Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "AGREEMENT") is made and entered into on
this 12th day of December 2003 and effective as of the 1st day of January 2004
(the "EFFECTIVE DATE"), by and between Equity Marketing, Inc., a Delaware
corporation (the "COMPANY"), and Xxx X. Xxxxxxx ("EXECUTIVE").
1. ENGAGEMENT AND DUTIES.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, the Company hereby engages and employs Executive as an officer of the
Company, with the title and designation "President and Chief Creative Officer."
Executive hereby accepts such engagement and employment.
(b) During the Employment Term, the Executive, as President and Chief
Creative Officer, shall report to the Chairman of the Board and Chief Executive
Officer of the Company. The Executive shall, subject to the direction and
control of the Chief Executive Officer, have general and active supervision and
control of the Creative service center of the Company and shall perform all
duties and enjoy all powers commonly incident to the position of chief creative
officer and otherwise as may be delegated to her from time to time by the Board;
provided, however, that in no event shall the scope of the Executive's duties or
the extent of the Executive's responsibilities be substantially different from
the Executive's current duties and responsibilities.
(c) Executive agrees to devote her full-time business time, energy and
efforts to the business of the Company and will use her best efforts and
abilities faithfully and diligently to promote the Company's business interests.
(d) For so long as Executive is employed by the Company or is receiving
severance under Section 5(a) or Section 5(c) of this Agreement, Executive shall
not, directly or indirectly, as owner, partner, joint venturer, shareholder,
employee, broker, agent, principal, trustee, corporate officer, director,
licensor, or in any capacity whatsoever engage in, become financially interested
in, be employed by, render any consultation or business advice with respect to,
or have any connection with, any business engaged in the development, design,
manufacture, sale, marketing, utilization or exploitation of any products or
services which are designed for the same
purpose as, are similar to, or are otherwise competitive with, current, proposed
or anticipated products or services of the Company Group, in any geographic area
where, prior to or at the time of the termination of her employment, the
business of the Company Group was being conducted or was proposed to be
conducted in any manner whatsoever; provided, however, that the Executive may
own any securities of any corporation which is engaged in such business and is
publicly owned and traded but in an amount not to exceed at any one time one
percent (1%) of any class of stock or securities of such corporation. Subject to
the foregoing prohibition and provided such services or investments do not
violate any applicable law, regulation or order, or interfere in any way with
the faithful and diligent performance by Executive of the services to the
Company otherwise required or contemplated by this Agreement or duly requested
by the Board, the Company expressly acknowledges that Executive may:
(i) make and manage personal business investments of Executive's
choice without consulting the Board;
(ii) serve in any capacity with any civic, educational, charitable
or trade organization; and (iii) serve as a member of the board of directors of
other companies or businesses with the approval of the Board, which approval
will not be unreasonably withheld.
2. DEFINITIONS.
For the purposes of this Agreement, the following terms shall have the
meanings set forth below:
"BOARD" shall mean the Board of Directors of the Company.
"CHANGE OF CONTROL" shall be deemed to have occurred if:
(a) any Person (other than the Chief Executive Officer of the Company,
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company's then outstanding voting securities;
(b) during any period of twenty-four (24) consecutive months,
individuals, who at the beginning of such period constitute the Board of
Directors of the Company, and any new director whose election by the Board of
Directors, or whose nomination for election by the Company's
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stockholders, was approved by a vote of at least one-half (1/2) of the directors
then in office (other than in connection with a contested election), cease for
any reason to constitute at least one-half (1/2) of the Board of Directors;
(c) the stockholders of the Company approve (i) a plan of complete
liquidation of the Company; or (ii) the sale or other disposition by the Company
of all or substantially all of the Company's assets; or
(d) the consummation of a merger, consolidation or reorganization of the
Company with any other entity other than:
(i) a merger, consolidation or reorganization which results in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the surviving entity's outstanding voting securities immediately
after such merger, consolidation or reorganization; or
(ii) a merger, consolidation or reorganization which would result
in the directors of the Company (who were directors immediately prior thereto)
continuing to constitute at least 50% of all directors of the surviving entity
immediately after such merger, consolidation or reorganization.
In this paragraph (d), "surviving entity" shall mean only an entity in which all
of the Company's stockholders immediately before such merger, consolidation or
reorganization (determined without taking into account any stockholder's
properly exercising appraisal or similar rights) become stockholders by the
terms of such merger, consolidation or reorganization, and the phrase "directors
of the Company (who were directors immediately prior thereto)" shall include
only individuals who were directors of the Company at the beginning of the
twenty-four (24) consecutive month period preceding the date of such merger,
consolidation or reorganization.
"COMPANY GROUP" shall mean the Company, including all parent, subsidiary
and affiliated entities, and each Person with respect to which the Company
directly or indirectly has Control.
"CONSULTING OPTION" shall mean the right of Executive to elect to
terminate her employment pursuant to this Agreement and continue her service
with the Company as a consultant commencing on or after January 1, 2006 and
continuing through the end of the Employment Term pursuant to a Consulting
Agreement in the form attached hereto as Exhibit
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"A" (the "CONSULTING AGREEMENT"). The Consulting option shall expire upon
termination of this Agreement pursuant to Sections 4(a), (b), (c) or (d) hereof.
"CONSULTING PERIOD" shall mean that period of time following the
termination of Executive's employment with the Company pursuant to her
Consulting Option during which Executive serves as a Consultant to the Company
pursuant to the Consulting Agreement.
"CONSUMER PRICE INDEX ADJUSTMENT" shall be determined as follows: the
Consumer Price Index for the Los Angeles - Riverside - Orange County, CA (All
Items), as published by the United States Department of Labor, Bureau of Labor
Statistics (1982-84=100) (the "INDEX") which is most recently available at the
commencement of the new year (the "NEW INDEX") shall be compared with the Index
most recently available twelve months prior to the New Index (the "PREVIOUS
INDEX"). If the New Index has increased over the Previous Index, the Consumer
Price Index Adjustment shall be set by multiplying the Base Rate of the prior
year by a fraction, the numerator of which is the New Index and the denominator
of which is the Previous Index; provided, however, that if the Index is changed
so that the base year used for the New Index differs from that used for the
Previous Index, the New Index shall be converted in accordance with the
conversion factor published by the United States Department of Labor, Bureau of
Labor Statistics.
"CONTROL" shall mean, with respect to any Person, (i) the beneficial
ownership of any of the outstanding voting securities of such Person, or (ii)
the power, directly or indirectly, by proxy, voting trust or otherwise, to elect
any of the outstanding directors, trustees or other managing persons of such
Person.
"EMPLOYMENT COMMENCEMENT DATE" shall mean January 1, 2004.
"EMPLOYMENT TERM" shall mean January 1, 2004 through December 31, 2007,
unless earlier terminated as provided herein.
"FOR CAUSE" shall mean, in the context of a basis for termination of
Executive's employment with the Company, that:
(a) Executive materially breaches any obligation, duty or agreement
under this Agreement, which breach is not cured or corrected within 15 days of
written notice thereof from the Company (except for breaches of Sections 1(d), 6
or 7 of this Agreement, which cannot be cured and for which the Executive shall
have no opportunity to cure);
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(b) Executive is grossly negligent in the course of providing services
to the Company, or commits any act of personal dishonesty, fraud or breach of
fiduciary duty or trust against the Company;
(c) Executive is convicted of, or pleads guilty or nolo contendere with
respect to, theft, fraud or felony under federal or applicable state law;
(d) Executive commits any act or acts of personal conduct that,
following due investigation and determination by the Board of probable cause,
gives rise to a likelihood of liability under federal or applicable state law
for discrimination or sexual or other forms of harassment or other similar
liabilities with respect to subordinate employees; or
(e) Executive commits continued and repeated material violations of
specific directions of the Chief Executive Officer, which directions are
consistent with past practices, with this Agreement and with Executive's
position as a chief creative officer, or continued and repeated substantive
failure to perform duties assigned by or pursuant to this Agreement; provided
that no termination shall be deemed For Cause under this subsection (e) unless
Executive first receives written notice from the Company advising her of the
specific acts or omissions alleged to constitute violations of written
directions or a material failure to perform her duties, and such violations or
material failure continue after she shall have had a reasonable opportunity to
correct the acts or omissions so complained of.
"OTHER THAN FOR CAUSE" shall mean, in the context of termination of
Executive's employment with the Company, any termination by the Company other
than pursuant to Sections 4(a), (b), (c) or (e) hereof.
"PERSON" shall mean an individual or a partnership, corporation, trust,
association, limited liability company, governmental authority or other entity.
3. COMPENSATION; EXECUTIVE BENEFIT PLANS.
(a) Base Salary. The Company shall pay to Executive a base salary (the
"BASE SALARY") at an annual rate of $325,000 during the Employment Term. The
Base Salary shall be payable in installments throughout the year in the same
manner and at the same times the Company pays base salaries to other executive
officers of the Company. Commencing April 1, 2004, the Base Salary shall be
adjusted upward annually in an amount at the discretion of the Board; provided,
however, that such upward annual adjustment shall be greater than or equal to
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the Consumer Price Index Adjustment. The parties will negotiate a reasonable
increase in the Base Salary if Executive's duties are increased.
(b) Bonus. During the Employment Term, the Executive shall be eligible
to participate in the Company's executive officer bonus program, as described
below. During the Employment Term, Executive will be treated no less favorably
in her annual cash bonus, LTIP, or Restricted Stock Grants programs (based on
the reasonable ability to earn awards, not the actual awards which may differ if
she is less able to achieve her goals) than any other executive officer of the
Company other than the Chief Executive Officer (or, if added, a Co-CEO or Chief
Operating Officer, including an executive with primary responsibility for
multiple operating divisions) or one or more executives whose compensation
packages are negotiated in connection with the hiring of executives employed by
businesses acquired by the Company. Subject to the forgoing, the executive
officer bonus program in which Executive is eligible to participate shall
consist of the following:
(i) Annual Cash Bonus. Executive shall be eligible to receive an
annual cash bonus no later than 90 days after the end of each year that is
included within the Employment Term. The amount of such bonus shall be
determined in accordance with the Board approved bonus program for executive
officers as if effect from time to time during the Employment Term.
(ii) Long Term Incentive Plan Participation. During each year of
the Employment Term, the Executive shall be eligible to participate in the
Equity Marketing, Inc. Long Term Incentive Plan (the "LTIP"). The amount and
terms of any LTIP award to Executive shall be determined in the discretion of
the Board and shall be subject to the terms and conditions of the LTIP.
(iii) Restricted Stock Units. During each year of the Employment
Term and at the same time as any annual awards of stock based compensation to
other executive officers of the Company, Executive shall be eligible to receive
a grant of restricted stock units with a four (4) year vesting schedule and
subject to the terms, conditions and limitations contained in the applicable
plan for such grant.
(c) Reimbursement. Executive shall be entitled to reimbursement from the
Company for the reasonable costs and expenses that she incurs in connection with
the performance of her duties and obligations under this Agreement in a manner
consistent with the Company's practices and policies for reimbursements for
executive officers.
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(d) Additional Reimbursement. During the Employment Term, the Company
shall reimburse Executive on a basis comparable to the current practice of the
Company, for leasing garage space, telephone and home office equipment for her
use in performing her employment duties and obligations under this Agreement.
(e) Group Benefit Plans. Executive shall be eligible to participate in
the Company's group health, dental, life, disability, retirement (including
401(k)) and pension benefit plans, subject to the terms, conditions and
limitations contained in the applicable plan documents and insurance policies.
(f) Vacation. In accordance with the Company's policy for executives at
the rank of vice president and above, no specific amount of vacation time will
be accrued by Executive. Executive shall be entitled to take the amount of
vacation time she and her supervisor determine to be appropriate in light of her
workload from time to time. Any vacation time shall be scheduled to minimize
interference with the exercise of Executive's duties under this Agreement.
(g) Insurance. During the Employment Term, the Company shall pay to or
on behalf of the Executive such amounts as are required on an after-tax basis to
maintain all premiums on (i) supplemental disability insurance paying at least
$20,000 per month, and (ii) term life insurance having a face value payable on
death of no less than $700,000 on the life of the Executive with the Executive
(or her estate) as beneficiary.
(h) Withholding. The Company may deduct from any compensation payable to
Executive the minimum amounts sufficient to cover applicable federal, state
and/or local income tax withholding, old-age and survivors' and other social
security payments, state disability and other insurance premiums and payments.
(i) Fringe Benefits. During the Employment Term, Executive shall be
entitled to an automobile allowance of $1,200 per month and a cellular phone
allowance of $150 per month. Such allowances shall be paid in a manner
consistent with the Company's practices and policies therefor. During the
Employment Term, Executive shall also be entitled to reimbursement for expenses
of travel (including business class airline upgrades) and hotel accommodations
while traveling on Company business in accordance with the policies of the
Company as in effect from time to time. The Company agrees to reimburse
Executive up to a total of $15,000 for the cost of reasonable attorneys' fees
incurred in connection with the negotiation and preparation of this Agreement.
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(j) Amended Option Agreement. Concurrently with and as partial
consideration for this Agreement and the Consulting Agreement, the Company and
Executive will enter into an Amended Option Agreement in the form attached
hereto as Exhibit "B" (the "AMENDED OPTION AGREEMENT").
(k) Long Term Deferred Compensation. On or before March 1, 2005, the
Company shall purchase, from a financial institution reasonably acceptable to
Executive, an annuity providing for annual payments of $200,000 per year for a
period of ten years commencing January 1, 2008 (the "ANNUITY"). Ownership of the
Annuity shall vest in Executive at the rate of 25% per year on the first,
second, third and fourth anniversaries of the Effective Date subject to her
continued service with the Company pursuant to this Agreement or the Consulting
Agreement; provided that the Annuity shall continue to vest at the same rate
during any period of Disability (as defined in Section 4(b) hereof).
Notwithstanding the foregoing, Executive's ownership of the Annuity shall be
accelerated (i) 100% upon termination of this Agreement by the Company pursuant
to Section 4(d) (Other Than For Cause), and (ii) 50% for events after March 3,
2004 and 100% for events after March 3, 2005 upon termination of this Agreement
pursuant to Section 4(d) (for death) or upon a Change of Control.
4. TERMINATION OF EMPLOYMENT.
Executive's employment pursuant to this Agreement shall commence on the
Employment Commencement Date and shall terminate on the earliest to occur of the
following:
(a) upon the death of Executive;
(b) upon delivery to Executive of written notice of termination by the
Company if Executive shall suffer a physical or mental disability which renders
Executive unable to perform her duties and obligations under this Agreement for
at least 120 days, whether or not consecutive, in any 12-month period
("DISABILITY");
(c) upon delivery to Executive of written notice of termination by the
Company For Cause;
(d) upon delivery to Executive of written notice of termination by the
Company Other Than For Cause;
(e) upon the Executive becoming a Consultant under Section 11; or.
(f) upon the earlier to occur of the end of the Employment Term or the
first anniversary of a Change of Control.
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5. SEVERANCE COMPENSATION.
(a) If Executive's employment is terminated pursuant to Section 4(a)
(death) or Section 4(b) (Disability), the Company shall pay to the Executive or
her estate her full Base Salary through the end of the month of Executive's
death or Disability, and Executive or her estate shall be entitled to a prorated
share of any bonus or benefits as provided under Section 3 hereof for the
calendar year during which her death or Disability occurred. Notwithstanding the
foregoing, if (i) Executive's employment is terminated due to a Disability, and
(ii) Executive is denied all or some disability benefits under the applicable
disability policy, then Executive shall be entitled to continue to receive her
Base Salary from the Company in accordance with Section 3(a) of this Agreement
through the end of the Employment Term, payable at the same time and in the same
manner as if Executive's employment had not terminated. Any disability benefits
that Executive does receive shall be offset against any amounts payable to
Executive pursuant to this Section. Executive agrees to cooperate fully with the
Company and the disability insurance carrier with respect to any claim for
disability benefits.
(b) If Executive's employment is terminated pursuant to Section 4(c) (by
the Company For Cause), Executive's Base Salary and all benefits under Section 3
shall cease as of the date of termination, and Executive shall not be entitled
to any bonus for the calendar year during which her employment shall be
terminated or at any time thereafter. In the event of termination of Executive's
employment pursuant to Section 4(c) (by the Company For Cause), and subject to
applicable law and regulations, the Company shall be entitled to offset against
any payments due Executive the loss and damage, if any, which shall have been
suffered by the Company as a result of the acts or omissions of Executive giving
rise to termination under Section 4(c). The foregoing shall not be construed to
limit any cause of action, claim or other rights which the Company may have
against Executive in connection with such acts or omissions.
(c) If Executive's employment is terminated pursuant to Section 4(d) (by
the Company Other Than For Cause) prior to the end of the Employment Term,
Executive shall be entitled to continue to receive (i) her Base Salary in
accordance with Section 3(a) of this Agreement, and (ii) the benefits provided
under Sections 3(e), 3(g) and 3(i) of this Agreement, through the end of the
Employment Term, payable at the same time and in the same manner as if
Executive's employment had not terminated. If for some reason the Executive is
not eligible to
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participate in the Company's group plans, the Company shall pay the COBRA
premiums associated with Executive's obtaining comparable benefits. Executive
shall have no duty to seek other employment upon such termination, and if
Executive does so, any income therefrom, including any amounts payable under the
Consulting Agreement, shall not be credited against amounts due hereunder.
(d) If Executive terminates her employment in breach of this Agreement
prior to the end of the Employment Term, Executive shall as of the date of
termination cease to be entitled to Base Salary, benefits or bonuses. In
addition, the Company shall be entitled to seek any other available remedies
pursuant to this Agreement or otherwise for such breach, and to offset against
any amounts due Executive any damages suffered as a result of such breach.
(e) Executive acknowledges that the Company has the right to terminate
Executive's employment Other Than For Cause and that such termination shall not
be a breach of this Agreement or any other express or implied agreement between
the Company and Executive. Accordingly, in the event of such termination,
Executive shall be entitled only to the compensation and benefits specifically
provided for in this Agreement and the Consulting Agreement, if applicable, in
the event of such termination, and shall not have any other rights to any
compensation or damages from the Company for breach of contract.
(f) Executive acknowledges that in the event of termination of her
employment for any reason, she shall not be entitled to any severance or other
compensation from the Company except as specifically provided in this Section 5
or in the Consulting Agreement. Without limitation on the generality of the
foregoing, this Section supersedes any plan or policy of the Company which
provides for severance to its officers or employees, and Executive shall not be
entitled to any benefits under any such plan or policy.
6. COVENANT NOT TO SOLICIT.
(a) During the Employment Term, any Consulting Period thereafter and
through the first anniversary of the end of the Employment Term or the
Consulting Period, if any, Executive will not directly or indirectly, either
alone or by action in concert with others: (i) induce any employee of any member
of the Company Group to engage in any activity in which Executive is prohibited
from engaging by Section 1(d) of this Agreement or to terminate his or her
employment with any member of the Company Group; or (ii) employ or offer
employment or induce any Person to employ or offer employment to anyone who is
or was within the 12 months
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prior to the date of the proscribed action employed by any member of the Company
Group; or (iii) induce or attempt to induce any customer, supplier, licensee or
other business relationship of any member of the Company Group to discontinue or
reduce its business with any member of the Company Group, or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relationship and any member of the Company Group; or (iv) solicit or
accept any business whatsoever from any of the customers with which the Company
did business during the Executive's engagement or employment by the Company. The
Company's Chief Executive Officer shall have the authority to waive the
provisions of Section 6(a)(ii) insofar as it relates to the personal assistant
who was assigned to Executive. (All of the provisions of this Section 6(a) shall
continue to apply through any Consulting Period following the Employment Term
and through the first anniversary of the end of the Employment Term or the
Consulting Period, as applicable (the "POST-EMPLOYMENT PERIOD")).
(b) Executive acknowledges that the Company Group conducts business on a
world-wide basis, that its sales and marketing prospects are for continued
expansion into world markets and that, therefore, the territorial and time
limitations set forth in Section 1(d) and in this Section 6 are reasonable and
properly required for the adequate protection of the business of the Company
Group. In the event any such territorial or time limitation is deemed to be
unreasonable by a court of competent jurisdiction, Executive agrees to the
reduction of the territorial or time limitation to the area or period which such
court deems reasonable.
(c) If any portion of the restrictions set forth in Section 1(d) and in
this Section 6 should, for any reason whatsoever, be declared invalid by a court
of competent jurisdiction, the validity or enforceability of the remainder of
such restrictions shall not thereby be adversely affected.
(d) The existence of any claim or cause of action by Executive against
the Company shall not constitute a defense to the enforcement by the Company of
the restrictive covenants set forth in Section 1(d) and in this Section 6, but
such claim or cause of action shall be litigated separately.
7. CONFIDENTIALITY.
Executive will not at any time (whether during or after her employment
with the Company) disclose or use for her own benefit or purposes or the benefit
or purposes of any other Person, other than any member of the Company Group, any
trade secrets, information or data of
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a proprietary or sensitive nature, or other confidential information relating to
customers, development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, financial methods, plans, or
the business and affairs of the Company Group generally. Executive agrees that
upon termination for any reason of this Agreement, she will immediately return
to the Company all such confidential memoranda, books, papers, plans,
information, letters and other data of a proprietary or sensitive nature, and
all copies thereof or therefrom, in any way relating to the business of the
Company Group; provided, however, that Executive may retain such materials as in
the reasonable discretion of the Chief Executive Officer are required to fulfill
her duties under the Consulting Agreement (retention being permitted by
Executive until such time as the Chief Executive Officer requests the return of
such materials). Executive further agrees that she will not retain or use at any
time any trade name, trademark or other proprietary business designation used or
owned in connection with the business of any member of the Company Group.
8. COPYRIGHT AND TRADEMARKS.
(a) All right, title and interest, of every kind whatsoever, in the
United States and throughout the world, in (i) any work, including the copyright
thereof (for the full terms and extensions thereof in every jurisdiction),
created by the Executive at any time during the Employment Term, and all
material embodiments of the work subject to such rights; and (ii) all
inventions, ideas, discoveries, designs and improvements, patentable or not,
made or conceived by the Executive at any time during the Employment Term, shall
be and remain the sole property of the Company without payment of any further
consideration to the Executive or any other person than as set forth herein, and
each such work shall, for purposes of United States copyright law, be deemed
created by the Executive pursuant to her duties under this Agreement and within
the scope of her employment and shall be deemed a work made for hire; and
Executive agrees to assign, at the Company's expense, and the Executive does
hereby assign, all of her right, title and interest in and to all such works,
copyrights, materials, inventions, ideas, discoveries, designs and improvements,
patentable or not, and any copyrights, letters patent, trademarks, trade
secrets, and similar rights, and the applications therefor, which may exist or
be issued with respect thereto. For the purposes of this Section 8, "works"
shall include all materials created during the Employment Term, whether or not
ever used by or submitted to the Company, including, without limitation, any
work which may be the subject matter of a copyright under the
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United States copyright law. In addition to its other rights, the Company may
copyright any such work in its name in the United States in accordance with the
requirements of the United States copyright law and the Universal Copyright
Convention and any other convention or treaty to which the United States is or
may become a party. Notwithstanding the foregoing, Executive is hereby notified
and acknowledges that this Section 8(a) does not apply (i) to an invention which
qualifies fully under the provisions of Section 2870 of the California Labor
Code and/or (ii) to any work(s) which were developed entirely on Executive's own
time without using the Company's equipment, supplies, facilities, or trade
secrets, except as to any of these which are related to the Company's business
or actual or demonstrably anticipated research or development of the Company.
(b) Whenever the Company shall so request, whether during or after the
Employment Term, the Executive shall execute, acknowledge and deliver all
applications, assignments or other instruments; make or cause to be made all
rightful oaths; testify in all legal proceedings; communicate all known facts
which relate to such works, copyrights, inventions, ideas, discoveries, designs
and improvements; perform all lawful acts and otherwise render all such
assistance as the Company may deem necessary to apply for, obtain, register,
enforce and maintain any copyrights, letters patent and trademark registrations
of the United States or any foreign jurisdiction or under the Universal
Copyright Convention (or any other convention or treaty to which the United
States is or may become a party), or otherwise to protect the Company's
interests therein, including any which the Company shall deem necessary in
connection with any proceeding or litigation involving the same. The Company
shall reimburse the Executive for all reasonable out-of-pocket costs incurred by
the Executive in testifying at the Company's request or in rendering any other
assistance requested by the Company pursuant to this Section 8 plus (if
Executive is not then an employee of the Company) reasonable compensation based
on her prior compensation by the Company . All registration and filing fees and
similar expenses shall be paid by the Company.
9. SPECIFIC PERFORMANCE.
Executive acknowledges and agrees that the Company's remedies at law for a
breach or threatened breach of any of the provisions of Sections 1(d), 6 or 7
would be inadequate and, in recognition of this fact, Executive agrees that, in
the event of such a breach or threatened breach, in addition to any remedies at
law, the Company shall be entitled to obtain equitable relief in the
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form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.
In addition, the Executive recognizes that the services to be rendered by her
under this Agreement are of a special, unique, unusual, extraordinary and
intellectual character involving skill of the highest order and giving them
peculiar value, the loss of which cannot be adequately compensated in damages.
Consequently, in the event of a breach of this Agreement by the Executive, the
Company shall be entitled to injunctive relief or any other legal or equitable
remedies. The Executive agrees that the Company also may recover by appropriate
action the amount of the actual damage caused the Company by any failure,
refusal or neglect of the Executive to perform her agreements, representations
and warranties contained in this Agreement. The remedies provided in this
Agreement shall be deemed cumulative and the exercise of one shall not preclude
the exercise of any other remedy at law or in equity for the same event or any
other event.
10. RESOLUTION OF DISPUTES.
(a) Except as provided in subsection (c) below, any controversy or claim
between or among the parties, relating to Executive's employment with the
Company, including but not limited to those arising out of or relating to this
Agreement or any agreements or instruments relating hereto or delivered in
connection herewith and any claim based on or arising from an alleged tort,
shall at the request of any party be determined by arbitration. The arbitration
shall be conducted in Los Angeles, California, in accordance with the United
States Arbitration Act (Title 9 of the United States Code), notwithstanding any
choice of law provision in this Agreement, and under the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
("AAA"). The parties shall have the right to review and approve a panel of
prospective arbitrators supplied by AAA, but the arbitration shall be conducted
by a single arbitrator selected from the approved panel by AAA or by stipulation
of the parties. The arbitrator shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an issue is arbitrable
shall be determined by the arbitrator. The arbitrator shall be entitled to order
specific performance of the obligations imposed by this Agreement. Judgment upon
the arbitration award may be entered in any court having jurisdiction.
(b) All decisions of the arbitrator shall be final, conclusive and
binding on all parties and shall not be subject to judicial review. All costs of
the arbitration shall be borne by the party
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which is not the Prevailing Party (as defined in Section 12(h) of this
Agreement). If required, each party shall advance 50% of any costs of the
arbitration required to be advanced, subject to the right of the non-Prevailing
Party to reimbursement.
(c) Subsection (a) above does not prohibit a party from seeking and
obtaining injunctive relief from a court of competent jurisdiction pending the
outcome of arbitration. A party bringing an action for injunctive relief shall
not be deemed to have waived its right to demand arbitration of all disputes.
11. CONSULTING OPTION. Upon the exercise of the Consulting Option, the
Executive shall be retained by the Company as a consultant for a period
commencing as of a specified date not less than 30 days after delivery of notice
by the Executive of her exercise of the Consulting Option and continuing until
December 31, 2007, pursuant to the terms and conditions of the Consulting
Agreement that is attached to this Agreement as Exhibit "A"; provided, however,
that if the Executive's employment is terminated Other Than For Cause pursuant
to Section 4(d) or following a Change of Control (whether or not as a result of
such event), Executive may elect within 30 days of such termination not to be
engaged as a Consultant for the Company and in such event, the provisions of the
Consulting Agreement shall not be binding upon either Executive or the Company.
12. MISCELLANEOUS.
(a) Notices. All notices, requests, demands and other communications
(collectively, "NOTICES") given pursuant to this Agreement shall be in writing,
and shall be delivered by personal service, courier, facsimile transmission or
by United States first class, registered or certified mail, addressed to the
following addresses:
(i) If to the Company, to:
Equity Marketing, Inc.
0000 Xxx Xxxxxxx Xxxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
(ii) If to Executive, to:
Xxx X. Xxxxxxx
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With a copy to:
Xxxx Xxxxxxxxxxx LLP
00000 Xxxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxx, Esq.
Any Notice, other than a Notice sent by registered or certified mail, shall be
effective when received; a Notice sent by registered or certified mail, postage
prepaid return receipt requested, shall be effective on the earlier of when
received or the third day following deposit in the United States mails (or on
the seventh day if sent to or from an address outside the United States). Any
party may from time to time change its address for further Notices hereunder by
giving notice to the other party in the manner prescribed in this Section.
(b) Entire Agreement. This Agreement, the concurrently executed
Consulting Agreement that is attached hereto as Exhibit "A" and the concurrently
executed Amended Option Agreement that is attached hereto as Exhibit "B"
(collectively, the "AGREEMENTS") contain the sole and entire agreement and
understanding of the parties with respect to the entire subject matter of the
Agreements, and any and all prior discussions, negotiations, commitments and
understandings, whether oral, written or implied, related to the subject matter
of the Agreements, including but not limited to that certain Stock Option
Agreement between the Company and the Executive dated as of March 3, 2000 and
any and all prior discussions, negotiations, commitments and understandings,
whether oral, written or implied, related thereto, are hereby extinguished and
superseded. No representations, oral or otherwise, express or implied, other
than those contained in the Agreements have been relied upon by any party to the
Agreements.
(c) Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.
(d) Governing Law. This Agreement has been made and entered into in the
State of California and shall be construed in accordance with the laws of the
State of California.
(e) Captions. The various captions of this Agreement are for reference
only and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
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(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(g) Business Day. If the last day permissible for delivery of any notice
under any provision of this Agreement, or for the performance of any obligation
under this Agreement, shall be other than a business day, such last day for such
notice or performance shall be extended to the next following business day
(provided, however, under no circumstances shall this provision be construed to
extend the date of termination of this Agreement).
(h) Attorneys' Fees. If any action, proceeding or arbitration is brought
to enforce or interpret any provision of this Agreement, the Prevailing Party
shall be entitled to recover as an element of its costs, and not its damages,
its reasonable attorneys' fees, costs and expenses. The "PREVAILING PARTY" is
the party who would have been entitled to recover its costs under the California
Code of Civil Procedure had the action been maintained in the Superior Court of
California regardless of whether there is final judgment. A party not entitled
to recover its costs may not recover attorneys' fees. No sum for attorneys' fees
shall be counted in calculating the amount of a judgment for purposes of
determining whether a party is entitled to recover its costs or attorneys' fees.
(i) Advice from Independent Counsel. The parties hereto understand that
this Agreement is legally binding and may affect such party's rights. Each party
represents to the other that it has received legal advice from counsel of its
choice regarding the meaning and legal significance of this Agreement.
(j) Interpretation. Should any provision of this Agreement require
interpretation, it is agreed that any court or arbitrator interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly construed against any Person by reason of the rule of construction
that a document is to be construed more strictly against the Person who itself
or through its agent prepared the same, it being agreed that all Parties have
participated in the preparation of this Agreement.
(k) Survival. The termination of the Executive's employment hereunder
shall not affect the enforceability of Sections 1(d), 6, 7 and 8.
(l) Waiver of Jury Trial. IF NOTWITHSTANDING THE AGREEMENT THAT ALL
DISPUTES BE SUBMITTED TO BINDING ARBITRATION, A DISPUTE IS
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SUBMITTED TO A COURT, EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN
ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED
AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, AND AGREE
TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS WRITTEN CONSENT TO A
TRIAL BY THE COURT.
COMPANY:
EQUITY MARKETING, INC.
By:/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx,
SVP, General Counsel and Secretary
EXECUTIVE:
/s/ Xxx X. Xxxxxxx
--------------------------------------------
Xxx X. Xxxxxxx
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