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EXHIBIT 10.4
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of the day of
February 15 , 2000 by and between TEAM COMMUNICATIONS GROUP, INC, a California
company ("Company") and XXXX X. XXXXX ("Executive"), in connection with
Company's engagement of Executive's personal services as Chairman of the Board
of Directors and Chief Executive Officer of Company.
1. EMPLOYMENT; DUTIES AND ACCEPTANCE:
(a) Employment by Company.
Company hereby engages Executive, and Executive hereby agrees to
provide to Company, his full-time services as Chairman of the Board of Directors
and Chief Executive Officer on the terms and conditions of this Agreement. In
such capacity Executive will report to, and serve under the direction and
subject to the control of Company's Board of Directors. Throughout the Term (as
hereinafter defined) of this Agreement, Executive shall devote substantially all
of his work time to the employment described hereunder; and Executive shall not
engage in or participate in the operation or management of, or render any
services to, any other business, enterprise or individual, directly or
indirectly.
(b) Acceptance of Employment by the Executive.
The Executive accepts such employment and shall render the
services described in Section 1.(a).
(c) Location of Employment:
Executive shall render his services at Company's offices in Los
Angeles, California; provided, however, that Executive agrees to render his
services at such other locations from time-to-time as the proper performance of
Executive's duties may reasonably require. Notwithstanding the foregoing,
Company's principal offices shall remain in Southern California and Executive
need not relocate to render his duties hereunder.
2. TERM:
The term of Executive's employment hereunder shall be for a period of
five (5) years commencing as of August 1, 1999 and ending on July 31, 2004 (the
"Term") unless sooner terminated pursuant to Section 7 hereof ("Termination
Sections").
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3. COMPENSATION AND BENEFITS:
(a) Salary.
During the Term, Executive shall receive a salary (the "Annual
Salary") at the rate of five hundred fifty thousand Dollars ($550,000.00) per
annum. Executive's Annual Salary shall be payable in equal installments on the
Company's normally scheduled pay cycle. Such salary shall be less such
deductions as shall be required to be withheld by applicable law and regulations
and shall be pro-rated for any period that does not constitute a full twelve
(12) month period.
The Annual Salary will increase by four per cent (4%) annually,
on the anniversary date of this agreement.
(b) Bonus.
(i) Executive will receive a one time special bonus of $250,000
payable on January 2, 2000.
(ii) Beginning with the fiscal year for the period ending
December 31, 1999 (the twelve month period commencing January 1 and ending
December 31 hereinafter referred to as "Fiscal Year"), and continuing thereafter
for each such full or partial Fiscal Year of the Term hereof, Executive shall
receive a bonus in the sum calculated below based upon the "Net Pre-Tax
Earnings" of the Company (the "Bonus"). Executive shall receive an amount equal
to seven and one-half percent (7.5%) of such Net Pre-Tax Earnings of the
Company. For purposes hereof, the term "Net Pre-Tax Earnings" shall mean that
amount as determined by the Company's outside accountant in accordance with
generally accepted accounting principles and such amount shall specifically be
determined after the calculation of the Annual Salary.
(iii) Executive's Bonus shall be paid to Executive within thirty
(30) days following the preparation and filing of the company's annual
statements (10K or equivalents) of Company's accounts for such relevant period.
If such above described accounts are not finalized within 30 days following the
end of any fiscal quarter, then Company shall within 30 days following the
expiration of such 30 day period pay to Executive his Bonus for such fiscal
quarter based upon the most complete information then available to Company at
such date and any adjustment to such amount so paid shall be made as soon as
practical after the accounts are completed and approved by Company.
(iv) Notwithstanding anything to the contrary contained above,
the Bonus shall be calculated prior to, and without regard to, any other profit
shares or bonus payable to other employees of the Company employed by Company
for such same fiscal quarter.
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(c) Upon a sale of all or substantially all of the Company, or upon a
"Change of Control" (as defined below), Employee shall receive a bonus equal to
10% of the "Net Appreciation". For purposes of this agreement, "Net
Appreciation" means the difference between (i) the total purchase price
consideration received by the Company (or its shareholders) in a sale or, in the
event of a Change of Control", the market value of the Company, determined by
reference to its closing bid or ask price on the date the Change of Control
occurs and (ii) the market value today as of February 15, 2000.
(d) The Company shall be further obligated to cause to be granted to
Executive 250,000 options to purchase shares of the Companies common stock under
the Company's employee stock option plan as in effect as of the date of this
agreement, such options to vest in full as of the date of this agreement. The
Company will also issue 865,000 options to purchase shares of the Companies
common stock at the then current market price concurrently with the closing of
the offering in Germany of the Company's common stock that Gontard & Metallbank
is underwriting. Provided however that this grant is subject to reduction in the
event that it exceeds the maximum number of options available under the plan.
The Company will also issue to Executive options to acquire 750,000 shares of
common stock at an exercise price of $ 5.00, such options to vest as of the date
of this restated agreement with automatic vesting upon the occurrence of a
Change of Control or a termination without cause. All such options will have a
term of five (5) years.
(e) Executive will receive on screen credit as Executive Producer in
productions produced or co-produced by the Company, or its affiliates on which
Executive renders such or similar services.
4. PARTICIPATION IN EXECUTIVE BENEFIT PLANS;
(a) Fringe Benefits.
Executive shall be permitted during the Term to participate in
any group life, medical, hospitalization, dental, and disability plans, to the
extent that Executive is eligible under the provisions of such plans, and in any
other plans and benefits, if any, generally maintained by Company for executives
of the stature and rank of Executive during the Term hereof, each in accordance
with the terms and conditions of such plans (collectively referred to herein as
"Fringe Benefits"); provided, however, that Company shall not be required to
establish or maintain any such Fringe Benefits.
(b) Vacation.
Executive shall accrue, in addition to sick days and days in
which Company is closed, paid vacation days at the rate of one and two thirds
(12/3) days per month up to a maximum of twenty (20) work days (four [4] work
weeks). Under no circumstances can Executive accrue more vacation than twenty
(20) work days (the "Ceiling"). Thus, once the maximum amount of paid vacation
time is accrued or earned, no further vacation time is accrued or earned until
after vacation is taken and the amount of Executive's accrued vacation time goes
below the Ceiling as
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stated above. At that point, Executive will start to accrue vacation time again
until Executive reaches the Ceiling.
Subject to the requirements of Executive's office, Executive shall be entitled
to annual vacation in accordance with the vacation policy of Company.
(c) Expenses.
(i) Company will reimburse Executive for actual and necessary
travel and accommodation costs, entertainment and other business expenses
incurred as a necessary part of discharging the Executive's duties hereunder,
subject to receipt of reasonable and appropriate documentation by Company.
Guidelines for reasonable and normal expenses will be determined by the
compensation committee of the board of directors.
(ii) Company shall pay all business related operating expenses of
Executive's automobile, pursuant to Company policy, and shall further provide
Executive with a monthly automobile allowance of $1500.00.
5. CERTAIN COVENANTS OF EXECUTIVE:
Without in any way limiting or waiving any right or remedy accorded to
Company or any limitation placed upon Executive by law, Executive agrees as
follows:
(a) Non-Compete.
Provided that Company is at all times relevant hereto, carrying on the
Business of the Company (as defined below), Executive agrees that during the
Term of this Agreement, and for an additional period of one (1) year after the
Term hereof, Executive shall not within the United States directly or
indirectly, in any form, capacity or manner, participate in activities which are
competitive with the Business of the Company (as defined below), or of those
divisions, subsidiaries and affiliated companies of Company (each of which,
including Company, is referred to as a "Protected Company") or have a direct
monetary interest in or invest capital in any competitive company of Company,
whether such interest be by way of (i) ownership, (ii) stock interest, (iii)
financing, (iv) lending arrangements, or (v) in any other form or of any other
nature. Upon the execution of this Agreement and during the Term hereof,
Executive shall disclose to Company any stock owned by him and his family in any
company competitive with a Protected Company; provided, however, Executive shall
not be prohibited from investing in any competitive company, as aforesaid, the
stock of which is publicly traded so long as his and his family's ownership
collectively is nominal and for investment purposes only. For purposes hereof,
the term "Business of the Company" shall mean television production and
distribution. Notwithstanding the foregoing, in the event that a court of
competent jurisdiction determines that the foregoing restriction is invalid,
Executive hereby agrees to indemnify and hold Company harmless from any and all
damages, liabilities, costs, losses and expenses (including legal costs and
reasonable attorneys' fees) arising out of or connected with any claim, demand
or action which is based upon a breach by Executive of the foregoing
restriction.
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This section shall not be operative in the event that Executive is terminated by
the Company without cause.
(b) Confidential Information.
Executive agrees that, neither during the Term nor at any time
thereafter shall the Executive (i) disclose to any person, firm, or corporation
not employed by any Protected Company or not engaged to render services to any
Protected Company or (ii) use for the benefit of himself, or others, any
confidential information of any Protected Company obtained by the Executive
prior to the execution of this Agreement, during the Term or any time
thereafter, including, without limitation, "know-how" trade secrets, details of
supplier's, manufacturer's, distributor's contracts, pricing policies, financial
data, operational methods, marketing and sales information or strategies,
product development techniques or plans or any strategies relating thereto,
technical processes, designs and design projects, and other proprietary
information of any Protected Company; provided, however, that this provision
shall not preclude the Executive from (x) upon advice of counsel, making any
disclosure required by any applicable law or (y) using or disclosing information
known generally to the public (other than information known generally to the
public as a result of any violation of this Section 5.(b) by or on behalf of the
Executive).
(c) Property of Company.
Any interest in trademarks, service marks, copyrights, copyright
applications, patents, patent applications, slogans, developments and processes
which the Executive, during the Term, may develop relating to the Business of
the Company in which the Company may then be engaged and any memoranda, notes,
lists, records and other documents (and all copies thereof) made or compiled by
the Executive or made available to the Executive concerning the business of any
Protected Company shall belong and remain in the possession of any Protected
Company, and shall be delivered to the Company promptly upon the termination of
the Executive's employment with Company or at any other time on request.
(d) Executive will not, for a period of one (1) year after the Term
hereof, induce any person who is an executive, officer or agent of the Company,
to terminate their relationship with the Company.
6. OTHER PROVISIONS;
(a) Rights and Remedies Upon Breach.
If the Executive breaches, or threatens to commit a breach of,
any of the provisions of Section 5. hereof (the "Restrictive Covenants"), the
Company shall have the following rights and remedies, each of which rights and
remedies shall be independent of the other and severally enforceable, and all of
which rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company at law or in equity.
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(b) Accounting.
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 a result of any transactions constituting a breach of any of the Restrictive
Covenants, and the Executive shall account for and pay over such Benefits to the
Company.
(c) Severability of Covenants.
If any court determines that any of the Restrictive Covenants, or
any part thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portions.
(d) Blue-Pencilling.
If any court construes any of the Restrictive Covenants, or any
part thereof, to be unenforceable because of the duration or geographic scope of
such provision, such court shall have the power to reduce the duration or scope
of such provision and, in its reduced form, such provision shall then be
enforceable.
(e) Enforceability in Jurisdictions.
The parties intend to and hereby confer jurisdiction to enforce
the Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Restrictive Covenants. If the courts of any one or
more of such jurisdictions hold the Restrictive Covenants unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of the
parties that such determination not bar or in any way affect Company's right to
the relief provided in this Section 6 in the courts of any other jurisdiction
within the geographical scope of such Restrictive Covenants, as to breaches of
such Restrictive Covenants in such other respective jurisdictions, such
Restrictive Covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants.
(f) Executive agrees and understands that the remedy at law for
any breach by Executive of the provisions of Paragraph 5 hereof may be
inadequate and that damages resulting from such breach may not be susceptible to
being measured in monetary terms. Accordingly, it is acknowledged that upon
Executive's breach of any provision of Paragraph 5 hereof, the Company shall be
entitled to seek to obtain from any court of competent jurisdiction injunctive
relief to prevent the continuation of such breach. Nothing contained herein
shall be deemed to limit the Company's remedies at law or in equity for any
breach of the provisions of Paragraph 5 hereof which may be available to the
Company.
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7. TERMINATION:
(a) Termination Upon Death or Disability.
If during the Term, Executive should (i) die or (ii) Executive
becomes so physically or mentally disabled whether totally or partially, that
Executive is unable to perform the duties, functions and responsibilities
required hereunder for (aa) a period of three (3) consecutive months or (bb)
shorter periods aggregating to four (4) months within any period of twelve (12)
months ("Disability"), then in such event, Company may, at any time thereafter,
by written notice to Executive, terminate Executive's employment hereunder.
Executive agrees to submit to reasonable medical examinations upon the request
of Company. The existence of Executive's disability for the purposes of this
Agreement shall be determined by a reputable physician selected by Company who
is experienced in the relevant field of medicine. If Executive's services are
terminated, as aforesaid, Executive or the designated beneficiary of Executive,
shall be entitled to receive Executive's base salary, accrued share of the Bonus
for that Fiscal Year and unused vacation (hereinafter collectively referred to
as "Fringe Benefits"), if any, earned through the date of Executive's
termination and continuing thereafter for an additional period of one year.
(b) Termination for Cause.
Company may terminate this Agreement and Executive's employment
hereunder, without any further obligation to Executive after the date of
termination (except as expressly provided herein) for "cause" which includes,
and shall be limited to, any of the following; (i) a material breach of this
Agreement by Executive; (ii) the failure of Executive to perform services and
duties exclusively for Company (excluding any passive income or unrelated
activities); (iii) a material failure by Executive to comply with any material
rule or regulation of Company reasonably related to his employment (which rule
or regulation has been previously disclosed in writing to Employer); (iv)
Executive's willful insubordination; or (v) Executive's commission of a felony.
Any termination of Executive's services hereunder shall be effected by notice in
writing stating the reason therefor, which notice shall be given to Executive as
provided in Paragraph 11 hereof. To the extent practicable, Executive shall have
the opportunity to cure any breach within forty five (45) days after receiving
written notice thereof from Company. The foregoing cure provision will not be
applicable to conduct which had previously been the subject of such
notification. In the event Executive is terminated for "cause", Company's
obligations to Executive shall be limited to the payment to Executive of the
base salary through such effective date of termination, Executive's accrued
share of the Bonus for that Fiscal Year and all of Executive's Fringe Benefits.
(c) Termination Without Cause.
If the Company terminates this Agreement without cause by written
notice to the Executive:
(i) Executive shall be entitled to receive from the Company
within seven (7) days from the effective date specified in the Company's notice
of termination, a lump sum payment equal to the Annual Salary, unpaid vacation
pay, unreimbursed business expenses, and any other monies
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payable to the Executive under any employee benefit plan, in each case earned
through the date of the Executive's termination, and;
(ii) Executive shall have the right to obtain a transfer of
any life insurance policy existing for the benefit of Executive from and after
the effective date specified in the Company's notice of termination through the
last day of the Term, and
(iii) Executive will be paid, as due and scheduled under
this Agreement, as if Executive had not been terminated, one hundred twenty per
cent (120%) of the balance of the Annual Salary payable through the end of the
then current term.
For the avoidance of doubt, upon the occurrence of a Change of Control
event, in addition to any other bonus payments which Executive may be entitled
to under Section 3(c), Executive shall be entitled, at his option, to deem a
Change of Control event as termination without cause. For purposes of this
Agreement, a "Change of Control" shall be deemed to occur: (A) upon a change in
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended ("Exchange Act"), whether or not the Company is then
subject to such reporting requirement; (B) any "person" (as such term is defined
in Section 3(a) (9) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 promulgated 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; (C) during
any period of two (2) consecutive years (the "Period"), individuals who at the
beginning of the Period constitute the Board, including for this purpose any new
director whose election or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the Period (or whose election or
nomination was similarly approved by the Board), cease for any reason to
constitute a majority thereof; (D) the sale of all or substantially all of the
assets of the Company; or, (E) the merger of the Company with any other
corporation if shareholders of the Company prior to the effective date of the
merger own, immediately following the merger, less than seventy-five percent of
the combined voting power of the surviving corporation excluding from such
ownership any voting securities not received in exchange for or in respect of
voting securities of the Company.
(d) No Duty to Mitigate.
In the event that Executive's services to Company are terminated
for any reason other than as provided in Paragraph 7(b) above prior to the
completion of the Term hereof, or in the event that Executive terminates this
Agreement based upon the Company's material failure to perform its obligations
hereunder, Executive shall have no duty, either express or implied, to mitigate
any damages hereunder and the Company shall remain liable for all compensation
(whether salary, bonus or other benefits) provided for under the terms of this
Agreement. Any compensation earned by Executive in any capacity after the date
of such termination shall not reduce or mitigate the amounts payable by the
Company hereunder. Nothing herein shall be deemed to imply that the Company has
the right to terminate Executive's services without cause.
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(e) Designation of Beneficiary.
The parties hereto agree that the Executive shall designate, by
written notice to the Company, a beneficiary to receive the payments described
in Section 7. in the event of his death and the designation of any such
beneficiary may be changed by the Executive from time to time by written notice
to the Company. In the event the Executive fails to designate a beneficiary as
herein provided, any payments which are to be made to the Executive's designated
beneficiary under Section 7. shall be made to the Executive's widow, if any,
during her lifetime. If the Executive has no designees or widow, such payments
shall be paid to the Executive's estate.
8. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES:
(a) Right to Enter Into Agreement.
Executive has the unfettered right to enter into this entire
Agreement on all of the terms, covenants and conditions hereof; and Executive
has not done or permitted to be done anything which may curtail or impair any of
the rights granted to Company herein.
(f) Breach Under Other Agreement or Arrangement.
Neither the execution and delivery of this Agreement nor the
performance by Executive of any of his obligations hereunder will constitute a
violation or breach of, or a default under, any agreement, arrangement or
understanding, or any other restriction of any kind, to which Executive is a
party or by which Executive is bound.
8. USE OF NAME:
Company shall have the right during the Term hereof to use Executive's
name, biography and approved likenesses in connection with Company's business,
including advertising their products and services; and Company may grant such
rights to others, but not for use as a direct endorsement.
9. ARBITRATION:
(a) Jurisdiction.
Any dispute whatsoever arising out of or referable to this
Agreement, including, without limitation, any dispute as to the rights and
entitlements and performance of the parties under this Agreement or concerning
the termination of Executive's employment or of this Agreement or its
construction or its validity or enforcement, or as to the arbitrator's
jurisdiction, or as to the arbitrability of any such dispute, shall be submitted
to final and binding arbitration in Los Angeles, California by and pursuant to
the Labor Arbitration Rules of the American Arbitration Association with
discovery proceedings pursuant to Section 1283.05 of the California Code of
Civil
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Procedure. The arbitrator shall be entitled to award any relief which might be
available at law or in equity, including that of a provisional, permanent or
injunctive nature. The prevailing party in such arbitration as determined by the
arbitrator, or in any proceedings in respect thereof as determined by the person
presiding, shall be entitled to receive its or his reasonable attorneys' fees
incurred in connection therewith.
10. NOTICES:
(a) Delivery.
Any notice, consent or other communication under this Agreement
shall be in writing and shall be delivered personally, telexed, sent by
facsimile transmission or overnight courier (regularly providing proof of
delivery) or sent by registered, certified, or express mail and shall be deemed
given when so delivered personally, telexed, sent by facsimile transmission or
overnight courier, or if mailed, two (2) days after the date of deposit in the
United States mail as follows: to the parties at the following addresses (or at
such other address as a party may specify by notice in accordance with the
provisions hereof to the other):
(i) If to Executive, to his address at:
Xxxx X. Xxxxx
00000 Xxxxx Xxxx Xxxxx
Xxxxxxx Xxxxxxxxx XX 00000
(ii) If to Company, to its address at:
TEAM Communications Group, Inc.
00000 Xxxxxxxx Xxxxxxxxx Xxxxx 000
Xxx Xxxxxxx XX 00000
(b) Change of Address.
Either party may change its address for notice hereunder by
notice to the other party in accordance with this Section 11.
11. COMPLETE AGREEMENT; MODIFICATION AND TERMINATION:
This Agreement contains a complete statement of all the arrangements
between the parties with respect to Executive's employment by Company and
supersedes all existing agreements between them concerning Executive's
employment. This Agreement may be amended, modified, superseded or canceled, and
the terms and conditions hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right or remedy, nor any single or
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partial exercise of any such right or remedy preclude any other or further
exercise thereof or the exercise of any other right or remedy.
12. GOVERNING LAW:
This Agreement shall be governed by and construed in accordance with
the law of the State of California applicable to agreements entered into and
performed entirely within such State.
13. HEADINGS:
The headings in this Agreement are solely for the convenience of
reference and shall not affect its interpretation.
WHEREFORE, the parties hereto have executed this Agreement as of the day
and year first above written.
TEAM COMMUNICATIONS GROUP, INC.
By: /s/ Xxxx X. Xxxxx
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Agreed to and Accepted:
/s/ Xxxx X. Xxxxx
------------------------
Xxxx X. Xxxxx
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