EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of the 7th
day of September, 1999 by and between NETTER DIGITAL ENTERTAINMENT, INC., a
Delaware Corporation ("Company"), and Xxx Xxxxxx ("Employee"):
1. ENGAGEMENT.
(a) Engagement; Title: Company hereby engages Employee, to render services as
a Senior Vice President in charge of Animation of Company and Employee hereby
accepts such engagement.
(b) Reporting. Employee shall report and be subject to the overall direction
and supervision of Xxxxxxx Xxxxxx, President and Xxxx Xxxxxxxx, Executive Vice
President.
2. NATURE AND PLACE OF SERVICES:
(a) Employee shall be primarily responsible for development and production of
animated productions and will render all services usually and customarily
rendered by and required of executives similarly employed in the entertainment
industry, as well as such other services as may be reasonably required by
Company.
(b) Employee shall render his services for the Company in Los Angeles County,
California.
(c) Employee shall be accorded credit on screen on a case by case basis
pursuant to the Company's practices.
3. EXCLUSIVITY: Employee shall work full-time for Company and its affiliates
during the Term hereof. Without limiting the foregoing, Employee's services
shall be rendered exclusively to Company and its affiliates hereunder during the
Term (as defined below) of this Agreement, and Employee shall not render
services of any nature to or for any other person, firm or corporation during
the Term of this Agreement without the prior written consent of Company. For so
long as Employee is employed pursuant to the terms hereof. Notwithstanding,
Company acknowledges that Employee is currently working on a project based on
"Viet Nam Veterans." (the "Project"). Employee shall endeavor to attach Company
to produce the Project. However, should Company not be attached, Employee may
pursue the production of the Project elsewhere, so long as Employee's services
on the Project do not materially interfere with Employee's obligations to
Company pursuant to the terms and conditions of this Agreement.
4. TERM: The term of this Agreement ("Term") shall commence on September 7,
1999 and, subject to termination as hereinafter provided, expire with the close
of business on September 6, 2001.
5. COMPENSATION:
(a) Fixed Salary. As consideration for the services to be rendered by
Employee pursuant hereto, and upon condition that Employee is substantially
performing all of the services required hereunder, that Employee is not in
material default, and that grounds do not then exist under this Agreement for
the termination of Employee hereunder, Company will pay or will cause to be paid
to Employee, subject to all applicable laws and requirements respecting
withholding of federal, state, and/or local taxes, a fixed annual salary,
payable in equal installments, no less frequently than semi-monthly, in the
amount of Two Hundred Thousand Dollars ($200,000)
(b) Stock Options: Company shall, effective upon the next Board of
Director's meeting ("Strike Date"), but no later than October 8, 1999, grant to
Employee an option to purchase Fifty Thousand (50,000) shares ("Option Shares")
of Company's Common Stock at a purchase price as set by the Board of Directors
on the Strike Date, subject to the terms and conditions of that certain Employee
Stock Option Plan dated as of August 29, 1997 (the "Stock Option Plan").
(c) Employee Benefits:
(i) Reimbursements: Company shall reimburse Employee for all ordinary
and necessary business, entertainment, travel and other expenses reasonably
incurred by Employee in the performance of Employee's duties and obligations
under this Agreement. Company agrees to repay or reimburse Employee for such
business expenses upon the presentation of itemized statements of such business
expenses in accordance with Company's policy.
(ii) Annual Vacations: Employee shall be entitled to take two (2) weeks
annual vacation for each Term Year.
(iii) Employee Benefits: Company shall provide Employee with health
insurance no less favorable in benefits than any other employee of Company. To
the extent that Company establishes any other employee benefit plan which
provides benefits to executives of Company generally, Employee shall be entitled
to participate in such plan pursuant to the terms thereof, except that Company
may exclude, except to the extent provided in paragraph 5(b) above, Employee's
participation in any plan which is a stock option plan or plan similar to a
stock option plan.
6. REPRESENTATIONS AND WARRANTIES:
(a) Representations of Employee. Employee represents and warrants that
Employee has all right, power, authority and capacity, and is free to enter into
this Agreement; that by doing so, Employee will not violate or interfere with
the rights of any other person or entity; and that Employee is not subject to
any contract, understanding or obligation which will or might prevent, interfere
with or impair the performance of this Agreement by Employee. Employee will
indemnify and hold Company harmless with respect to any losses, liabilities,
demands, claims, fees, expenses, damages and costs (including attorneys fees and
court costs) resulting from or arising out of any claim or action based upon
Employee's entering into this Agreement.
(b) Representations of Company. Company represents and warrants that Company
has all right, power and authority, without the consent of any other person, to
execute and deliver, and perform its obligations under, this Agreement. All
corporate and other actions required to be taken by Company to authorize the
execution, delivery and performance of this Agreement and the consummation of
all transactions contemplated hereby have been duly and properly taken. This
Agreement is the lawful, valid and legally binding obligation of Company,
enforceable in accordance with its terms.
7. RELATIONSHIP AND COVENANTS OF EMPLOYEE:
(a) Covenant Not To Disclose: Employee shall not at any time during or
after the termination of the Term, knowingly reveal, divulge or make known to
any person (other than Company or its affiliates) or use for Employee's own
account any confidential information concerning or used by Company of which
Employee was apprised or otherwise had become aware during the term of
Employee's employment by Company (excluding any such information which becomes
public for reasons other than Employee's breach of this Agreement or which
Employee is required to disclose by law).
(b) Covenant to Deliver Records: All memoranda, notes, records and other
documents made or compiled by Employee, or made available to Employee during the
term of this Agreement concerning the business of Company shall be Company's
property and shall be delivered to Company on the termination of this Agreement
or at any other time on request. Employee shall keep in confidence and shall not
use for Employee or others, or divulge to others, any secret or confidential
information, knowledge or data of Company obtained by Employee as a result of
Company's employment, unless authorized by Company or required by law. Employee
shall be entitled to retain for his own records only copies of any and all
memoranda, notes, records and other documents made or compiled by Employee
during the Term of this Agreement.
(c) Covenant Not To Divert: Employee shall not so long as Employee is
employed hereunder, or if such employment shall terminate during or at the
expiration of the Term, for a period of one year following such termination,
directly or indirectly, either on Employee's own behalf, or as a member of a
partnership, joint venture or corporation, or as an employee or agent on behalf
of any person, firm, partnership, joint venture or corporation, either
(i) solicit, induce (or attempt to induce), or endeavor to entice away any
clients of Company (unless Company consents in writing), (ii) solicit, divert,
or seek to develop or exploit any existing entertainment projects on which
Company is working at the time of termination (unless Company thereafter advises
Employee in writing that it has abandoned such project) , or (iii) solicit,
interfere with, induce (or attempt to induce) or endeavor to entice away any
employee associated with Company to become affiliated with him or any other
person, firm, partnership, joint venture, corporation or business organization.
Notwithstanding the foregoing, Employee will not induce a breach or interfere
with Company's contractual rights with any third parties. Employee may
undertake business with clients, talent and/or others where such business does
not violate the preceding sentence.
(d) Limitations on Covenants: The provisions under this Paragraph 7 shall
survive the termination of this Agreement. The parties hereto agree that in the
event any of the provisions set forth in this Paragraph 7 are held by any court
or other duly constituted legal authority to be effective in any particular area
or jurisdiction only if modified to limit their duration or scope or to be void
or otherwise unenforceable in any particular area or jurisdiction, then such
provisions shall be deemed amended and modified with respect to that particular
area or jurisdiction so as to comply with the order of any such court or other
duly constituted legal authority and, as to all other areas and jurisdictions,
and as to all other provisions of this Paragraph 7, such provisions shall remain
in full force and effect as set forth in this Agreement.
(e) Remedies: Employee acknowledges that Company will have no adequate
remedy at law if Employee violates the terms of the provisions of this Paragraph
7 or any other provisions of this Agreement (including, without limitation, the
exclusivity provisions of Paragraph 3, above). In such event, Company shall have
the right, in addition to any other rights it may have, to obtain in any court
of competent jurisdiction injunctive relief to restrain any breach or threatened
breach or specific performance of this Agreement.
8. CERTAIN RIGHTS OF COMPANY: Company shall have the right (but not the
obligation) to use, publish and broadcast, and to authorize others to do so, the
name, approved likeness and approved biographical material of Employee to
advertise, publicize and promote the business of Company and of affiliates,
but not for the purposes of direct endorsement without Employee's consent. An
"approved likeness" and "approved biographical material" shall be, respectively,
any photograph or other depiction of Employee, or any biographical information
or life story concerning the professional career of Employee, which has been
submitted to and approved by Employee prior to its first use, publication or
broadcast, such approval not to be unreasonably withheld.
9. TERMINATION:
(a) Disability: If Employee shall be rendered incapable by illness (physical
or mental disability) of substantially complying with the material terms,
provisions and conditions hereof on his part to be performed for a period in
excess of 45 consecutive days or 90 days in the aggregate during the Term, then
Company may, at its option, prior to the date Employee resumes the rendering of
services, terminate this Agreement by written notice to that effect sent by
registered or certified mail. Such termination shall terminate any and all
obligations to Employee under this Agreement effective as of the date of such
written notice except (i) Employee's right to receive the Fixed Salary in
Paragraph 5(a) for the Term Year in which the date of such written notice falls,
pro-rated to the date of such written notice, and (ii) Employee's vested rights
with respect to the option set forth in the Employee Stock Option Plan.
(b) Death: If Employee dies during the Term of this Agreement, such death
shall terminate any and all obligations to Employee under this Agreement
effective as of the date of death except (i) Employee's right to receive the
Fixed Salary in Paragraph 5(a) for the Term Year in which the date of death
falls, pro-rated to the date of death, and (ii) Employee's vested rights with
respect to the option set forth in the Employee Stock Option Plan.
(c) Cause Company may terminate Employee's employment hereunder for cause,
which shall mean (i) indictment of Employee for a felony or a crime involving a
high degree of moral turpitude, (ii) the commission by Employee of an act or
acts of dishonesty constituting a crime, which act or acts are intended to
result directly or indirectly, in gain or personal enrichment at the expense of
Company or any of its subsidiaries or affiliates by Employee, (iii)
certification by a medical doctor that Employee is a habitual alcoholic or is a
narcotic addict, (iv) Employee's material breach of this Agreement. To the
extent that a breach pursuant to subparagraph (iv) is curable by Employee
without harm to Company or its reputation, then Company shall, instead of
immediately terminating Employee pursuant to this Paragraph, provide Employee
with notice of such breach and, specifying the actions required to cure such
breach. Employee shall have ten days to cure such breach by performing the
actions so specified. If Employee fails to cure such breach within the ten day
period, Company may terminate Employee. Any termination pursuant to this
Paragraph shall terminate any and all obligations to Employee under this
Agreement and the Stock Option Agreement effective as of the date of such
written notice except Employee's right to receive the Fixed Salary in Paragraph
5(a) for the Term Year in which the date of such written notice falls, pro-rated
to the date of such written notice.
(d) At Convenience of Company: Company shall have the absolute and
unconditional right to terminate Employee's employment hereunder at any time,
other than pursuant to Paragraphs 9(a), 9(b) or 9(c), by a ninety day (90)
written notice to that effect delivered in person or sent by registered or
certified mail. Such termination shall terminate any and all obligations to
Employee under this Agreement, subject to Company's obligation to pay Employee
the remaining Compensation due and owing to Employee, on Company's regular
payroll periods for the balance of the Term and Employee's vested rights, if
any, with respect to the grant of options set forth in paragraph 5(b), above.
Notwithstanding the foregoing, any compensation due and owing to Employee
hereunder shall be subject to offset based on any money paid or payable to
Employee for services rendered to third parties, during the balance of the
Term.
10. ARBITRATION:
(a) The terms of this Paragraph 10.contain the sole and exclusive method,
means and procedure to resolve any and all claims, disputes or disagreements
arising under this Agreement, except those arising under the provisions of
Paragraph 8, above. The parties irrevocably waive any and all rights to the
contrary and shall at all times conduct themselves in accordance with the terms
of this Paragraph 10; any attempt to circumvent the terms of this Paragraph 10
shall be null and void and of no force or effect.
(b) Within ten (10) days after delivery of written notice (the "Notice of
Dispute") of the existence and nature of any dispute given by any party to the
other party, and unless otherwise provided herein in any specific instance, the
parties shall each (i) appoint one (1) lawyer or retired judge licensed to
practice law in the County of Los Angeles for a continuous period immediately
preceding the date of delivery (the "Dispute Date") of the Notice of Dispute
of not less than ten (10) years, but who has at no time ever represented or
acted on behalf of any of the parties, and (ii) deliver written notice of the
identity of such lawyer and a copy of his or her written acceptance of such
appointment and acknowledgment of and agreement to be bound by the time
constraints and other terms of this Paragraph 10 (the "Acceptance") to the other
party hereto. In the event that any party fails to so act, that party's
arbitrator shall be appointed pursuant to the same procedure that is followed
when agreement cannot be reached as to the third arbitrator. Within ten (10)
days after such appointment and notice, such lawyers shall appoint a third
lawyer (who, together with the first two (2) lawyers, shall hereinafter be
referred to collectively as the "Arbitration Panel") of the same qualification
and background as the first two (2) lawyers (including the qualification that he
or she has at no timeever represented or acted on behalf of any of the parties)
and shall deliver written notice of the identity of such lawyers and a copy of
his or her written Acceptance of such appointment to each of the parties. If
agreement cannot be reached on the appointment of a third lawyer within such
period, such appointment and notification shall be made as rapidly as possible
by any court of competent jurisdiction, by any licensing authority, agency or
organization having jurisdiction over such lawyers, by any professional
association of lawyers in existence for not less than ten (10) years at the time
of such dispute or disagreement and the geographical membership boundaries of
which extend to the County of Los Angeles, or by any arbitration association or
organization in existence for not less than ten (10) years at the time of such
dispute or disagreement and the geographic boundaries of which extend to the
County of Los Angeles, as determined by the party giving such Notice of Dispute
and simultaneously confirmed in writing delivered by such party to the other
party. Any such court, authority, agency, association or organization shall be
entitled either to directly select such third lawyer or to designate in writing
delivered to each of the parties an individual who shall do so. In the event of
any subsequent vacancies or inabilities to perform among the Arbitration Panel,
the lawyer or lawyers involved shall be replaced in accordance with the terms of
this Paragraph 10 as if such replacement was an initial appointment to be made
under this Paragraph 10 within the time constraints set forth in this Paragraph
10, measured from the date of notice of such vacancy or inability to the person
or persons required to make such appointment, with all attendant consequences of
failure to act timely if such appointment is not so made. Unless the parties
shall otherwise agree, all arbitration proceedings shall be conducted at such
location within Los Angeles County as the members of the Arbitration Panel shall
by majority vote from time to time designate.
(c) The Arbitration Panel shall (i) enforce and interpret the rights and
obligations set forth in this Agreement to the extent not prohibited by law,
(ii) fix and establish any and all rules as it shall consider appropriate in its
sole and absolute discretion to govern the proceedings before it, including any
and all rules of discovery, procedure and/or evidence, provided however, that
such rules shall be consistent with such rules established by the American
Arbitration Association and (iii) make and issue any and all orders, final or
otherwise, and any all awards, as a court of competent jurisdiction sitting at
law or in equity could make and issue and as it shall consider appropriate in
its sole and absolute discretion, including the awarding of monetary damages
(but specifically excluding the awarding of consequential, punitive or exemplary
damages or the awarding of attorneys' fees and costs to either party) to the
prevailing party as determined by the Arbitration Panel in its sole and absolute
discretion, and the issuance of injunctive relief.
(d) The decision of the Arbitration Panel shall be final and binding, and may
be confirmed and entered by any court of competent jurisdiction at the request
of any party and may not be appealed to any court of competent jurisdiction or
otherwise, except upon a claim of fraud on the part of any member of the
Arbitration Panel (except as to the arbitrator chosen by the party claiming the
fraud), or on the basis of a manifest error as to the applicable law. The
Arbitration Panel shall retain jurisdiction over any dispute until its award has
been implemented, and judgment on any such award may be entered in any court
having appropriate jurisdiction and may be enforced against either party and its
assets pursuant to applicable laws and procedures.
(e) The compensation and expenses of the Arbitrators shall be borne by the
non-prevailing party as determined by the Arbitration Panel in its sole and
absolute discretion, unless the Arbitration Panel does not make a determination
that one of the parties is the prevailing party, in which case the parties shall
bear the cost as fixed by the Arbitration Panel.
11. GENERAL:
(a) Assignment; Successors; Affiliates. Company may assign this Agreement (or
the interest of Company therein) to any affiliate of Company or to any entity
which is a party to a merger, reorganization, or consolidation with Company or
to a subsidiary of Company or to an entity or entities acquiring substantially
all of the assets of Company or of any division with respect to which Employee
is providing services (providing any such assignee assumes Company's obligations
under this Agreement). Employee shall, if requested by Company, perform
Employee's services and duties, as specified in this Agreement, to or for the
benefit of any subsidiary or other affiliate of Company. Upon such assignment,
acquisition, merger, consolidation, or reorganization, the term "Company" as
used herein shall be deemed to refer to such assignee or such successor entity.
Notwithstanding anything herein to the contrary, no assignment by Company may
change the reporting provision of paragraph 1(b), above. Should both Xxxxxxx
Xxxxxx and Xxxx Xxxxxxxx cease working full time for the Company, Employee may
terminate this Agreement, subject to thirty (30) days prior written notice.
Should Employee elect such termination, Employee's stock options ganted pursuant
to paragraph 5(b) above, shall vest, if at all, pursuant to terms and conditions
of the Stock Option Plan. Employee shall not have the right to assign
Employee's interest in this Agreement, any rights under this Agreement or any
duties imposed under this Agreement nor shall Employee (or Employee's spouse,
heirs, beneficiaries, administrator's or executors) have the right to pledge,
hypothecate or otherwise encumber Employee's right to receive compensation
hereunder without the consent of Company.
(b) Headings: The subject headings of the paragraphs and subparagraphs of
this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.
(c) Severability: It is agreed that if any term, covenant, provision,
paragraph or condition of this Agreement shall be illegal, such illegality shall
not invalidate the whole Agreement but it shall be construed as if not
containing the illegal part, and the rights and obligations of the parties shall
be construed and enforced accordingly.
(d) Entire Agreement: The parties hereto agree that this Agreement
supersedes all existing agreements between Company and Employee, whether oral,
written, expressed or implied, and contains the entire understanding and
agreement between the parties. This Agreement shall not be amended, modified
or supplemented in any respect except by a subsequent written agreement entered
into by both parties hereto.
(e) Choice of Law: This Agreement and the performance hereunder shall be
construed in accordance with and under and pursuant to the internal substantive
laws of the State of California applicable to agreements fully executed and to
be performed entirely in such state.
(f) Notices: All communications and notices hereunder shall be in writing and
shall be deemed to have been duly given and delivered personally if sent by
United States registered or certified mail, postage prepaid:
If to Company: Netter Digital Entertainment, Inc..
0000 Xxxxxxxxxx Xxxx.
Xxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
If to Employee: Xxx Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
With a copy to: Catalyst Literary and Talent Agency
00000 Xxxx Xxx Xxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
or to such other addresses as may be designated in writing by either of the
parties.
IN WITNESS WHEREOF, Company and Employee have executed this Agreement as of
the 7th of September, 1999.
NETTER DIGITAL ENTERTAINMENT, INC.
/s/Xxxxxxx Xxxxxx
-----------------
Xxxxxxx Xxxxxx
Its: President
Agreed and Accepted:
/s/Xxx Xxxxxx
-------------
Xxx Xxxxxx
