EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
31st day of October, 1996 between Xxxxxxx X. Xxxxxxx ("Employee") and Overseas
Filmgroup, Inc., a Delaware corporation (the "Company").
WHEREAS, pursuant to an Agreement of Merger, dated as of July 2, 1996,
by and among Entertainment/Media Acquisition Corporation ("EMAC"), Overseas
Filmgroup, Inc. (the "Disappearing Corporation"), Xxxxxx X. Xxxxxx and Xxxxx
Xxxxxxxx Little, as amended by that certain Amendment to Agreement of Merger
dated as of September 20, 1996 by and among the same parties (as so amended,
the "Merger Agreement"), the Disappearing Corporation has been merged with and
into EMAC (the "Merger"), with EMAC being the surviving corporation which was
renamed "Overseas Filmgroup, Inc." at the effective time of the Merger; and
WHEREAS, Employee has been Chief Operating Officer and Chief Financial
Officer of the Disappearing Corporation, an entertainment company engaged in
the business of, among other things, motion picture distribution, for more than
five years, and, during such period Employee served in such positions, Employee
was a loyal and dedicated officer and employee of the Disappearing Corporation,
devoting his time and energies to the success of the Disappearing Corporation;
and
WHEREAS, Employee possesses special skills, knowledge, abilities and
experience unique to the Company's business and possesses an intimate knowledge
of the operations of the Disappearing Corporation which the Company deems
valuable and desirous of maintaining; and
WHEREAS, a condition to consummation of the Merger was that the
Company, as the surviving corporation in the Merger, and Employee enter into
this Agreement as of the date that the Merger becomes effective; and
WHEREAS, Employee and the Company desire to enter into this Agreement
setting forth the terms and conditions for the employment relationship of
Employee with the Company during the Term (as defined below).
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties to this Agreement hereby agree as follows:
1. SERVICES.
1.1 Employment. During the Term (as defined below), the Company hires
Employee to serve as Chief Operating Officer and Chief Financial Officer of the
Company and to perform such other services as the Company or its Affiliates may
from time to time reasonably request consistent with Employee's position and
duties with the Company and Employee's stature and experience (the "Services").
Employee agrees to perform such Services in a competent and professional
manner, consistent with the skills to be possessed by a senior executive in
Company's business. Employee shall comply with all of the reasonable and
customary employment policies of the Company and its Affiliates. For purposes
of this Agreement, "Affiliates" shall mean, as to any person, any other person
controlled by or under common control with (or, where applicable, controlling),
directly or indirectly, such person; and "person" shall mean any individual,
corporation, partnership, limited liability company, joint venture,
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association, joint-stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof, or any other
entity.
1.2 Location. During the Term, Employee's Services shall be performed
principally in Los Angeles, California or elsewhere in the western Metropolitan
Los Angeles area. In addition, the Services may be performed by Employee from
time to time on a temporary travel basis at such other locations as Company
shall reasonably request consistent with its reasonable business needs.
1.3 Reporting Requirements. During the Term, Employee shall report to
the persons holding the positions of Co-Chief Executive Officers of the Company
(or the person holding the position of Chief Executive Officer if such office
is not shared by two persons), the Board of Directors and the Executive
Committee thereof. During the Term, no person shall be interposed between
Employee and the persons holding the positions of Co-Chief Executive Officers
(or the person holding the position of Chief Executive Officer if such office
is not shared by two persons). Employee agrees to comply with Section "V" of
the Company's Operating Guidelines attached hereto as Exhibit "A."
1.4 Offices. The Company, in its discretion, may from time to time
during the Term appoint Employee to one or more additional offices of the
Company or its Affiliates and elect Employee to the Board of Directors of the
Company, such subsidiaries or Affiliates. Employee agrees to accept such
offices if consistent with Employee's stature and experience and with the type
of offices with the Company held by Employee.
1.5 Term. The term of Employee's employment under this Agreement (the
"Term") shall commence at the effective time of the Merger on the date first
written above (the "Effective Date") and shall end on October 30, 2001 unless
sooner terminated in accordance with the provisions of this Agreement. For
purposes of this Agreement, "Employment Year" shall mean each twelve month
period during the Term commencing on October 31, and ending on October 30, of
the following year.
1.6 Exclusivity. During the Term, the Services shall be rendered on a
full-time basis during normal working hours. During the Term of this Agreement
and of Employee's employment by the Company, all Services of Employee shall be
exclusive to the Company and its Affiliates and, among other things, Employee
shall not, directly or indirectly, (i) engage in any business for his own
account which is competitive with the businesses of the Company or Company's
Affiliates (collectively, "Competitive Business") so long as Company or
Company's Affiliates (as the case may be) continue to engage in such business;
(ii) enter the employ of, or render any services to, any person engaged in a
Competitive Business; (iii) become interested in a Competitive Business in any
capacity, including, without limitation, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant; or
(iv) induce any customer or supplier of Company or Company's Affiliates to
terminate its relationship with Company or Company's Affiliates (as the case
may be). Notwithstanding anything to the contrary stated in this Agreement,
Employee may acquire and/or retain, as an investment, and take customary
actions (including the exercise or conversion of any securities or rights) to
maintain and preserve Employee's ownership of any one or more of the following
(provided such actions, other than passive investment activities, do not
unreasonably interfere with Employee's Services hereunder): (i) securities of
any corporation that are registered under Sections 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and that are
publicly traded as long as Employee is not part of any control group of such
corporation and, in the case of public corporations in Competitive Businesses,
such securities do not constitute more than five percent of the outstanding
voting power of that public company; (ii) any securities of a partnership,
trust, corporation or other person so long as Employee remains a passive
investor in that entity and so long as such entity is not, directly or
indirectly, in
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competition with the Company or its Affiliates; (iii) securities or other
interests now owned or controlled, in whole or in part, directly or indirectly,
by Employee in any corporation or other person and which are identified on
Schedule 1.6 hereto; and (iv) securities of the Company or any of its
Affiliates. Nothing in this Agreement shall be deemed to restrict Employee's
ability to render on-going consultation to the entities listed on Schedule 1.6
hereto provided such consultation does not unreasonably interfere with
Employee's services hereunder.
1.7 Confidentiality. Employee acknowledges that in furnishing his
Services to the Company, he will, through the Term, come into close contact
(and through services provided to the Disappearing Corporation has come into
close contact) with many confidential affairs of the Company, including
confidential information about costs, profits, sales, pricing policies,
operational methods, and other confidential information not readily available
to the public (the "Confidential Materials"). In recognition of the foregoing,
Employee covenants and agrees that Employee will keep secret all material
confidential matters of the Company and its Affiliates and will not
intentionally disclose any material Confidential Materials to anyone outside
the Company and its Affiliates during or after the Term except in the course of
rendering the Services or with the Company's written consent. For purposes of
this Agreement, the term "Confidential Materials" does not include information
which at the time of disclosure has previously been made generally available to
the public by any means other than the wrongful act of Employee in violation of
this Section 1.7. Employee may use and disclose Confidential Materials to the
extent necessary to assert any right or defend against any claim arising under
this Agreement, to assert any right or defend against any claim pertaining to
Confidential Materials or their use, to comply with any applicable statute,
constitution, treaty, rule, regulation, ordinance or order, whether of the
United States, any state thereof, or any other jurisdiction applicable to
Employee after giving prior notice to the Company (time permitting), or if
Employee receives a request to disclose all or any part of the information
contained in the Confidential Materials under the terms of a subpoena, order,
civil investigative demand or similar process issued by a court of competent
jurisdiction or by a governmental body or agency, whether of the United States
or any state thereof, or any other jurisdiction applicable to Employee after
giving prior notice to the Company (time permitting). Employee will deliver
promptly to the Company on termination of the Term or at any other time Company
may so request, at Company's expense, all confidential memoranda, notes,
records, reports and other documents (and all copies thereof) relating to
Company's and its Affiliates' business, which Employee obtained while employed
by, or otherwise serving or acting on behalf of, Company, or which Employee may
then possess or have under his control; provided, however, that Employee may
maintain a copy of such documents to the extent necessary to assert any right
or defend against any claim arising under this Agreement; provided further,
that Employee shall promptly return such materials to the Company when it is no
longer necessary for Employee to maintain such materials in accordance with the
foregoing proviso.
1.8 Indemnification. The Company shall indemnify Employee to the
fullest extent allowed by applicable law. Without limiting the foregoing,
Employee shall be entitled to the benefit of the indemnification provisions
contained on the date hereof in the Bylaws of the Company and any applicable
Bylaws of any Affiliate, notwithstanding any future changes therein, and
Employee shall also be entitled to the benefit of the Indemnification Agreement
attached hereto as Exhibit "B" which shall be entered into between the Company
and Employee concurrently with the execution of this Agreement. During the
Term, Employee shall also be entitled to the protection of any insurance
policies the Company or any of its Affiliates may elect to maintain generally
for the benefit of its directors and officers against all costs, charges and
expenses whatsoever incurred or sustained by Employee or his legal
representatives in connection with any action, suit or proceeding to which
Employee (or his legal representatives or other successors) may be made a party
by reason of Employee being or having been a director or officer of
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the Company or any of its Affiliates or Employee serving or having served any
other enterprises as a director, officer or employee at the request of the
Company.
2. COMPENSATION; BENEFITS; EXPENSES.
As compensation and consideration for all Services provided by
Employee during the Term pursuant to this Agreement, the Company agrees to pay
to Employee the compensation set forth below.
2.1 Fixed Annual Compensation. During the Term, the Company shall pay
to Employee salary ("Fixed Annual Compensation") at the rate of $175,000 per
annum for the first two Employment Years, $200,000 per annum for the third and
fourth Employment Years and $225,000 per annum for the fifth Employment Year.
Fixed Annual Compensation payable to Employee by the Company hereunder shall be
paid at such times and in such amounts as the Company may designate in
accordance with the Company's usual salary practices, but in no event less than
once monthly.
2.2 Annual Bonus. During each Employment Year during the Term,
Employee shall be entitled to a bonus of $50,000 (the "Annual Bonus") payable
to Employee in four equal installments of $12,500 with the first installment
payable on the first day of the first full month of the Employment Year and the
remaining installments paid each three months thereafter. During the Term,
Employee shall also be entitled to such additional bonus, if any, as may be
granted to Employee by the Company's Board of Directors (with Employee
abstaining from any vote thereon) or compensation or similar committee thereof
in the Board's (or such committee's) sole discretion based upon Employee's
performance of his Services under this Agreement.
2.3 Stock Options. During the Term, Employee shall be entitled to
stock options ("Options"), if any, only if granted by the Board of Directors of
the Company or appropriate committee of the Board of Directors of the Company.
2.4 Employee Benefits. In addition to the foregoing, during the Term,
the Company agrees as follows:
2.4.1 To provide Employee with an automobile allowance of $1,200
per month during the Term ("Automobile Benefits").
2.4.2 During the Term, to include Employee and his eligible
dependents in any group hospital, surgical, officer's medical reimbursement and
medical and dental benefit plans of Company which the Company maintains for the
benefit of its general employees ("Health Insurance Benefits"); provided,
however, that the Company shall not be obligated to provide Employee's eligible
dependents any such Health Insurance Benefits which the Company is not also
providing to the eligible dependents of its general employees.
2.4.3 Employee shall be entitled for each Employment Year during
the Term to an aggregate of four weeks of vacation with full pay. Such vacation
shall be taken at such time or times during the applicable year as may be
determined by Employee subject to the Company's business needs ("Vacation
Benefits"). Employee shall be entitled to accrue vacation (beginning with any
vacation after December 31, 1995) and/or be paid therefor in accordance with
the Company's policies with respect thereto applicable to the Company's general
employees. Employee shall also be entitled for each Employment Year during the
Term to take a leave of absence of up to five business days (with full pay) if
required due to a serious illness in Employee's family.
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2.4.4 Employee shall be entitled to reimbursement of all
reasonable legal fees and expenses incurred in connection with the negotiation,
execution and delivery of this Agreement up to a maximum aggregate amount of
$5,000.
2.4.5 In addition to any life insurance benefits or insurance
coverage provided to Employee through any group plan of the Company or its
Affiliates, the Company during the Term shall provide Employee with life
insurance (from a reputable and financially-sound carrier of national standing
which is acceptable to Employee) providing the maximum amount of life insurance
benefits to Employee that are available under a life insurance policy with an
annual premium of $5,000 ("Life Insurance Benefits"). Employee shall be
entitled to name the beneficiary or beneficiaries of such policy. The Company
shall pay such annual premium of $5,000 directly to the insurance company;
provided, however, that Employee reserves the right (either before or after the
Company obtains such life insurance policy) to require the Company to pay
directly to Employee the premiums for such policy (and to assign the policy to
Employee if the Company has already obtained such policy) so that Employee owns
the policy and Employee makes the premium payments. In the event of a payment
on such policy during the Term, the Company will be paid its premium investment
in such policy from the policy benefits. Employee may supplement or increase
such insurance coverage by paying additional premiums in excess of the $5,000
annual premium to be paid by the Company. Upon expiration (or earlier
termination) of the Term, Employee shall have the right to require the Company
to assign any rights it may have in such life insurance policy to Employee.
Employee agrees that the Company may secure additional insurance on Employee's
life for the benefit of the Company, and Employee shall cooperate with the
Company (including taking such physical exams as an insurance carrier
reasonably requests) in connection with obtaining such insurance.
2.4.6 In addition to any disability benefits or insurance coverage
provided to Employee through any group disability plan of the Company or its
Affiliates, as well as in addition to any social security or workers'
compensation benefits provided to Employee, the Company during the Term shall
provide Employee with disability insurance with one or more substantial
carriers providing the maximum amount of disability benefits to Employee that
are available under a disability policy with an annual premium of $2,500
("Disability Insurance Benefits"). The Company shall pay such annual premium of
$2,500 directly to the insurance company; provided, however, that Employee
reserves the right (either before or after the Company obtains such disability
insurance policy) to require the Company to pay directly to Employee the
premiums for such policy (and to assign the policy to Employee if the Company
has already obtained such policy) so that Employee owns the policy and Employee
makes the premium payments. Employee may supplement or increase such insurance
coverage by paying additional premiums in excess of the $2,500 annual premium
to be paid by the Company. Upon expiration (or earlier termination) of the
Term, Employee shall have the right to require the Company to assign any rights
it may have in such disability insurance policy to Employee.
The foregoing Health Insurance Benefits, Automobile Benefits, Life
Insurance Benefits, Disability Insurance Benefits, and Vacation Benefits shall
be hereinafter referred to as "Special Benefits".
2.5 Additional Benefits. Without limiting any other provision hereof,
Employee shall be entitled to participate during the Term in any
profit-sharing, pension, health, insurance or other plans (including 401(k)
plans), benefits or policies available generally to the senior executive
employees of Company and not duplicative of those provided herein on the terms
determined by the Company in its sole and absolute discretion from time to
time, and Employee will be entitled during the Term to reimbursement of his
reasonable and customary business expenses (including first-class air travel)
incurred on behalf of the Company or the Company's Affiliates and for which
Employee makes an adequate
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accounting to the Company ("Additional Benefits"). The determination of the
adequacy of the accounting of the foregoing expenses shall be within the
reasonable discretion of the Company's independent certified accountants taking
into consideration the substantive requirements of the Internal Revenue Code of
1986, as amended.
3. TERMINATION.
3.1 Termination by Company.
3.1.1 Employee Material Breach. The Company shall have the right,
at its election, to terminate the Term, by written notice to Employee to that
effect, only for "good cause" defined for this purpose to mean (i) material and
repeated instances of misconduct or habitual failure to perform the Services,
(ii) a single act so grievous as to constitute the equivalent of such repeated
instances (including, without limitation, theft or misappropriation of the
Company's assets), (iii) unauthorized disclosure of confidential information
which is materially damaging to the Company, (iv) conviction of a felony
involving a crime of moral turpitude, or (v) a material breach of any covenant,
condition, agreement or term of this Agreement (each of (i) through (v)
constituting an "Employee's Material Breach") and only if the Company shall
have given written notice to Employee specifying the claimed cause or breach
and, provided such breach is curable, Employee fails to correct the claimed
breach or fails to alter the objectionable pattern of conduct specified in the
applicable written notice as soon as practical thereafter but no later than
thirty (30) days after receipt of the applicable notice or such longer time as
may be reasonably required by the nature of the claimed breach. However, in no
event shall a material breach of the provisions of Sections 1.7 or 3.1(ii),
(iii) or (iv) be subject to cure.
3.1.2 Effect of Termination by Company. Should the Term be
terminated by the Company by reason of Employee's Material Breach, Employee
shall have no right to any further Fixed Annual Compensation or Annual Bonus
from and after termination, or to any Special Benefits or Additional Benefits
accruing for the fiscal year of termination or thereafter, and all Options, if
any, not then vested shall terminate.
3.2 Termination by Employee.
3.2.1 Company's Material Breach. Employee shall have the right, at
his election, to terminate the Term by written notice to the Company to that
effect if the Company shall have failed to substantially comply with or perform
a material condition or covenant of this Agreement ("Company's Material
Breach"); provided that, if such breach is curable, termination for Company's
Material Breach will not be effective until Employee shall have given written
notice specifying the claimed breach and the Company fails to correct the
claimed breach within thirty (30) days after the receipt of the applicable
notice or such longer time as may be reasonably required by the nature of the
claimed breach (but within ten business days, if the failure to perform is a
failure to pay monies when due under the terms of this Agreement).
3.2.2 Effect of Termination by Employee. Subject to the provisions
of Section 3.4 below, should Employee terminate the Term due to Company's
Material Breach, Company shall, for the then remainder of the Term, pay to
Employee or provide Employee with:
(i) Employee's Fixed Annual Compensation,
(ii) Annual Bonuses,
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(iii) Health Insurance Benefits,
(iv) Life Insurance Benefits,
(v) Disability Benefits, and
(vi) Automobile Benefits.
In addition, all Options, if any, shall vest on the date of such termination.
Employee shall also receive, through the date of termination, such Vacation
Benefits accrued but unpaid through such date. All other benefits shall cease
on the date of termination of employment.
Should Employee terminate the Term other than for Company's Material
Breach, such termination shall be treated as a termination by the Company for
Employee's Material Breach.
3.3 Employee's Death or Disability.
3.3.1 Death. The Term shall immediately terminate upon Employee's
death as certified in accordance with the provisions of California law
("Death").
3.3.2 Disability. As used herein, the term "Disability" shall have
such meaning as set forth in the Company's disability policy in effect as of
the date hereof. If there is no Company disability policy in effect on the date
of a potential Disability, the term "disability" shall mean Employee becoming
unable to perform the Services as a result of his permanent or temporary, total
or partial, physical or mental disability. In such event, absent a Material
Breach by Employee, Company shall not have the right (notwithstanding any other
provision of this Agreement to the contrary) to terminate the Term due to
Disability prior to the expiration of the Disability Period. As used herein,
the term "Disability Period" shall mean the period commencing on the first day
of the calendar month following the month during which such Disability occurs
and ending on the first to occur of the following: (i) the expiration of the
Term; (ii) if the Disability is continuous throughout the five consecutive
months following the month during which the Disability occurs, then the last
day of such fifth consecutive calendar month; and (iii) if the Disability is
intermittent and shall exist throughout each of any twelve calendar months
following the month during which the Disability occurs, then the last day of
such twelfth calendar month.
3.3.3 Effect of Death or Disability.
(a) Fixed Annual Compensation, Special Benefits and
Additional Benefits: Should the Term be terminated in accordance with the
provisions of Sections 3.3.1 or 3.3.2 by reason of Employee's Death or
Disability, Employee or his estate (as the case may be) shall have no right to
any further Fixed Annual Compensation, any Annual Bonuses, any Special
Benefits, any Additional Benefits or any other sums or benefits accruing to
Employee hereunder after the date of termination; provided, however, that the
Fixed Annual Compensation and installments of Annual Bonus otherwise payable
during the Disability Period shall nevertheless be payable on the terms set
forth herein to Employee as a disability benefit ("Disability Benefit") reduced
on a dollar-for-dollar basis by any disability insurance proceeds actually
received by Employee during the Disability Period with respect to such
Disability. All disability insurance proceeds received by Employee after the
Disability Period (or during the Disability Period but in excess of the
Disability Benefit) shall be the sole property of Employee as governed by such
insurance policy.
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(b) Options: All Options, if any, shall vest on the date of
termination by reason of Employee's Death or Disability, and Employee's estate
shall be entitled to exercise all such Options by reason of Employee's Death as
provided in the option agreement relating to such options.
3.4 Mitigation. Employee agrees to attempt to mitigate the damages he
may incur in the event of termination due to Company's Material Breach
provided, however, that he shall not be required to accept employment not
consistent with his stature and position in the entertainment industry.
Employee agrees that if Employee furnishes his services for other engagements
or employment after termination hereunder, fifty percent of the total
compensation actually earned by Employee together with any other benefits
earned by Employee shall reduce (on a dollar-for-dollar basis) any amounts and
benefits which the Company would otherwise be required to pay or provide to
Employee. By way of example, if Employee earns $100,000 after termination
hereunder due to the Company's Material Breach, the amounts and benefits which
the Company would otherwise be required to pay or provide to Employee hereunder
would be reduced by $50,000. Employee agrees that he shall give written notice
to the Company (promptly after accepting employment or furnishing his services
after termination of his employment with the Company) of any amount earned (or
to be earned) by Employee and any benefits provided (or to be provided) to
Employee pursuant to his new employment arrangement. Employee's inability to
mitigate due to Disability shall not be a breach hereof.
4. GENERAL.
4.1 Applicable Law Controls. Nothing contained in this Agreement shall
be construed to require the commission of any act contrary to law and wherever
there is any conflict between the provisions of this Agreement and any material
statute, law, ordinance or regulation contrary to which the parties have no
legal right to contract, then the latter shall prevail; provided, however, that
in any such event the provisions of this Agreement so affected shall be
curtailed and limited only to the extent necessary to bring them within
applicable legal requirements, and provided further that if any obligation to
pay the Fixed Annual Compensation, Annual Bonuses or any other amount due
Employee hereunder is so curtailed, then such compensation or amount shall be
paid as soon thereafter, either during or subsequent to the Term, as
permissible.
4.2 Waiver/Estoppel. Any party hereto may waive the benefit of any
term, condition or covenant in this Agreement or any right or remedy at law or
in equity to which any party may be entitled, but only by an instrument in
writing signed by the parties to be charged. No estoppel may be raised against
any party except to the extent the other parties rely on an instrument in
writing, signed by the party to be charged, specifically reciting that the
other parties may rely thereon. Except as provided herein, the parties' rights
and remedies under and pursuant to this Agreement or at law or in equity shall
be cumulative and the exercise of any rights or remedies under one provision
hereof or rights or remedies at law or in equity shall not be deemed an
election of remedies; and any waiver or forbearance of any breach of this
Agreement or remedy granted hereunder or at law or in equity shall not be
deemed a waiver of any preceding or succeeding breach of the same or any other
provision hereof or of the opportunity to exercise such right or remedy or any
other right or remedy, whether or not similar, at any preceding or subsequent
time. Employee acknowledges that Employee's performances and services hereunder
are of a special, unique, unusual, extraordinary and intellectual character
which gives them particular value, the loss of which cannot be reasonably or
adequately compensated in an action at law for damages and that a breach by
Employee of the terms hereof (including, without limitation, Section 1.6 and
Section 1.7) will cause the Company irreparable injury. Employee agrees that
the Company is entitled to seek injunctive and other equitable relief to
prevent a breach or threatened breach of this
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Agreement, which shall be in addition to any other rights or remedies to which
the Company may be entitled.
4.3 Attorneys' Fees and Costs. Subject to Section 4.11.4 hereof, in
any action, suit or proceeding brought by any party hereto with respect to this
Agreement, its subject matter or the actions, statements or conduct of any or
each of the parties in the negotiation, execution or performance of this
Agreement, the prevailing party shall be entitled to recover from the other
parties all reasonable costs and expenses incurred in connection therewith,
including but not limited to attorneys' fees, attorneys' costs and court costs.
4.4 Notices. Any notice that the Company is required or may desire to
give to Employee hereunder shall be in writing and may be served by delivering
it to Employee, or by sending it to Employee by certified mail, return receipt
requested (effective five days after mailing) or overnight delivery of the same
by delivery service capable of providing verified receipt (effective the next
business day), or facsimile (effective twenty-four hours after receipt is
confirmed by person or machine), at the address set forth below, or such
substitute address as Employee may from time to time designate by notice to the
Company. Any notice that Employee is required or may desire to serve upon the
Company hereunder shall be in writing and may be served by delivering it
personally or by sending it certified mail, return receipt requested, or
overnight delivery, or facsimile (with receipt confirmed by person or machine)
to the address set forth below, or such other substitute address as the Company
may from time to time designate by notice to Employee. Such notices by Employee
shall be effective at the same times as specified in this Section 4.4 for
notices by the Company.
The Company: Overseas Filmgroup, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Employee: Xxxxxxx X. Xxxxxxx
000 X. Xxxxxxxx, Xxxx X
Xxx Xxxxxxx, Xxxxxxxxxx 00000
with a copy to: Xxxxxxx Agusta
Agusta & Xxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
4.5 Governing Law. Subject to Section 4.11 hereof, this Agreement
shall be governed by, construed and enforced and the legality and validity of
each term and condition shall be determined in accordance with the internal,
substantive laws of the State of California applicable to agreements fully
executed and performed entirely in California.
4.6 Captions. The paragraph headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
4.7 No Joint Venture. Nothing herein contained shall constitute a
partnership between or joint venture by the parties hereto.
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4.8 Assignability. Neither the Company nor Employee may assign this
Agreement or any portion of its rights or obligations hereunder. This Agreement
shall be fully effective and binding upon the successors in interest, assigns
and Affiliates of the Company.
4.9 Modification/Entire Agreement. This Agreement may not be altered,
modified or amended except by an instrument in writing signed by all of the
parties hereto. No person, whether or not an officer, agent, employee or
representative of any party, has made or has any authority to make for or on
behalf of that party any agreement, representation, warranty, statement,
promise, arrangement or understanding not expressly set forth in this Agreement
or in any other document executed by the parties concurrently herewith ("Parol
Agreements"). This Agreement and all other documents executed by the parties
concurrently herewith constitute the entire agreement between the parties and
supersede all express or implied, prior or concurrent, Parol Agreements and
prior written agreements with respect to the subject matter hereof. The parties
acknowledge that in entering into this Agreement, they have not relied and will
not in any way rely upon any Parol Agreements.
4.10 Severability. If any term, provision or covenant in this
Agreement is held to be invalid, void or unenforceable, (i) the remainder of
the terms, provisions and covenants in this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
(ii) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, all portions of any section of this Agreement
containing any such provision held to be invalid, void or unenforceable that
are not themselves invalid, void or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision held invalid, void or
unenforceable.
4.11 Arbitration.
4.11.1 Company and Employee each hereby irrevocably agree to
submit any and all disputes between them arising under this Agreement to
binding, non-appealable arbitration, to be conducted in accordance with this
Section 4.11. The parties further agree irrevocably to submit themselves, in
any suit to confirm the judgment or finding of such arbitrator, to the
jurisdiction of the Superior Court for the County of Los Angeles, State of
California, and hereby waive and agree not to assert (by way of motion, as a
defense or otherwise) (a) any and all objections to jurisdiction that they may
have under the laws of the State of California or the United States and (b) any
claim (i) that it or he is not subject personally to jurisdiction of such
court, (ii) that such forum is inconvenient, (iii) that venue is improper, or
(iv) that this Agreement or its subject matter may not for any reason be
arbitrated or enforced as provided in this Section 4.11.
4.11.2 The aggrieved party shall, upon written notice to the
other, submit any dispute or controversy respecting actual or alleged breach
of, or interpretation of, or enforcement of, this Agreement to binding
non-appealable arbitration before a retired judge of the Superior Court of the
State of California in and for the County of Los Angeles, to be conducted by
means of a reference pursuant to California Code of Civil Procedure Section
6381(1). Within ten (10) business days after receipt of the notice submitting a
dispute or controversy to arbitration, the parties shall attempt in good faith
to agree upon an arbitrator to whom the dispute will be referred and on a joint
statement of contentions. Failing agreement thereto within ten (10) business
days after receipt of such notice, each party shall name three (3) retired
judges and thereafter either party may file a petition seeking the appointment
of one of the persons named by the party as a referee by the presiding Judge of
the Superior Court, which petition shall recite in a clear and meaningful
manner the factual basis of the controversy between the parties and the issues
to be submitted to the referee for decision. Each party hereby agrees that
service of process in
10
such action will be deemed accomplished and completed when a copy of the
documents is sent in accordance with the notice provisions in Section 4.4
hereof.
4.11.3 The hearing before the referee shall be held within thirty
(30) days after the parties reach agreement as to the identity of the referee
(or within thirty (30) days after the appointment of a referee by the court).
Unless more extensive discovery is expressly permitted by the referee, each
party shall have only the right to two document production requests, shall
serve but two sets of interrogatories and shall only be entitled to depose
those witnesses which the referee expressly permits, it being the parties'
intention to minimize discovery procedures and to hold the hearing on an
expedited basis. The referee shall establish the discovery schedule promptly
following submission of the joint statement of contentions (or the filing of
the answer to the petition) which schedule shall be strictly adhered to. To the
extent the contentions of the parties relate to custom or practice in the film
business, or the entertainment industry generally, or to accounting matters,
the referee shall select an independent expert or accountant (as applicable)
with substantial experience in the industry segment involved to provide
recommendations to the referee. All decisions of the referee shall be in
writing and shall not be subject to appeal. The referee shall make all rulings
in accordance with California law and shall have authority equal to that of a
Superior Court judge, to grant equitable relief in an action pending in Los
Angeles Superior Court in which all parties have appeared.
4.11.4 Except as otherwise provided in this Agreement, the fees
and costs of the referee and of any experts retained shall be shared equally by
the parties to such dispute. The referee shall award legal fees, disbursements
and reimbursement of other expenses to the prevailing party for such amounts,
if any, as determined by the referee to be appropriate. Judgment upon the
referee's award may be entered as if after trial in accordance with California
law.
4.12 Contractual Nomenclature. All references herein to "Dollars" or
"$" shall mean Dollars of the United States of America, its legal tender for
all debts public and private. Wherever used herein and to the extent
appropriate, the masculine, feminine or neuter gender shall include the other
two genders, the singular shall include the plural, and the plural shall
include the singular.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
OVERSEAS FILMGROUP, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx
11
EXHIBIT "A"
The officers of the Corporation will submit the following actions to
the Board for its consideration (unless contemplated by the Annual Business
Plan of the Corporation):
(a) Any material amendments to the Annual Business Plan and
quarterly updates.
(b) The disposition of any asset or assets of the Corporation or
any subsidiary of the Corporation with an aggregate fair
market value in excess of $2,000,000; provided that the
Corporation may dispose of distribution and other rights to
motion pictures or other related properties or assets in the
ordinary course of business.
(c) Any acquisition by the Corporation or any subsidiary of the
Corporation of any business of another person, or any
property, securities, rights or other assets in a transaction
for a consideration in excess of $2,000,000; provided that
the Corporation may acquire distribution and other rights to
motion pictures or other related properties or assets in the
ordinary course of business.
(d) The creation, incurrence, assumption or guaranty by the
Corporation or any subsidiary of the Corporation of any
indebtedness obligation or liability in excess of $2,000,000,
except for (i) film financing incurred by the Corporation or
by special purpose subsidiaries of the Corporation, (ii) bank
financing used for general corporate purposes of the
Corporation or its subsidiaries, or (iii) as otherwise
permitted by the Operating Guidelines of the Corporation
(collectively, "Permitted Indebtedness").
(e) The creation, incurrence, or assumption of any lien,
mortgage, pledge, security interest, charge or encumbrance by
the Corporation or any subsidiary of the Corporation with
respect to any property, capital stock or asset of the
Corporation or any subsidiary of the Corporation, which
secures payment of indebtedness of the Corporation in excess
of $2,000,000, except (i) liens or pledges securing Permitted
Indebtedness, (ii) liens or pledges encumbering film
collateral necessary to secure film financing, or (iii) as
otherwise permitted by the Operating Guidelines of the
Corporation.
(f) Committing to finance in excess of $4,000,000 of the
Uncovered Amount of the budgeted negative costs of any motion
picture. For purposes hereof, the Uncovered Amount means the
budgeted negative costs of any motion picture not to be
financed by advances, guarantees, or bank or other third
party financing commitments.
(g) Committing to finance in excess of $3,000,000 of the
distribution costs of any motion picture which are not being
financed by other means.
(h) The declaration or payment by the Corporation or any
subsidiary of the Corporation (other than special purpose
subsidiaries) of any dividend on any class of its common
stock.
(i) Any other investments, or series of investments, by the
Corporation or any subsidiary of the Corporation in excess of
$1,500,000 other than (i) marketable direct obligations
issued or unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the
full faith and credit of the United States, (ii) marketable
A-1
direct obligations issued by any state of the United States
of America or any political subdivision of any such state or
any public instrumentality thereof, (iii) commercial paper or
other corporate obligations, (iv) repurchase agreements and
reverse repurchase agreements, (v) money market funds
organized under the laws of the United States of America or
any state thereof and administered by securities dealers of
recognized national standing, (vi) any investment in
subsidiaries of the Corporation, and (vii) negotiable
instruments endorsed for deposit or collection or similar
instruments in the ordinary course of business.
(j) Raising additional debt or equity capital including material
increases to existing bank facilities.
(k) Granting any bonus in excess of $50,000 per grant to any
employee or agent of, or consultant to the Corporation not
required by any employment, consulting or other agreement.
A-2
EXHIBIT "B"
INDEMNITY AGREEMENT
This AGREEMENT is made and entered into this ___ day of October, 1996,
by and between OVERSEAS FILMGROUP, INC., a Delaware corporation (hereinafter
called "Overseas"), and Xxxxxxx X. Xxxxxxx (hereinafter called "Indemnitee")
(sometimes collectively referred to herein as "the Parties hereto").
WHEREAS, there is a general awareness that competent and experienced
persons are becoming more reluctant to serve as directors and officers of a
corporation unless they are protected by comprehensive insurance or
indemnification, especially since stockholder class and derivative lawsuits
against publicly held corporations, their directors and officers for
line-of-duty decisions and actions have increased in number in recent years for
damages in amounts which are greatly in excess of the amount of compensation
received by the directors or officers from the corporations, and
WHEREAS, the vagaries of "public policy" and the interpretations of
ambiguous statutes, regulations and bylaws are too uncertain to provide
corporate officers and directors with adequate, reliable knowledge of legal
risks to which they may be exposed, with these indeterminables multiplied
substantially for officers and directors of corporations such as Overseas with
operations in many of the states in the United States and many foreign
jurisdictions, and
WHEREAS, damages sought by class action plaintiffs in some cases
amount to tens of millions of dollars and, whether or not the case is
meritorious, the cost of defending them is enormous with few individual
directors and officers having the resources to sustain such legal costs, not to
mention the risk of a judgment running into millions even in cases where the
defendant was neither culpable nor profited personally to the detriment of the
corporation, and
WHEREAS, the issues in controversy in such litigation are usually
related to the knowledge, motives and intent of the director or officer and
such person may be the only witness with first-hand knowledge of the essential
facts or of exculpating circumstances, who is qualified to testify in such
person's defense regarding matters of such subjective nature, and the long
period of time which normally and usually elapses before such suits can be
disposed of can extend beyond the normal time for retirement for a director or
officer with the result that such person, after retirement, or in the event of
such person's death, such person's spouse, heirs, executors or administrators,
as the case may be, may be faced with limited ability, undue hardship and an
intolerable burden in launching and maintaining a proper and adequate defense
of such director or officer or such person's estate against claims for damages,
and
WHEREAS, the Board of Directors, based upon their experience as
business managers, have concluded that unless Overseas enters into
indemnification agreements with its directors and officers, the continuation of
present trends in litigation against corporate directors and officers
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will inevitably result in less effective direction and supervision of Overseas
and its subsidiaries and affiliates, their business affairs and the operation
of their facilities and the Board deems such consequences to be so detrimental
to the best interests of Overseas' shareholders that it has concluded that its
directors and officers should be provided with maximum protection against
inordinate risks in order to insure that the most capable persons otherwise
available will be attracted to such positions; therefore, said directors have
further concluded that it is not only reasonable and prudent but necessary for
Overseas to contractually obligate itself to indemnify in a reasonable and
adequate manner its directors and officers and the directors and officers of
its affiliates and to assume for itself maximum liability for expenses and
damages in connection with claims lodged against them for their line-of-duty
decisions and actions, and
WHEREAS, Section 145 of the General Corporation Law of the State of
Delaware, under which Overseas is organized, empowers corporations to indemnify
persons serving as a director, officer, employee or agent of the corporation or
a person who serves at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, and further specifies that the indemnification set forth in
said section "shall not be deemed exclusive to any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise", and said section further
empowers a corporation to "purchase and maintain insurance" (on behalf of such
persons) "against any liability asserted against him or incurred by him in any
such capacity or arising out of status as such whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of" (said laws), and
WHEREAS, Overseas initiated an investigation to determine the type of
insurance available, the nature and extent of the coverage provided and the
cost thereof to Overseas to insure the directors and officers of Overseas and
of its affiliates against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
persons in connection with any action, suit or proceeding with which any such
director or officer is threatened or made a party by reason of such status
and/or such person's line-of-duty decisions or actions, and, upon receiving
such information, the directors of Overseas have determined that the coverage
available is inadequate for Overseas and its directors, officers and agents and
that its shareholders' best interests would be served by Overseas contracting
to indemnify such persons and to thereby effectively self-insure against such
potential liabilities not covered by insurance, and
WHEREAS, Overseas desires to have Indemnitee serve or continue to
serve as a director and/or officer of Overseas and/or of any other corporation,
partnership, joint venture, trust or other enterprise of which he has been or
is serving at the request of, for the convenience of, or to represent the
interests of Overseas (any such enterprise being hereinafter referred to as an
"Affiliate of Overseas") free from undue concern for unpredictable,
inappropriate or unreasonable claims for damages by reason of his being a
director, officer, employee and/or agent of Overseas or of an Affiliate of
Overseas or by reason of his decisions or actions on their behalf and
Indemnitee desires to serve or to continue to serve (provided that he is
furnished the indemnity provided for hereinafter), in one or more of such
capacities, NOW, THEREFORE,
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W I T N E S S E T H
THAT for and in consideration of the premises and the covenants
contained herein, Overseas and Indemnitee do hereby covenant and agree as
follows:
1. DEFINITIONS.
"Litigation Costs" means all reasonable costs, charges, expenses,
including attorneys', accountants' and expert witnesses' fees, and obligations
paid or incurred in connection with investigating, defending (including
affirmative defenses and counterclaims), obtaining or attempting to obtain a
settlement, being a witness in, or participating in or preparing to defend, be
a witness in, or participate in, any Proceeding and any appeal therefrom and
the cost of appeal, attachment and similar bonds.
"Losses" means the total amount which Indemnitee becomes legally
obligated to pay in connection with any Proceeding including, without
limitation, Litigation Costs, judgments, fines and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Litigation Costs, judgments, fines and
amounts paid in settlement) of or with respect to that Proceeding.
"Proceeding" means any threatened, pending or completed action, suit
or proceeding (including, without limitation, securities laws actions, suits,
and proceedings), or any inquiry or investigation, formal or informal,
(including discovery), whether conducted by Overseas or any other party, that
Indemnitee in good faith believes might lead to the institution of any action,
suit, or proceeding, whether civil, criminal, administrative, investigative, or
other.
2. AGREEMENT TO SERVICE.
Indemnitee will serve and/or continue to serve, at the will
of Overseas or its stockholders or under separate contract, if such exists,
Overseas or an Affiliate of Overseas as a director, officer, employee and/or
agent faithfully so long as he is duly elected and qualified in accordance with
the provisions of the bylaws thereof or until such time as he tenders his
resignation in writing or is removed in accordance with applicable law (subject
to the terms of any separate contract, if such exists).
3. INDEMNIFICATION. Overseas shall indemnify Indemnitee:
(a) If Indemnitee is a person who was or is a party, or
witness in, or is threatened to be made a party to, or witness in, or otherwise
becomes involved in, any Proceeding (other than an action by or in the right of
Overseas or an Affiliate of Overseas) by reason of (or arising in part out of)
the fact that he is or was a director, officer, employee or agent of Overseas
or is or was serving at the request of Overseas as a director, officer,
employee or agent of an Affiliate of Overseas, or by reason of anything done or
not done by him in any
B-3
such capacity, against Losses actually incurred by him in connection with such
Proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe that
his conduct was unlawful, or
(b) If Indemnitee is a person who was or is a party, or
witness in, or is threatened to be made a party to, or witness in or otherwise
becomes involved in, any Proceeding by or in the right of Overseas or an
Affiliate of Overseas to procure a judgment in its favor by reason of (or
arising in part out of) the fact that he is or was a director, officer,
employee or agent of Overseas or is or was serving at the request of Overseas
as a director, officer, employee or agent of an Affiliate of Overseas, or by
reason of anything done or not done by his in any such capacity, against
Litigation Costs actually incurred by him in connection with such Proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of Overseas and except that no indemnification
under this subsection shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to Overseas unless
and only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the relevant circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper, and
(c) The protections afforded Indemnitee by this Agreement
shall continue after Indemnitee ceases as a director, officer, employee or
agent of Overseas or an Affiliate of Overseas, and shall inure to the benefit
of the heirs, executors and administrators of such Indemnitee, except that no
indemnification shall be due under the provisions of this subsection to the
extent a court of competent jurisdiction shall have found in such Proceeding
that Indemnitee defrauded or stole from Overseas or an Affiliate of Overseas or
converted to his own personal use and benefit business or properties of
Overseas or an Affiliate of Overseas or was guilty of gross negligence or
willful misconduct of a culpable nature to Overseas or an Affiliate of
Overseas, and
(d) To the extent Indemnitee has been successful on the
merits or otherwise in defense of any Proceedings referred to in subsections
(a), (b) or (c) of this Section 3, or in the defense of any claim, issue or
matter described therein, Indemnitee shall be indemnified against Litigation
Costs actually incurred by him in connection with the investigation, defense or
appeal of such action, suit or proceeding. If Indemnitee is not wholly
successful in such Proceedings, but is successful on the merits or otherwise as
to one or more, but less than all, claims, issues or matters in such
Proceedings, Overseas shall indemnify Indemnitee against all Losses actually
incurred by Indemnitee or on his behalf in connection with the successfully
resolved claim, issue or matter.
For purposes of this Section 3 and without limitation, the
termination of any Proceedings by judgment order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself create a
presumption (1) that Indemnitee did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of
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Overseas, or (2) with respect to any criminal action or proceeding, that
Indemnitee had reasonable cause to believe that his conduct was criminal.
4. OVERSEAS' ASSUMPTION OF DEFENSE.
To the extent that it may wish, Overseas jointly with any
other indemnifying party similarly notified will be entitled to promptly assume
the defense of any such Proceeding, with counsel satisfactory to Indemnitee.
After notice from Overseas to Indemnitee of its election so to assume the
defense thereof, Overseas will not be liable to the Indemnitee under this
Agreement for any Litigation Costs subsequently incurred by Indemnitee in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have the right
to employ personal counsel in such Proceeding, but the fees and expenses of
such counsel incurred after notice from Overseas of its assumption of the
defense thereof shall be at the expense of Indemnitee, unless (i) the
employment of counsel by Indemnitee has been authorized by Overseas, (ii)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between Overseas and/or any Affiliate of Overseas and Indemnitee in
the conduct of the defense of such action, or (iii) Overseas shall not in fact
have promptly employed counsel to assume the defense of such action, in each of
which cases the fees and expenses of counsel shall be at the expense of
Overseas. Overseas shall not be entitled to assume the defense of any
Proceeding brought by or on behalf of Overseas or an Affiliate of Overseas or
as to which Indemnitee shall have made the conclusion provided for in (ii)
above.
5. ASSUMPTION OF LIABILITY BY OVERSEAS. Subject to the other
terms and provisions hereof (including applicable limitations relating to
actions by or in the right of Overseas or Affiliates of Overseas), if
Indemnitee is deceased and is entitled to indemnification under any provision
of this Agreement, Overseas shall indemnify Indemnitee's estate and his spouse,
heirs, administrators and executors against, and Overseas shall, and does
hereby agree, to assume any and all Losses incurred by or for Indemnitee or his
estate in connection with the investigation, defense, settlement or appeal of
any such Proceeding. Further, when requested in writing by the spouse of
Indemnitee and/or the heirs, executors or administrators of Indemnitee's
estate, Overseas shall provide appropriate evidence of Overseas' Agreement set
out herein, to indemnify Indemnitee against and to itself assume such Losses.
6. NOTICE OF PROCEEDING. Promptly after receipt by Indemnitee of
notice of the commencement of any Proceeding but in no event later than twenty
days after receipt by Indemnitee of such notice, Indemnitee will, if a claim in
respect thereof is to be made against Overseas under this Agreement, notify
Overseas of the commencement thereof; provided, however, that any failure by
Indemnitee to so notify Overseas shall not relieve Overseas from its
obligations hereunder unless Overseas shall have been materially prejudiced by
the failure of Indemnitee to notify Overseas and then only to the extent of
such material prejudice.
7. REQUEST FOR INDEMNIFICATION. To obtain indemnification under
this Agreement, Indemnitee shall submit to Overseas a written request,
including therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification.
B-5
8. DETERMINATION OF RIGHT TO INDEMNIFICATION. Anything contained
elsewhere herein to the contrary notwithstanding, the determination as to
whether or not Indemnitee has met the standard of conduct required to qualify
and entitle him partially or fully, to indemnification under the provisions of
any subparagraph of Paragraph 3 hereof may be made either (1) by the Board of
Directors by a majority vote of directors who were not parties to such
Proceeding even though less than a quorum, (2) or if there are no such
directors or if such directors so direct, by independent legal counsel
(selected and retained by Overseas in the manner hereinafter set forth) in a
written opinion, or (3) by the stockholders of Overseas provided that the
manner in which (and if applicable, the counsel by which) the right to
indemnification is to be determined shall be approved in advance in writing by
both the Board of Directors of Overseas and by Indemnitee. In the event that
such parties are unable to agree on the manner in which the determination of
the right to indemnity is to be made, such determination may be made by
independent legal counsel selected and retained by Overseas especially for such
purpose, provided that such counsel be approved in advance in writing by both
the Board of Directors and Indemnitee and provided further, that such counsel
shall not be outside counsel regularly employed by Overseas. In the event that
the Parties hereto are unable to agree on the selection of such outside
counsel, such outside counsel shall be selected by lot by the outside counsel
regularly employed by Overseas from among the Los Angeles, California law firms
having more than twenty (20) attorneys and having a rating of "av" or better in
the then current Xxxxxxxxxx-Xxxxxxx Law Directory. Such selection by lot shall
be made in the presence of Indemnitee (and his legal counsel or either of them,
as Indemnitee may elect). The outside counsel regularly employed by Overseas
and Indemnitee (and his legal counsel or either of them as Indemnitee may
elect) shall contact, in the order of their selection by lot, such law firms,
requesting each such firm to accept engagement to make the determination
required hereunder until one of such firms accepts such engagement. The fees
and expenses of counsel in connection with making said determination
contemplated hereunder shall be paid by Overseas, and, if requested by such
counsel, Overseas shall give such counsel an appropriate written agreement with
respect to the payment of their fees and expenses and such other matters as may
be reasonably requested by counsel. Nothing contained in this Agreement shall
require any determination under this Section 8 to be made by the Board of
Directors, independent legal counsel or the stockholders prior to the
disposition or conclusion of the Proceeding against the Indemnitee; provided,
however, that Advancements shall continue to be made by Overseas pursuant to
and to the extent required by Section 10 hereunder. Notwithstanding the
foregoing, Indemnitee may, either before or within two (2) years after a
determination has been made as provided above, petition the Court of Chancery
of the State of Delaware or any other court of competent jurisdiction to
determine whether Indemnitee is entitled to indemnification under the
provisions hereof under which he claims the right to indemnification, and such
court shall thereupon have the exclusive authority to make such determination,
unless and until such court dismisses or otherwise terminates such action
without having made such determination. The determination of the court, as
petitioned, as to whether Indemnitee is entitled to indemnification hereunder,
shall be independent and irrespective of any prior determination made by the
Board of Directors, the stockholders or counsel. If the Court shall determine
that Indemnitee is entitled to indemnification hereunder as to any claim, issue
or matter involved in any Proceeding with respect to which there has been no
prior determination pursuant hereto or with respect to which there has been a
prior determination pursuant hereto that Indemnitee was not entitled to
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indemnification hereunder, Overseas shall pay all expenses (including
attorneys' fees) actually incurred by Indemnitee in connection with such
judicial determination. If the person (including the Board of Directors,
independent legal counsel in a written opinion, the stockholders, or a court)
making the determination hereunder shall determine that Indemnitee is entitled
to indemnification as to some claims, issues or matters involved in the
Proceeding but not as to others, such person shall reasonably prorate the
Losses with respect to which indemnification is sought by Indemnitee among such
claims, issues or matters. If, and to the extent it is finally determined by
the Court that Indemnitee is not entitled to indemnification, then Indemnitee
agrees to reimburse (the "Indemnitee Reimbursement Obligation"), without
interest, Overseas (which agreement shall be an unsecured obligation of
Indemnitee) for all expenses advanced or prepaid pursuant to Section 10 hereof,
or the proper proportion thereof, other than the expenses of obtaining the
judicial determination referred to above. Anything contained elsewhere herein
to the contrary notwithstanding, Overseas shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any
Proceeding or claim effected without its written consent. Overseas shall not
settle any Proceeding or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee's written consent. Neither Overseas
nor Indemnitee will unreasonably withhold their consent to any proposed
settlement.
9. LIMITATION OF ACTIONS AND RELEASE OF CLAIMS. No legal action
shall be brought and no cause of action shall be asserted by or on behalf of
Overseas or any Affiliate of Overseas against Indemnitee, his spouse, heirs,
executors or administrators after the expiration of two (2) years from the date
Indemnitee ceases (for any reason) to serve in any one or more of the
capacities covered by this Agreement, and any claim or cause of action of
Overseas or any Affiliate of Overseas shall be extinguished and deemed released
unless asserted by filing of a legal action within such two (2) year period;
provided, however, that nothing in this Section 9 shall be deemed to limit or
prevent any legal action (or to release any claim) based on fraud or criminal
misconduct of Indemnitee which is not discovered by Overseas or the applicable
Affiliate of Overseas until after the expiration of such two (2) year period.
10. ADVANCEMENT OF LITIGATION COSTS. If so requested in writing
by Indemnitee, Overseas shall pay any and all Litigation Costs incurred by
Indemnitee (or, if applicable, reimburse Indemnitee for any and all Litigation
Costs incurred by Indemnitee and previously paid by Indemnitee) and/or shall,
subject to the other terms and provisions hereof (including applicable
limitations relating to actions by or in the right of Overseas or Affiliates of
Overseas), pay any judgments, fines or amounts paid in settlement (or, if
applicable, reimburse Indemnitee for any such sums previously paid by
Indemnitee) in each case promptly, but in any event within 10 days, after such
request (an "Advancement"). Overseas shall be obligated to make or pay an
Advancement in advance of the final disposition or conclusion of any
Proceeding. Any request for an Advancement under this Agreement shall
reasonably evidence the Litigation Costs incurred by Indemnitee. In connection
with any request for an Advancement, if requested by Overseas, Indemnitee or
Indemnitee's counsel shall submit an affidavit stating that the Litigation
Costs incurred were reasonable, and Indemnitee shall submit at such time a
signed undertaking reflecting the terms of the Indemnitee Reimbursement
Obligation set forth in Section 8 hereof (i.e., that Indemnitee shall repay
such Advancement, without interest, if, and to the extent it is finally
determined by the Court that Indemnitee is not entitled to indemnification).
Any dispute
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as to the reasonableness of any Litigation Costs shall not delay an Advancement
by Overseas, and Overseas agrees that any such dispute shall be resolved only
upon the disposition or conclusion of the underlying Proceeding against the
Indemnitee. If Indemnitee has petitioned the Court of Chancery of the State of
Delaware or any other court of competent jurisdiction pursuant to Section 8
hereof to secure a determination that Indemnitee should be indemnified under
applicable law, any determination made by the Board of Directors, independent
legal counsel or the stockholders that Indemnitee would not be permitted to be
indemnified under the applicable law shall not be binding and Indemnitee shall
not be required to reimburse Overseas for any Advancements, and Overseas shall
be obligated to continue to make Advancements, until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or have lapsed).
11. OTHER RIGHTS AND REMEDIES. The indemnification and advance
payment of expenses as provided by any provision of this Agreement shall not be
deemed exclusive of any other rights to which Indemnitee may be entitled under
any provision of law, the Certificate of Incorporation, any Bylaw, this or
other agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while occupying any of the positions or having any of the relationships
referred to in Section 3 of this Agreement, and shall continue after Indemnitee
has ceased to occupy such position, or have such relationship and shall inure
to the benefit of the heirs, executors and administrators of Indemnitee.
12. SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever (i) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, all portions of
any paragraphs of this Agreement containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby, and (ii)
to the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable.
13. PRIOR AGREEMENTS. This Agreement shall be of no force and
effect with regard to the cost of settlement borne or paid by Indemnitee under
the provisions of any agreement executed by Overseas and/or Indemnitee prior to
the date hereof.
14. IDENTICAL COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original and all of which shall constitute the same instrument, but only one
of which need be produced.
15. HEADINGS. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
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16. USE OF CERTAIN TERMS. As used in this Agreement, the words
"herein", "hereto" and "hereunder", and other words of similar import refer to
this Agreement as a whole and not to any particular paragraph, subparagraph or
other subdivision. When the context so requires in this Agreement, the
masculine gender includes the feminine and/or neuter.
17. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
Any repeal or modification of the relevant provisions of the Delaware General
Corporation Law in effect as of the date of execution of this Indemnity
Agreement shall not affect any right or obligation then existing with respect
to any state of facts then or previously existing or any action, suit or
proceeding previously or thereafter brought or threatened based in part or in
whole on such state of facts.
18. NOTICE TO OVERSEAS BY INDEMNITEE. Indemnitee agrees to
promptly notify Overseas in writing upon being served with any citation,
complaint, indictment or other document covered hereunder, either civil or
criminal.
19. NOTICES. All notices, requests, demands and other
communication hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid on the third business day
after the date on which it is so mailed.
(a) If to Indemnitee, at the address indicated on the
signature page hereof;
(b) If to Overseas to:
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
or to such other address as may have been furnished to Indemnitee by Overseas.
20. GOVERNING LAW. The Parties hereto agree that this Agreement
shall be construed and enforced in accordance with and governed by the laws of
the State of Delaware. Nothing in this Agreement is intended to eliminate the
requirement that Indemnitee satisfy the applicable standards of conduct for
indemnification required by Delaware law.
21. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon Overseas and its successors and assigns and shall inure to the benefit of
Indemnitee and his spouse, heirs, executors and administrators.
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ENTERED into on the day and year first above written.
ATTEST: OVERSEAS FILMGROUP, INC.
BY: BY:
---------------------------- -------------------------------
Name:
Title:
Indemnitee
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Address: 000 X. Xxxxxxxx, Xxxx X
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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