EXHIBIT 10.3
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is made and entered into as of the 7th day of
June, 1996, by and between MSH ENTERTAINMENT CORPORATION, a Utah corporation
(the "Company"), and Xxxxxxxxxxx Xxxxx (the "Executive").
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PRELIMINARY STATEMENTS:
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A. The Executive is currently employed as President of East End
Productions, Inc. and East End Communications, Inc. and X.X. Xxxx, Inc., each of
which is a California corporation (collectively, "EEP").
B. The Executive possesses intimate knowledge of the business and affairs
of EEP, its policies, methods and personnel.
C. The Company, EEP, and the Executive (as agent and attorney-in-fact
for the shareholders of EEP) have entered into an Agreement dated as of June 7,
1996 (the "Agreement"), pursuant to which the Company will purchase the Assets
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of the EEP.
D. The Board of Directors of the Company (the "Board") recognizes that
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the Executive has contributed to the growth and success of EEP and desires to
assure the Company of the Executive's continued employment and to compensate him
therefor.
E. The Board has determined that this Agreement will reinforce and
encourage the Executive's continued attention and dedication to the Company.
F. The Executive is willing to make his services available to the Company
on the terms and conditions hereinafter set forth.
AGREEMENT:
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NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. EMPLOYMENT.
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1.1 GENERAL. The Company hereby agrees to employ the Executive,
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and the Executive hereby agrees to serve the Company, on the terms and subject
to the conditions set forth herein.
1.2 DUTIES OF EXECUTIVE. During the term of this Agreement, the
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Executive shall serve as an executive of the Company, shall diligently perform
all services as may be assigned to him by the Board, and shall exercise such
power and authority as may from time to time be delegated to him by the Board.
The Executive shall devote his full time and attention to the business and
affairs of the Company, render such services to the best of his ability, and use
his best efforts to promote the interests of the Company.
2. TERM.
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2.1 INITIAL TERM. The initial term of this Agreement and the
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employment of the Executive hereunder shall expire on the later to occur of the
following: (i) three years after the date the transactions contemplated by the
Agreement are consummated; or (ii) the Aggregate Purchase Consideration has
been paid to the Seller (the "Initial Term"), unless sooner terminated in
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accordance with the terms and conditions hereof.
2.2 RENEWAL TERMS. The Initial Term of this Agreement, and the
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employment of the Executive hereunder, may be renewed and extended for such
period or periods as may be mutually agreed to by the Company and the Executive
in a written supplement to this Agreement signed by the Executive and the
Company (the "Written Supplement"). If this Agreement is not so renewed and
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extended prior to the expiration of the Initial Term, this Agreement, and the
employment of the Executive hereunder, shall automatically terminate upon the
expiration of the Initial Term.
3. COMPENSATION. The Executive shall receive a base salary at the annual
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rate of $150,000 (the "Base Salary") during the Initial Term of this Agreement,
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with such Base Salary payable in installments consistent with the Company's
normal payroll schedule, subject to applicable withholding and other taxes. If
the term of this Agreement shall be renewed and extended as provided in Section
2.2 hereof, then during such renewal term of his employment hereunder the
Executive shall be paid a base salary as set forth in the Written Supplement.
The Company shall place $150,000 (the "Escrow Fund") in an escrow account to
secure the Company's performance of its obligations under this Agreement. The
Executive's Base Salary for the Initial Term will be paid out of the Escrow
Fund.
3.1 PRODUCER AND DIRECTOR DUTIES. The Company will act in good faith
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to assign either producer or director duties to the Executive where reasonably
practicable under all the circumstances. Fees shall not exceed industry
standards. The Executive shall not be assigned as both the producer and
director of the same project and will not be assigned to every project.
Assignments shall be made at the sole direction of the Company.
3.2 RESOLUTION OF DISPUTES. In the event of a dispute as to the
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amount of director's or producer's fees, the parties agree to single-arbitrator
arbitration under the Commercial Rules of the American Arbitration Association
with the arbitration forum to be in San Francisco, California.
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4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
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4.1 EXPENSE REIMBURSEMENT. The Executive shall be entitled to
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reimbursement by the Company for all reasonable business expenses incurred by
him in connection with the performance of his duties hereunder; provided,
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however, that such entitlement is conditioned upon the Executive providing the
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Company with appropriate documentation of such expenses in accordance with
Company policy.
4.2 OTHER BENEFITS. The Executive shall be entitled to
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participate in all medical, hospitalization, disability and group life insurance
plans, and any and all other employee benefit plans, as are presently and
hereinafter provided by the Company to its executives. The Executive shall be
entitled to four weeks vacation per year in accordance with the Company's
prevailing policy for its executives; provided, however, that in no event may a
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vacation be taken when to do so could reasonably be expected to materially and
adversely affect the Company's business. In addition, the Executive shall be
entitled to the benefits set forth on Exhibit "A" attached hereto.
Notwithstanding the foregoing, except as set forth on Exhibit "A", the Executive
shall be entitled to employee benefits which are no less favorable than those
currently in operation in the Company.
4.3 WORKING FACILITIES. The Company shall furnish the Executive with
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an office, secretarial help and other facilities and services suitable to his
position and adequate for the performance of his duties hereunder.
4.4 FEES. The Executive shall be entitled to be paid additional
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amounts from the Company for producing and directing programs and projects.
Such fees may not exceed industry standards, and may in fact be less than
industry standards in keeping with the Company's desire to create a reputation
for producing quality, low to moderate budget programming.
4.5 DIRECTORSHIP. During the term of the Executive's employment with
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the Company, the Executive shall be given a seat on the Company's board of
directors.
4.6 STOCK OPTIONS. Executive will have the right to participate in
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the Company's existing Stock Option Plan. The number and price for such stock
options shall be based on the performance of the Company and the Executive.
5. TERMINATION.
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5.1 TERMINATION FOR CAUSE. The Company shall at all times have
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the right, upon written notice to the Executive, to terminate the Executive's
employment hereunder for Cause (as hereinafter defined). For purposes of this
Agreement, the term "Cause" shall mean (a) a willful breach by the Executive of
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any of the material terms or provisions of this Agreement, (b) the charging or
indictment of the Executive in connection with a felony, (c) commission by the
Executive of an act or acts involving fraud, embezzlement, misappropriation,
theft, breach of fiduciary duty or dishonesty against the property or personnel
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of the Company, or (d) willful or reckless conduct by the Executive which the
Board in good faith determines could reasonably be expected to have a material
adverse effect on the business, assets, properties, results of operations,
financial condition or prospects of the Company. Upon any termination pursuant
to this Section 5.1, the Executive shall be entitled to be paid his Base Salary
to the date of termination and the Company shall have no further liability under
this Agreement (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however to the provisions of
Section 4.1).
5.2 DISABILITY. The Company shall at all times have the right,
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upon written notice to the Executive, to terminate the Executive's employment
hereunder, if the Executive shall, as the result of mental or physical
incapacity, illness or disability, become unable to perform his duties hereunder
for in excess of 60 consecutive calendar days or 90 calendar days in any 12-
month period. Upon any termination pursuant to this Section 5.2, (a) the
Company shall pay to the Executive (i) immediately any unpaid amounts of his
Base Salary accrued through the effective date of termination, (ii) plus one
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year's Base Salary, plus (iii) in accordance with Section 3.2(b), an amount
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equal to the Incentive Compensation, if any, payable to him in respect of the
fiscal year of the Company in which such termination occurs, prorated for the
period of service by the Executive from the beginning of such fiscal year
through the date of termination, and (b) the Company shall have no further
liability under this Agreement (other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the provisions of Section 4.1).
5.3 DEATH. In the event of the death of the Executive during
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the term of his employment hereunder, (a) the Company shall pay to the estate of
the deceased Executive (i) immediately any unpaid amounts of his Base Salary
accrued through the date of his death, (ii) plus one year's Base Salary, plus
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(iii) in accordance with Section 3.2(b), an amount equal to the Incentive
Compensation, if any, payable to him in respect of the fiscal year of the
Company in which such death occurs, prorated for the period of service by the
Executive from the beginning of such fiscal year through the date of his death,
and (b) the Company shall have no further liability under this Agreement (other
than for reimbursement for reasonable business expenses incurred prior to the
date of the Executive's death, subject, however to the provisions of Section
4.1).
5.4 TERMINATION WITHOUT CAUSE. At any time the Company shall
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have the right to terminate the Executive's employment hereunder by written
notice to the Executive; provided, however, that the Company shall (i) on the
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effective date of termination specified in the notice, pay to the Executive any
unpaid Base Salary accrued through the effective date of termination, (ii) pay
the executive his then-effective Base Salary through the Term of this Agreement
plus any applicable extensions or renewals, or otherwise for the remainder of
the then-applicable contractual term of employment; and (iii) in accordance with
Section 3.2(b), pay the Executive an amount equal to the Incentive Compensation,
if any, payable to him in respect of the fiscal year of the Company in which
such termination occurs, prorated for the period of service by the Executive
from the beginning of such fiscal year through the date of termination. Upon
such termination and payments, the Company shall have no further liability under
this Agreement (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however to the provisions of
Section 4.1).
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5.5 TERMINATION BY EXECUTIVE. In the event the Executive voluntarily
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terminates his employment with the Company, the Company, consistent with current
labor laws, and, subject to Section 6.5, shall pay to the Executive any unpaid
Base Salary accrued through the date of termination. Upon any termination
pursuant to this Section 5.5, the Executive shall be entitled to be paid his
Base Salary to the date of termination and the Company shall have no further
liability under this Agreement (other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however to
the provisions of Section 4.1).
6. RESTRICTIVE COVENANTS.
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6.1 NON-COMPETITION. While employed by the Company and during the
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Non-competition Period (as hereinafter defined), subject to limitations on
enforcement of Section 6.5, the Executive shall not, directly or indirectly,
engage in or have any interest in any sole proprietorship, partnership,
corporation or business or any other person or entity (whether as an employee,
officer, director, partner, agent, security holder, creditor, consultant or
otherwise) that directly or indirectly engages in activities which are in direct
competition with the major activities of the Company, or which result in the
loss of customers to the Company. For purposes of this Section 6.1, the term
"Non-competition Period" shall mean (a) in the event the Executive's employment
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is terminated pursuant to Section 5.4, the period beginning on the effective
date of such termination and ending one year thereafter, or (b) in the event the
Executive's employment hereunder is terminated for any other reason, a period of
two years following the date his employment is terminated.
6.2 NONDISCLOSURE. The Executive shall not divulge,
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communicate, or use to the detriment of the Company or for the benefit of any
other person or persons, or misuse in any way, any confidential information
pertaining to the business of the Company. Any confidential information or data
now known or hereafter acquired by the Executive with respect to the business of
the Company (which shall include, but not be limited to, information concerning
the Company's financial condition, prospects, customers, sources of leads,
methods of doing business, and the manner of design, manufacture, financing,
marketing and distribution of the Company's products) shall be deemed a
valuable, special and unique asset of the Company that is received by the
Executive in confidence and as a fiduciary, and the Executive shall remain a
fiduciary to the Company with respect to all of such information.
6.3 NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. While employed
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by the Company and for two years following the termination of his employment for
any reason, the Executive shall not, directly or indirectly, for himself or for
any other person, firm, corporation, partnership, association or other entity,
(a) attempt to employ or enter into any contractual arrangement with any
employee or former employee of the Company, unless such employee or former
employee has not been employed by the Company for a period in excess of one
year, or (b) call on or solicit any of the actual or targeted prospective
customers or clients of the Company, nor shall the Executive make known the
names and addresses of such customers or clients or any information relating in
any manner to the Company's trade or business relationships with such customers
or clients.
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6.4 BOOKS AND RECORDS. All books, records and accounts relating in
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any manner to the business, customers, suppliers or clients of the Company and
all other documents, disks, software or other items containing confidential
information relating to the Company, whether prepared by the Executive or
otherwise coming into the Executive's possession, shall be the exclusive
property of the Company and shall be returned immediately, together with any
copies, to the Company on termination of the Executive's employment hereunder or
on the Company's request at any time.
6.5 ENFORCEMENT OF THE NON-COMPETITION PERIOD. In the event the
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Executive is terminated for Cause, or voluntarily terminates his employment with
the Company, the Company shall only have the right to enforce the Non-
Competition Period by continuing to pay to the Executive the then applicable
installments of Base Salary. The enforceable Non-Competition Period shall be
extended as each installment is made by the period covered by such installment.
In the event that the Executive is terminated without cause, the
Company shall have the right to enforce the Non-Competition Period only by
paying the Executive the Average Total Compensation (as hereafter defined) at
the time of termination. The enforceable Non-Competition Period shall be
extended as each installment is made by the period covered by such installment,
and such Non-Competition may not exceed the limits set forth in Section 6.1,
unless otherwise mutually agreed. Average Total Compensation shall mean Base
Salary, plus director's and producer's fees and other compensation paid to the
Executive for the previous 12-month period.
7. INJUNCTION. It is recognized and hereby acknowledged by the parties
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hereto that a breach by the Executive of any of the covenants contained in
Section 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Section 6 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
8. GOVERNING LAW. This Agreement shall be governed by and construed
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in accordance with the internal laws of the State of California.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire
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agreement between the parties hereto with respect to the subject matter hereof
and, upon its effectiveness, shall supersede all prior agreements,
understandings and arrangements, both oral and written, between and among the
Executive, the Company and the Target (or any of their affiliates) with respect
to such subject matter. Except for the obligation to pay any accrued but unpaid
salary due the Executive, all such prior agreements, understandings and
arrangements for the provision of services by the Executive to the Target and/or
any of its affiliates and the compensation of the Executive in any form shall
automatically terminate upon the consummation of the transactions contemplated
by the Merger Agreement, and each party shall thereupon and thereby, without any
further action, release and forever discharge the other (and the other's
affiliates) from any and all liabilities and obligations of any nature arising
out of or in connection with any and all such prior agreements, understandings
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or arrangements. This Agreement may not be modified in any way unless by a
written instrument signed by both the Company and the Executive.
10. NOTICES. Any notice required or permitted to be given hereunder
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shall be deemed given when delivered by hand, by facsimile or three business
days after being deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, (i) if to the Company, to the
address of the Company's principal offices in San Francisco, California and (ii)
if to the Executive, to his address as reflected on the payroll records of the
Company, or to such other address as either party hereto may from time to time
give notice of to the other.
11. BENEFITS; BINDING EFFECT. This Agreement shall be for the
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benefit of and binding upon the parties hereto and their respective heirs,
personal representative, legal representatives, successors and, where
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise; provided, however, that under no circumstances may the Executive
delegate his employment obligations hereunder or any portion thereof.
12. SEVERABILITY. The invalidity of any one or more of the words,
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phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
13. WAIVER. The waiver by either party hereto of a breach or
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violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.
14. DAMAGES; PREVAILING PARTY. Nothing contained herein shall be
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construed to prevent the Company or the Executive from seeking and recovering
from the other damages sustained by either or both of them as a result of its or
his breach of any term or provision of this Agreement. If there is any legal
action or proceeding to enforce or interpret any provision of this Agreement or
to protect or establish any right or remedy of any party, the nonprevailing
party to such action or proceeding shall pay to the prevailing party all costs
and expenses, including reasonable attorneys' fees and costs, incurred by such
prevailing party in such action or proceeding, in enforcing its judgment, and in
connection with any appeal from such judgment. Reasonable attorneys' fees and
costs incurred in enforcing any judgment or in connection with any appeal shall
be recoverable separately from and in addition to any other amount included in
such judgment. The prevailing party's rights under this Section 14 shall not
merge into any judgment and shall survive until all such fees and costs have
been paid.
15. SECTION HEADINGS. The section headings contained in this
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Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this agreement.
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16. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
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Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
17. SUBSIDIARIES. All references to the "Company" in this Agreement,
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including but not limited to those in Section 6, shall be deemed to include any
and all of the Company's direct and indirect subsidiaries to the extent the
context may require.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
MSH ENTERTAINMENT CORPORATION,
a Utah corporation
By: /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx (Print Name)
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Its: Chairman
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/s/ XXXXXXXXXXX XXXXX
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Xxxxxxxxxxx Xxxxx
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EXHIBIT A
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EMPLOYEE BENEFITS
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(Xxxxx)
1. The Executive shall be entitled to the use of one of the two
automobiles provided to him by EEP (the "Old Automobile"). On or after June 1,
1996, the Executive shall have an option to purchase the Old Automobile from the
Company at a price equal to its net book value as recorded on the Company's
balance sheet (the "Option"). In the event that the Executive purchases the Old
Automobile pursuant to the Option, the Company shall provide to the Executive
for his use a leased automobile comparable to the automobiles provided to the
senior executives of the Company (the "New Automobile"). All reasonable
expenses for the maintenance and operation of the Old Automobile before the
exercise of the Option and the New Automobile thereafter shall be paid by the
Company.
2. If, in the performance of his duties on behalf of the Company, the
Executive should utilize a place of abode owned by the Executive or a member of
his immediate family while on a business trip away from his principal residence,
the Company shall pay to the Executive a lodging allowance of $175 per night.
Under no circumstances, however, shall the Executive be entitled to such payment
with respect to any place of abode owned or leased by him or by a member of his
immediate family in the San Francisco metropolitan area.
3. The Company shall not pay the Executive's personal expenses,
including, but not limited to, insurance, legal or accounting expenses.
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