AGREEMENT
AGREEMENT made this 6th day of March, 1996, by and between
Communications and Entertainment Corp., a Nevada corporation having a principal
place of business at 0000 Xxxxxx xx xxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000
(the "Company"), and Xxx X. Xxxxx, having a principal place of business at 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Xxxxx").
WHEREAS, Xxxxx executed an agreement with the Company on October 1,
1995 (the "1995 Agreement"), pursuant to which Xxxxx agreed to serve as one of
three co-chairmen in the Office of the Chairman of the Company, for a three year
period commencing on October 1, 1995 and terminating on October 1, 1998; and
WHEREAS, the Company and Xxxxx have agreed to terminate the 1995
Agreement and, in lieu thereof, to enter into this management agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. TERM. The term of this management agreement (the "Agreement") shall
commence as of April 1, 1996 (the "Effective Date") and shall continue in effect
until October 1, 1998, unless otherwise earlier terminated as provided herein
(the "Term").
2. SERVICES. During the Term, Xxxxx agrees to serve the Company in the
capacity of co-chairman in the Office of the Chairman of the Company. Xxxxx
agrees to provide such services, and devote such time, as may be reasonably
required by the Board of Directors of the Company to perform his services of Co-
Chairman of the Company in connection with the performance of the following
duties, or such other duties and requirements as may be reasonably promulgated
by the Board of Directors of the Company from time to time:
(a) Working to create and develop a strategic plan to define and
implement the Company's objectives and, in connection therewith, to create
viable action, business and financial plans which will provide the Company with
a sound program to achieve its objectives;
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(b) Increasing the Company's film libraries through all manner of
acquisition including the purchase of existing libraries;
(c) Developing ancillary businesses to complement the Company's film
distribution business while achieving maximum sales of the Company's existing
library; and
(d) Performing such other duties as may be reasonably requested by
the Board of Directors of the Company from time to time, including, but not
limited to, services on behalf of any subsidiary or affiliate of the Company.
Anything to the contrary contained or implied herein notwithstanding,
Xxxxx shall be free to engage in any other business activities which are not in
direct conflict or competition with the Company's principal business or
activities.
3. LOCATION. Xxxxx shall perform his duties hereunder primarily in New
York City; provided, however, that Xxxxx shall be available for travel
throughout the United States and the rest of the world at such times as such
travel shall appear in the reasonable judgment of Xxxxx and the Co-Chairmen of
the Company to be in the best interests of the Company. Any such travel shall be
for the benefit of the Company and at the Company's sole cost and expense.
Although Xxxxx shall be permitted to travel first class on all air travel
required in connection with the performance of his duties for the Company, Xxxxx
will make every reasonable effort to fly business class whenever practical.
4. CONFIDENTIALITY. Xxxxx acknowledges that the services to be
rendered by him under this Agreement are special and unique, and that by reason
of such services he will acquire confidential information and trade secrets
relating to the Company. Xxxxx agrees that all information relating to the
business of the Company which is of a secret or confidential nature, including
the Company's data bases, proprietary programs, contractual terms, offers,
financial information, administrative procedures, negotiations with third
parties and strategic, financial and business plans, is and shall remain the
sole property of the Company, and that Xxxxx shall not, either during the Term
of this Agreement or thereafter, disclose or use for his benefit or for the
benefit of third parties, any such information so long as it is secret and
non-public or otherwise not in the public domain.
5. COMPENSATION. In consideration of the services to be rendered by
Xxxxx hereunder, the Company shall pay to Xxxxx the following management fees,
incentive management fees, and additional compensation, and Xxxxx agrees to
accept the same as full compensation for his services:
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5.1. MANAGEMENT FEE. Subject to the limitations, terms and conditions
set forth on Exhibit A hereto, the Company shall pay the following management
fee to Xxxxx:
(a) During the period between the date of this Agreement and
September 30, 1996, the sum of Fifteen Thousand ($15,000) Dollars per month,
payable monthly in advance on the first day of each month;
(b) During the period between October 1, 1996 and September 30,
1997, the sum of Twenty Thousand ($20,000) Dollars per month, payable monthly in
advance on the first day of each month; and
(c) During the period between October 1, 1997 and September 30,
1998, the sum of Twenty-Five Thousand ($25,000) Dollars per month, payable in
advance on the first day of each month.
5.2 INCENTIVE MANAGEMENT FEE. With respect to each twelve month period
during the Term of this Agreement (counting the period between October 1, 1995
and September 30, 1996 as the first twelve month period during the Term), an
incentive bonus plan shall be established and paid as follows: In the event the
annual budget and income projections as created by the Board of Directors and
the Office of the Chairman is met for a particular twelve month period, then
Xxxxx shall be entitled to receive one-third of two (2%) percent of the budgeted
gross income for such twelve month period, and an additional one-third of five
(5%) percent of the gross income, if any, in excess of the budgeted gross
income. Such incentive management fee, if any, shall be paid to Xxxxx within
thirty days after the end of the particular twelve month period for which such
incentive management fee was earned.
5.3 ADDITIONAL COMPENSATION. In addition to any warrants or options
which may have been granted to Xxxxx in his individual capacity as a member of
the Board of Directors of the Company, the Company hereby agrees to grant to
Xxxxx 1,200,000 pre-split (or 200,000 post-split) options to purchase common
stock of the Company, par value $.01 per share, at an exercise price of $.3125
per share (on a pre-split basis), or $1.875 per share (on a post-split basis),
exercisable for a five-year period commencing on March 6, 1996 and terminating
on March 5, 2001, such options to vest in full immediately and not to be subject
to dilution of any kind.
6. REIMBURSEMENT OF EXPENSES. Xxxxx shall be reimbursed for all
expenses reasonably incurred by him in connection with the performance of his
duties on behalf of the Company, upon
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presentation to the Company of appropriate documentation and receipts therefor.
The Company may, from time to time, advance travel and related expenses to Xxxxx
in connection with the performance of his duties hereunder.
7. BENEFITS. Xxxxx shall be entitled to participate in any medical and
dental insurance, hospitalization, sick leave, disability insurance, and 401(k)
tax savings benefits, upon the same terms and subject to the same
qualifications, as those presently available to the Company's other senior
officers.
8. VACATION. Xxxxx shall be entitled to four weeks of paid vacation
each year during the Term of this Agreement, to be taken at such time or times
as shall be mutually agreeable to Xxxxx and the Company.
9. EARLIER TERMINATION. Notwithstanding the provisions of Paragraph 1
hereof, the Term may be earlier terminated by the Company "for cause" upon the
occurrence of any of the following ("Earlier Termination"): (a) Xxxxx'x death,
(b) Xxxxx'x inability by reason of physical or mental disability to continue to
substantially perform his duties for a period of 120 consecutive days or for an
aggregate of 180 days in any consecutive twelve month period, (c) Xxxxx'x
conviction for a criminal act involving fraud, dishonesty or moral turpitude,
(d) Xxxxx'x commission of an act of embezzlement or misappropriation of funds or
property of the Company, (e) chronic alcoholism or drug use after refusing
treatment, (f) habitual absenteeism without medical documentation, (g) engaging
in conduct that is detrimental to the business or reputation of the Company, its
subsidiaries and affiliates after having been provided written notice from the
Company instructing Xxxxx to cease such conduct, and/or (h) in the event of a
material breach of this Agreement by Xxxxx which is not cured within ten (10)
days following the Company's written notice to Xxxxx of such material breach. In
the event of Earlier Termination pursuant to subparagraph (a) or (b) of this
Paragraph 9, Xxxxx or his estate shall be entitled to receive continued
compensation hereunder for the greater of twelve months following the date of
such Earlier Termination or the balance of the Term. In all other instances of
Earlier Termination under this Paragraph 9, Xxxxx shall be entitled to receive
continued compensation hereunder for a period of ninety (90) days following the
date of such Earlier Termination.
10. STATUS. At all times during the Term of this Agreement the
relationship between Xxxxx and the Company shall be one of independent
contractor and not one of employer and employee, provided, however, Xxxxx shall
have authority to bind the Company pursuant to authority granted to Xxxxx by the
terms of this Agreement or as otherwise granted to him by the Board of Directors
of the Company from time to time.
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11. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be entirely performed in such State.
12. SEVERABILITY. In the event that any term or condition of this
Agreement shall for any reason be held by a court of competent jurisdiction to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not effect any other term or condition of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable term or condition had never been contained herein.
13. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties with respect to the subject matter hereof, and
supersedes all previous agreements, arrangements and understandings between the
parties including, but not limited to, the 1995 Agreement which shall be deemed
terminated in all respects upon the Effective Date. Any modification or
amendment to this Agreement will be effective only if in writing and signed by
the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed by each of the
parties as of the date and year first above written.
Communications and Entertainment Corp.
By:
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Xxxxxxx X. Xxxxxxxxx, CEO
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Xxx X. Xxxxx
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