Employment Agreement
EMPLOYMENT AGREEMENT, dated as of January 1, 1999 between Panavision
Inc., a Delaware corporation (the "Company") and Xxxx X. Xxxxxxx (the
"Executive").
WHEREAS, the Company and the Executive are signatories to an Agreement
dated as of November 19, 1996 (with all Appendices and Amendments thereto, the
"Prior Agreement"); and
WHEREAS, the Company and the Executive desire to enter into a new
contractual arrangement whereby the Company will employ the Executive on the
terms and conditions set forth in this Agreement, such that the Prior Agreement
shall be superseded and of no further force and effect; and
WHEREAS, the Company wishes to employ the Executive, and the Executive
wishes to accept such employment, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment, Duties. The Company hereby employs the Executive
for the Term (as defined in Section 2.1), to render exclusive and full-time
services to the Company as President and Chief Executive Officer or in such
other executive position as may be mutually agreed upon by the Company and the
Executive, and to perform such other duties consistent with such position as may
be assigned to the Executive by the Board of Directors or any officer of the
Company senior to the Executive.
1.2 Acceptance. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, to devote the Executive's entire business time, energy and skill to
such employment, and to use the Executive's best efforts, skill and ability to
promote the Company's interests. The Executive further agrees to accept
election, and to serve during all or any part of the Term, as an officer or
director of the Company and of any subsidiary or affiliate of the Company,
without any compensation therefor other than that specified in this Agreement,
if elected to any such position by the shareholders or by the Board of Directors
of the Company or of any subsidiary or affiliate, as the case may be. The
Executive hereby represents and warrants that the Executive is not
subject to any other agreement, including without limitation any agreement not
to compete or confidentiality agreement, which would be violated by the
Executive's performance of services hereunder.
1.3 Location. The duties to be performed by the Executive
hereunder shall be performed primarily at the office of the Company in Woodland
Hills, California, subject to reasonable travel requirements on behalf of the
Company.
2. Term of Employment; Certain Post-Term Benefits.
2.1 The Term. The term of the Executive's employment under this
Agreement (the "Term") shall commence on January 1, 1999 and shall end on
December 31, 2001 or such later date to which the Term is extended pursuant to
Section 2.2.
2.2 End-of-Term Provisions. At any time on or after December 31,
1999 the Company shall have the right to give written notice of non-renewal of
the Term. In the event the Company gives such notice of non-renewal, the Term
automatically shall he extended so that it ends twenty-four months after the
last day of the month in which the Company gives such notice. From and after
December 31, 2001, unless and until the Company gives written notice of
non-renewal as provided in this Section 2.2, the Term automatically shall be
extended day-by-day; upon the giving of such notice by the Company, the Term
automatically shall be extended so that it ends twenty-four months after the
last day of the month in which the Company gives such notice.
2.3 Special Curtailment. The Term shall end earlier than the
original December 31, 2001 termination date provided in Section 2.1 or any
extended termination date provided in Section 2.2, in either case if sooner
terminated pursuant to Section 4. Non-extension of the Term shall not be deemed
to be a wrongful termination of the Term or this Agreement by the Company
pursuant to Section 4.4.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Executive during the
Term a base salary, payable semi-monthly in arrears, at the annual rate of not
less than $800,000 in 1999, $900,000 in 2000 and $1,000,000 in 2001 and
thereafter, less such deductions or
2
amounts to be withheld as required by applicable law and regulations (the "Base
Salary"). In the event that the Company in its sole discretion from time to time
determines to further increase the Base Salary, such increased amount shall,
from and after the effective date of the increase, constitute "Base Salary" for
purposes of this Agreement.
3.2 Incentive Compensation. In addition to the amounts to be paid
to the Executive pursuant to Section 3.1, the Executive will be eligible,
subject to adoption by the Compensation and Stock Option Committee (the
"Compensation Committee") of the Company's Board of Directors and approval by
the Company's stockholders, to participate in the Company's Executive Incentive
Compensation Plan (the "Incentive Plan"). The Incentive Plan shall establish a
financial performance target (the "Target") for the Company for each fiscal
year. The Executive's participation in the Incentive Plan shall permit the
Executive to earn an award of (i) 50% of Base Salary if the Company achieves
85% of the Target, (ii) 100% of Base Salary if the Company achieves 100% of the
Target and (iii) 200% of Base Salary if the Company achieves 110% of the
Target. The Executive shall earn an award which is prorated, as applicable, on a
linear basis should the Company's performance be between 85% and 100% of the
Target or between 100% and 110% of the Target.
3.3 Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the Executive
during the Term in the performance of the Executive's services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as the Company customarily may require of its officers
provided, however, that the maximum amount available for such expenses during
any period may be fixed in advance by the Chairman of the Board of Directors or
the Executive Committee of the Board of Directors.
3.4 Vacation. The Executive shall be entitled to a vacation period
in accordance with the vacation policy of the Company during each year of the
Term.
3.5 Fringe Benefits. During the Term, the Executive shall be
entitled to all benefits for which the Executive shall be eligible under any
qualified pension plan, 401(k) plan, group insurance or other so-called "fringe"
benefit plan which the Company provides to its employees and officers generally.
3
3.6 Additional Benefits. During the Term, the Executive shall be
entitled to such other benefits as are specified in Appendix I to this
Agreement.
4. Termination.
4.1 Death. If the Executive shall die during the Term, the Term
shall terminate and no further amounts or benefits shall be payable hereunder,
except that the Executive's legal representatives shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the end of the Term (as in effect immediately
prior to the Executive's death) or, if the Company has not then given written
notice of non-renewal pursuant to Section 2.2, for a period of twenty-four
months after the last day of the month in which termination described in this
Section 4.1 occurred, whichever is longer.
4.2 Disability. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) for shorter periods aggregating six
months during any twelve month period, the Company may at any time after the
last day of the six consecutive months of disability or the day on which the
shorter periods of disability shall have equalled an aggregate of six months, by
written notice to the Executive (but before the Executive has recovered from
such disability), terminate the Term and no further amounts or benefits shall be
payable hereunder, except that the Executive shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the end of the Term (as in effect immediately
prior to such termination) or, if the Company has not then given notice of
non-renewal pursuant to Section 2.2, for a period of twenty-four months after
the last day of the month in which termination described in this Section 4.2
occurred. If the Executive shall die before receiving all payments to be made by
the Company in accordance with the foregoing, such payments shall be made to a
beneficiary designated by the Executive on a form prescribed for such purpose
by the Company, or in the absence of such designation to the Executive's legal
representative.
4.3 Cause. In the event (i) of gross neglect by the Executive of
the Executive's duties hereunder, (ii) conviction of the Executive of any
felony, (iii) conviction of the Executive of any lesser crime or offense
involving the property of the Company or any of its subsid-
4
iaries or affiliates, (iv) willful misconduct by the Executive in connection
with the performance of any material portion of the Executive's duties
hereunder, (v) breach by the Executive of any material provision of this
Agreement, (vi) breach by the Executive of the Company's official written Code
of Conduct as in effect from time to time or (vii) any other conduct on the part
of the Executive which would make the Executive's continued employment by the
Company materially prejudicial to the best interests of the Company, the Company
may at any time by written notice to the Executive terminate the Term, provided,
however, that in the case of any matter covered by clauses (i), (iv), (v) or
(vii), the Company shall first have given the Executive written notice of the
conduct (or lack thereof) at issue and 30 days within which to cure. Upon such
termination, this Agreement shall terminate and the Executive shall be entitled
to receive no further amounts or benefits hereunder, except any as shall have
been earned to the date of such termination. For the purposes of this Section
4.3, "amounts earned to the date of such termination" shall include incentive
compensation in the manner and amount specified in Section 3.2 prorated for that
portion of the year prior to the date of the Executive's termination.
4.4 Company Breach. In the event of the breach of any material
provision of this Agreement by the Company, the Executive shall be entitled to
terminate the Term upon 60 days' prior written notice to the Company. Upon such
termination, or in the event the Company terminates the Term or this Agreement
other than pursuant to the provisions of Sections 4.2 or 4.3, the Company shall
continue to provide the Executive (i) payments of (A) Base Salary, in the manner
and amount specified in Section 3.1, (B) incentive compensation in the manner
and amount specified in Section 3.2 prorated for that portion of the year prior
to the date of the Executive's termination and (C) thereafter, incentive
compensation at a rate equal to 50% of Base Salary and (ii) fringe benefits and
additional benefits in the manner and amounts specified in Sections 3.5 and 3.6
until the end of the Term (as in effect immediately prior to such termination)
or, if the Company has not then given written notice of non-renewal pursuant to
Section 2.2, for a period of twenty-four months after the last day of the month
in which termination described in this Section 4.4 occurred, whichever is longer
(the "Damage Period"). The Company's obligations pursuant to this Section 4.4
are subject to the Executive's duty to mitigate damages by seeking other
employment provided, however, that the Executive shall not be required to accept
a position of lesser importance or of substantially different character than the
position held with the Company immediately prior to the effective date of
termination or in a location
5
outside of the Woodland Hills, California metropolitan area. The Company
acknowledges that the non-competition obligation imposed on the Executive
pursuant to Section 5.2 may reduce substantially the ability of the Executive to
mitigate damages pursuant to this Section 4.4 and, accordingly, agrees that the
Executive's failure to mitigate damages as a consequence of the restrictions
imposed on him by Section 5.2 will be deemed an excuse for such failure on the
Executive's part. To the extent that the Executive shall earn compensation
during the Damage Period (without regard to when such compensation is paid), the
Base Salary and incentive compensation payments to be made by the Company
pursuant to this Section 4.4 shall be correspondingly reduced. All payments and
benefits (including service credit for benefit plan purposes and stock option
vesting purposes) to be received by the Executive under this Section 4.4 will be
treated for the Executive's benefit in the same manner as that customarily
accorded full-time employees of the Company.
4.5 Litigation Expenses. Except as provided for in Section 5.7, if
the Company and the Executive become involved in any action, suit or proceeding
relating to the alleged breach of this Agreement by the Company or the
Executive, and if a judgment in such action, suit or proceeding is rendered in
favor of the Executive, the Company shall reimburse the Executive for all
expenses (including reasonable attorneys' fees) incurred by the Executive in
connection with such action, suit or proceeding.
5. Protection of Confidential Information; Non-Competition.
5.1 In view of the fact that the Executive's work for the Company
will bring the Executive into close contact with many confidential affairs of
the Company, its subsidiaries and affiliates not readily available to the
public, and plans for future developments, the Executive agrees:
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company, its subsidiaries and affiliates, including,
without limitation, "know how", trade secrets, customer lists, pricing policies,
operational methods, technical processes, formulae, inventions and research
projects, other business affairs of the Company, its subsidiaries and
affiliates, and any information whatsoever concerning any director, officer,
employee or agent of the Company, its subsidiaries and affiliates or their
respective family members learned by the Executive heretofore or hereafter, and
not to disclose
6
them to anyone outside of the Company, either during or after the Executive's
employment with the Company, except in the course of performing the Executive's
duties hereunder or with the Company's express written consent. The foregoing
prohibitions shall include, without limitation, directly or indirectly
publishing (or causing, participating in, assisting or providing any statement,
opinion or information in connection with the publication of) any diary, memoir,
letter, story, photograph, interview, article, essay, account or description
(whether fictionalized or not) concerning any of the foregoing, publication
being deemed to include any presentation or reproduction of any written, verbal
or visual material in any communication medium, including any book, magazine,
newspaper, theatrical production or movie, or television or radio programming or
commercial; and
5.1.2 To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof), including data stored in computer
memories or on other media used for electronic storage or retrieval, relating to
the Company's business, or the business of its subsidiaries or affiliates, and
all property associated therewith, which the Executive may then possess or have
under the Executive's control.
5.2 During the Term and for a period of twenty-four months
thereafter, the Executive shall not, directly or indirectly, enter the employ
of, or render any services to, any person, firm or corporation engaged in any
business competitive with the business of the Company or of any of its
subsidiaries or affiliates; the Executive shall not engage in such business on
the Executive's own account; and the Executive shall not become interested in
any such business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee, trustee, consultant,
or in any other relationship or capacity provided, however, that nothing
contained in this Section 5.2 shall be deemed to prohibit the Executive from
acquiring, solely as an investment, up to five percent (5%) of the outstanding
shares of capital stock of any public corporation. In addition, during the Term
and for a period of twenty-four months thereafter, the Executive shall not
solicit or encourage any person who, within six (6) months prior to the
expiration or earlier termination of the Term, was an employee of the Company or
any of its subsidiaries or affiliates to (i) terminate his or her employment
with the Company or any such subsidiary or affiliate or (ii) engage in any
activity prohibited to the
7
Executive by the first sentence of this Section 5.2.
5.3 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the following rights and remedies:
5.3.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to account for
and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits") derived or received by
the Executive as the result of any transactions constituting a breach of any of
the provisions of Sections 5.1 or 5.2, and the Executive hereby agrees to
account for and pay over such Benefits to the Company.
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
5.4 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, hereafter are construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
5.5 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, are held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, said provision shall then be
enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of any
state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in
8
any way affect the Company's right to the relief provided above in the courts of
any other states within the geographical scope of such covenants as to breaches
of such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being for this purpose severable into diverse and
independent covenants.
5.7 In the event that any action, suit or other proceeding in law
or in equity is brought to enforce the covenants contained in Sections 5.1 and
5.2 or to obtain money damages for the breach thereof, and such action results
in the award of a judgment for money damages or in the granting of any
injunction in favor of the Company, all expenses (including reasonable
attorneys' fees) of the Company in such action, suit or other proceeding shall
(on demand of the Company) be paid by the Executive. In the event the Company
fails to obtain a judgment for money damages or an injunction in favor of the
Company, all expenses (including reasonable attorneys' fees) of the Executive in
such action, suit or other proceeding shall (on demand of the Executive) be paid
by the Company.
6. Inventions and Patents.
6.1 The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive's work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company's time or with the use of
the Company's facilities or materials. The Executive shall further: (a) promptly
disclose such Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent and other rights to such Inventions for the
United States and foreign countries; (c) sign all papers necessary to carry out
the foregoing; and (d) give testimony in support of the Executive's
inventorship.
6.2 If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within two
years after the termination of the Executive's employment by the Company, it is
to be presumed that the Invention was conceived or made during the Term.
6.3 The Executive agrees that the Executive will not assert any
rights to any Invention as having been
9
made or acquired by the Executive prior to the date of this Agreement, except
for Inventions, if any, disclosed to the Company in writing prior to the date
hereof.
7. Intellectual Property.
The Company shall be the sole owner of all the products and proceeds of
the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
8. Indemnification.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by the Executive in connection with any action, suit or proceeding to
which the Executive may be made a party by reason of the Executive being an
officer, director or employee of the Company or of any subsidiary or affiliate
of the Company.
9. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
10
If to the Company, to:
Panavision Inc.
0000 Xx Xxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Page
Vice Chairman and Chief
Administrative Officer
If to the Executive, to:
Xxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
10. General.
10.1 This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York.
10.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
10.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof, including, without limitation, the
Prior Agreement, which Prior Agreement is deemed terminated hereby and of no
further force or effect. Moreover, the parties agree that no further amounts are
due and owing to the Executive under the Prior Agreement as of the date hereof
(except amounts, if any, as have accrued to the Executive pursuant to the
Company's employee benefit plans and are unpaid as of the date hereof). No
representation, promise or inducement has been made by either party that is not
embodied in this Agreement, and neither party shall be bound by or liable for
any alleged representation, promise or inducement not so set forth.
10.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii) to
third parties in connection with any sale, transfer or other disposition of all
or substantially all of its business or assets; in any event the obligations of
the
11
Company hereunder shall he binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its business
or assets.
10.5 This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or covenants hereof may be waived,
only by a written instrument executed by both of the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by either
party of the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
11. Subsidiaries and Affiliates.
11.1 As used herein, the term "subsidiary" shall mean any corporation
or other business entity controlled directly or indirectly by the corporation or
other business entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the corporation or other
business entity in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PANAVISION INC.
By: /s/ Xxxxxx X. Page
-----------------------------
Xxxxxx X. Page
Vice Chairman and Chief
Administrative Officer
/s/ Xxxx X. Xxxxxxx
-----------------------------
Xxxx X. Xxxxxxx
12
APPENDIX I
----------
Additional Benefits:
--------------------
1. Medical Examination. The Executive shall be reimbursed by the
Company for the reasonable cost of one annual medical examination upon
presentation of an expense statement.
2. Automobile. The Company shall afford the Executive the right to use
an automobile on a continuing basis and shall provide garaging near the
Executive's residence, all on the following basis. The Company shall pay, upon
presentation of an expense statement, all reasonable expenses associated with
the operation of such automobile and the rental of such garage space in the same
manner as is, from time to time, in effect with respect to executive officers of
the Company generally, including, without limitation, all reasonable maintenance
and insurance expenses. The automobile furnished by the Company shall be a late
model top-of-the-line Jaguar, Mercedes Benz or like vehicle to be reasonably
selected by the Executive. Upon the expiration of the Term, the Executive
promptly shall return the automobile to the Company.
3. Insurance. The Company agrees to provide the Executive with
additional term life insurance coverage with a face amount of twice the then
current Base Salary, subject to the insurer's satisfaction with the results of
any required medical examination to which the Executive hereby agrees to submit,
on the following basis. The Executive may select a plan of his choice and may
designate the beneficiary of such plan. The Company shall pay, upon presentation
of an expense statement, the periodic premiums relating to such additional term
life insurance payable during the Term.
4. Tax Advisor. The Executive shall be reimbursed by the Company, upon
presentation of an expense statement, for the reasonable fees and disbursements
of a personal tax advisor to be selected by the Executive.
5. Club Membership. The Company shall reimburse the Executive, upon
presentation of an expense statement, for all reasonable initiation fees and
periodic dues for membership in a club of the Executive's choice.
6. Estate Planning. The Executive shall be reimbursed by the Company,
upon presentation of an expense statement, for the reasonable fees and
disbursements of an
13
estate planning advisor to be selected by the Executive.
7. Stock Options. The Executive shall be eligible, subject to adoption
by the Compensation Committee of the Company's Board of Directors and approval
by the Company's stockholders, to receive an award under the Company's 1999
Stock Option Plan of non-qualified options to acquire 100,000 shares of the
Company's common stock at an exercise price of $13.00 per share and 100,000
shares of the Company's common stock at an exercise price of $15.00 per share
and, in each case, otherwise on such terms and conditions as are prescribed by
the Compensation Committee in accordance with the 1999 Stock Option Plan.
14
