EXHIBIT 10.3
FORM OF
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of ______ __, 2003, between Hollywood
Software, Inc., a corporation organized under the laws of the State of
California (the "Company"), ___________ ("Executive"), and Access Integrated
Technologies, Inc. , a Delaware corporation ("AccessIT").
WHEREAS, Executive desires to provide services to the Company and the
Company desires to retain the services of Executive;
WHEREAS, the Company is a wholly-owned subsidiary of AccessIT; and
WHEREAS, the Company and Executive desire to formalize the terms and
conditions of Executive's employment with the Company.
NOW, THEREFORE, the Company and Executive hereby agree as follows:
1. Employment.
1.1. General. The Company hereby employs Executive in the
capacity of [XXXXX: President/Chief Operating Officer] [XXX: Chief Technology
Officer] of the Company or in such other executive position as may be mutually
agreed upon by Executive and the Company. Executive hereby accepts such
employment, upon the terms and subject to the conditions herein contained.
1.2. Duties. During the Executive's employment with the
Company, Executive will report directly to the Company's Chief Executive Officer
("CEO") or such other executive officer as the CEO shall designate. Executive
will be responsible for those duties consistent with Executive's position as may
from time to time be assigned to or requested of Executive by the CEO or the
Board of Directors of the Company (the "Board"). Executive shall perform such
responsibilities faithfully and effectively. Executive shall conduct all of his
activities in a manner so as to maintain and promote the business and reputation
of the Company.
1.3. Certifications. Whenever the Chief Executive Officer
of the Company or AccessIT is required by law, rule or regulation or requested
by any governmental authority or by the Company's or AccessIT's auditors to
provide certifications with respect to the Company's or AccessIT's financial
statements or filings with the Securities and Exchange Commission or any other
governmental authority, Executive shall sign such certifications as may be
reasonably requested by the Chief Executive Officer of AccessIT or the Company,
with such exceptions as Executive deems necessary to make such certifications
accurate and not misleading; provided, however, that Executive's failure or
refusal to sign such certifications shall not be deemed a breach of his
obligations under this Agreement and shall not constitute "Cause" unless such
failure is unreasonable in the circumstances.
1.4. Full-Time Position. Executive, during his employment
with the Company, will devote all of his business time, attention and skills to
the business and affairs of the Company; provided, however, that Executive shall
be entitled to provide time and attention to personal and family business
matters so long as such activities (i) do not violate the terms of any
non-competition covenant between the Executive and the Company and/or Access IT,
and (ii) do not interfere with the performance of Executive's responsibilities
as an executive of the Company. In addition, nothing in this Agreement shall
prevent Executive, upon approval of the Board of Directors of the Company, from
serving as a director, trustee or advisor of other corporations or businesses
which are not in competition with the business of the Company, AccessIT, or
Access Digital Media, Inc.
2. Compensation and Benefits.
2.1. Base Salary. The Company shall pay to Executive as
full compensation for any and all services rendered in any capacity during the
term of his employment under this Agreement, an annualized, minimum base salary
of $175,000 ("Base Salary"), subject to such increases, if any, as the Board
shall determine, in its sole discretion. Executive's Base Salary shall be
payable in accordance with the regular payroll practices of the Company, as in
effect from time to time.
2.2. Additional Compensation. Executive shall have no
guaranteed bonus. Any bonus payable to Executive shall be determined by the
Board in its sole discretion based upon performance targets, if any, which may
be adopted by the Board promptly after commencement of the term hereof and at
the beginning of each year of employment hereunder. Executive shall participate
in the preparation of such annual performance targets recommended by management
of the Company for adoption by the Board. In addition, Executive shall be
entitled to participate in such bonus programs as the Company may from time to
time offer or provide to executives of the Company at similar levels.
2.3. Executive Benefits.
2.3.1. Expenses. The Company will reimburse
Executive for expenses he reasonably incurs in connection with the performance
of his duties (including business travel and entertainment expenses), all in
accordance with the Company's policies with respect thereto, as in effect from
time to time.
2.3.2. Benefit Plans. As long as Executive remains
a full-time employee of the Company, Executive shall be entitled to participate
in such executive benefit plans and programs the Company may from time to time
offer or provide to executives of the Company at similar levels, including, but
not limited to, any life insurance, health and accident, medical and dental,
disability and retirement plans and programs. In addition, Executive shall be
entitled to participate in such executive benefit plans and programs AccessIT
may from time to time offer or provide to executives of AccessIT and its
subsidiaries at similar levels, including any stock option, 401(k) or similar
profit sharing or pension plans, as well as any life insurance, health and
accident, medical and dental, disability and retirement plans and programs to
the extent that such plans and programs are more favorable to Executive than
those offered by the Company.
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2.3.3. Vacation. Executive shall be eligible for
four (4) weeks of paid vacation per year. All vacation must be used by December
31 of each year of Executive's employment at which time any unused vacation
shall expire and Executive shall no longer be entitled to such vacation. Except
as may be required by applicable law, no compensation shall be payable in
respect of any unused vacation days.
2.4. Employment Term. Executive's employment by the
Company pursuant to this Agreement shall commence on the date hereof and, except
as provided in Section 3.1 hereof, will continue until October 31, 2005 (the
"Initial Term"). Thereafter, this Agreement shall be automatically renewed for
successive one year periods commencing on November 1, 2005 the anniversary of
such date in each subsequent year (the Initial Term, together with any
subsequent employment period being referred to herein as the "Employment Term");
provided, however, that either party may elect to terminate this Agreement as of
the end of the then current Employment Term, by written notice to such effect
delivered to the other party at least 90 days prior to such termination date.
3. Termination of Employment.
3.1. Events of Termination. Executive's employment with
the Company will terminate upon the occurrence of any one or more of the
following events:
3.1.1. Death. In the event of Executive's death,
Executive's employment will terminate on the date of death.
3.1.2. Disability. In the event of Executive's
Disability (as hereinafter defined), the Company will have the option to
terminate Executive's employment by giving a notice of termination to Executive.
The notice of termination shall specify the date of termination, which date
shall not be earlier than thirty (30) days after the notice of termination is
given. For purposes of this Agreement, "Disability" means the inability of
Executive to substantially perform his duties hereunder for either 90
consecutive days or a total of 120 days out of 365 consecutive days as a result
of a physical or mental illness, all as determined in good faith by the Board.
3.1.3. Termination by the Company for Cause. The
Company may, at its option, terminate Executive's employment for "Cause"
determined in good faith by a majority of the Board (exclusive of Executive if
Executive shall then serve as a member of the Board) by giving a notice of
termination to Executive specifying the reasons for termination and if Executive
shall fail to cure same within thirty (30) days of him receiving the notice of
termination his Employment shall terminate at the end of such thirty (30) day
period; provided, that in the event the Board in good faith determines that the
underlying reasons giving rise to such determination cannot be cured, then said
cure period shall not apply and Executive's employment shall terminate on the
date of Executive's receipt of the notice of termination. "Cause" shall mean (i)
Executive's conviction of, guilty or no contest plea to, or confession of guilt
of, a felony or other crime involving moral turpitude; (ii) an act or omission
by Executive in connection with his employment which constitutes gross
negligence, malfeasance, willful misconduct or other bad faith conduct which is
materially injurious to the Company; (iii) a material breach by Executive of
this Agreement; (iv) continuing failure to perform such reasonable duties as are
assigned to Executive by the Company in accordance with the terms of this
Agreement, other than a failure resulting from a Disability as defined in
Section 3.1.2 hereof and refusal to perform duties if such duties would
constitute the basis for a Good Reason (as defined below) resignation by
Executive; (v) Executive's knowing taking any action in conflict of interest
with the Company or any of its affiliates given Executive's position with the
Company but only to the extent that such action results in material harm to the
Company.
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3.1.4 Resignation for Good Reason. The Executive
may terminate employment for "Good Reason" by giving notice thereof to the
Company and a brief summary of the nature of the basis for such termination and,
if the Company shall fail to cure the same within thirty (30) days of receiving
such notice, then Executive's employment shall terminate at the end of such
thirty (30) day period. "Good Reason" shall mean any of the following: (i) the
Company requiring Executive to relocate his office more than 35 miles from the
Company's [XXXXX: headquarters in Hollywood, California] [XXX: offices in Brea,
California], (ii) the Company assigning Executive to a position other than the
position described in Section 1.1 of this Agreement without Executive's consent,
(iii) the Company requiring Executive to report directly to any officer other
than the Chief Executive Officer or such other executive officer as the CEO
shall designate without Executive's consent, (iv) the Company substantially
diminishing Executive's duties or responsibilities or (v) the Company failing to
pay any amounts owned to Executive when due or otherwise materially breaching
any material term of this Agreement.
3.2. Certain Obligations of the Company Following
Termination of the Executive's Employment. Following the termination of
Executive's employment under the circumstances described below, the Company
shall pay to Executive in accordance with its regular payroll practices the
following compensation and provide the following benefits in full satisfaction
and final settlement of any and all claims and demands that Executive now has or
hereafter may have hereunder against the Company under this Agreement:
3.2.1. Death; Disability. In the event that
Executive's employment is terminated by reason of Executive's death or
Disability, Executive or his estate, as the case may be, shall be entitled to
the following payments:
(i) continuing payments of Base Salary
through the date of death of Executive or the date of termination due to
Executive's Disability in accordance with the Company's regular payroll
practices;
(ii) any additional compensation
(including compensation pursuant to Section 2.2 and reimbursement pursuant to
Section 2.4.1 hereof) earned but not yet paid with respect to the calendar year
of termination, or, if based on annual performance, annualizing such performance
to the date of death of Executive or the date of termination due to Executive's
Disability and pro rating such additional compensation for the portion of the
calendar year prior to such termination, payable at the time such additional
compensation would have been payable but for such death or Disability; and
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(iii) The Company shall pay to Executive
or his estate, as the case may be, the amounts and shall provide all benefits
generally available under the employee benefit plans, and the policies and
practices of the Company, determined in accordance with the applicable terms and
provisions of such plans, policies and practices, in each case, as accrued to
the date of termination or otherwise payable as a consequence of Executive's
death or Disability.
3.2.2. Termination by the Company for Cause. In the
event Executive's employment is terminated by the Company pursuant to Section
3.1.3 hereof, Executive shall be entitled to no further compensation or other
benefits under this Agreement except that portion of any unpaid Base Salary
accrued and earned by him hereunder up to and including the effective date of
such termination.
3.2.3 Termination by Company Without Cause or by
Executive for Good Reason. In the event the Company terminates Executive without
Cause or Executive terminates his employment for Good Reason, Executive shall be
entitled to the following payments:
(i) continuing payments of Base Salary
through the expiration of the Employment Term in accordance with the Company's
regular payroll practices; provided, however, that if the termination for Good
Reason occurs within ninety days prior to the end of the then current Employment
Term and no notice of termination was given prior to such 90 day period, then
the Base Salary shall continue through the end of the yearly term following the
then current Employment Term (the "Extended Term");
(ii) any additional compensation
(including compensation pursuant to Section 2.2 and reimbursement pursuant to
Section 2.4.1 hereof) earned but not yet paid with respect to the calendar year
of termination, or, if based on annual performance, through the end of the
applicable year, payable at the time such additional compensation would have
been payable but for such death or Disability;
(iii) The Company shall pay to Executive
or his estate, as the case may be, the amounts and shall provide all benefits
generally available under the employee benefit plans, and the policies and
practices of the Company, determined in accordance with the applicable terms and
provisions of such plans, policies and practices, in each case, as accrued to
the date of termination; and
(iv) The Company shall, to the extent
legally permissible, continue to participate in any life insurance, health
insurance, and accident, medical and dental, disability and retirement plans and
programs through the end of the Employment Term (and any Extended Term). To the
extent that such participation is not legally permissible, the Company shall
make or reimburse Executive for any continuation benefits under COBRA for the
Employment Term (and any Extended Term).
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3.3. Nature of Payments. All amounts to be paid by the
Company to Executive pursuant to this Section 3 are considered by the parties to
be severance payments. In the event such payments are treated as damages, it is
expressly acknowledged by the parties that damages to Executive for termination
of employment would be difficult to ascertain and the above amounts are
reasonable estimates thereof. Notwithstanding anything to the contrary contained
in this Agreement, payments due pursuant to Section 3.2.3(i) shall be reduced by
the amount of any income received by Executive for services rendered as an
employee to any other business or entity during the remainder of the Employment
Term (and, if applicable, any Extended Term); provided, however, that in no case
shall any reduction be made as a result of investment or other income earned by
Executive in connection with activities other than the provision of employment
or consulting services by Executive. Executive agrees to provide, upon request
by the Company, copies of any Forms W-2 received by Executive for services
rendered during any period in which Executive is entitled to receive payment
pursuant to Section 3.2.3(i) of this Agreement.
3.4 Guarantee by AccessIT. The payment obligations of the
Company pursuant to this Agreement are hereby unconditionally and irrevocably
guaranteed by AccessIT.
4. Confidentiality; Inventions; Non-Compete.
Executive and Company shall enter into a Confidentiality,
Inventions and Noncompete Agreement, the form of which is attached as Exhibit A
hereto. The terms of that agreement and the duties and obligations thereunder
shall be a part of this agreement and Executive agrees to perform its duties
thereunder.
5. Miscellaneous Provisions.
5.1. Severability. If in any jurisdiction any term or
provision hereof is determined to be invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired, (b) any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction, and (c) the invalid or
unenforceable term or provision shall, for purposes of such jurisdiction, be
deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.
5.2. Execution in Counterparts. This Agreement may be
executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement (and all
signatures need not appear on any one counterpart), and this Agreement shall
become effective when one or more counterparts has been signed by each of the
parties hereto and delivered to each of the other parties hereto.
5.3. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly given when
delivered by hand, or when delivered if mailed by registered or certified mail
or overnight delivery, postage prepaid, return receipt requested as follows:
If to the Company, to:
Hollywood Software, Inc.
0000 X. Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile No.: 323-463-1319
Attention:
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Copy to:
Access Integrated Technologies, Inc.
00 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attention: President
Copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to Executive, to:
Copy to:
or to such other address(es) as a party hereto shall have designated by like
notice to the other parties hereto.
5.4. Amendment. No provision of this Agreement may be
modified, amended, waived or discharged in any manner except by a written
instrument executed by the Company and Executive.
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5.5. Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the parties
hereto, oral or written, with respect to the subject matter hereof.
5.6. Applicable Law; Consent to Jurisdiction. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of California applicable to contracts entered into and to be performed
wholly within said State. Executive and the Company hereby consent to the
jurisdiction of the Federal and State courts located in the City of Los Angeles
and waive any objections to such courts based on venue in connection with any
claim or dispute arising under this Agreement.
5.7. Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Agreement.
5.8. Binding Effect; Successors and Assigns. Executive may
not delegate his duties or assign his rights hereunder. This Agreement will
inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
5.9. Waiver, etc. The failure of either of the parties
hereto to at any time enforce any of the provisions of this Agreement shall not
be deemed or construed to be a waiver of any such provision, nor to in any way
affect the validity of this Agreement or any provision hereof or the right of
either of the parties hereto to thereafter enforce each and every provision of
this Agreement. No waiver of any breach of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party against whom or which enforcement of such waiver is sought, and no
waiver of any such breach shall be construed or deemed to be a waiver of any
other or subsequent breach.
5.10. Representations and Warranties. Executive and the
Company hereby represent and warrant to the other that: (a) he or it has full
power, authority and capacity to execute and deliver this Agreement, and to
perform his or its obligations hereunder; (b) such execution, delivery and
performance will not (and with the giving of notice or lapse of time or both
would not) result in the breach of any agreements or other obligations to which
he or it is a party or he or it is otherwise bound; and (c) this Agreement is
his or its valid and binding obligation in accordance with its terms; and (d)
Executive represents and warrants that he is under no other obligations,
contractual or otherwise, that could impair his ability to perform his
obligations under this Agreement.
5.11. Enforcement. If any party institutes legal action to
enforce or interpret the terms and conditions of this Agreement, the prevailing
party shall be awarded reasonable attorneys' fees at all trial and appellate
levels, and the expenses and costs incurred by such prevailing party in
connection therewith.
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5.12. Continuing Effect. Where the context of this
Agreement requires, the respective rights and obligations of the parties shall
survive any termination or expiration of the term of this Agreement.
5.13. Expenses. Each party to this Agreement agrees to bear
his or its own expenses in connection with the negotiation and execution of this
Agreement.
[Signature Page to Follow]
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IN WITNESS WHEREOF, this Employment Agreement has been executed and
delivered by the parties hereto as of the date first above written.
HOLLYWOOD SOFTWARE, INC.
By:
------------------------------------
Name:
Title:
ACCESS INTEGRATED TECHNOLOGIES, INC.
By:
------------------------------------
Name:
Title:
EXECUTIVE:
----------------------------------------
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EXHIBIT A
FORM OF CONFIDENTIALITY, INVENTIONS AND
NONCOMPETE AGREEMENT
Form of
CONFIDENTIALITY, INVENTIONS AND
NONCOMPETE AGREEMENT
CONFIDENTIALITY, INVENTIONS AND NONCOMPETE AGREEMENT (this
"Agreement"), dated as of ___________ ___, 2003, made by ______________________
("Employee") in favor of Access Integrated Technologies, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, it is recognized by the Employee that the day-to-day
performance of his or her duties while in the employment of the Company is
likely to give or require access to confidential Company records and sources of
information and to bring Employee into contact with others engaged in
confidential work for the Company;
WHEREAS, it is further recognized by the Employee that by reason of
being employed by the Company, Employee may create or develop intellectual
property (including inventions, ideas, discoveries, trade secrets and
copyrightable works) resulting from or arising out of the work performed by
Employee within the scope of Employee's responsibilities, or with the Company's
facilities, equipment or supplies, or resulting from Employee's use or knowledge
of confidential or trade secret information which is proprietary to the Company;
and
WHEREAS, the Employee has agreed to be bound by the non-competition
provisions of Section 5 hereto in connection with the sale of all of the issued
and outstanding shares of capital stock of the Company pursuant to that certain
Stock Purchase Agreement, dated July , 2003, between and among the Company,
Hollywood Software, Inc. and Xxxxx Xxxxx and Xxxxxx Xxxxxxxxx (the "Purchase
Agreement"). Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of employment by the Company and of
prospective assignments to work on confidential matters, which Employee
acknowledges is sufficient consideration for this Agreement, Employee agrees to
the following continuing obligations:
1. Confidentiality. During the period of Employee's employment with the
Company, Employee agrees, except in the course of Employee's duties on behalf of
the Company:
(a) to keep secret and treat confidentially all confidential
information of the Company pertaining to Company customers and
prospective customers, customer requirements, customer financial
information, and other such confidential information compiled or
maintained internally by the Company concerning its customers and
prospective customers; and
(b) to keep secret and treat confidentially all confidential
information of the Company pertaining to Company products, costs,
marketing plans and contemplated activities, financial matters,
research and development, production, engineering, product design, and
other such confidential information compiled or maintained internally
by the Company concerning its business, operations and activities; by
way of illustration, but not limitation, confidential information
includes inventions, processes, formulae, data, computer programs
(whether in source or object code form) and all information relating to
programs now existing or under development, computer program listings,
know-how, improvements, discoveries, developments, designs, techniques,
marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses, prices, costs,
customer and supplier lists and compilations of information. For
purposes of this Agreement, confidential information does not include
information (i) which is or becomes generally known to the public or
within the industry or industries in which the Company operates (other
than through a breach of this agreement); (ii) made available to
Employee by a person or entity not affiliated with the Company;
provided, that such party is not under any -------- obligation of
confidentiality to the Company which is known to Employee; or (iii)
required by law or court order to be disclosed; provided, that Employee
shall give the Company prompt written notice of any such -------- legal
or judicial process requiring disclosure of confidential information
and shall reasonably cooperate with the Company at the Company's
expense, in any lawful action which the Company desires to take to
limit the disclosure required by such legal or judicial process and
shall permit to attempt, by appropriate legal means to limit and/or
delay such disclosure.
2. Confidentiality Upon Termination. Upon termination of Employee's
employment with the Company, whether voluntary or involuntary and for whatever
reason, Employee agrees:
(a) to promptly return to the Company any and all documents
made or obtained by Employee in the course of his or her employment
pertaining to or containing any of the confidential information of the
Company referred to in Section 1 above; and
(b) for a period of five (5) years thereafter, to keep
confidential and to make no written record of confidential information
of the Company referred to in Section 1 above, and to make no use or
disclosure thereof adverse to the interests of the Company in any
geographic area in which Company interests would be damaged by such use
or disclosure.
3. Confidential Relationship.Employee acknowledges that this Agreement
provides notice that the Company regards it to be vital to its interest that its
confidential information and trade secrets be safeguarded by its employees.
Employee understands that this Agreement establishes a confidential relationship
between Employee and the Company, and that Employee has a duty under the law not
to breach the confidential relationship by using or disclosing Company
confidential information and trade secrets. Employee further understands that
the Company relies upon Employee honoring such duty of confidence when the
Company entrusts Employee with access to the Company's confidential information
and trade secrets.
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4. Invention Disclosure and Assignment.
4.1 During the period of Employee's employment with the
Company, Employee agrees to report to the Company fully and promptly in writing,
all intellectual property (including inventions, ideas, discoveries, technical
or business innovations and works of authorship, patentable or unpatentable,
trade secrets and copyrightable works) which is made, developed, conceived or
reduced to practice by Employee either solely or jointly with others resulting
from or arising out of the work performed by Employee, within the scope of his
responsibilities, or with the Company's facilities, equipment or supplies, or
which results from his or her use or knowledge of confidential or trade secret
information which is proprietary to the Company.
4.2 Upon termination of Employee's employment with the
Company, and for a period of one (1) year thereafter, Employee agrees to report
to the Company fully and promptly in writing, all intellectual property
(including inventions, ideas, discoveries, technical or business innovations and
works of authorship, patentable or unpatentable, trade secrets and copyrightable
works) which is reduced to practice by Employee either solely or jointly with
others, wherever such intellectual property reasonably results from the work
performed by Employee during employment by the Company within the scope of his
or her responsibilities, or with the Company's facilities, equipment or
supplies, or results from his or her use or knowledge of confidential or trade
secret information which is proprietary to the Company.
4.3 Employee agrees to hold all such intellectual property
described in this Section 4 for the benefit of the Company and not to assign nor
attempt to assign any rights therein to anyone other than the Company.
4.4 Employee agrees to assign to the Company upon its request
and without further compensation all rights, title and interest in such
intellectual property described in this Section 4 to which the Company is
entitled as set forth in this Section 4 at any time, whether during or
subsequent to Employee's period of said employment. Employee agrees to execute
and deliver in a prompt manner all proper documents provided by the Company and
presented to Employee including those necessary and attendant to domestic and
foreign patent applications, including, but not limited to, divisional,
continuation, continuation-in-part, substitute and/or reissue applications, and
all other instruments for the perfection of intellectual property rights,
including related registrations of issued patents, design patent applications
and registrations, applications for utility models and industrial models and
copyrights, as well as formal assignments thereof. The Company will pay all
reasonable out-of-pocket expenses incurred by Employee in perfecting the
Company's rights as they relate to assisting the Company in all proper ways in
the acquisition and preservation of the rights to such intellectual property as
described in this subsection 4.4 and will pay Employee a reasonable hourly rate
for Employee's post-employment efforts in perfecting such intellectual property.
4.5 Except as disclosed on Schedule 4.5 attached hereto,
Employee covenants that there are no unpatented inventions, discoveries, ideas,
technical or business innovations and works of authorship or information
currently held by Employee which are to be outside the scope of this agreement.
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4.6 The Employee recognizes that this Agreement does not
require assignment of any invention which he has developed entirely on the
Employee's own time without using the Company's equipment, supplies, facilities,
or trade secret information except for those inventions that either:
(a) relate at the time of conception or reduction to practice of
the invention to the Company's business, or actual or demonstrably
anticipated research or development of the Company; or,
(b) result from any work performed by the Employee for the
Company.
4.7 The Employee acknowledges that all original works of
authorship which are made by the Employee (solely or jointly with others) within
the scope of his employment and which are protectable by copyright are "works
made for hire," as that term is defined in the United States Copyright Act (17
U.S.C., Section 101) and belong to the Company. The Employee hereby further
waives any moral rights he may otherwise claim on such works of authorship and
copyright.
4.8 This Agreement shall not apply to an invention,
improvement, discovery or development which qualifies fully as non-assignable
under Section 2870 of the California Labor Code. The Employee has reviewed the
notification on Exhibit B (Limited Exclusion Notification).
5. Non-Competition; Non-Solicitation.
5.1 Subject to the provisions of Section 8 of the Purchase
Agreement, during the term of Employee's employment by the Company and for any
period thereafter in respect of which the Company is required to and does make
severance payments ("Severance") to the Employee pursuant to the terms of his
Employment Agreement, the Employee will not directly or indirectly:
(a) engage in any business or activity that competes with the
Business, anywhere in the United States or Canada;
(b) enter the employ of any person or entity engaged in any
business or activity that competes with the Business or render any
consulting or other services to any person or entity for use in or with
the effect of competing with the Business;
(c) have an interest in any business or activity that competes
with the Business, in any capacity, including, without limitation, as an
investor, partner, stockholder, officer, director, principal, agent,
employee, or creditor; provided, however, that nothing herein shall
prevent the purchase or ownership by the Employee of less than 3% of the
outstanding equity securities of any class of securities of a company
registered under Section 12 of the Securities and Exchange Act of 1934,
as amended;
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(d) recruit, solicit or induce, or attempt to recruit, solicit
or induce, any employee or employees of the Company to terminate their
employment with, or otherwise cease their relationship with, the Company;
or
(e) solicit, divert or take away, or in any manner persuade or
attempt to persuade any of the clients, customers or accounts, or
prospective clients, customers or accounts of the Company which were
contracted, solicited or served by the Employee while employed by the
Company to discontinue, cease or alter his, her or its relationship with
the Company.
[The following carve out is for Xxxxxxxxx only.] Notwithstanding
the foregoing, Xxxxxxxxx may, upon (i) termination of employment by the
Company without Cause (as defined in his Employment Agreement), (ii)
resignation by Xxxxxxxxx for Good Reason (as defined in his Employment
Agreement), or (iii) expiration of the Employment Term (as defined in his
Employment Agreement), be employed by (A) a consulting company so long as
such consulting company is not engaged, and does not become engaged, in
the Business or (B) a company in the film distribution, production or
exhibition business so long as such company is not engaged, and does not
become engaged, in the Business (other than the research, development or
production of proprietary back office transaction software for both
distributors or exhibitors of filmed and digital entertainment for its
own use or for the use of such company's subsidiaries or affiliates);
provided, that, prior to commencing employment with any such company,
Xxxxxxxxx shall deliver written notice to such company, with a copy to
the Company, of his obligations hereunder and under to the terms of the
Purchase Agreement. [END OF CARVE OUT FOR XXXXXXXXX]
Notwithstanding anything to the contrary contained in this
Agreement, the Employee's Employment Agreement or the Purchase Agreement,
the provisions of this Section 5.1 and any non-compete covenant in favor
of the Company or its affiliates contained in any other document(s) to
which the Employee is a party, shall terminate and be of no further force
and effect in the event that the Company is in default, and fails to cure
such default within thirty (30) days prior written notice from the
applicable Seller, under (i) any obligations under the Note or Pledge
Agreement securing such Note, (ii) any payment obligation under the
Purchase Agreement, or (iii) any obligation of the Company to issue,
deliver and/or permit the sale of any shares of Class A Common Stock
issued pursuant to the terms of the Purchase Agreement. Notwithstanding
anything to the contrary contained in the first paragraph of this Section
5.1, in the event that the Employee's employment by the Company is
terminated and the Company's obligation to pay Severance is terminated as
a result of either (A) any waiver by the Employee of his right to receive
such Severance or (B) as a result of any offset against earnings of the
Employee in accordance with his Employment Agreement, then the covenants
contained in this Agreement shall terminate upon the date on which the
Severance payments are terminated, waived or offset.
5.2 If any restriction set forth in this Section 5 is found
by any court of competent jurisdiction to be unenforceable because it extends
for too long a period of time or over too great a range of activities or in too
broad a geographic area, it shall be interpreted to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable.
5
5.3 The restrictions contained in this Section 5 are
necessary for the protection of the business and goodwill of the Company and are
considered by Employee to be reasonable for such purpose. In addition, Employee
acknowledges that Employee's education, background, skills, and experience are
such that the enforcement of the restrictions in this Section 5 will not
unreasonably interfere with Employee's ability to earn a living. Employee agrees
that Severance paid to him constitutes consideration in respect of his
obligations hereunder with respect to the periods covered thereby, including,
without limitation, periods subsequent to his employment.
6. Miscellaneous.
(a) All of the covenants and provisions herein contained are
severable; in the event that any of said covenants or provisions shall be held
by any court of competent jurisdiction to be invalid or unenforceable, this
agreement shall be construed as if any such invalid or unenforceable covenant or
provision were not herein contained. Employee acknowledges and agrees that any
breach by Employee of any provision of this Agreement would cause irreparable
injury to the Company and could not be remedied solely by monetary damages. In
addition to any other available remedies in enforcing this agreement, the
Company shall be entitled to equitable relief, including, without limitation,
injunctive relief and specific performance, without proof of actual damages. No
delay or omission by the Company in exercising any right under this agreement
shall operate as a waiver of that or any other right. A written waiver or
consent given by the Company on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any right on any other
occasion.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of California. Employee agrees that notwithstanding
Employee's place of residence at the time of or subsequent to any breach by
undersigned of this agreement, that he or she shall be subject to suit in the
state or Federal courts located in Los Angeles County, California.
[SIGNATURE PAGE FOLLOWS]
6
IN WITNESS WHEREOF, the undersigned has executed this Confidentiality,
Inventions and Noncompete Agreement as of the day and year first above written.
Employee:
--------------------------------------
7
SCHEDULE 4.5
Unpatented inventions, discoveries, ideas, technical or business
innovations and works of authorship or information currently held by Employee
that are outside the scope of this Agreement.
EXHIBIT B
LIMITED EXCLUSION NOTIFICATION
THIS IS TO NOTIFY you in accordance with Section 2872 of the California
Labor Code that the foregoing Agreement between you and the Company does not
require you to assign or offer to assign to the Company any invention that you
developed entirely on your own time without using the Company's equipment,
supplies, facilities or trade secret information except for those inventions
that either:
1. relate at the time of conception or reduction to practice of the
invention to the company's business, or actual or demonstrably anticipated
research or development of the Company; and
2. result from any work performed by you for the Company.
To the extent a provision in the foregoing Agreement purports to
require you to assign an invention otherwise excluded from the preceding
paragraph, the provision is against the public policy of this state and is
unenforceable.
This limited exclusion does not apply to any patent or invention
covered by a contract between the Company and the United States or any of its
agencies requiring full tide to such patent or invention to be in the United
States.
