1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of the 1st
day of January, 1997 by and between TEAM COMMUNICATIONS GROUP, INC, a California
company ("Company") and XXXX X. XXXXX ("Executive"), in connection with
Company's engagement of Executive's personal services as President of Company.
1. EMPLOYMENT; DUTIES AND ACCEPTANCE:
(a) Employment by Company.
Company hereby engages Executive, and Executive
hereby agrees to provide to Company, his full-time services as President on the
terms and conditions of this Agreement. In such capacity Executive will report
to, and serve under the direction and subject to the control of Company's Board
of Directors. Throughout the Term (as hereinafter defined) of this Agreement,
Executive shall devote substantially all of his work time to the employment
described hereunder; and Executive shall not engage in or participate in the
operation or management of, or render any services to, any other business,
enterprise or individual, directly or indirectly.
(b) Acceptance of Employment by the Executive.
The Executive accepts such employment and shall
render the services described in Section 1.(a).
(c) Location of Employment:
Executive shall render his services at Company's offices in
Los Angeles, California; provided, however, that Executive agrees to render his
services at such other locations from time-to-time as the proper performance of
Executive's duties may reasonably require. Notwithstanding the foregoing,
Company's principal offices shall remain in Southern California and Executive
need not relocate to render his duties hereunder.
2. TERM:
The term of Executive's employment hereunder shall be for a
period of five (5) years commencing as of January 1, 1997 and ending on December
31, 2001 (the "Term") unless sooner terminated pursuant to Section 7 hereof
("Termination Sections"). The Term hereof shall be, at the option of Executive,
extended for one successive period for a period of three (3) years ending on
December 31 2004, such period commencing immediately upon the termination of the
prior period (the "Option Period").
3. COMPENSATION AND BENEFITS:
(a) Salary.
1
2
During the Term, Executive shall receive a salary
(the "Annual Salary") at the rate of three hundred sixty five thousand Dollars
($365,000.00) per annum. Executive's Annual Salary shall be payable in fifty-two
(52) weekly payments per year. Such salary shall be less such deductions as
shall be required to be withheld by applicable law and regulations and shall be
prorated for any period that does not constitute a full twelve (12) month
period.
The Company, as represented by the Board of Directors
and Executive shall, in good faith, renegotiate the compensation payable to
Executive for the period commencing upon the expiration of the first two (2)
years of the Term through the end of the Term and for the Option Period, after
having given due consideration to the improvements in the profits of the Company
and cost of living increases, provided that in no event shall the Annual Salary
(as defined below) and Bonus (as defined below) payable to Executive be less
than the Annual Salary and Bonus payable during the initial two (2) year period
of the Term hereof and provided further that the increase of the Annual Salary
shall not be increased by more than ten (10%) percent per annum in any given
year through the remainder of the contract.
(b) Bonus.
(i) Beginning with the fiscal year for the period
ending December 31, 1997 (the twelve month period commencing January 1 and
ending December 31 hereinafter referred to as "Fiscal Year"), and continuing
thereafter for each such full or partial Fiscal Year of the Term hereof,
Executive shall receive a bonus in the sum calculated below based upon the "Net
Pre-Tax Earnings" of the Company (the "Bonus"). For any Fiscal Year of the
Company in which Net Pre-Tax Earnings are from one dollar ($1.00) up to, but not
not greater than, two million dollars ($2,000,000), Executive shall receive an
amount equal to five percent (5%) of such Net Pre-Tax Earnings of the Company.
For any Fiscal Year of the Company in which Net Pre-Tax Earnings of the Company
are greater than two million dollars ($2,000,000), Executive shall receive an
amount equal to seven and one half percent (7.5%) of such Net Pre-Tax Earnings
of the Company. For purposes hereof, the term "Net Pre-Tax Earnings" shall mean
that amount as determined by the Company's outside accountant in accordance with
generally accepted accounting principles and such amount shall specifically be
determined after the calculation of the Annual Salary.
(ii) Executive's Bonus shall be paid to Executive on
a quarterly basis, within thirty (30) days following the preparation and filing
of the company's quarterly statements (10Q or equivalents) of Company's accounts
for such relevant period. If such above described accounts are not finalized
within 30 days following the end of any fiscal quarter, then Company shall
within 30 days following the expiration of such 30 day period pay to Executive
his Bonus for such fiscal quarter based upon the most complete information then
available to Company at such date and any adjustment to such amount so paid
shall be made as soon as practical after the accounts are completed and approved
by Company.
(iii) Notwithstanding anything to the contrary
contained above, the Bonus shall be calculated prior to, and without regard to,
any other profit shares or bonus payable to other employees of the Company
employed by Company for such same fiscal quarter.
2
3
(c) The Company shall be further obligated to cause to be
granted to Executive 85,000 options to purchase shares of the Companies common
stock under the companies employee stock option plan as in effect as of the date
of this agreement, such options to vest in full as of the date of this
agreement.
4. PARTICIPATION IN EXECUTIVE BENEFIT PLANS;
(a) Fringe Benefits.
Executive shall be permitted during the Term to
participate in any group life, medical, hospitalization, dental, and disability
plans, to the extent that Executive is eligible under the provisions of such
plans, and in any other plans and benefits, if any, generally maintained by
Company for executives of the stature and rank of Executive during the Term
hereof, each in accordance with the terms and conditions of such plans
(collectively referred to herein as "Fringe Benefits"); provided, however, that
Company shall not be required to establish or maintain any such Fringe Benefits.
(b) Vacation.
Executive shall accrue, in addition to sick days and
days in which Company is closed, paid vacation days at the rate of one and two
thirds (1-2/3) days per month up to a maximum of twenty (20) work days (four [4]
work weeks). Under no circumstances can Executive accrue more vacation than
twenty (20) work days (the "Ceiling"). Thus, once the maximum amount of paid
vacation time is accrued or earned, no further vacation time is accrued or
earned until after vacation is taken and the amount of Executive's accrued
vacation time goes below the Ceiling as stated above. At that point, Executive
will start to accrue vacation time again until Executive reaches the Ceiling.
Subject to the requirements of Executive's office, Executive shall be entitled
to annual vacation in accordance with the vacation policy of Company.
(c) Expenses.
(i) Company will reimburse Executive for actual and
necessary travel and accommodation costs, entertainment and other business
expenses incurred as a necessary part of discharging the Executive's duties
hereunder, subject to receipt of reasonable and appropriate documentation by
Company. Guidelines for reasonable and normal expenses will be determined by the
compensation committee of the board of directors.
(ii) Company shall pay all business related operating
expenses of Executive's automobile, at the rate of $.29 per mile.
5. CERTAIN COVENANTS OF EXECUTIVE:
Without in any way limiting or waiving any right or remedy
accorded to Company or any limitation placed upon Executive by law, Executive
agrees as follows:
3
4
(a) Non-Compete.
Provided that Company is at all times relevant hereto,
carrying on the Business of the Company (as defined below), Executive agrees
that during the Term of this Agreement, and solely in the event that Executive
does not exercise his option to extend the Term hereof for the Option Period,
for an additional period of one (1) year after the Term hereof, Executive shall
not within the United States directly or indirectly, in any form, capacity or
manner, participate in activities which are competitive with the Business of the
Company (as defined below), or of those divisions, subsidiaries and affiliated
companies of Company (each of which, including Company, is referred to as a
"Protected Company") or have a direct monetary interest in or invest capital in
any competitive company of Company, whether such interest be by way of (i)
ownership, (ii) stock interest, (iii) financing, (iv) lending arrangements, or
(v) in any other form or of any other nature. Upon the execution of this
Agreement and during the Term hereof, Executive shall disclose to Company any
stock owned by him and his family in any company competitive with a Protected
Company; provided, however, Executive shall not be prohibited from investing in
any competitive company, as aforesaid, the stock of which is publicly traded so
long as his and his family's ownership collectively is nominal and for
investment purposes only. For purposes hereof, the term "Business of the
Company" shall mean television production and distribution. Notwithstanding the
foregoing, in the event that a court of competent jurisdiction determines that
the foregoing restriction is invalid, Executive hereby agrees to indemnify and
hold Company harmless from any and all damages, liabilities, costs, losses and
expenses (including legal costs and reasonable attorneys' fees) arising out of
or connected with any claim, demand or action which is based upon a breach by
Executive of the foregoing restriction. This section shall not be operative in
the event that Executive is terminated by the Company without cause.
(b) Confidential Information.
Executive agrees that, neither during the Term nor at
any time thereafter shall the Executive (i) disclose to any person, firm, or
corporation not employed by any Protected Company or not engaged to render
services to any Protected Company or (ii) use for the benefit of himself, or
others, any confidential information of any Protected Company obtained by the
Executive prior to the execution of this Agreement, during the Term or any time
thereafter, including, without limitation, "know-how" trade secrets, details of
supplier's, manufacturer's, distributor's contracts, pricing policies, financial
data, operational methods, marketing and sales information or strategies,
product development techniques or plans or any strategies relating thereto,
technical processes, designs and design projects, and other proprietary
information of any Protected Company; provided, however, that this provision
shall not preclude the Executive from (x) upon advice of counsel, making any
disclosure required by any applicable law or (y) using or disclosing information
known generally to the public (other than information known generally to the
public as a result of any violation of this Section 5.(b) by or on behalf of the
Executive).
(c) Property of Company.
4
5
Any interest in trademarks, service marks,
copyrights, copyright applications, patents, patent applications, slogans,
developments and processes which the Executive, during the Term, may develop
relating to the Business of the Company in which the Company may then be engaged
and any memoranda, notes, lists, records and other documents (and all copies
thereof) made or compiled by the Executive or made available to the Executive
concerning the business of any Protected Company shall belong and remain in the
possession of any Protected Company, and shall be delivered to the Company
promptly upon the termination of the Executive's employment with Company or at
any other time on request.
(d) Executive will not, for a period of one (1) year after the
Term hereof, induce any person who is an executive, officer or agent of the
Company, to terminate their relationship with the Company.
6. OTHER PROVISIONS;
(a) Rights and Remedies Upon Breach.
If the Executive breaches, or threatens to commit a
breach of, any of the provisions of Section 5. hereof (the "Restrictive
Covenants"), the Company shall have the following rights and remedies, each of
which rights and remedies shall be independent of the other and severally
enforceable, and all of which rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company at law or
in equity.
(b) Accounting.
The right and remedy to require the Executive to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits (collectively "Benefits") derived or
received by the Executive as a result of any transactions constituting a breach
of any of the Restrictive Covenants, and the Executive shall account for and pay
over such Benefits to the Company.
(c) Severability of Covenants.
If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the remainder of
the Restrictive Covenants shall not thereby be affected and shall be given full
effect, without regard to the invalid portions.
(d) Blue-Pencilling.
If any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration or
geographic scope of such provision, such court shall have the power to reduce
the duration or scope of such provision and, in its reduced form, such provision
shall then be enforceable.
5
6
(e) Enforceability in Jurisdictions.
The parties intend to and hereby confer jurisdiction
to enforce the Restrictive Covenants upon the courts of any jurisdiction within
the geographical scope of such Restrictive Covenants. If the courts of any one
or more of such jurisdictions hold the Restrictive Covenants unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of the
parties that such determination not bar or in any way affect Company's right to
the relief provided in this Section 6 in the courts of any other jurisdiction
within the geographical scope of such Restrictive Covenants, as to breaches of
such Restrictive Covenants in such other respective jurisdictions, such
Restrictive Covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
(f) Executive agrees and understands that the remedy at law
for any breach by Executive of the provisions of Paragraph 5 hereof may be
inadequate and that damages resulting from such breach may not be susceptible to
being measured in monetary terms. Accordingly, it is acknowledged that upon
Executive's breach of any provision of Paragraph 5 hereof, the Company shall be
entitled to seek to obtain from any court of competent jurisdiction injunctive
relief to prevent the continuation of such breach. Nothing contained herein
shall be deemed to limit the Company's remedies at law or in equity for any
breach of the provisions of Paragraph 5 hereof which may be available to the
Company.
7. TERMINATION:
(a) Termination Upon Death or Disability.
If during the Term, Executive should (i) die or (ii)
Executive becomes so physically or mentally disabled whether totally or
partially, that Executive is unable to perform the duties, functions and
responsibilities required hereunder for (aa) a period of three (3) consecutive
months or (bb) shorter periods aggregating to four (4) months within any period
of twelve (12) months ("Disability"), then in such event, Company may, at any
time thereafter, by written notice to Executive, terminate Executive's
employment hereunder. Executive agrees to submit to reasonable medical
examinations upon the request of Company. The existence of Executive's
disability for the purposes of this Agreement shall be determined by a reputable
physician selected by Company who is experienced in the relevant field of
medicine. If Executive's services are terminated, as aforesaid, Executive or the
designated beneficiary of Executive, shall be entitled to receive Executive's
base salary, accrued share of the Bonus for that Fiscal Year and unused vacation
(hereinafter collectively referred to as "Fringe Benefits"), if any, earned
through the date of Executive's termination and continuing thereafter for an
additional period of one year.
(b) Termination for Cause.
Company may terminate this Agreement and Executive's
employment hereunder, without any further obligation to Executive after the date
of termination (except as expressly provided herein) for "cause" which includes,
and shall be limited to, any of the following;
6
7
(i) a material breach of this Agreement by Executive; (ii) the failure of
Executive to perform services and duties exclusively for Company (excluding any
passive income or unrelated activities); (iii) a material failure by Executive
to comply with any material rule or regulation of Company reasonably related to
his employment (which rule or regulation has been previously disclosed in
writing to Employer); (iv) Executive's willful insubordination; or (v)
Executive's commission of a felony. Any termination of Executive's services
hereunder shall be effected by notice in writing stating the reason therefor,
which notice shall be given to Executive as provided in Paragraph 11 hereof. To
the extent practicable, Executive shall have the opportunity to cure any breach
within forty five (45) days after receiving written notice thereof from Company.
The foregoing cure provision will not be applicable to conduct which had
previously been the subject of such notification. In the event Executive is
terminated for "cause", Company's obligations to Executive shall be limited to
the payment to Executive of the base salary through such effective date of
termination, Executive's accrued share of the Bonus for that Fiscal Year and all
of Executive's Fringe Benefits.
(c) Termination Without Cause.
If the Company terminates this Agreement without
cause by written notice to the Executive:
(i) Executive shall be entitled to receive from the Company within
seven (7) days from the effective date specified in the Company's notice of
termination, a lump sum payment equal to the Annual Salary, unpaid vacation pay,
unreimbursed business expenses, and any other monies payable to the Executive
under any employee benefit plan, in each case earned through the date of the
Executive's termination, and;
(ii) Executive shall have the right to obtain a transfer of any life
insurance policy existing for the benefit of Executive from and after the
effective date specified in the Company's notice of termination through the last
day of the Term, and
(iii) Executive will be paid, as due and scheduled under this
Agreement, as if Executive had not been terminated, one half of the balance of
the Annual Salary payable through the end of the then current term, with a
minimum payable of one (1) year's Annual Salary, and a maximum payable of two
(2) years' Annual Salary.
(d) No Duty to Mitigate.
In the event that Executive's services to Company are
terminated for any reason other than as provided in Paragraph 7(b) above prior
to the completion of the Term hereof, or in the event that Executive terminates
this Agreement based upon the Company's material failure to perform its
obligations hereunder, Executive shall have no duty, either express or implied,
to mitigate any damages hereunder and the Company shall remain liable for all
compensation (whether salary, bonus or other benefits) provided for under the
terms of this Agreement. Any compensation earned by Executive in any capacity
after the date of such termination shall not reduce or mitigate the amounts
payable by the Company hereunder. Nothing herein shall be deemed to imply that
the Company has the right to terminate Executive's services without cause.
(e) Designation of Beneficiary.
7
8
The parties hereto agree that the Executive shall
designate, by written notice to the Company, a beneficiary to receive the
payments described in Section 7. in the event of his death and the designation
of any such beneficiary may be changed by the Executive from time to time by
written notice to the Company. In the event the Executive fails to designate a
beneficiary as herein provided, any payments which are to be made to the
Executive's designated beneficiary under Section 7. shall be made to the
Executive's widow, if any, during her lifetime. If the Executive has no
designees or widow, such payments shall be paid to the Executive's estate.
8. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES:
(a) Right to Enter Into Agreement.
Executive has the unfettered right to enter into this
entire Agreement on all of the terms, covenants and conditions hereof; and
Executive has not done or permitted to be done anything which may curtail or
impair any of the rights granted to Company herein.
(b) Breach Under Other Agreement or Arrangement.
Neither the execution and delivery of this Agreement
nor the performance by Executive of any of his obligations hereunder will
constitute a violation or breach of, or a default under, any agreement,
arrangement or understanding, or any other restriction of any kind, to which
Executive is a party or by which Executive is bound.
9. USE OF NAME:
Company shall have the right during the Term hereof to use
Executive's name, biography and approved likenesses in connection with Company's
business, including advertising their products and services; and Company may
grant such rights to others, but not for use as a direct endorsement.
10. ARBITRATION:
(a) Jurisdiction.
Any dispute whatsoever arising out of or referable to
this Agreement, including, without limitation, any dispute as to the rights and
entitlements and performance of the parties under this Agreement or concerning
the termination of Executive's employment or of this Agreement or its
construction or its validity or enforcement, or as to the arbitrator's
jurisdiction, or as to the arbitrability of any such dispute, shall be submitted
to final and binding arbitration in Los Angeles, California by and pursuant to
the Labor Arbitration Rules of the American Arbitration Association with
discovery proceedings pursuant to Section 1283.05 of the California Code of
Civil Procedure. The arbitrator shall be entitled to award any relief which
might be available at law or in
8
9
equity, including that of a provisional, permanent or injunctive nature. The
prevailing party in such arbitration as determined by the arbitrator, or in any
proceedings in respect thereof as determined by the person presiding, shall be
entitled to receive its or his reasonable attorneys' fees incurred in connection
therewith.
11. NOTICES:
(a) Delivery.
Any notice, consent or other communication under this
Agreement shall be in writing and shall be delivered personally, telexed, sent
by facsimile transmission or overnight courier (regularly providing proof of
delivery) or sent by registered, certified, or express mail and shall be deemed
given when so delivered personally, telexed, sent by facsimile transmission or
overnight courier, or if mailed, two (2) days after the date of deposit in the
United States mail as follows: to the parties at the following addresses (or at
such other address as a party may specify by notice in accordance with the
provisions hereof to the other):
(i) If to Executive, to his address at:
Xxxx X. Xxxxx
00000 Xxxxx Xxxx Xxxxx
Xxxxxxx Xxxxxxxxx XX 00000
(ii) If to Company, to its address at:
TEAM Communications Group, Inc.
00000 Xxxxxxxx Xxxxxxxxx Xxxxx 000
Xxx Xxxxxxx XX 00000
(b) Change of Address.
Either party may change its address for notice
hereunder by notice to the other party in accordance with this Section 11.
12. COMPLETE AGREEMENT; MODIFICATION AND TERMINATION:
This Agreement contains a complete statement of all the
arrangements between the parties with respect to Executive's employment by
Company and supersedes all existing agreements between them concerning
Executive's employment. This Agreement may be amended, modified, superseded or
canceled, and the terms and conditions hereof may be waived, only by a written
instrument signed by the parties or, in the case of a waiver, by the party
waiving compliance. No delay on the part of any party in exercising any right or
remedy hereunder shall operate as a waiver thereof, nor shall any waiver on the
part of any party of any such right or remedy, nor any single or partial
exercise of any such right or remedy preclude any other or further exercise
thereof or the exercise of any other right or remedy.
9
10
13. GOVERNING LAW:
This Agreement shall be governed by and construed in
accordance with the law of the State of California applicable to agreements
entered into and performed entirely within such State.
14. HEADINGS:
The headings in this Agreement are solely for the convenience
of reference and shall not affect its interpretation.
WHEREFORE, the parties hereto have executed this Agreement as of the
day and year first above written.
TEAM COMMUNICATIONS GROUP, INC.
By: __________________________
Agreed to and Accepted:
------------------------
Xxxx X. Xxxxx
10
