Exhibit 10.1
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of July 21, 1997 by and between
Discovery Zone, Inc., a Delaware corporation (the "Company"), and Xxxxx
Xxxxxxxxx ("Executive").
WHEREAS, the Board of Directors of the predecessor in interest of
the Company, as debtor-in-possession (the "Debtor"), approved hiring
Executive as President and Chief Executive Officer on December 5, 1996 (the
"Commencement Date") and the Bankruptcy Court having jurisdiction over the
Debtor's bankruptcy case authorized such hiring on January 23, 1997;
WHEREAS, the Debtor's Third Amended Joint Plan of Reorganization
(the "Plan") was confirmed on July 18, 1997;
WHEREAS, the Board of Directors of the Company (the "Board"),
considers it essential to the Company's best interests and the best interests
of its shareholders to retain and xxxxxx the continued employment of
Executive by the Company following its emergence from bankruptcy proceedings
and to enter into an agreement embodying the terms of such employment (the
"Agreement"); and
WHEREAS, Executive is willing to accept and continue his employment
on the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein and for other good and valuable consideration, the parties
agree as follows:
1. TERM OF EMPLOYMENT. Subject to the provisions of Section 7 of
this Agreement, the Company shall employ Executive for a period (the
"Employment Term") initially ending on January 1, 2001 (such initial period,
the "Initial Employment Term"); provided that the Employment Term will
automatically extend for successive one year periods unless not later than
sixty (60) days prior to such automatic extension the Company or Executive
gives the other written notice to the contrary.
2. POSITION.
(a) During the term of Executive's employment hereunder, Executive
will serve as the President and Chief Executive Officer of the Company and
any holding company thereof and will report directly to the Board. In such
position, Executive will have such duties and authority as are customarily
exercised by a President and Chief Executive Officer of business
corporation of similar size and public stature and as the Board
determines, from time to time, are reasonably related to the business of the
Company and do not limit or otherwise hamper Executive's ability to perform
his duties. Subject to the authority and direction of the Board and within
the scope of the business plan approved by the Board, Executive will be
ultimately responsible for overall management, administration and operation
of all present and future business of the Company and its subsidiaries,
including, but not limited to, finance, budgeting, strategic and business
planning, customer development, corporate development, service development,
personnel management, consulting and marketing. Executive will also serve
without additional compensation as the chief executive officer of each
subsidiary of the Company. In addition, Executive will serve on the Board,
the board of directors of the holding company, if any, or which the Company
is a subsidiary and on the boards of directors of the Company's subsidiaries,
in each case, without additional compensation.
(b) During the term of Executive's employment hereunder, Executive
shall devote substantially all of his business time and best efforts to the
performance of his duties hereunder and will not engage in any other
business, profession or occupation for compensation or otherwise which would
conflict with the rendition of such services either directly or indirectly,
without the prior written consent of the Board; provided that nothing herein
will preclude Executive from continuing to serve on the board of directors of
any business corporation or any charitable organization on which he now
serves and which has been disclosed to the Company in writing, or subject to
the prior approval of the Board, from accepting appointment to additional
boards of directors, in either case, provided that such activities do not
materially interfere with the performance of Executive's duties hereunder.
(c) The Company shall indemnify Executive against directors' and
officers' liability to the fullest extent permitted by law.
3. BASE SALARY. For the period commencing on the Effective Date
(as defined in Section 13(m) of this Agreement) and ending on December 31,
1997, the Company shall pay Executive a base salary at the initial annual
rate of $440,000, payable in regular installments in accordance with the
Company's usual payment practices. On January 1, 1998 and on each January 1
thereafter during the Employment Term, the Company shall increase Executive's
annual base salary at least $40,000 above the base salary in effect
immediately prior thereto. Such base salary, as in effect from time to time,
is hereinafter referred to as the "Base Salary".
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4. BONUS OPPORTUNITY. Executive is entitled to a cash bonus for
each fiscal year of the Company (the "Annual Bonus") equal to not less than
two percent (2%) of the Company's Operating Cash Flow for such fiscal year.
The Company shall pay the Annual Bonus as soon as practicable following each
fiscal year, and in no event later than ninety days after the end of the
relevant fiscal year. Notwithstanding the foregoing, Executive's Annual
Bonus for the 1997 fiscal year will be not less than $200,000. For purposes
of this Agreement, "Operating Cash Flow" means the Company's consolidated net
income determined in conformity with generally accepted accounting practices
plus, in each case, to the extent deducted from the Company's consolidated
net income for such fiscal year, (i) net income and franchise tax expenses,
(ii) amortization and depreciation and (iii) consolidated interest expenses.
5. EQUITY OPPORTUNITY.
(a) OPTION GRANT UNDER STOCK INCENTIVE PLAN. The Company shall
adopt a Stock Incentive Plan for the benefit of Executive and certain other
selected members of the Company's senior management on substantially the
terms attached as Exhibit F to the Plan. The Company shall grant to
Executive on or about the Effective Date an option pursuant to the Stock
Incentive Plan (the "Option") exercisable at $11.88 per share for 357,845
shares of Common Stock of the Company ("Common Stock") (representing 5% of
the outstanding Common Stock on the Effective Date on a fully diluted basis
assuming the exercise of all warrants, options or other securities issued
under the Plan or issued in connection with the exit financing therefor which
are convertible into Common Stock). Except to the extent inconsistent with
the specific provisions of this Section 5, the Option will be subject to the
terms and conditions of the Stock Incentive Plan and such other terms to be
determined by the compensation committee of the Board.
(b) MATERIAL TERMS. On January 1 of each of 1998, 1999 and 2000,
the Option shall vest and become exercisable with respect to thirty-three and
1/3 percent (331/3%) of the aggregate amount of shares of Common Stock
subject to the Option (the "Initial Amount"). The period commencing on the
Effective Date and ending on January 1, 2000 is referred to herein as the
"Vesting Period." Subject to the provisions of the next paragraph, to the
extent vested, the Option is excisable at any time during the period ending
on the tenth anniversary of the Effective Date (such period, the "Exercise
Period").
If Executive's employment with the Company is terminated during the
Vesting Period by the Company for "Cause" (as
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defined in Section 7(a)) or during the Vesting Period by Executive without
"Good Reason" (as defined in Section 7(d)), the Option shall, to the extent
not previously exercised, be canceled without consideration and any shares of
Common Stock previously acquired by Executive upon the exercise in whole or
in part of the Option shall be subject to redemption by the Company at a
redemption price per share equal to the exercise price per share under the
Option. If Executive's employment with the Company is terminated during the
Vesting Period due to his death or disability, the then unvested portion of
the Option, if any, will be canceled without consideration and Executive will
be entitled to retain the then vested portion of the Option which will remain
exercisable for the remainder of the Exercise Period. Following the Vesting
Period, the Option is not subject to cancellation and no termination of
Executive's employment with the Company for any reason, whether by Executive
or Company, will affect the remainder of the Exercise Period and no shares of
Common Stock acquired by Executive upon the exercise of the Option are
subject to forced redemption by the Company.
If a "Change of Control" (as defined in that certain Indenture dated
as of July 22, 197, between the Company and State Street Bank and Trust Company,
as trustee, in respect of the Company's 13 1/2% Senior Secured Notes) occurs
during the term of Executive's employment with the Company or Executive's
employment is terminated by the Company without Cause or by the Executive for
Good Reason, any unvested portion of the Option will vest and become exercisable
immediately (or, in the case of a Change of Control, immediately prior to such
Change of Control) and will remain exercisable for the remainder of the Exercise
Period; provided that in connection with the consummation of any such Change of
Control in which the selling holders of Common Stock are receiving cash
consideration for their shares, the Company may elect to cancel the unexercised
portion of the Option (the "Unexercised Portion") in exchange for a cash payment
to Executive equal to the excess of (x) the fair market value of the shares of
Common Stock covered by the Unexercised Portion over (y) the aggregate exercise
price of the Unexercised Portion. For purposes of this Section 5, "fair market
value" shall be determined by the Board in good faith and, in the event of a
Change of Control involving the sale of shares of Common Stock, shall be based
upon the price per share of Common Stock paid by the acquiror in connection with
such Change of Control.
(c) TAG ALONG RIGHTS. If at any time (x) Birch Holdings LLC and its
successors and assigns (collectively, "Birch") intends to transfer all or a
portion of the shares of Common Stock then held by Birch to any person or
persons other
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than an affiliate of Birch and (y) Birch has previously received aggregate
proceeds in excess of $32 million in respect of prior transfers of Common
Stock, then Birch shall notify Executive of such intended transfer and its
terms and conditions. Within 15 days of the date of receipt of such notice,
Executive shall notify Birch in writing whether he elects to participate in
such transfer. If Executive timely notifies Birch in writing of his election
to participate in such transfer, Executive will have the right to sell, at
the same price and on the same terms as Birch, such number of shares of
Common Stock then beneficially owned by Executive equal to the product of (i)
the number of shares of Common Stock Birch actually proposes to transfer
multiplied by (ii) a fraction, the numerator of which is the number of shares
of Common Stock then beneficially owned by Executive and the denominator of
which is the aggregate number of shares of Common Stock then beneficially
owned by Birch and Executive.
6. EMPLOYEE BENEFITS.
(a) PLAN PARTICIPATION. During the term of Executive's employment
hereunder, the Company shall provide Executive with employee benefits
(including fringe benefits, vacation, pension and profit sharing plan
participation and life, health, accident and disability insurance) on the
same basis as it generally makes those benefits available to senior
executives of the Company and commensurate with those benefits customarily
provided to the President and Chief Executive Officer of business
corporations of similar size and public stature in this industry.
(b) BUSINESS EXPENSES AND PERQUISITES. The Company shall reimburse
reasonable travel, entertainment and other business expenses incurred by
Executive in the performance of his duties hereunder in accordance with the
Company policies. In addition, the Company shall provide Executive with an
automobile allowance of $2,000 per month and shall reimburse Executive for
his out-of-pocket expenses in respect of annual dues for one country club
membership.
7. TERMINATION.
(a) TERMINATION FOR CAUSE BY THE COMPANY.
(i) The Company may terminate Executive's employment hereunder
for "Cause." For purposes of this Agreement, "Cause" means (A) Executive's
willful and continued failure substantially to perform his duties hereunder
(other than as a result of total or partial incapacity due to physical or
mental illness) which is not cured by Executive within ten (10)
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days following written notice given by the Company of such failure, (B)
Executive has stolen funds or property from the Company or otherwise engaged
in fraudulent conduct against the Company, (C) Executive's conviction of, or
plea of guilty or nolo contendere to a crime constituting a felony under the
laws of the United States or any state thereof involving moral turpitude, or
(D) an intentional breach by Executive of the covenants set forth in Sections
8 or 9 of this Agreement which is not cured by Executive within ten (10) days
following written notice from the Company of such breach.
(ii) If Executive's employment is terminated by the Company for
Cause, he will receive his Base Salary through the date of termination and
Executive will be entitled to no other payments of Base Salary or Annual
Bonus under this Agreement. All other benefits, if any, due Executive
following Executive's termination of employment by the Company for Cause will
be determined in accordance with the plans, policies and practices of the
Company.
(b) TERMINATION BY THE COMPANY WITHOUT CAUSE, BY EXECUTIVE WITH
GOOD REASON, OR DUE TO NON-RENEWAL OR EXECUTIVE'S DEATH OR DISABILITY.
(i) Executive's employment hereunder may be terminated under
any of the following circumstances: by the Company without Cause, by
Executive with Good Reason, upon Executive's death, at the end of the
Employment Term following the Company's delivery of a notice of non-renewal
as provided in Section 1 and if Executive becomes physically or mentally
incapacitated and is therefore reasonably expected to be unable for a period
of six (6) consecutive months or for an aggregate of nine (9) months in any
twenty-four (24) consecutive month period to perform his duties (such
incapacity is hereinafter referred to as "Disability"). Any question as to
the existence of a Disability as to which Executive and the Company cannot
agree will be determined in writing by a qualified independent physician
mutually acceptable to Executive and the Company. If Executive and the
Company cannot agree as to a qualified independent physician, each will
appoint such a physician and those two physicians shall select a third who
will make such determination in writing. The determination of Disability made
in writing to the Company and Executive will be final and conclusive for all
purposes of the Agreement.
(ii) Except as otherwise provided in Sections 7(c) and 13(f) below,
upon the termination of Executive's employment hereunder under any
circumstance described in paragraph (i) of this Section 7(b), Executive or
his estate (as the case may be) is entitled to receive, as and when due under
the
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terms of this Agreement, his Base Salary, the benefits described in Section 6
of this Agreement and an annual bonus for each year the Company remains
obligated to make payments under this Section 7(b)(ii) equal to the average
of the Annual Bonuses received by Executive during the two years immediately
preceding such termination (or in the immediately preceding year if Executive
received only one Annual Bonus before such termination) until the later of
(A) the end of the Initial Employment Term and (B) the date one year after
the date of such termination; PROVIDED that in the event of Executive's
termination of employment due to death or Disability, such payments shall be
reduced by the aggregate amount of payments received or to be received by
Executive under any disability or life insurance program maintained by the
Company or its affiliates.
(c) TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY EXECUTIVE WITH
GOOD REASON WITHIN ONE YEAR FOLLOWING A CHANGE OF CONTROL. If Executive's
employment hereunder is terminated by the Company (or by another entity which
directly or indirectly acquired the business, assets or the equity of the
Company) without Cause or is terminated by Executive with Good Reason, in
either case, within one (1) year following a "Change of Control", Executive
shall be entitled to receive, in lieu of the compensation set forth in
paragraph (b) above, a lump sum payment equal to the product of (x) 2.99
times (y) Executive's "base amount," as defined in Section 280G(b)(3) of the
Code (the "Executive Base Amount"). Executive shall be entitled to no other
payments of Base Salary or Annual Bonus under this Agreement. All other
benefits, if any, due Executive following Executive's termination of
employment by the Company without Cause within one year following a Change of
Control shall be determined in accordance with the plans, policies and
practices of the Company.
(d) TERMINATION BY EXECUTIVE WITHOUT GOOD REASON.
(i) If Executive terminates his employment hereunder with the
Company for any reason (other than for Good Reason), he will receive his Base
Salary through the date of termination and will be entitled to no other
payments of Base Salary or Annual Bonus under this Agreement. All other
benefits, if any, due Executive following any such termination of Executive's
employment will be determined in accordance with the plans, policies and
practices of the Company.
(ii) For purposes of this Agreement "Good Reason" means (t) a
reduction in Base Salary, (u) an adverse change in Executive's title, (v) a
material reduction in the scope of Executive's duties and responsibilities to
the extent that they become materially inconsistent with his position as
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President and Chief Executive Officer of the Company (w) the failure of
Executive to report directly to the Board, (x) the failure of the Company to
pay Executive any of the compensation due and owing to Executive hereunder,
(y) the failure of the Company to maintain Executive's principal office in
the greater New York metropolitan area without Executive's written consent or
(z) any other material breach of this Agreement by the Company, in any such
case, following written notice from Executive to the Company describing the
event allegedly constituting Good Reason and the Company's failure to cure or
to in good faith commence the cure of such event within ten (10) days
following Executive's giving of such written notice.
(e) LIMITATION ON CERTAIN PAYMENTS FOLLOWING TERMINATION OF
EMPLOYMENT. Notwithstanding any other provision of this Agreement:
(i) In the event it is determined pursuant to clause (ii)
below, that part or all of the consideration, compensation or benefits to be
paid to Executive under this Agreement in connection with Executive's
termination of employment coincident with or following a Change of Control or
under any other plan, arrangement or agreement in connection therewith,
constitutes a "parachute payment" (or payments) under Section 280G(b)(2) of
the Code, then, if the aggregate present value of such parachute payments
(the "Parachute Amount") exceeds 2.99 times the Executive Base Amount, the
amounts constituting "parachute payments" which would otherwise be payable to
or for the benefit of Executive shall be reduced to the extent necessary so
that the Parachute Amount is equal to 2.99 times the Executive Base Amount;
PROVIDED, HOWEVER, that unless Executive otherwise agrees, in no event shall
the Parachute Amount otherwise payable to Executive be reduced by more than
10% pursuant to this Section 7(e).
(ii) Any determination that a payment constitutes a parachute
payment and any calculation described in this Section 7(e) ("determination")
shall be made by the independent public accountants for the Company, and may,
at the Company's election, be made prior to termination of Executive's
employment where the Company determines that a Change in Control, as provided
in this Section 7, is imminent. Such determination shall be furnished in
writing no later than 30 days following the date of the Change in Control by
the accountants to Executive.
(iii) If the determination made pursuant to clause (ii) of this
Section 7(e) results in a reduction of the payments that would otherwise be
paid to Executive except for the application of clause (i) of this Section
7(e), Executive
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may then elect, in his sole discretion, which and how much of any particular
entitlement shall be eliminated or reduced and shall advise the Company in
writing of his election within ten (10) days of the determination of the
reduction in payments. If no such election is made by Executive within such
ten-day period, the Company may elect which and how much of any entitlement
shall be eliminated or reduced and shall notify Executive promptly of such
election. Within ten (10) days following such determination and the
elections hereunder, the Company shall pay to or distribute to or for the
benefit of Executive such amounts as are then due to Executive under this
Agreement and shall promptly pay to or distribute to or for the benefit of
Executive in the future such amounts as become due to Executive under this
Agreement.
(iv) As a result of the uncertainty in the application of
Section 280G of the Code at the time of a determination hereunder, it is
possible that payments will be made by the Company which should not have been
made under clause (i) of this Section 7(e) ("Overpayment") or that additional
payments which are not made by the Company pursuant to clause (i) of this
Section 7(e) should have been made ("Underpayment"). In the event that there
is a final determination by the Internal Revenue Service, or a final
determination by a court of competent jurisdiction, that an Overpayment has
been made, any such Overpayment shall be treated for all purposes as a loan
to Executive which Executive shall repay to the Company together with
interest at the applicable Federal rate provided for in Section 7872(f)(2) of
the Code. In the event that there is a final determination by the Internal
Revenue Service, a final determination by a court of competent jurisdiction
or a change in the provisions of the Code or regulations pursuant to which an
Underpayment arises under this Agreement, any such Underpayment shall be
promptly paid by the Company to or for the benefit of Executive, together
with interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Code.
(f) EXPIRATION OF EMPLOYMENT TERM. Unless otherwise agreed in
writing between the Company and Executive, Executive's employment hereunder
terminates upon the expiration of the Employment Term following delivery of a
notice of non-renewal as provided in Section 1 of this Agreement. Following
such expiration of the Employment Term, the Company will have no further
obligations to Executive hereunder, other than (i) if Executive delivers the
notice of non-renewal, with respect to compensation (including, but not
limited to, Annual Bonus, any amounts payable under any employee benefit
program of the Company in which Executive is or was a participant, accrued
vacation time not taken, unreimbursed business expenses
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and any other amounts which may be due and/or owing to Executive hereunder)
which shall have accrued to Executive during the Employment Term but which
shall then remain unpaid, and (ii) if the Company delivers the notice of
non-renewal, as provided in Section 7(b)(ii). Executive's continuation of
employment with the Company beyond the expiration of the Employment Term will
be deemed an employment at will which may be terminated by the Company or
Executive at any time and will not extend any of the provisions of this
Agreement. Any payments received by Executive in connection with such
employment-at-will reduce the amounts payable by the Company under Section
7(b)(ii).
(g) NOTICE OF TERMINATION. Any purported termination of employment
by the Company or by Executive must be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13(h)
hereof. For purposes of this Agreement, a "Notice of Termination" means a
notice which indicates the specific termination provision in this Agreement
relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under
the provision so indicated.
8. NON-COMPETITION. Executive acknowledges and recognizes the
highly competitive nature of the businesses of the Company and its affiliates
and accordingly agrees as follows:
(a) During the term of Executive's employment hereunder and
for a period of one year following the termination of Executive's employment
with the Company, Executive shall not become an employee, owner (except for
passive investments of not more than one percent (1%) of the outstanding
shares of, or any other equity interest in, any company or entity listed or
traded on a national securities exchange or in an over-the-counter securities
market), officer, agent or director of any company or entity engaged in the
location-based entertainment center business (other than major theme parks)
which directly competes with the Company.
(b) For one year following the termination of Executive's
employment with Company, Executive shall not directly or indirectly induce
any employee of the Company or any of its affiliates to engage in any
activity in which Executive is prohibited from engaging by Section 8(a) above
or to terminate such employee's employment with the Company or any of its
affiliates, and shall not directly or indirectly employ or offer employment
to any person who was employed by the Company or any of its affiliates unless
such person has ceased to be employed by the Company or any of its affiliates
for a period of at least 12 months.
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(c) It is expressly understood and agreed that although
Executive and the Company consider the restrictions contained in this Section
8 to be reasonable, if a final judicial determination is made by a court of
competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against
Executive, the provisions of this Agreement shall not be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such maximum extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction finds
that any restriction contained in this Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding
shall not affect the enforceability of any of the other restrictions
contained herein.
(d) Notwithstanding the foregoing, it is expressly understood
and agreed that Executive's obligation to comply with the provisions of this
Section 8 during any period following the termination of his employment with
the Company will cease in the event that the Company is in material breach of
any of its obligations to make payments to Executive hereunder; PROVIDED that
(i) Executive has notified the Company in writing of such alleged breach and
the Company has failed to cure such breach within ten (10) days of its
receipt of such written notice and (ii) Executive shall continue to be bound
by the provisions of this Section 8 in the event of any bona fide dispute
over Executive's entitlement to any such payments pending settlement or
judicial resolution of such bona fide dispute.
9. CONFIDENTIALITY. Executive shall not at any time (whether
during or after his employment with the Company) disclose or use for his own
benefit or purposes or the benefit or purposes of any other person, firm,
partnership, joint venture, association, corporation or other business
organization, entity or enterprise other than the Company and any of its
affiliates, any trade secrets, information, data, or other confidential
information relating to customers, development programs, costs, marketing,
trading, investing, sales activities, promotion, credit and financial data,
financing methods, plans, or the business and affairs of the Company
generally, or of any affiliate of the Company, PROVIDED that the foregoing
prohibition shall apply only to information (i) which is or could be material
to the Company, (ii) which is not generally known to the industry or the
public other than as a result of Executive's breach of this covenant and
(iii) which is or could be used by the recipient thereof in a manner
materially detrimental to the Company. Upon the Company's request after
termination of Executive's employment with the Company for any reason,
Executive shall return to the Company immediately all memoranda, books,
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papers, plans, information, letters and other data, and all copies thereof or
therefrom, in any way relating to the business of the Company and its
affiliates, except that he may retain personal notes, notebooks and diaries.
Further, Executive shall not retain or use for his account at any time any
trade names, trademark or other proprietary business designation used or
owned in connection with the business of the Company or its affiliates. It
is understood and agreed that nothing contained in this Section 9 shall
restrict Executive's ability to obtain future employment.
10. COOPERATION WITH REGARD TO LITIGATION. Executive shall
cooperate with the Company during the Employment Term and thereafter
(including following Executive's termination of employment for any reason) by
making himself reasonably available to testify on behalf of the Company or
its affiliates, in any action, suit or proceeding, whether civil, criminal,
administrative, or investigative and to assist the Company or any of its
affiliates in any such action, suit, or proceeding by providing information
and meeting and consulting with the Board or its representatives or counsel
or representatives or counsel to the Company or its affiliates, as reasonably
requested by the Board or such representatives or counsel. Executive shall
be reimbursed by the Company for any expenses (including, but not limited to,
legal fees) reasonably incurred by Executive in connection with his
compliance with the foregoing covenant.
11. NOTIFICATION REQUIREMENT. During the Employment Term and for
the one year period following Executive's termination of employment with the
Company for any reason, Executive shall give notice to the Company of any
change in Executive's address and of each new employment that Executive plans
to undertake at least seven (7) days prior to beginning any such new
employment. Such notice must state the nature of the new employment, the
name and address of the person for whom such new employment is undertaken and
Executive shall provide the Company with such other pertinent information
concerning such new employment as the Company may reasonably request in order
to determine Executive's continued compliance with his obligations under
Sections 8 and 9.
12. SPECIFIC PERFORMANCE. Executive acknowledges and agrees that
the Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 8 or Section 9 would be inadequate and, in recognition
of this fact, Executive agrees that, in the event of such a breach or
threatened breach, in addition to any remedies at law, the Company may seek
equitable relief in the form of specific performance,
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temporary restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available.
13. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
without reference to conflicts of laws provisions.
(b) ENTIRE AGREEMENT/AMENDMENTS. This Agreement contains the
entire understanding of the parties with respect to the employment of
Executive by the Company. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written
instrument signed by the parties hereto.
(c) NO WAIVER. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement.
(d) SEVERABILITY. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respects, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not be affected thereby.
(e) ASSIGNMENT. This Agreement is not assignable by Executive
and is assignable by the Company only with the consent of Executive; PROVIDED
that if the Company effects a reorganization, consolidates with, or merges
into any other entity or transfers all of substantially all of its properties
or assets to any other entity the Company must assign its rights and
obligations under this Agreement (and Executive hereby consents to any such
assignment); and provided, further, that any assignee of the Company must
expressly assume the obligations, rights and privileges of this Agreement.
(f) MITIGATION. Executive has no duty to mitigate damages
following termination of his employment. However, the Company's obligation
to make the severance payments described in Section 7(b)(ii) as a result of
its delivery of a notice of non-renewal will be reduced on a
dollar-for-dollar basis to the extent Executive receives compensation in
connection with new employment.
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(g) SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure
to the benefit of and be binding upon the Company, its successors and
permitted assigns. This Agreement shall also inure to the benefit of and be
binding upon Executive, his executors, administrators and heirs.
(h) NOTICE. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement must be in writing and
will be deemed to have been duly given when delivered by hand or nationally
recognized overnight courier or five (5) business days after being mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the Company at its executive offices with a copy sent to the
address set forth below, and addressed to Executive at the last known address
of Executive contained in the personnel records of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
Copies of Notices to Company:
Wellspring Associates, L.L.C.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, X.X. 00000
(i) WITHHOLDING TAXES. The Company may withhold from any
amounts payable under this Agreement such federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or regulation.
(j) REPRESENTATION AS TO NO CONFLICT. Each of Executive and
the Company hereby represents and warrants to the other than neither the
execution nor performance by such party of this Agreement is prohibited or
restricted by or constitutes or will constitute, directly or indirectly, a
breach or violation of any written or other agreement to which such party is
or has been a party or by which such party is otherwise bound. The Company
further represents to Executive that it has been duly formed as a corporation
under the laws of the state of Delaware, is in good standing, is authorized
to conduct and carry on its business and that the Agreement has been
authorized by the Board and that all corporate action required to be taken to
enter into this Agreement has been duly taken.
(k) SURVIVAL. Provisions of this Agreement shall survive any
termination to the extent necessary or desirable to fully accomplish the
purposes of such provision; provided that the provisions of Sections 5, 7, 8,
9, 10, 11, 12 and 13(j)
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shall in all events survive any termination of Executive's employment and the
expiration of the Employment Term.
(l) COUNTERPARTS. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instruments.
(m) EFFECTIVE DATE. This Agreement becomes effective on the
later of the following dates (such later date the "Effective Date"): (i) the
date this Agreement is executed by the parties hereto and Birch and (ii) the
"Effective Date" as defined in the Plan.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
Discovery Zone, Inc.
By: /s/ Xxxxxx Xxxxxx
---------------------------
Name: Xxxxxx Xxxxxx
Title: Senior Vice President
/s/ Xxxxx Xxxxxxxxx
---------------------------
Xxxxx Xxxxxxxxx
Consented and Agreed
With Respect to Sections 2(a) and 5(c):
BIRCH HOLDINGS LLC
By: /s/ Xxxx Xxxxxxx
-----------------------------
Name: Xxxx Xxxxxxx
Title: Member
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