EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") made and entered as of this
1st day of January, 1997, by and between Spice Entertainment Companies, Inc.
(the "Company" or "Employer"), a Delaware corporation, and Xxxxx Xxxxx (the
"Executive") (collectively the Company and the Executive are referred to as the
"Parties").
INTRODUCTION
WHEREAS, the Parties desire to enter into an Agreement and to
set forth herein the terms and conditions of the Executive's employment by the
Company. Accordingly, in consideration of the mutual covenants and agreement set
forth herein and the mutual benefits to be derived herefrom, and intending to be
legally bound hereby, the Company and the Executive agree as follows:
1. Employment.
1.1 Duties. The Company shall employ the Executive on the
terms and conditions set forth in this Agreement, as its Senior Vice President,
Sales & Marketing. The Executive accepts such employment with the Company and
shall perform and fulfill such duties as are assigned to him hereunder
consistent with his status as a senior executive of the Company, devoting his
best efforts and all of his professional time and attention, to the performance
and fulfillment of his duties and to the advancement of the best interests of
the Company, subject only to the direction, approval, and control of the
Company's President and/or Chief Executive Officer, and specific directives of
the Board of Directors of the Company (collectively, "Senior Management"). In
addition, and without any additional consideration, Executive is and/or may be
requested to serve as a director or as an employee and officer of the Company
and any or all subsidiaries of the Company. Unless otherwise indicated by the
context, the "Company" shall include the Company and all its subsidiaries.
1.2 Place of Performance. In connection with his employment by
the Company, the Executive shall be based at the Company's current corporate
facilities located in the New York City Metropolitan area except for required
travel on Company business.
2. Term.
The Executive's employment under this Agreement shall commence as of
January 1, 1997 (the "Commencement Date") and shall continue uninterrupted up to
and including the hour of midnight of December 31, 2000 (the "Term"), unless
otherwise terminated as provided for in Sections 7.1 or 7.3. If the Company has
not agreed to renew this Agreement and/or extend the term by 90 days prior to
the expiration of the Term, the Executive may terminate this Agreement, which
termination shall be for "Good Reason," as that term is defined in Section 7.4.1
below.
3. Compensation.
3.1 Base Salary. During the Term the Executive shall receive a
minimum annual salary (the "Base Salary") payable in installments at such times
as the Company customarily pays its other senior executive employees (but in any
event no less often than twice per month), and calculated as follows:
3.1.1 The Base Salary to be paid to Executive
during the Term shall be $250,000; and
3.1.2 For each Year after the year commencing January
1, 1997, and in conformance with Company policy, the Company shall review the
Executive's performance and may, in the sole determination of the Company,
increase, but not decrease, the Executive's Base Salary and other benefits that
the Company deems appropriate. (As used herein "Year" shall refer to a twelve-
month period ending December 31.)
3.2 Health Insurance and Other Benefits. During the Term the
Executive shall be provided all employee benefits provided by the Company to its
management and all other Company salaried employees, including without
limitation, all medical insurance and life insurance plans or arrangements and
shall be entitled to participate in all pension, profit sharing, stock option
and any other employee benefit plan or arrangement established and maintained by
the Company, all subject, however, to the Company rules and policies then in
effect regarding participation therein. During the Term, the benefits provided
to Executive, as described in the preceding sentence, shall not be reduced
except in accordance with the general reduction of such benefits applicable to
all salaried employees generally, but then only to the extent that such benefits
are reduced for such other salaried employees.
4. Reimbursement of Expenses.
The Executive shall be reimbursed for all items of travel,
entertainment and miscellaneous expenses which the Executive reasonably incurs
in connection with the performance of his duties hereunder, provided that the
Executive submits to the Company on proper forms provided by the Company, such
statements and other evidence supporting such expenses as the Company may
reasonably require and provided such expenses meet the Company's policy
concerning such matters.
5. Stock Options.
The Executive is entitled to participate in all Company employee stock
option programs as determined by the Stock Option Committee of the Company's
Board of Directors and approved by the Company's shareholders and Executive
shall be granted stock options on a basis consistent with grants to similarly
situated employees.
6. Vacations.
The Executive shall be entitled to not less than four (4) weeks of paid
vacation in any calendar year (prorated in any Year during which the Executive
is employed hereunder for less than the entire Year).
7. Termination of Employment.
7.1 Death or Disability. If the Executive dies during the
Term, the Term shall terminate as of the date of the Executive's death. If
Executive becomes Totally Disabled (as that term is defined below) for one
hundred eighty (180) days in the aggregate during any consecutive twelve-month
period during the Term, the Company shall have the right to terminate the Term
by giving the Executive thirty (30) days' prior written notice thereof, and upon
the expiration of such thirty-day period, the Executive's employment under this
Agreement shall terminate. If the Executive resumes his duties within thirty
(30) days after receipt of a notice of termination and continues to perform such
duties for four (4) consecutive weeks thereafter, the Term shall continue and
the notice of termination shall be considered null and void and of no effect.
Upon termination of the Term under this Section 7.1, the Company shall have no
further obligations or liabilities under this Agreement, except to pay to the
Executive's estate or the Executive, as the case may be: (i) the portion, if
any, that remains unpaid of the Base Salary for periods worked by the Executive
plus one year's Base Salary; and (ii) the amount of any expenses reimbursable in
accordance with Section 4 above; and (iii) any amounts due under any Company
benefit, welfare or pension plan. Any stock options or other compensation plan
benefits not vested at the time of the termination of the Agreement under this
Section 7.1 shall immediately become fully vested and options shall remain
exercisable for one year following such termination, subject to earlier
termination if the option's maximum term occurs sooner.
7.2 "Totally Disabled," as used herein, shall mean a mental or
physical condition which in the reasonable opinion of an independent medical
doctor selected by the Company, subject to the Executive's approval, such
approval not to be unreasonably withheld, renders the Executive unable or
incompetent to carry out the material duties and responsibilities of the
Executive under this Agreement.
7.3 Discharge for Cause. The Company may discharge the
Executive for "Cause" upon written notice (as defined in Section 11.1), and
thereby immediately terminate his employment under this Agreement. For purposes
of this Agreement, the Company shall have "Cause" to terminate the Executive's
employment if the Executive, in the reasonable good faith judgment of the
Company, (i) materially breaches any of his agreements, duties or obligations
under this Agreement and has not cured such breach within ten (10) days after
Company's written notice; (ii) willfully fails to carry out a material lawful
directive of the Board of Directors, the Chairman of the Board, and/or the
President of the Company; (iii) embezzles or converts to his own use any funds
of the Company or any client or customer of the Company; (iv) converts to his
own use or destroys, any property of the Company having a significant value; (v)
is in material violation of any of the Company policies and/or procedures as
identified in the Company Employee Manual; or (vi) is habitually drunk or
intoxicated. If Executive is discharged for Cause, he shall receive only those
amounts earned but not distributed under the relevant plan, program or practice
of the Company. The Company and the Executive acknowledge that the Company's
business may be considered controversial in some localities and may result in
civil or criminal litigation against the Company based upon obscenity and
similar laws. The Parties agree that, notwithstanding the other provisions of
this Section, the naming of Executive in any such suit, and any conviction of
Executive or plea bargain, settlement or other disposition of such litigation
relating to Executive, shall not be considered Cause for the termination of
Executive's employment, so long as the conduct of Executive upon which such
claim was based consisted of Executive carrying out his duties in good faith and
in accordance with directions of management of the Company.
7.4 Termination by Executive. Executive may terminate the
Term of his employment:
7.4.1 either (i) upon failure by the Company to
comply with the material provisions of this Agreement, which failure is not
cured within ten (10) days after written notice or (ii) the Company elects not
to renew the Term as provided in Section 2 (either of the foregoing are referred
to herein as "Good Reason") or (iii) there is a change in the Company's
Chairman, Chief Executive Officer or President from the individual currently
holding such titles (any such event is referred to as an "Executive Change"); or
7.4.2 upon a "Change in Control of the Company"
(as defined i Section 7.6.1 below) upon thirty (30) days' prior written notice
given at any time within eighteen (18) months after a Change in Control; or
7.4.3 for any reason other than Good Reason or
following a Change in Control of the Company, which termination shall be
considered a "Voluntary Termination" by Executive.
7.5 Severance upon Termination. If the Executive's employment
is terminated by the Company without Cause, or the Executive shall terminate
employment for Good Reason other than upon an Executive Change or upon a Change
in Control of the Company, then the Company shall pay the Executive in lieu of
other damages, an amount (the "Severance Payments") equal to his then current
Base Salary payable in installments at the same time the Company pays salary to
its other senior executive employees payable over the longer of (i) the balance
of the Term or (ii) two years (the period over which the Severance Payments are
made is referred to as the "Severance Period"). If Executive shall terminate his
employment upon an Executive Change, then the Company shall pay the Executive in
lieu of other damages, an amount equal to the Executive's then current Base
Salary payable in installments over one year, which shall be the Severance
Period. The Company shall have no liability to make any severance payments as
provided for in this paragraph unless (i) the Executive executes a General
Release in a form substantially as set forth in Exhibit A attached hereto and
(ii) Executive complies with all provisions in Section 8 (Restrictive
Covenants). In addition, (i) any Company stock options not vested at the time of
termination shall immediately become vested and remain exercisable for their
term as if Executive's employment had not been terminated and (ii) the Company
shall maintain during the Severance Period all employee benefit plans and
programs which the Executive participated in immediately prior to such
termination other than bonus, incentive compensation and similar plans based on
performance, provided Executive's participation is permissible under the general
terms and provisions of such plans. If Executive causes a Voluntary Termination,
he shall receive only those amounts earned but not distributed under the
relevant plan, program or practice of the Company.
7.6 Change In Control.
7.6.1 Definitions. For purposes of this Section
7.6, a "Change in Control" shall mean a change in control of a nature that
would be required to be reported in response to Item 5(f) of Schedule 14A of
Regulation 14A, as in effect on the date of this Agreement, promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act");
provided, that whether or not required to be reported under such Item 5(f),
without limitation, such a Change in Control shall be deemed to have occurred
if (i) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities; or (ii) during any period
of two consecutive years, individuals who, at the beginning of such period,
constitute the Board cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at least three-
fourths of the directors then still in office who were directors at the
beginning of the period; provided, however, that notwithstanding the foregoing,
no Change of Control shall be deemed to have occurred pursuant to either clause
(i) or (ii) above in the event of (and notwithstanding any resultant change in
the membership of the Board) an acquisition by any group comprised of senior
officers of the Company, including Executive, of 25% or more of the combined
voting power of the Company's then outstanding securities.
7.6.2. Termination Payment. Notwithstanding any
provision of this Agreement, if, within eighteen (18)months following a Change
in Control of the Company, (a) Executive's employment by the Company shall be
terminated by the Company other than as a result of the Executive becoming
Totally Disabled or (b) Executive terminates the Term for any reason, then
Executive shall be entitled to the benefits provided below:
(1) The Company shall pay Executive full
Base Salary through the Termination Date at the rate in effect at that time,
will pay Executive for any vacation earned but not taken and the amount, if any,
of any bonus for a past Company fiscal year which has not yet been awarded or
paid;
(2) In lieu of any further salary
payments to Executive for periods subsequent to the Termination Date, the
Company, subject to the limitation described below, shall pay to Executive on
the 60th day following the Termination Date a lump sum amount equal to four
times the sum of (i) the Base Salary and (ii) cash bonuses and other cash
compensation paid to Executive during the 12 months preceding the Termination
Date ("Termination Payment"); and
(3) All stock options held by Executive
shall be fully vested and remain outstanding for their full original term unless
sooner exercised.
7.6.3 Certain Additional Payments by the Company.
(1) Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment
or distribution to or for the benefit of the Executive (whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 7.6.3 (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred
by the Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred
to as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(2) Subject to the provisions of
Section 7.6.3(3), all determinations required to be made under this Section
7.6.3, including whether and when Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Deloitte & Touche LLP (the
"Accounting Firm"); provided, however, that the Accounting Firm shall not
determine that no Excise Tax is payable by the Executive unless it delivers
to the Executive a written opinion (the "Accounting Opinion") that failure to
report the Excise Tax on the Executive's applicable federal income tax return
would not result in the imposition of a negligence or similar penalty. In the
event that Deloitte & Touche LLP has served, at any time during the two years
immediately preceding a Change in Control Date, as accountant or auditor for the
individual, entity or group that is involved in effecting or has any material
interest in the Change in Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations and perform the
other functions specified in this Section 7.6.3 (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company, the Accounting Firm shall
make all determinations required under this Section 7.6.3, shall provide to the
Company and the Executive a written report setting forth such determinations,
together with detailed supporting calculations, and, if the Accounting Firm
determines that no Excise Tax is payable, shall deliver the Accounting Opinion
to the Executive. Any Gross-Up Payment, as determined pursuant to this Section
7.6.3, shall be paid by the Company to the Executive within five days of the
receipt of the Accounting Firm's determination. Subject to the remainder of this
Section 7.6.3, any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that it is
ultimately determined in accordance with the procedures set forth in Section
7.6.3(3) that the Executive is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(3) The Executive shall notify the
Company in writing of any claims by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than 30
days after the Executive actually receives notice in writing of such claim
and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid; provided, however, that the failure
of the Executive to notify the Company of such claim (or to provide any required
Executive under this Section 7.6.3 except to the extent that the Company is
materially prejudiced in the defense of such claim as a direct result of such
failure. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which he gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim;
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
selected by the Company and reasonably acceptable to the
Executive;
(iii) cooperate with the Company in good faith in
order to effectively contest such claim; and
(iv) if the Company elects not to assume and
control the defense of such claim, permit the Company to
participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 7.6.3, the Company shall have the right, at its sole option, to
assume the defense of and control all proceedings in connection with
such contest, in which case it may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim, and may either direct the
Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on
an interest-free basis, and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided, that any extension of
the statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Company's right to assume the defense of and control
the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(4) If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 7.6.3(3) the
Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the requirements of
Section 7.6.3(3)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 7.6.3(3) a determination is made that the Executive
shall not be entitled to any refund with respect to such claim, and the Company
does not notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
8. Restrictive Covenants.
8.1 Covenant Not to Compete. Executive recognizes that in each
of the highly competitive businesses in which the Company is engaged, personal
contact is of primary importance in securing new customers and in retaining the
accounts and goodwill of present customers and protecting the business of the
Company. The Executive, therefore, agrees that during the Employment Period and,
if Executive's employment is terminated for Cause, for one year following the
Termination Date, or for any other reason other than the Executive becoming
Totally Disabled or the Executive terminating his employment for Good Reason,
during the Severance Period, he will not, with respect to the adult television
entertainment industry, the adult movie industry, or any other electronically
disseminated adult entertainment media, in the United States, Canada and Europe
(the "Relevant Geographic Area"), (i) accept employment or render service to any
Person that is engaged in a business directly competitive with the business then
engaged in by the Company or any of its affiliated companies or (ii) enter into
or take part in or lend his name, counsel or assistance to any business, either
as proprietor, principal, investor, partner, director, officer, executive,
consultant, advisor, agent, independent contractor, or in any other capacity
whatsoever, for any purpose that would be competitive with the business of the
Company or any of its affiliated companies (all of the foregoing activities are
collectively referred to as the "Prohibited Activity"). For these purposes, the
adult television entertainment industry shall refer to television channels,
networks or programming services which are or would be if operated in the United
States subject to regulation under Section 505 of the Telecommunications Act of
1996, regardless of the basis on which such programming is sold or the means by
which such programming is distributed.
8.2 Non-Disclosure of Information. The Executive shall:
8.2.1 Never, directly or indirectly, disclose to
any person or entity for any reason, or use for his own personal benefit, any
"Confidential Information" as hereinafter defined; and
8.2.2 At all times take all reasonable precautions
necessary to protect from loss or disclosure by Executive or his subordinates
any and all documents or other information containing, referring, or relating
to such Confidential Information. Upon termination of employment with the
Company for any reason, the Executive shall promptly return to the Company any
and all documents or other tangible property containing referring, or relating
to such Confidential Information, whether prepared by him or others.
8.2.3 Notwithstanding any provision to the
contrary in Section 8, this paragraph shall not apply to information which
the Executive is called upon by legal process (including, without limitation,
by subpoena or discovery requirement) to disclose or any information which has
become part of the public domain or is otherwise publicly disclosed through no
fault or action of the Executive.
8.2.4 For purposes of this Agreement,
"Confidential Information" shall mean any information relating in any way to the
business of the Company disclosed to or known to the Executive as a consequence
of, result of, or through the Executive's employment by the Company which may
consist of, but not be limited to, technical and non-technical information about
the Company's proprietary products, processes, programs, concepts, forms,
business methods, data, any and all financial and accounting data, employees,
marketing, customers, customer lists, and services and information
corresponding thereto acquired by the Executive during the term of the
Executive's employment by the Company. Confidential Information shall not
include any of such items which are published or are otherwise part of the
public domain, or freely available from trade sources or otherwise.
8.2.5 Upon termination of this Agreement for any
reason, the Executive shall return to a designated officer of the Company all
equipment and/or tangible property then in the Executive's possession or
custody which belongs or relates to the Company, including, without limitation,
copies or reproductions of correspondence, memoranda, reports, notebooks,
drawings, photographs, data base, or any other documents or electronically
stored information which constitutes Confidential Information.
8.3 Trade Secrets - Intellectual Property Rights. Executive
shall provide the Company with any copyrightable work, trade secrets and other
protectable intellectual property developed or produced by Executive while in
the employ of the Company pursuant to this Agreement (collectively, "Work
Product").
8.3.1 All Work Products shall be considered works
made for hire and shall be the exclusive property of the Company and the Company
shall be considered the author and/or creator of such work for worldwide
copyright purposes and renewals and extensions thereof. The Company may request,
at its own cost and expense, that Executive assist the Company in obtaining
worldwide patent, copyright and other property rights for the Work Product.
8.3.2 If Executive's rights in the Work Product
cannot be assigned to the Company, the Executive waives enforcement of all such
rights against the Company. The Executive further agrees to join in any action,
at the Company's sole cost and expense, to enforce or to procure a waiver of
such rights.
8.3.3 If the rights of the Work Product cannot be
waived or the Work Product is not deemed a "work for hire," the Executive
hereby grants the Company and its assigns a worldwide royalty-free license
to reproduce, distribute, modify, publicly display, sublicense and assign
such rights in all media or distribution technologies now known and hereinafter
developed or devised.
8.3.4 The Executive hereby appoints the Company
as his attorney in fact to execute and file any patent, copyright or other
lawful application with respect to the Work Product.
8.4 Conflict of Interest. Executive shall exercise good
judgment and maintain high ethical standards in the course of his dealings so as
to preclude the possibility of a conflict between the interest of the Company
and his own personal interest. Executive, therefore, has an obligation to avoid
any activity, agreement, personal interest, or other relationship or situation
which: (i) conflicts with the Company's best interest; (ii) interferes with
Executive's responsibility to serve the Company to the best of Executive's
ability; or (iii) gives the appearance of self dealing.
8.4.1 This policy requires that Executive shall
not have any relationship, nor engage in any activity that might impair the
independence or judgment in the execution of Executive's duties. Executive
shall not have any direct or indirect personal financial interests in suppliers
of property, goods or services that would affect his decisions or actions on
the Company's behalf. Executive shall not accept gifts, benefits, or unusual
hospitality that would be reasonably likely to influence Executive in the
performance of his duties.
8.4.2 If any possible conflict of interest
situation arises, the Executive is responsible to immediately disclose the facts
to the President or Chief Executive Officer of the Company so that an evaluation
may determine whether a problem exists and, if so, to eliminate it.
8.5 Injunctive Relief/Legal Remedies. The Parties agree that
the remedy at law for any breach by Executive of this Agreement and specifically
the provisions of Section 8 ("Restrictive Covenants"), will be inadequate and
that the Company or any of its subsidiaries or other successors or assigns shall
be entitled to injunctive relief without bond. Such injunctive relief shall not
be exclusive, but shall be in addition to any other rights and remedies Company
or any of its subsidiaries or their successors or assigns might have for such
breach.
8.5.1 The Employee acknowledges: (i) that
compliance with the restrictive provisions contained in Section 8 is
necessary to protect the business and goodwill of the Company and its
subsidiaries, and (ii) that a breach of this Agreement will result in
irreparable and continuing damage to the Company, for which monetary damages may
not provide adequate relief. Consequently, Employee agrees that in the event of
a breach or threatened breach of any of the restrictive covenants described
herein, the Company, at its discretion, shall be entitled to seek both: (i) a
preliminary and/or permanent injunction in order to prevent such damage, or
continuation of such damage, and (ii) monetary damages as determinable. Nothing
herein, however, shall be construed to restrict and/or prohibit the Company from
pursuing any and all other remedies; the employee acknowledges that all remedies
are cumulative.
8.5.2 If any legal action arises to enforce the
Company's trade secrets, the prevailing party shall be entitled to recover
any and all damages, as well as all costs and expenses, including reasonable
attorney's fees incurred in enforcing or attempting to enforce the Company's
trade secrets.
9. Nature of Company Business.
Executive acknowledges that the Company, through one or more of its
affiliated companies, is currently involved in (i) producing and distributing
television networks which feature explicit and cable version adult movies and
features and other programming depicting sexual situations and/or nudity, (ii)
producing and distributing adult movies and features and (iii) distributing
adult telephone "chat" lines and may engage in other related businesses
(collectively, the "Adult Business"). Executive acknowledges that he will likely
be exposed, from time to time, to one or more aspects of the Adult Business
during the course of his employment by the Company. Furthermore, Executive
confirms that he is currently comfortable working for a company engaged in the
Adult Business and working in an environment where some or all aspects of the
Adult Business are present. If, at any time, Executive's view on the foregoing
changes or Executive otherwise becomes uncomfortable with the nature of the
Company's business, Executive agrees to promptly inform Senior Management. The
Company will work with the Executive to explore mutually acceptable means of
accommodating Executive's concerns which, both parties acknowledge, may result
in the termination of Executive's employment. Termination of Executive's
employment occasioned by Executive's desire not to be associated with the
Company as a result of the nature of its business shall be treated as a
Voluntary Termination by Employee without Good Reason.
10. Arbitration.
10.1 Any and all disputes, controversies and claims arising
out of, or relating to, this Agreement, or with respect to the interpretation of
this Agreement, or the rights or obligations of the Parties and their successors
and permitted assigns, whether by operation of law or otherwise, shall be
settled and determined by arbitration in New York City, New York, pursuant to
the then existing rules of the American Arbitration Association ("AAA"), for
commercial arbitration. Each party shall pay their own legal fees. The losing
party shall pay the fees and costs imposed by the AAA; if neither party clearly
prevails in the arbitration, the parties shall request that the AAA appointed
arbitrator apportion the AAA's fees and costs between the parties.
10.2 If the Executive disputes a determination that Cause
exists for terminating his employment hereunder pursuant to Section 7.3, or the
Company disputes the determination that Good Reason exists for Executive's
termination of his employment pursuant to Section 7.4, either party disputing
this determination shall serve the other with written notice of such dispute
("Dispute Notice") within ten (10) days after receipt of the Notice of
Termination. Within ten (10) days thereafter, the Executive or the Company, as
the case may be, shall in accordance with the Rules of the AAA, file a petition
with the AAA for arbitration of the dispute. If the Executive serves a Dispute
Notice upon the Company, an amount equal to the portion of the Base Salary
Executive would be entitled to receive shall be placed in an interest-bearing
escrow account mutually agreeable to the Parties by the Company, or the Company
shall deliver an irrevocable letter of credit for such amount plus interest
containing terms mutually agreeable to the Parties. If the AAA determines that
Cause existed for the termination, the escrowed funds and accrued interest shall
be released and returned to the Company. However, if the AAA determines that the
Executive was terminated without Cause or that Executive resigned for Good
Reason, the Company agrees that the escrowed funds and accrued interests shall
be released and paid to the Executive within five (5) working days after such
determination.
10.3 The Parties covenant and agree that the decision of the
AAA shall be final and binding and hereby waive their right to appeal therefrom.
11. Miscellaneous.
11.1 Notices. Any notice, demand or communication required or
permitted under this Agreement shall be in writing and shall either be
hand-delivered to the other party or mailed to the addresses set forth below by
registered or certified mail, return receipt requested, or sent by overnight
express mail or courier or facsimile to such address, if a party has a facsimile
machine. Notice shall be deemed to have been given and received (i) when
hand-delivered or after three (3) business days when deposited in the U.S. Mail,
(ii) when transmitted and received by facsimile or sent by express mail properly
addressed to the other party. The addresses are:
To the Company:
Spice Entertainment Companies, Inc.
000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: President
To the Executive:
Xxxxx Xxxxx
[INTENTIONALLY OMITTED]
The foregoing addresses may be changed at any time by either
party by notice given in the manner herein provided.
11.2 Integration; Modification. This Agreement, the
Indemnification Agreement executed contemporaneously herewith, together with the
Company's Employee Manual in the form attached hereto as Exhibit B, constitutes
the entire understanding and agreement between the Company and the Executive
regarding its subject matter, and supersedes all prior negotiations and
agreements or interpretations, whether oral or written. This Agreement may not
be modified except by written agreement signed by the Executive and a duly
authorized officer of the Company.
11.3 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties, including and their respective heirs,
executors, successors and assigns, except that this Agreement may not be
assigned by the Executive.
11.4 Waiver of Breach. No waiver by either party of any
condition or of the breach by the other of any term or covenant contained in
this Agreement, whether conduct or otherwise, in any one (1) or more instances
shall be deemed or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition, or the breach of any
other term or covenant set forth in this Agreement. Moreover, the failure of
either party to exercise any right hereunder shall not bar the later exercise
thereof with respect to other future breaches.
11.5 Governing Law. This Agreement shall be governed by
the internal laws of the State of New York.
11.6 Headings. The headings of the various sections and
paragraphs have been included herein for convenience only and shall not be
considered in interpreting this Agreement.
11.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one (1) and the same instrument.
11.8 Due Authorization. The Company represents that all
corporate action required to authorize the execution, delivery and performance
of this Agreement has been duly taken.
IN WITNESS WHEREOF, this Agreement has been executed by the
Executive and on behalf of the Company by its duly authorized officer on the day
and year first above written.
SPICE ENTERTAINMENT COMPANIES, INC.
By:/s/ J. Xxxxx Xxxxxxx
________________________________
J. Xxxxx Xxxxxxx
June 13, 1997
________________________________
Date
EXECUTIVE:
/s/ Xxxxx Xxxxx
________________________________
Xxxxx Xxxxx
June 13, 1997
________________________________
Date
