereunder on such form and in such manner so that
upon exercise of the options hereunder the shares of Common Stock issuable as a
result thereof may be transferred thereafter by the Optionees without any
restriction whatsoever under any federal or state securities law. Until all
options granted hereunder have been exercised or have expired, the Company
shall use its best efforts to maintain such
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registration, keep the applicable registration statement effective and
otherwise permit the transferability by Optionees of the Common Stock issuable
upon exercise of the options granted hereunder without restriction under any
federal or state securities laws. The Company shall cause all shares of Common
Stock issuable upon exercise of the options granted hereunder to be listed on
each securities exchange or quotation system on which similar securities issued
by the Company are then listed. All of the foregoing actions of the Company
have been and shall be at the Company's expense. The Company will at all times
reserve and keep available, free from preemptive rights, out of the aggregate
of its authorized but unissued Common Stock, for the purpose of enabling it to
satisfy any obligation to issue shares of Common Stock upon exercise of the
Options, the maximum number of shares of Common Stock which may then be
deliverable upon the exercise of all outstanding Options.
3. Grants to Optionees.
The Company hereby grants, on the date hereof (the "Date of Grant"),
to each Optionee, subject to the terms and conditions set forth herein, options
to purchase from the Company an aggregate of 1,100,000 shares of the Company's
Common Stock per Optionee, of which options to purchase 537,500 shares of
Common Stock shall be referred to herein as "Group A Options" and options to
purchase 562,500 shares of Common Stock shall be referred to herein as "Group B
Options." The Group A Options and the Group B Options shall be collectively
referred to herein as the "Options" and each option hereunder is sometimes
individually referred to herein as an "Option." Neither the Group A Options nor
the Group B Options are intended to qualify as and will not be treated as
"incentive stock options" within the meaning of Section 422 of the Code. The
maximum number of shares of Common Stock for which each Optionee may be granted
options under this Plan Agreement shall be limited to 1,100,000 (such number
being subject to adjustment in accordance with the terms and provisions hereof
including, without limitation, Section 12 hereof).
4. Price and Exercise of the Options.
(a) Exercise Price. The exercise price of the Group A Options is $5.00
per share of Common Stock, subject to adjustment as provided in this Plan
Agreement. The exercise price of the Group B Options is $8.50 per share of
Common Stock, subject to adjustment as provided in this Plan Agreement. The
exercise price of the Group A Options and the exercise price of the Group B
Options, shall be referred to herein as the "Exercise Prices" (and each as an
"Exercise Price"). The Exercise Price shall be paid in full at the time of
exercise (except to the extent the sale and remittance procedure described in
subparagraph (iv) below is utilized) by one of the following methods selected
in each case by the Optionee:
(i) in cash or by certified or cashier's check payable to
the order of the Company,
(ii) by cancellation of indebtedness owed by the Company to
the Optionee exercising the Option, including, without limitation, the Merger
Note (as defined in that certain Merger Agreement by and among
Entertainment/Media Acquisition Corporation, Overseas Filmgroup, Inc., Xxxxxx
X. Xxxxxx and Xxxxx Xxxxxxxx Little, dated as of July 2, 1996 as amended by
that certain Amendment to Agreement of Merger dated as of September 20, 1996 by
and among the same parties (as so amended, the "Merger Agreement"),
(iii) by delivery of shares of the Common Stock of the
Company already beneficially owned by the Optionee(s) and having an aggregate
Current Market Price determined in accordance with Section 9 hereof equal to
the total Exercise Price of the Options being exercised (provided such shares
have been beneficially owned by the Optionee(s) for at least six (6) months),
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(iv) through a special sale and remittance procedure, which
the Company shall promptly establish, pursuant to which upon irrevocable
written instructions of Optionee to the Company (a) a Company-designated
brokerage firm shall effect the immediate sale of the shares underlying the
Options being exercised and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the exercise of the Options covering such shares
plus all applicable taxes required to be withheld by the Company by reason of
such exercise, (b) the remainder of the sale proceeds shall be promptly
remitted to Optionee and (c) the Company shall deliver the certificates for
such shares underlying the Options being exercised directly to such brokerage
firm in order to complete the sale,
(v) by any combination thereof, or
(vi) in such other manner as the Committee may specify in
order to facilitate the exercise of Options by the Optionees.
(b) Exercise Notice. In order to exercise an Option, the Optionee or
any other person or persons entitled to exercise the Option shall give written
notice to the Secretary of the Company or to such other person as may be
designated by the Company, in the form set forth on Exhibit "A" or Exhibit "B,"
specifying the number of shares to be purchased. If the Option is being
exercised by any person(s) other than the Optionee, such notice shall be
accompanied by proof, satisfactory to counsel for the Company, of the right of
such person(s) to exercise the Option. This notice shall be accompanied by
payment of the Exercise Price for the shares as provided in Section 4(a). The
Optionee shall also deliver such additional documents as the Company may then
reasonably require pursuant to this Plan Agreement.
(c) Withholding Tax. Upon the exercise of an Option, the Company shall
have the right to require the Optionee, and Optionee hereby agrees, to pay the
Company the amount of any taxes which the Company may be required to withhold
with respect thereto. The Committee may, in its discretion, grant an Optionee,
at any time while any of such Optionee's Options remain outstanding, the right
to pay the amount of any taxes which the Company may be required to withhold in
connection with the subsequent exercise of such Options by delivering shares of
Common Stock with a Current Market Price (determined in accordance with Section
9 hereof) equal to such withholding tax obligation. If such right is granted to
an Optionee, then the shares which may be delivered in satisfaction of such
withholding tax obligation may, at such Optionee's discretion, be either shares
withheld by the Company upon the exercise of the Option or other shares of
Common Stock.
5. Vesting Schedule.
(a) Subject to paragraphs (c), (d), (e) and (f) of this Section 5 and
Section 7 of this Plan Agreement, the Group A Options granted to each Optionee
will vest as follows:
Number of Shares
of Common Stock
Underlying Options which
Vesting Date Vest on Vesting Date
------------ --------------------
Date of Grant 100,000
October 30, 1997 87,500
October 30, 1998 87,500
October 30, 1999 87,500
October 30, 2000 87,500
October 30, 2001 87,500
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(b) Subject to paragraphs (c), (d), (e) and (f) of this Section 5 and
Section 7 of this Plan, the Group B Options granted to each Optionee will vest
as follows:
Number of Shares
of Common Stock
Underlying Options which
Vesting Date Vest on Vesting Date
------------ --------------------
October 30, 1997 112,500
October 30, 1998 112,500
October 30, 1999 112,500
October 30, 2000 112,500
October 30, 2001 112,500
(c) Notwithstanding the foregoing, if, during the term of an
Optionee's employment under such Optionee's Employment Agreement, such
Optionee's employment with the Company (i) is validly terminated by the Company
for "Cause" (as defined in such Optionee's Employment Agreement) or (ii) is
voluntarily terminated by such Optionee other than for "Good Reason" (as
defined in such Optionee's Employment Agreement), then all of such Optionee's
unvested Options shall cease to continue to vest and all of such Optionee's
unvested Options shall expire and become void.
(d) Notwithstanding anything to the contrary contained in this Plan
Agreement (including anything in Section 13), if an Optionee's employment with
the Company is terminated (i) by the Company other than for "Cause" (as such
term is defined in such Optionee's Employment Agreement), or (ii) by Employee
for "Good Reason" (as such term is defined in such Optionee's Employment
Agreement), then all of such Optionee's Options shall automatically and without
any required action on the part of Optionee or the Company, immediately fully
vest (to the extent any such Options were unvested) and become exercisable.
(e) Notwithstanding anything to the contrary contained herein, (i) if
an Optionee's employment with the Company is terminated as a result of
Optionee's Death or Disability (as such terms are defined in Optionee's
Employment Agreement) and the other Optionee's employment with the Company
shall not have previously terminated, then such deceased or disabled Optionee's
Options which were to have vested on the next two Vesting Dates following the
date of such termination of employment due to Death or Disability shall
automatically, and without any required action on the part of Optionee or the
Company, immediately fully vest (to the extent such Options were unvested at
the time of such Optionee's termination of employment due to Death or
Disability) and become exercisable and (ii) if an Optionee's employment with
the Company is terminated as a result of Optionee's Death or Disability and the
other Optionee's employment with the Company shall have previously terminated
or shall simultaneously terminate due to Death or Disability, then such
deceased or disabled Optionee's Options which were to have vested on the next
Vesting Date following the date of such Optionee's termination of employment
due to Death or Disability shall automatically, and without any required action
on the part of Optionee or the Company, immediately fully vest (to the extent
such Options were unvested at the time of such Optionee's termination of
employment due to Death or Disability) and become fully exercisable. Any
portion of the deceased or disabled Optionee's Options which remain unvested
after the application of the acceleration provisions of this paragraph (e) upon
such Optionee's Death or Disability shall cease to continue to vest and such
unvested portion of the deceased or disabled Optionee's Options shall
immediately expire and become void.
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(f) In addition to the accelerated vesting pursuant to paragraphs (d)
and (e) of this Section 5, the vesting of shares subject to the Options granted
to an Optionee shall accelerate upon the terms and conditions set forth in
Sections 7 and 13 hereof.
(g) Installments of vested Options may be exercised in whole or in
part, and, to the extent not exercised, will accumulate and be exercisable at
any time on or before termination of the Options.
6. Expiration Date.
Both the Group A Options and the Group B Options shall terminate and
expire at 5:00 p.m., California time, on October 30, 2003. In no event may
either the Group A Options or the Group B Options be exercised after the date
on which they terminate.
7. Redemption of Group A Options
The Company may, upon the affirmative vote of the majority of the
Committee, call the Group A Options for redemption, in whole or in part, at a
price of $0.01 per Group A Option (each, a "Redemption Call"), (i) on the date,
if any, on which the Company calls for redemption (the "Warrant Call") all of
the Company's Redeemable Common Stock Purchase Warrants issued pursuant to that
certain Warrant Agreement dated as of February 16, 1995, by and between the
Company and Continental Stock Transfer & Trust Company or (ii) at any time
after the Warrant Call, upon notice in the case of (i) and (ii) (in the manner
set forth below) to each Optionee of not less than 30 days prior to the date of
redemption (the "Redemption Date"), and, in the case of a Redemption Call
pursuant to clause (ii) of this sentence, such Redemption Call may only be made
if the Current Market Price (determined in accordance with Section 9 hereof) of
the Common Stock has been at least $8.50, subject to adjustment in accordance
with Section 12 hereof, on each of the twenty (20) consecutive trading days
ending on the third business day prior to the date on which notice of such
Redemption Call is given. Any Group A Options which are subject to a Redemption
Call, but which have not vested prior to such Redemption Call, shall
immediately become fully vested. The Company shall cause to be mailed,
certified mail, postage prepaid, return receipt requested, to each Optionee at
the notice address set forth in Section 15 hereof, a written notice, notifying
such Optionee that the Company has called all or a portion of the Group A
Options for redemption and stating (i) the Redemption Date, (ii) the number of
Group A Options called for redemption (identifying any Group A Options called
for redemption which are not yet vested), (iii) that all Group A Options
subject to such Redemption Call which have not been previously exercised may be
exercised prior to and including the Redemption Date, regardless of whether
such Group A Options would otherwise be vested as of such Redemption Date and
(iv) that all Group A Options which are the subject of such Redemption Call
which are not exercised on or before the Redemption Date shall thereafter cease
to be exercisable. Notwithstanding anything to the contrary in the foregoing,
in the event that exercise of an Optionee's Group A Options and/or sale of the
shares received upon exercise during the period after a Redemption Call and
prior to the applicable Redemption Date (i) would result in liability under
Sections 10(b) or 16(b) of the Exchange Act or (ii) would be prohibited or
restricted in any manner by any applicable law or regulation, the redemption of
such Optionee's Group A Options shall be delayed until the tenth day after the
later of (i) last date upon which such exercise and sale would result in such
liability or (ii) the last date when any applicable law or regulation would
prohibit or restrict in any manner such exercise or sale.
8. Transferability.
The Options granted under this Plan Agreement shall be
non-transferable by the holder either voluntarily or by operation of law, other
than by will or the laws of descent and distribution, and shall
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be exercisable during the holder's lifetime only by the holder, regardless of
any community property interest therein of the spouse of the holder, or such
spouse's successors in interest. If the spouse of the holder shall have
acquired a community property interest in an Option pursuant to a domestic
relations order as defined under the Code or Title 1 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), the holder, or the holder's
permitted successors in interest, may exercise the Option on behalf of the
spouse of the holder or such spouse's successors in interest.
9. Current Market Price of Common Stock
For purposes of this Plan Agreement, Current Market Price means the
closing price of a share of Common Stock on the trading day immediately
preceding the date of such determination. The closing price shall be the last
reported sales price regular way (or, in case no such reported sale takes place
on such day, the last reported sales price regular way for the most recent day
for which such information is available shall be used), in each case on the
principal national securities exchange or in the Nasdaq National Market System
to which the shares of Common Stock are listed or admitted to trading, or if
not listed or admitted to trading thereon, the average of the closing bid and
asked prices of the Common Stock in the over-the-counter market as reported by
Nasdaq or any comparable system, or if the Common Stock is not listed on Nasdaq
or a comparable system, the average of the closing bid and asked prices on such
day in the domestic over-the-counter market as reported on the NASD Electronic
Bulletin Board, or, if not reported on such bulletin board, in the "pink
sheets" published by the National Quotation Bureau, Incorporated. If at any
time the Common Stock is not listed on any national securities exchange or
quoted in the Nasdaq System or the over-the-counter market or reported on the
NASD Electronic Bulletin Board or in the "pink sheets" published by the
National Quotation Bureau, Incorporated, the Current Market Price on such day
shall be the fair market value thereof reasonably determined in good faith by
the Committee and agreed to by the Optionees (which agreement shall not be
unreasonably withheld) based upon such information and advice as they mutually
consider appropriate (such agreement between the Committee and the Optionees
being referred to herein as "Mutual Agreement"). If the Committee and the
Optionee are unable to so agree within twenty-one (21) days of the date of
determination, the Current Market Price on such day will be the fair market
value thereof determined by an independent, nationally recognized investment
banking firm selected by mutual agreement of the Committee and the Optionees
(an "Agreed Upon Firm").
10. No Right to Continued Employment or Engagement by the Company.
This Plan Agreement is not an employment contract and nothing in this
Plan Agreement shall be deemed to create in any way whatsoever any obligation
on Optionee's part to continue in the employ of the Company, or an affiliate of
the Company or on the Company's part to continue Optionee's employment with the
Company or an affiliate of the Company.
11. Privileges of Stock Ownership
No person entitled to exercise any Option granted under this Plan
Agreement shall have any of the rights or privileges of a stockholder of the
Company in respect of any shares of Common Stock issuable upon exercise of such
Option until certificates representing such shares shall have been issued and
delivered.
12. Adjustment of Exercise Prices and Number of Options.
The Exercise Prices shall be subject to adjustment from time to time
as hereinafter provided.
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(a) Subdivision or Combination of Stock. In case the Company shall at
any time subdivide the outstanding shares of Common Stock into a greater number
of shares, whether through a stock split, stock dividend or otherwise, the
number of shares of Common Stock issuable upon exercise of the Options shall be
proportionately increased and the Exercise Prices in effect immediately prior
to such subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Common Stock shall be combined into a smaller number
of shares, the number of shares of Common Stock issuable upon exercise of the
Options shall be proportionately reduced and the Exercise Prices in effect
immediately prior to such combination shall be proportionately increased. Upon
each adjustment of the Exercise Prices pursuant to this paragraph (a), each
Optionee shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares of Common Stock obtained
by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable upon exercise of
such Option immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, Etc. In case the Company (i) consolidates with or merges into
any other entity and is not the continuing or surviving corporation of such
consolidation or merger, or (ii) permits any other entity to consolidate with
or merge into the Company and the Company is the continuing or surviving
corporation but in connection with such consolidation or merger, the Common
Stock is changed into or exchanged for stock or other securities of any other
corporation or cash or any other assets, or (iii) transfers all or
substantially all of its properties and assets to any other entity, or (iv)
effects a capital reorganization or reclassification of the capital stock of
the Company in such a way that holders of Common Stock shall be entitled to
receive stock, securities, cash or assets with respect to or in exchange for
Common Stock (each of the foregoing events in clauses (i) through (iv) being a
"Fundamental Change"), then in each such case proper provision shall be made so
that, upon the basis and upon the terms and in the manner provided in this
subsection (b), the Optionees, upon the exercise of the Options at any time
after the consummation of such Fundamental Change, shall be entitled to receive
(at the aggregate Exercise Price in effect for all shares of Common Stock
issuable upon such exercise immediately prior to such consummation as adjusted
to the time of such transaction), in lieu of shares of Common Stock issuable
upon such exercise prior to such consummation, the stock and other securities,
cash and assets to which such Optionees would have been entitled upon such
consummation if such Optionees had exercised such Options immediately prior
thereto (subject to adjustments subsequent to such corporate action as nearly
equivalent as possible to the adjustments provided for in this Section 12). In
the case of any Fundamental Change, the Company shall require the successor or
acquiring corporation to assume the obligation to perform each and every
covenant and condition of this Plan Agreement to be performed and observed by
the Company and all liabilities and obligations of the Company hereunder.
(c) Other Equitable Adjustments. If any event occurs as to which the
other provisions of this Section 12 are not strictly applicable (or if strictly
applicable would not fairly protect the rights of the Optionees in accordance
with the basic intent and principles of such provisions) but, in the reasonable
opinion of the Committee, an adjustment should be made to fairly protect the
rights of Optionees in accordance with the basic intent and principles of such
provisions, then the Company shall appoint a firm of independent certified
public accountants (which may be the regular auditors of the Company) of
recognized national standing, which shall give its opinion upon the adjustment,
if any, to be made to protect the Optionees against dilution on a basis
consistent with the basic intent and principles established in the other
provisions of this Section 12. Upon receipt of such opinion, the Company shall
forthwith make the adjustments, if any, described therein, provided such
equitable adjustments under this Section 12(c) would not result in a charge to
the Company's earnings pursuant to applicable financial accounting principles.
C-7
(d) Notice of Adjustment. Upon any adjustment of the Exercise Prices
or of the number of shares issuable upon the exercise of the Options, then and
in each such case the Company shall promptly deliver a notice to each Optionee
of the adjustment and a copy of a certificate of either the Committee or a firm
of independent public accountants selected by the Committee (who may be the
regular accountants employed by the Company), which certificate shall state the
Exercise Prices resulting from such adjustment and the increase or decrease, if
any, in the number of shares issuable at such prices upon the exercise of each
Option, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
(e) Other Notices. In case at any time:
(i) the Company shall declare any cash dividend on its Common
Stock;
(ii) the Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution (other than regular cash dividends) to
the holders of its Common Stock;
(iii) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or
other rights;
(iv) the Company shall authorize the distribution to all holders
of its Common Stock of evidences of its indebtedness or assets (other than cash
dividends or cash distributions payable out of earnings or earned surplus or
dividends payable in Common Stock);
(v) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation or
merger of the Company with another corporation (other than a subsidiary of the
Company in which the Company is the surviving or continuing corporation and no
change occurs in the Company's Common Stock), or sale of all or substantially
all of its assets to, another entity;
(vi) there shall be a voluntary or involuntary dissolution,
liquidation, bankruptcy, assignment for the benefit of creditors, or winding up
of the Company; or
(vii) the Company proposes to take any other action or an event
occurs which would require an adjustment of the Exercise Prices pursuant to
this Section 12;
then, in any one or more of such cases, the Company shall give written notice
to each Optionee who is not then an executive officer or director of the
Company, addressed to each such Optionee at the address of the Optionee shown
on the books of the Company, of (1) the date on which the books of the Company
shall close or a record shall be taken for such dividend, distribution or
subscription rights, or (2) the date (or, if not then known, a reasonable
approximation thereof by the Company) on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
bankruptcy, assignment for the benefit of creditors, winding up or other
action, as the case may be, shall take place. Such notice shall also specify
(or, if not then known, reasonably approximate) the date as of which the
holders of Common Stock or record shall participate in such dividend,
distribution or subscription rights or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, bankruptcy, assignment for the benefit of creditors, winding up or
other action, as the case may be. Such written notice shall be given at least
ten days prior to the action in question and not less than ten days prior to
the record date or the date on which the Company's transfer books are closed in
respect thereto.
C-8
(f) Adjustments below Par Value. Before taking any action which would
cause an adjustment pursuant to this Section 12 to reduce the Exercise Prices
below the then par value (if any) of the shares of Common Stock issuable upon
the exercise of Options, the Company will take any corporate action which may,
in the opinion of its counsel (which may by counsel employed by the Company),
be necessary in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock at the Exercise Prices as so adjusted.
(g) Shares of Common Stock. For the purpose of this Section 12, the
terms "shares of Common Stock" shall mean (i) the class of stock designated as
the Common Stock of the Company at the date of this Agreement, or (ii) any
other class of stock resulting from successive changes or reclassifications of
such shares consisting solely of changes in par value, or from par value to no
par value, or from no par value to par value. In the event that at any time, as
a result of an adjustment made pursuant to this Section 12, the Optionees shall
become entitled to purchase any securities of the Company other than shares of
Common Stock, thereafter the number of such other shares so issuable upon
exercise of each Option and the Exercise Prices with respect to such shares
shall be subject to adjustment from time to time in a manner on the terms as
nearly equivalent as practicable to the provisions with respect to the Options
contained in this Section 12, and the provisions of this Section 12 shall apply
on like terms to any such other securities.
13. Amendment of Plan Agreement
(a) This Plan Agreement may not be revised or amended without the
written consent of the Company and each Optionee who holds an outstanding
Option subject to such proposed revision or amendment, provided further, that
any such amendment or revision shall also be subject to any applicable
stockholder approval requirements. Notwithstanding the foregoing, this Plan
Agreement may not be amended more than once every six months, other than to
comport with changes in the Code, ERISA or the rules thereunder.
(b) Except as provided in Section 12 hereof, no modification may be
made to the Options except in compliance with Rule 16b-3.
14. Section 16 of the Exchange Act
(a) It is the intent of the Company that this Plan Agreement comply in
all respects with Rule 16b-3 in connection with the Options granted hereunder.
Accordingly if any provision of this Plan Agreement does not comply with Rule
16b-3 as then applicable to Optionees, then, with the written consent of
Optionees, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements with respect to the Optionees.
(b) Unless an Optionee could otherwise transfer an Option or the
shares of Common Stock issued upon exercise of an Option granted under this
Plan Agreement without incurring liability under Section 16(b) of the Exchange
Act, at least six months shall elapse from the Grant Date to the date of
disposition of any Common Stock issuable upon exercise of any Option hereunder.
15. Notices.
Any notice that the Company is required or may desire to give to
Optionees hereunder shall be in writing and may be served by delivering it to
Optionees, or by sending it to Optionees by certified mail, return receipt
requested (effective five days after mailing) or overnight delivery of the same
by
C-9
delivery service capable of providing verified receipt (effective the next
business day) or facsimile (effective twenty-four hours after receipt is
confirmed by person or machine), at the addresses set forth below, or such
substitute addresses as Optionees may from time to time designate by notice to
the Company. Any notice that the Optionees are required or may desire to serve
upon the Company hereunder shall be in writing and may be served by delivering
it personally or by sending it certified mail, return receipt requested or
overnight delivery, or facsimile (with receipt confirmed by person or machine)
to the address set forth below, or such substitute address as the Company may
from time to time designate by notice to Optionees. Such notices by Employee
shall be effective at the same times as specified in this Section 15 for
notices by the Company.
Xxxxxx X. Xxxxxx: Xxxxxx X. Xxxxxx
00000 Xxxxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
Xxxxx Xxxxxxxx Little: Xxxxx Xxxxxxxx Little
00000 Xxxxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
The Company: OVERSEAS FILMGROUP, INC.
0000 Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 9069
Attention: Corporate Secretary
(fax) (000) 000-0000
17. Governing Law; Assigns.
This Plan Agreement and the Options issued hereunder shall be deemed
to be a contract made under the laws of Delaware and for all purposes shall be
governed by and construed in accordance with the internal laws of such state,
regardless of the law of choice of law of that or any other jurisdiction. This
Plan Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Plan Agreement to be
executed as of the date first set forth above.
OVERSEAS FILMGROUP, INC.
a Delaware corporation
By:
-----------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
--------------------------------
XXXXXX X. XXXXXX
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Social Security No.:
------------
--------------------------------
XXXXX XXXXXXXX LITTLE
Social Security No.:
------------
C-11
EXHIBIT A
EXERCISE NOTICE
OVERSEAS FILMGROUP, INC,
0000 Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
Re: Exercise of Stock Option
Ladies and Gentlemen:
Pursuant to Section 4 of that certain OVERSEAS FILMGROUP, INC. 1996
SPECIAL STOCK OPTION PLAN AND AGREEMENT (the "Plan Agreement") between the
undersigned and OVERSEAS FILMGROUP, INC., a Delaware corporation (the
"Company"), the undersigned hereby elects to exercise options granted thereby
to purchase shares of Common Stock of the Company at a price of $ per share.
Accompanying this Notice is the payment in full for such shares in the
following manner permitted by Section 4 of the Plan Agreement: (check one and
fill in blanks)
CHECK HERE
[ ] (i) $___________ in cash or by certified check or cashier's check payable
to the order of the Company;
[ ] (ii) $___________ by cancellation of indebtedness (including principal and
accrued interest) in the amount of $___________ owed by the Company to the
undersigned (which indebtedness may include the Merger Note (as defined in
Section 4(a)(ii) of the Plan Agreement));
[ ] (iii) $___________ by delivery of _________ shares of Common Stock of the
Company, which have an aggregate Current Market Price determined in accordance
with Section 9 of the Plan Agreement of $____________which shares are
beneficially owned by the undersigned and, if applicable, by ____________ and
have been so beneficially owned for a least six (6) months prior to the date
hereof;
[ ] (iv) $___________ through the special sale and remittance procedure
pursuant to which, attached hereto are the following: (i) irrevocable written
instructions to the Company-designated brokerage firm in the form supplied to
the undersigned pursuant to the Plan Agreement and (ii) irrevocable written
instructions to the Company to deliver the shares underlying the Options being
exercised herewith to deliver such shares to the Company-designated brokerage
firm in the form supplied to the undersigned pursuant to the Plan Agreement;
[ ] (v) $___________ through a combination of the payment methods set forth
above. (Check each payment method being used and indicate the amount of the
aggregate exercise price being paid pursuant to each method.
[ ] (vi) $___________ in the manner described in the addendum to this Exercise
Notice, which manner has been approved by the Committee described in Section
1(b) of the Plan Agreement.
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Dated:
----------------------- ------------------------------
Signature
------------------------------
Print Name
------------------------------
Please print here the exact
name desired to be on the
stock certificate and the
records of the Company.
C-13
