LIVE FILM AND MEDIAWORKS INC.
00000 XXXXXXX XXX
XXXXX 000
XXX XXXX, XXXXXXXXXX 00000
DATE: As of August 15, 1996
Xx. Xxxxxx Xxxxxxx
c/o LIVE Film and Mediaworks Inc.
00000 Xxxxxxx Xxx
Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Re: Employment Agreement
Dear Xx. Xxxxxxx:
When executed by you ("Employee") and by a duly authorized
representative of LIVE Film and Mediaworks Inc., a Delaware
corporation ("Company"), this letter will set forth the terms and
conditions of Employee's employment.
1. Services
1.1 Employment. Company employs Employee during the Term (as
hereinafter defined) to serve as Executive Vice President/Sales and
Marketing of Company, and to render such other services
("Services") as Company or corporations controlled by, under common
control with or controlling, directly or indirectly, Company
("Company's Affiliates"), may from time to time reasonably request
which are consistent with the duties Employee is to perform and
Employee's stature and experience. Employee shall comply with all
of the reasonable and customary employment policies of Company and
its Affiliates. The Services shall be generally performed at the
principal offices of Company, currently in Van Nuys, California.
In addition, the Services may be performed by Employee from time to
time on a temporary travel basis at such other locations as Company
shall reasonably request consistent with its reasonable business
needs. Employee agrees to perform such Services in a competent and
professional manner, consistent with the skills to be possessed by
a senior executive officer in Company's business.
1.2. Duties; Reporting Requirements. Among the duties that
Employee shall perform in connection with the Services is that
Employee shall do and perform all services, acts or things reasonably
necessary or advisable to manage and conduct the domestic
(United States and Canada) sales and marketing business of Company
(other than sales and marketing of television rights) and all of
Company's employees in such areas of Company's business shall report
to Employee or his designates. The above statement of Employee's
duties shall not be deemed exclusive, and Employee's duties hereunder
shall be those which are identified by Company from time to time,
as modified by Company from time to time. In performing his duties
hereunder, Employee shall report to the Chief Executive Officer of
Company or his successor(s).
1.3 Ownership of Properties. Company, as employer, shall
own, and Employee hereby transfers and assigns to Company, all
rights in and to any material and/or ideas written, suggested or
submitted by Employee during the Term and all other results and
proceeds of the Services ("Properties"). Company and its licensees
and assigns shall have the right to adapt, change, revise, delete
from, add to and/or rearrange the Properties or any part thereof
written or submitted by Employee and to combine the same with other
works to any extent, and to change or substitute the title thereof
and in this connection Employee hereby waives any so-called "moral
rights" of authors. Employee agrees to execute and deliver to
Company such assignments or other instruments as Company may
require from time to time to evidence its ownership of the results
and proceeds of Employee's services; provided, however, that
nothing in this Section 1.3 shall be deemed in any manner to
restrict or qualify Employee's ownership or right to exploit
Employee's personal memoirs.
1.4 Term/Exclusivity
1.4.1 The Term of this Agreement shall commence on
the date hereof and shall end on December 31, 1999 unless extended
or sooner terminated in accordance with the provisions of this
Agreement (the "Term").
1.4.2 The Services shall be rendered on a full time
basis during normal working hours and all services of Employee
shall be exclusive to Company; provided, however, that Employee may
engage in other business activities with Company's prior written
consent which consent shall not be unreasonably withheld provided
that such other business activities shall not constitute a
Competitive Business (as defined in Section 1.4.3 hereof), and
shall not adversely affect the performance of Employee's Services
hereunder. Employee acknowledges that Employee's performances and
services hereunder are of a special, unique, unusual, extraordinary
and intellectual character which gives them peculiar value, the
loss of which cannot be reasonably or adequately compensated in an
action at law for damages and that a breach by Employee of the
terms hereof (including without limitation this Section 1.4 and
Section 1.5) will cause Company irreparable injury. Employee agrees
that Company is entitled to injunctive and other equitable relief
to prevent a breach or threatened breach of this Agreement, which
shall be in addition to any other rights or remedies to which Company
may be entitled.
1.4.3 During the term of this Agreement and of
Employee's employment by Company (the "Restricted Period"),
Employee shall not, directly or indirectly, (i) engage in any
business for his own account which is competitive with the
businesses of Company or Company's Affiliates (collectively,
"Competitive Business") so long as Company or Company's Affiliates
(as the case may be) continue to engage in such business; (ii)
enter the employ of, or render any services to, any person engaged
in a Competitive Business; (iii) become interested in a Competitive
Business in any capacity, including, without limitation, as an
individual, partner, shareholder, officer, director, principal,
agent, trustee or consultant; or (iv) induce any customer or
supplier of Company or Company's Affiliates to terminate its
relationship with Company or Company's Affiliates (as the case may
be). Notwithstanding anything to the contrary, Employee may
acquire and/or retain, solely as an investment, and take customary
actions to maintain and preserve Employee's ownership of:
A. securities of any corporation which are
registered under Sections 12(b) or 12(g) of the Securities Exchange
Act of 1934, as amended, and which are publicly traded, as long as
Employee is not part of any control group of such corporation; and
B. any securities of a partnership, trust,
corporation or other person so long as Employee remains a passive
investor in that entity and does not become part of any control
group thereof (except in a passive capacity) and so long as such
entity is not, directly or indirectly, in competition with Company
or its Affiliates.
1.5 Confidentiality. Employee acknowledges that his Services
will, throughout the Term, bring Employee into close contact with
many confidential affairs of Company and its Affiliates, including
information about costs, profits, markets, sales, products, key
personnel, pricing policies, operational methods, technical
processes and other business affairs and methods and other
information not readily available to the public, and plans for
future development. Employee further acknowledges that the
businesses of Company and its Affiliates are international in
scope, that their products are marketed throughout the world, that
Company and its Affiliates compete in nearly all of their business
activities with other organizations which are or could be located
in nearly any part of the world and that the nature of Employee's
Services, position and expertise are such that he is capable of
competing with Company and its Affiliates from nearly any location
in the world. In recognition of the foregoing, Employee covenants
and agrees:
1.5.1 that Employee will keep secret all material
confidential matters of Company and its Affiliates which are not
otherwise in the public domain and will not intentionally disclose
them to anyone outside of Company or its Affiliates, either during
or after the Term, except with Company's written consent and except
for such disclosure as is necessary in the performance of
Employee's duties during the Term; and
1.5.2 that Employee will deliver promptly to Company
on termination of the Term or at any other time Company may so
request, at Company's expense, all confidential memoranda, notes,
records, reports and other documents (and all copies thereof)
relating to Company's and its Affiliates' business, which Employee
obtained while employed by, or otherwise serving or acting on
behalf of, Company, or which Employee may then possess or have
under his control.
1.6 Indemnification. Employee shall be entitled throughout
the Term to the benefit of the indemnification provisions contained
on the date hereof in the Bylaws of Company notwithstanding any
future changes therein, to the extent permitted by applicable law
at the time of the assertion of any liability against Employee, and
to the most favorable indemnification provisions or agreements
available to any other senior executive of Company.
2. Compensation
As compensation and consideration for all Services provided by
Employee during the Term pursuant to this Agreement, Company agrees
to pay to Employee the compensation set forth below.
2.1 Fixed Annual Compensation. Fixed Annual Compensation of
the following amounts during the following periods:
January 1, 1996 through December 31, 1996 - $300,000
January 1, 1997 through December 31, 1997 - $320,000
January 1, 1998 through December 31, 1998 - $340,000
January 1, 1999 through December 31, 1999 - $360,000
Employee's Fixed Annual Compensation shall be payable in equal
installments on Company's regular pay dates following commencement
of the Term.
2.2 Theatrical Performance Bonus. Employee will be eligible
to receive a Theatrical Performance Bonus based on the performance
determined on a film by film basis of theatrical films released by
the Company. All films released during the term of this Agreement
will qualify. The amount of the percentage of the bonus will be
determined based on net theatrical film rental as a percentage of
theatrical distribution expenses per the following schedule:
Net Rental Percent of Theatrical
Distribution Expenses Bonus Amount
0% - 60% 0
61% - 70% 6,000
71% - 80% 9,000
81% - 90% 12,000
91% + 16,000
Such distribution expenses are defined as those that are normally
customary per Company's current policy. Any disagreement regarding
what represents a distribution expense will be decided by the
Company's Chief Executive Officer at his/her sole and absolute
discretion.
2.3 Incentive Compensation. Employee shall be eligible to
participate in Company's discretionary Corporate Bonus Program, as
determined, modified and published by Company from time to time
("Incentive Compensation").
2.4 LIVE Entertainment Inc. Stock Options. Employee hereby
confirms that Company has granted to Employee options to acquire
15,000 shares of Company's common stock at the closing price of
Company's Nasdaq Small Cap Market on March 6, 1995 ("Options"),
with such Options to vest as follows:
(i) 5,700 Options vested on Xxxxx 0, 0000
(xx) 5,700 Options will vest on Xxxxx 0, 0000
(xxx) 3,600 Options will vest on March 6, 1998
Employee hereby also confirms that Company has granted to Employee
options to acquire 8,000 shares of Company's common stock at the
closing price of Company's Nasdaq Small Cap Market on February 7,
1996 ("2/96 Options"), with such 2/96 Options to vest as follows:
(i) 2,667 Options will vest on February 7, 1997
(ii) 2,667 Options will vest on February 7, 1998
(iii) 2,666 Options will vest on February 7, 1999
In addition, upon (a) approval by the Stock Option Committee of the
Board of Directors of Company, (b) the occurrence of the Effective
Date, and (c) Employee's execution of the stock option agreement
referred to hereinafter in this Section 2.3, as a special
inducement to Employee, Company will grant to Employee options to
acquire 21,000 shares of Company's common stock on the Nasdaq
National Market at the closing price of the Market on September 12,
1996 ("9/96 Options"), with such 9/96 Options to vest as follows:
(i) 7,000 Options will vest on September 12, 1997
(ii) 7,000 Options will vest on September 12, 1998
(iii) 7,000 Options will vest on September 12, 1999
The Options will be subject to such additional terms and conditions
as may be set forth in LIVE's 1988 Stock Option and Stock
Appreciation Rights Plan, as amended (the "Option Plan"), as well
as the form of stock option agreement as may be adopted by LIVE's
Board of Directors from time to time pursuant to the Plan. Such
additional terms and conditions shall be implemented in a non-
discriminatory manner with respect to Employee as compared to other
employee holders of options under the Plan.
2.5 Special Inducements. As a special inducement to Employee
to enter into this Agreement, during the Term, Company agrees as
follows:
2.5.1 During each year of the Term, Employee shall be
entitled to a vacation of three (3) weeks, without deduction of
salary. Such vacations shall be taken at such time or times during
the applicable year as may be determined by Employee subject to
Company's business needs. Employee shall be entitled to take any
unused portion of his paid vacation in any subsequent year of the
Term, subject to the Company's business needs and policy and
consistent with applicable laws ("Vacation Benefits").
Notwithstanding the foregoing, Employee shall at no time have more
than six (6) weeks of accrued vacation, and at such time as six (6)
weeks of vacation are accrued by Employee, no additional vacation
will accrue unless and until vacation time is taken and the amount
of Employee's accrued vacation time becomes less than six (6)
weeks. Any additional vacation period shall be determined by
Company consistent with the general customs and practices of the
Company applicable to its executives.
2.6 Additional Benefits. Without limiting any other
provision hereof, Employee shall be entitled to participate in any
profit-sharing, pension, health, vacation, insurance or other
plans, benefits or policies available to all executives of Company
of similar stature and seniority on the terms generally applicable
to such executives and will be entitled to reimbursement of his
reasonable and customary business expenses incurred on behalf of
Company or Company's Affiliates ("Additional Benefits"). Employee
acknowledges that such benefits can change from time to time without
notice to Employee, and Employee shall retain no residual rights in
any superseded benefit plan.
3. Termination
3.1 Termination by Company.
3.1.1 Employee Material Breach. Company shall have
the right, at its election, to terminate the Term, by written
notice to Employee to that effect, only for "good cause" defined
for this purpose to mean (i) material and repeated instances of
misconduct or habitual inability to perform the Services, or
material violation of Company's published policies or procedures,
(ii) a single act so grievous as to constitute the equivalent of
such repeated instances (including, without limitation, theft,
misappropriation of Company's assets, or sexual harassment), (iii)
knowingly unauthorized disclosure of confidential information
related to customers, employees or general business strategies, or
(iv) a material breach of any covenant, condition, agreement or
term of this Agreement ("Employee's Material Breach") and only if
Company shall have given written notice to Employee specifying the
claimed cause or breach and, provided such breach is curable,
Employee fails to correct the claimed breach or fails to alter the
objectional pattern of conduct specified in the applicable written
notice as soon as practical thereafter but no later than thirty
(30) days after receipt of the applicable notice or such longer
time as may be reasonably required by the nature of the claimed
breach. However, in no event shall a material breach of the
provisions of Section 1.3, 1.5 or 3.1.1 (ii) or (iii) be subject to
cure.
3.1.2 Effect of Termination by Company. Should the
Term be terminated by Company by reason of Employee's Material
Breach, Employee shall have no right to any further Fixed Annual
Compensation from and after termination, or to any Incentive
Compensation, Automobile Benefits, or Additional Benefits accruing
for the fiscal year of termination or thereafter.
3.2 Termination by Employee.
3.2.1 Company's Material Breach. Employee shall have
the right, at his election, to terminate the Term by written notice
to Company to that effect if Company shall have failed to
substantially perform a material condition or covenant of this Agreement,
or if Company shall terminate Employee's employment or materially
reduce Employee's job duties or responsibilities in the absence of
Employee's Material Breach ("Company's Material Breach"); provided
that, if such breach is curable, termination for Company's Material
Breach will not be effective until Employee shall have given
written notice specifying the claimed breach and Company fails to
correct the claimed breach within thirty (30) days after the receipt
of the applicable notice or such longer time as may be reasonably
required by the nature of the claimed breach (but within ten (10)
days, if the failure to perform is a failure to pay monies when
due under the terms of this Agreement).
3.2.2 Effect of Termination by Employee. Subject to
the provisions of Section 3.4 below, should Employee terminate the
Term due to Company's Material Breach, Company shall pay to
Employee or provide Employee with:
(i) Employee's Fixed Annual Compensation for the
remainder of the Term, paid in equal installments
on Company's regular pay dates during the Term, and
(ii) Health insurance for the remainder of the Term.
In addition, all Options shall vest on the date of termination.
Employee shall also receive such Incentive Compensation and
Vacation Benefits accrued through the date of termination. All
other benefits shall cease on the date of termination of
employment.
Except with regard to a termination of the Term by reason
of Employee's Death or Disability (as both terms are defined in
Section 3.3), should Employee terminate the Term other than for
Company's Material Breach, such termination shall be treated as a
termination by Company for Employee's Material Breach.
3.3 Employee's Death or Disability.
3.3.1 Death. The Term shall immediately terminate
upon Employee's death as certified in accordance with the
provisions of California law ("Death").
3.3.2 Disability. In the event that during the Term
Employee becomes unable to perform the Services as a result of his
permanent or temporary, total or partial, physical or mental
disability (as defined in Company's disability insurance policy, if
any) ("Disability"):
3.3.2.1 the Fixed Annual Compensation otherwise
payable during the Disability Period (as herein defined) shall
nevertheless be payable on the terms set forth herein to Employee
as a disability benefit ("Disability Benefit");
3.3.2.2 any disability insurance proceeds actually
received by Employee during the Disability Period with respect to
such Disability shall reduce on a dollar-for-dollar basis the
Disability Benefit otherwise payable by Company during the Disability
Period pursuant to this Section 3; and
3.3.2.3 Company shall not have the right
(notwithstanding any other provision of this Agreement to the
contrary) to terminate the Term due to such Disability prior to the
expiration of the Disability Period.
As used herein, the term "Disability Period" shall have such
meaning as shall be defined in Company's disability insurance
policy in effect as of the date hereof, and if no such policy is in
effect it shall mean the period commencing on the first day of the
calendar month following the month during which such Disability
occurs and ending on the first to occur of the following: (i) the
expiration of the Term; (ii) if the Disability is continuous
throughout the six (6) consecutive months following the month
during which the Disability occurs, then the last day of such sixth
consecutive calendar month; and (iii) if the Disability is
intermittent and shall exist throughout each of any twelve (12)
calendar months following the month during which the Disability
occurs, then the last day of such twelfth calendar month. Company
shall have the right to terminate the Term at the expiration of the
Disability Period if and only if the Disability of Employee is then
continuing.
3.3.3 Effect of Death or Disability.
(a) Fixed Annual Compensation and Additional
Benefits: Should the Term be terminated in accordance with the
provisions of Sections 3.3.1 or 3.3.2 by reason of Employee's Death
or Disability, Employee or his estate (as the case may be) shall
have no right to any further Fixed Annual Compensation, any
Additional Benefits or any other sums or benefits accruing to
Employee hereunder; provided, however, that the sums identified in
Section 3.3.2 hereof shall be paid to Employee on the terms set
forth therein.
(b) Incentive Compensation and Options: Should the
Term be terminated in accordance with the provisions of Sections
3.3.1 or 3.3.2 by reason of Employee's Death or Disability,
Employee or his estate (as the case may be) shall be entitled to
receive such Incentive Compensation that shall have accrued during
that portion of the fiscal year prior to such Death or Disability.
All Options shall vest on the date of termination by reason of
Employee's Death or Disability, and Employee's estate shall be
entitled to exercise all Options which have vested on or prior to
the date of termination by reason of Employee's Death.
3.4 Mitigation. Employee agrees that if Employee furnishes
his services for other engagements or employment after termination
hereunder, the total compensation actually earned by Employee
together with any welfare or other benefits earned by Employee
shall reduce any amounts and benefits which Company would
otherwise be required to pay or provide to Employee. Employee
agrees that he shall give written notice to Company (promptly
after accepting employment or furnishing his services after
termination of his employment with Company) of any amounts
earned (or to be earned) by Employee and any benefits provided
(or to be provided) to Employee pursuant to his new employment
arrangement.
4. General
4.1 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 any
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 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.
4.2 Waiver/Estoppel. Either 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 either party may be
entitled but only by an instrument in writing signed by the party
to be charged. No estoppel may be raised against either party
except to the extent the other party relies on an instrument in
writing, signed by the party to be charged, specifically reciting
that the other party 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.
4.3 Notices. Any notice which Company is required or may
desire to give to Employee hereunder shall be in writing and may be
served by delivering it personally to Employee, or by sending it to
Employee by certified mail, return receipt requested, or by
overnight courier service, at the address set forth on page 1
hereof, or such substitute address as Employee may from time to
time designate by notice to Company. Any notice which Employee is
required or may desire to serve upon Company hereunder shall be
served in writing and may be served by delivering it personally
or by sending it by certified mail, return receipt requested,
or by overnight courier service, to the address set forth on
page 1 hereof, attention of the Chief Executive Officer, or
such other substitute address as Company may from time to time
designate by notice to Employee.
4.4 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.
4.5 Captions. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
4.6 No Joint Venture. Nothing herein contained shall
constitute a partnership between or joint venture by the parties
hereto or appoint either party the agent of the other party.
Neither party shall hold itself out contrary to the terms of this
Section and, except as otherwise specifically provided herein,
neither party shall become liable for the representation, act or
omission of the other party. This Agreement is not for the benefit
of any third party who is not referred to herein and shall not be
deemed to give any right or remedy to any such third party.
4.7 Modification/Entire Agreement. This Agreement may not be
altered, modified or amended except by an instrument in writing
signed by both of the parties hereto. No person, whether or not an
officer, agent, employee or representative of either 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 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.
5. Resolution of Disputes by Binding Arbitration
5.1 Employee and the Company each acknowledge and agree that,
any controversy or claim arising out of or relating to this
Employment Agreement shall be settled by final and binding
arbitration in accordance with the National Rules for the
Resolution of Employment Disputes of The American Arbitration
Association ("AAA") to the extent that such Rules do not
conflict with any provisions of this Employment Agreement. Any
arbitration proceeding hereunder must be instituted within one year
after the controversy of claim arose. Failure to institute an
arbitration proceeding within such period shall constitute an
absolute bar to the institution of any proceedings respecting such
controversy or claim, and a waiver thereof. The arbitrator shall
interpret the Employment Agreement in accordance with the laws of
California. Any award, order of judgment pursuant to such
arbitration shall be deemed final and binding and may be entered
and enforced in any state or federal court of competent
jurisdiction. Each party agrees to submit to the jurisdiction of
any such court for purposes of the enforcement of any such award,
order of judgment. All costs of the arbitration shall borne
equally by the parties.
Please confirm your agreement to the foregoing by signing
below where indicated.
Dated as of August 15, 1996 Very truly yours,
LIVE FILM AND MEDIAWORKS INC.
a Delaware corporation
By:________________________________
Xxxxx X. Xxxxxxx
Chief Executive Officer
and Chairman
AGREED AND ACCEPTED
this ____ day of September, 1996
_____________________________________
XXXXXX XXXXXXX
