EXHIBIT 10.12
Employment Agreement
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EMPLOYMENT AGREEMENT, dated as of October 15, 2002 between Panavision Inc.,
a Delaware corporation (the "Company") and Xxxxx X. Xxxxxxx (the "Executive").
WHEREAS, the Company wishes to employ the Executive, and the Executive
wishes to accept such employment, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Employment, Duties and Acceptance.
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1.1 Employment, Duties. The Company hereby employs the Executive
for the Term (as defined in Section 2.1), to render exclusive and full-time
services to the Company as Executive Vice President and Chief Financial Officer
or in such other executive position as may be mutually agreed upon by the
Company and the Executive, and to perform such other duties consistent with such
position as may be assigned to the Executive by the Board of Directors or any
officer of the Company senior to the Executive. The Executive will report
jointly to the Chief Executive Officer of Panavision and the Vice Chairman and
Chief Administrative Officer of Mafco Holdings Inc.
1.2 Acceptance. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, to devote the Executive's entire business time, energy and skill to
such employment, and to use the Executive's best efforts, skill and ability to
promote the Company's interests. The Executive further agrees to accept
election, and to serve during all or any part of the Term, as an officer or
director of the Company and of any subsidiary or affiliate of the Company,
without any compensation therefor other than that specified in this Agreement,
if elected to any such position by the shareholders or by the Board of Directors
of the Company or of any subsidiary or affiliate, as the case may be. The
Executive hereby represents and warrants that the Executive is not subject to
any other agreement, including without limitation any agreement not to compete
or confidentiality agreement, which would be violated by the Executive's
performance of services hereunder.
1.3 Location. The duties to be performed by the Executive
hereunder shall be performed primarily at the office of the Company in Woodland
Hills, California, subject to reasonable travel requirements on behalf of the
Company.
2. Term of Employment; Certain Post-Term Benefits.
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2.1 The Term. The term of the Executive's employment under this
Agreement (the "Term") shall commence on October 15, 2002 and shall end on
December 31, 2005 or such later date to which the Term is extended pursuant to
Section 2.2.
2.2 End-of-Term Provisions. At any time on or after December 31,
2003 the Company shall have the right to give written notice of non-renewal of
the Term. In the event the Company gives such notice of non-renewal, the Term
automatically shall be extended so that it ends
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twenty-four months after the last day of the month in which the Company gives
such notice. From and after December 31, 2005, unless and until the Company
gives written notice of non-renewal as provided in this Section 2.2, the Term
automatically shall be extended day-by-day; upon the giving of such notice by
the Company, the Term automatically shall be extended so that it ends
twenty-four months after the last day of the month in which the Company gives
such notice.
2.3 Special Curtailment. The Term shall end earlier than the
original December 31, 2005 termination date provided in Section 2.1 or any
extended termination date provided in Section 2.2, in either case if sooner
terminated pursuant to Section 4. Non-extension of the Term shall not be deemed
to be a wrongful termination of the Term or this Agreement by the Company
pursuant to Section 4.4.
3. Compensation; Benefits.
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3.1 Salary. As compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Executive during the
Term a base salary, payable semi-monthly in arrears, at the annual rate of not
less than $475,000, less such deductions or amounts to be withheld as required
by applicable law and regulations (the "Base Salary"). In the event that the
Company in its sole discretion from time to time determines to further increase
the Base Salary, such increased amount shall, from and after the effective date
of the increase, constitute "Base Salary" for purposes of this Agreement.
3.2 Incentive Compensation. In addition to the amounts to be
paid to the Executive pursuant to Section 3.1, the Executive will be eligible to
participate in the Company's Executive Incentive Compensation Plan or any
successor incentive compensation plan from time to time maintained by the
Company for employees or officers generally (the "Bonus Plan"). The Executive
shall receive a bonus (a "Bonus") on account of service to the Company during
any calendar year commencing with 2003 in an amount equal to the greater of (i)
the bonus computed pursuant to this Section 3.2 (the "Contract Bonus") and (ii)
any award pursuant to the Bonus Plan, to be paid in the next following year on
the earlier to occur of (A) March 15th and (B) the date on which the Company
pays bonuses to officers generally. For any period of less than a full calendar
year commencing with 2003 during the Term or the Damage Period, as applicable,
the Executive shall be paid a Bonus in an amount equal to the greater of (i) the
Contract Bonus and (ii) any award pursuant to the Bonus Plan, in the applicable
case prorated for the number of full calendar months of service rendered by the
Executive during such year. If in any calendar year (a "Bonus Year"), the
Company achieves an increase in EBITDA over EBITDA for the immediately preceding
calendar year of (i) $10 million or more, the Contract Bonus shall be 75% of
Base Salary as in effect at the end of the Bonus Year, (ii) between $5 million
and $10 million, the Contract Bonus shall be a percentage of Base Salary as in
effect at the end of the Bonus Year equal to (A) that portion of the increase in
EBITDA which exceeds $5 million (B) divided by $5 million (C) multiplied by .75
and (iii) less than $5 million, the Contract Bonus shall be zero (-0-),
provided, however, that for purposes of this calculation, EBITDA in any year
shall be the greater of (A) actual EBITDA for such year and (B) $75 million. The
Company acknowledges that the Executive should have an opportunity to evaluate
the feasibility of EBITDA increasing by up to $10 million per year and the
appropriateness of using $75 million of EBITDA as a base benchmark against which
increases in EBITDA are measured. Accordingly, the Company agrees that should
the Executive by December 31, 2002 in good faith determine that either or both
of (i) $10 million annual increases in EBITDA or (ii) use of $75 million of
EBITDA as a measurement benchmark are sufficiently unlikely to provide an
appropriate basis for the Executive to earn a Contract Bonus of up to 75% of
Base Salary, the Company shall negotiate in good
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faith with the Executive in an effort to establish a more suitable performance
target for the Contract Bonus.
3.3 Equity Participation. In addition to the amounts to be paid
to the Executive pursuant to Section 3.1 and Section 3.2, the Executive shall be
entitled to receive a payment (the "Equity Participation Payment") at the time
and in an amount determined pursuant to this Section 3.3. The Equity
Participation Payment shall be made to the Executive within fifteen (15) days
following issuance of audited financial statements of the Company for the fiscal
year in which occurred the last day of the Term pursuant to Section 2.2 or the
last day on account of which the Company made a payment of Base Salary pursuant
to Section 4.4, as applicable (such fiscal year, the "Final Fiscal Year"). The
Equity Participation Payment shall be in an amount equal to one percent (1%) of
(i) EBITDA for the Final Fiscal Year multiplied by 7.8, (ii) less the sum of (A)
$700 million and (B) any contributions to the capital of the Company since
September 30, 2002 and (iii)(A) less if an increase or (B) plus if a decrease,
the change in debt (reduced by any unrestricted cash) of the Company and its
consolidated subsidiaries outstanding between September 30, 2002 and the last
day of the Final Fiscal Year. The Company acknowledges that the Executive should
have an opportunity to evaluate whether the Company's estimate of 2003 EBITDA,
which is a predicate for constructing the Equity Participation Payment, is
appropriate for such purpose. Accordingly, the Company agrees that should the
Executive by December 31, 2002 in good faith determine that the Company's 2003
EBITDA estimate is inappropriate as a predicate for the Equity Participation
Payment, the Company shall negotiate in good faith with the Executive in an
effort to establish a more suitable EBITDA predicate for the Equity
Participation Payment.
3.4 Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the Executive
during the Term in the performance of the Executive's services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as the Company customarily may require of its officers
provided, however, that the maximum amount available for such expenses during
any period may be fixed in advance by the Chairman of the Board of Directors or
the Executive Committee of the Board of Directors.
3.5 Vacation. The Executive shall be entitled to a vacation
period in accordance with the vacation policy of the Company during each year of
the Term.
3.6 Fringe Benefits. During the Term, the Executive shall be
entitled to all benefits for which the Executive shall be eligible under any
qualified pension plan, 401(k) plan, group insurance or other so-called "fringe"
benefit plan which the Company provides to its employees and officers generally.
3.7 Additional Benefits. During the Term, the Executive shall be
entitled to such other benefits as are specified in Appendix I to this
Agreement.
4. Termination.
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4.1 Death. If the Executive shall die during the Term, the Term
shall terminate and no further amounts or benefits shall be payable hereunder,
except that the Executive's legal representatives shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the end of the Term (as in effect immediately
prior to
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the Executive's death) or, if the Company has not then given written notice of
non-renewal pursuant to Section 2.2, for a period of twenty-four months after
the last day of the month in which termination described in this Section 4.1
occurred, whichever is longer.
4.2 Disability. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) for shorter periods aggregating six
months during any twelve month period, the Company may at any time after the
last day of the six consecutive months of disability or the day on which the
shorter periods of disability shall have equaled an aggregate of six months, by
written notice to the Executive (but before the Executive has recovered from
such disability), terminate the Term and no further amounts or benefits shall be
payable hereunder, except that the Executive shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the end of the Term (as in effect immediately
prior to such termination) or, if the Company has not then given notice of
non-renewal pursuant to Section 2.2, for a period of twenty-four months after
the last day of the month in which termination described in this Section 4.2
occurred. If the Executive shall die before receiving all payments to be made by
the Company in accordance with the foregoing, such payments shall be made to a
beneficiary designated by the Executive on a form prescribed for such purpose by
the Company, or in the absence of such designation to the Executive's legal
representative.
4.3 Cause. In the event (i) of gross neglect by the Executive of
the Executive's duties hereunder, (ii) conviction of the Executive of any
felony, (iii) conviction of the Executive of any lesser crime or offense
involving the property of the Company or any of its subsidiaries or affiliates,
(iv) willful misconduct by the Executive in connection with the performance of
any material portion of the Executive's duties hereunder, (v) breach by the
Executive of any material provision of this Agreement, (vi) breach by the
Executive of the Company's official written Code of Conduct as in effect from
time to time or (vii) any other conduct on the part of the Executive which would
make the Executive's continued employment by the Company materially prejudicial
to the best interests of the Company, the Company may at any time by written
notice to the Executive terminate the Term, provided, however, that in the case
of any matter covered by clauses (i), (iv), (v) or (vii), the Company shall
first have given the Executive written notice of the conduct (or lack thereof)
at issue and 30 days within which to cure. Upon such termination, this Agreement
shall terminate and the Executive shall be entitled to receive no further
amounts or benefits hereunder, except Base Salary and benefits as shall have
been earned to the date of such termination.
4.4 Company Breach. In the event of the breach of any material
provision of this Agreement by the Company, the Executive shall be entitled to
terminate the Term upon 60 days' prior written notice to the Company. Upon such
termination, or in the event the Company terminates the Term or this Agreement
other than pursuant to the provisions of Sections 4.2 or 4.3, the Company shall
continue to provide the Executive (i) payments of (A) Base Salary, in the manner
and amount specified in Section 3.1, (B) Bonus in the manner and amount
specified in Section 3.2 and (C) Equity Participation Payment in the manner and
amount specified in Section 3.3 and (ii) fringe benefits and additional benefits
in the manner and amounts specified in Sections 3.6 and 3.7 until the end of the
Term (as in effect immediately prior to such termination) or, if the Company has
not then given written notice of non-renewal pursuant to Section 2.2, for a
period of twenty-four months after the last day of the month in which
termination described in this Section 4.4 occurred, whichever is longer (the
"Damage Period"). The Company's obligations pursuant to this Section 4.4 are
subject to the Executive's duty to mitigate damages by seeking other employment
provided, however, that the Executive shall not be required to accept a position
of lesser importance or of substantially different character than the position
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held with the Company immediately prior to the effective date of termination or
in a location outside of the Los Angeles County, California area. The Company
acknowledges that the non-competition obligation imposed on the Executive
pursuant to Section 5.2 may reduce substantially the ability of the Executive to
mitigate damages pursuant to this Section 4.4 and, accordingly, agrees that the
Executive's failure to mitigate damages as a consequence of the restrictions
imposed on him by Section 5.2 will be deemed an excuse for such failure on the
Executive's part. To the extent that the Executive shall earn compensation
during the Damage Period (without regard to when such compensation is paid), the
Base Salary, Bonus and Equity Participation payments to be made by the Company
pursuant to this Section 4.4 shall be correspondingly reduced. All payments and
benefits (including service credit for benefit plan purposes and stock option
vesting purposes) to be received by the Executive under this Section 4.4 will be
treated for the Executive's benefit in the same manner as that customarily
accorded full-time employees of the Company.
4.5 Litigation Expenses. Except as provided for in Section 5.7,
if the Company and the Executive become involved in any action, suit or
proceeding relating to the alleged breach of this Agreement by the Company or
the Executive, and if a judgment in such action, suit or proceeding is rendered
in favor of the Executive, the Company shall reimburse the Executive for all
expenses (including reasonable attorneys' fees) incurred by the Executive in
connection with such action, suit or proceeding.
5. Protection of Confidential Information;
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Non-Competition.
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5.1 In view of the fact that the Executive's work for the Company
will bring the Executive into close contact with many confidential affairs of
the Company, its subsidiaries and affiliates not readily available to the
public, and plans for future developments, the Executive agrees:
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company, its subsidiaries and affiliates, including,
without limitation, "know how", trade secrets, customer lists, pricing policies,
operational methods, technical processes, formulae, inventions and research
projects, other business affairs of the Company, its subsidiaries and
affiliates, and any information whatsoever concerning any director, officer,
employee or agent of the Company, its subsidiaries and affiliates or their
respective family members learned by the Executive heretofore or hereafter, and
not to disclose them to anyone outside of the Company, either during or after
the Executive's employment with the Company, except in the course of performing
the Executive's duties hereunder or with the Company's express written consent.
The foregoing prohibitions shall include, without limitation, directly or
indirectly publishing (or causing, participating in, assisting or providing any
statement, opinion or information in connection with the publication of) any
diary, memoir, letter, story, photograph, interview, article, essay, account or
description (whether fictionalized or not) concerning any of the foregoing,
publication being deemed to include any presentation or reproduction of any
written, verbal or visual material in any communication medium, including any
book, magazine, newspaper, theatrical production or movie, or television or
radio programming or commercial; and
5.1.2 To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof), including data stored in computer
memories or on other media used for electronic storage or retrieval, relating to
the Company's business, or the business of its subsidiaries or affiliates, and
all property associated therewith, which the Executive may then possess or have
under the Executive's control.
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5.2 During the Term and for a period of twenty-four months
thereafter, the Executive shall not, directly or indirectly, enter the employ
of, or render any services to, any person, firm or corporation engaged in any
business competitive with the business of the Company or of any of its
subsidiaries or affiliates; the Executive shall not engage in such business on
the Executive's own account; and the Executive shall not become interested in
any such business, directly or indirectly, as an individual, partner,
shareholder, director, officer, principal, agent, employee, trustee, consultant,
or in any other relationship or capacity provided, however, that nothing
contained in this Section 5.2 shall be deemed to prohibit the Executive from
acquiring, solely as an investment, up to five percent (5%) of the outstanding
shares of capital stock of any public corporation. In addition, during the Term
and for a period of twenty-four months thereafter, the Executive shall not
solicit or encourage any person who, within six (6) months prior to the
expiration or earlier termination of the Term, was an employee of the Company or
any of its subsidiaries or affiliates to (i) terminate his or her employment
with the Company or any such subsidiary or affiliate or (ii) engage in any
activity prohibited to the Executive by the first sentence of this Section 5.2.
5.3 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the following rights and remedies:
5.3.1 The right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to account for
and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits") derived or received by
the Executive as the result of any transactions constituting a breach of any of
the provisions of Sections 5.1 or 5.2, and the Executive hereby agrees to
account for and pay over such Benefits to the Company.
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
5.4 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, hereafter are construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
5.5 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, are held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, said provision shall then be
enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction
to enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of
any state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to
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the relief provided above in the courts of any other states within the
geographical scope of such covenants as to breaches of such covenants in such
other respective jurisdictions, the above covenants as they relate to each state
being for this purpose severable into diverse and independent covenants.
5.7 In the event that any action, suit or other proceeding in law
or in equity is brought to enforce the covenants contained in Sections 5.1 and
5.2 or to obtain money damages for the breach thereof, and such action results
in the award of a judgment for money damages or in the granting of any
injunction in favor of the Company, all expenses (including reasonable
attorneys' fees) of the Company in such action, suit or other proceeding shall
(on demand of the Company) be paid by the Executive. In the event the Company
fails to obtain a judgment for money damages or an injunction in favor of the
Company, all expenses (including reasonable attorneys' fees) of the Executive in
such action, suit or other proceeding shall (on demand of the Executive) be paid
by the Company.
6. Inventions and Patents.
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6.1 The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive's work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company's time or with the use of
the Company's facilities or materials. The Executive shall further: (a) promptly
disclose such Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent and other rights to such Inventions for the
United States and foreign countries; (c) sign all papers necessary to carry out
the foregoing; and (d) give testimony in support of the Executive's
inventorship.
6.2 If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within two
years after the termination of the Executive's employment by the Company, it is
to be presumed that the Invention was conceived or made during the Term.
6.3 The Executive agrees that the Executive will not assert any
rights to any Invention as having been made or acquired by the Executive prior
to the date of this Agreement, except for Inventions, if any, disclosed to the
Company in writing prior to the date hereof.
7. Intellectual Property.
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The Company shall be the sole owner of all the products and proceeds
of the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
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8. Indemnification.
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The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by the Executive in connection with any action, suit or proceeding to
which the Executive may be made a party by reason of the Executive being an
officer, director or employee of the Company or of any subsidiary or affiliate
of the Company.
9. Notices.
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All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
If to the Company, to:
Panavision Inc.
0000 Xx Xxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
MacAndrews & Forbes Holdings Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
If to the Executive, to:
Xxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
10. General.
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10.1 This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York.
10.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
10.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
in-
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ducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
10.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii) to
third parties in connection with any sale, transfer or other disposition of all
or substantially all of its business or assets; in any event the obligations of
the Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its business
or assets.
10.5 This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or covenants hereof may be waived,
only by a written instrument executed by both of the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by either
party of the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
11. Subsidiaries and Affiliates.
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11.1 As used herein, the term "subsidiary" shall mean any
corporation or other business entity controlled directly or indirectly by the
corporation or other business entity in question, and the term "affiliate" shall
mean and include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the corporation or other
business entity in question.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
PANAVISION INC.
By: /S/ XXXXX X. XXXXXXXX
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Xxxxx X. Xxxxxxxx
Executive Vice President
/S/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
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APPENDIX I
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Additional Benefits:
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1. Medical Examination. The Executive shall be reimbursed by
the Company for the reasonable cost of one annual medical examination upon
presentation of an expense statement.
2. Automobile. The Company shall afford the Executive the
right to use an automobile on a continuing basis and shall provide garaging near
the Executive's residence, all on the following basis. The Company shall pay,
upon presentation of an expense statement, all reasonable expenses associated
with the operation of such automobile and the rental of such garage space in the
same manner as is, from time to time, in effect with respect to executive
officers of the Company generally, including, without limitation, all reasonable
maintenance and insurance expenses. The automobile furnished by the Company
shall be a late model top-of-the-line BMW530 or like vehicle to be reasonably
selected by the Executive. Upon the expiration of the Term, the Executive
promptly shall return the automobile to the Company. Alternatively, the
Executive shall have the right to elect to forego the use of a Company-provided
automobile and receive from the Company instead a monthly cash payment in an
amount equal to what would have been the direct out-of-pocket cost to the
Company of providing to the Executive the benefit described in this paragraph.
3. Insurance. The Company agrees to provide the Executive with
additional term life insurance coverage with a face amount of twice the then
current Base Salary, subject to the insurer's satisfaction with the results of
any required medical examination to which the Executive hereby agrees to submit,
on the following basis. The Executive may select a plan of his choice and may
designate the beneficiary of such plan. The Company shall pay, or reimburse to
the Executive if the Executive purchases term life insurance coverage himself,
upon presentation of an expense statement, the periodic premiums relating to
such additional term life insurance payable during the Term.
4. Relocation. The Company acknowledges that the Executive will
relocate his family and principal residence from Boca Raton, Florida to Woodland
Hills, California. The Company shall provide the Executive with the following
payments and benefits:
(i) During the period from October 15, 2002 through
December 31, 2002, the Company shall pay the lesser of (A) the cost of business
class commercial airline transportation for the Executive to commute weekly
between the Company's offices and Boca Raton, Florida and (B) the actual cost
incurred by the Executive for such commutation.
(ii) During the period from October 15, 2002 through
December 31, 2002, the Company shall pay the lesser of (A) the cost of business
class commercial airline transportation for the Executive's wife and three
children to make three round trips between Woodland Hills, California and Boca
Raton, Florida and (B) the actual cost incurred by the Executive's wife and
children for such trips.
(iii) During the period from October 15, 2002 through
December 31, 2002, the Company shall pay the rental and related costs of a
suitable short term furnished corporate apartment in the Woodland Hills,
California vicinity for the Executive's use.
(iv) The Company shall pay the actual and reasonable
expenses of relocating the Executive and his family from the Boca Raton, Florida
area to the Woodland Hills, California vicinity. Should the executive rent a
residence in the Woodland Hills vicinity and subsequently purchase a principal
residence, relocation expenses shall include the cost of storage of personal
belongings while the Executive and his family reside in the rented premises, as
well as the expenses of moving from the rented premises to the principal
residence.
(v) Upon expiration or termination of the Term for
any reason other than pursuant to Section 4.3 or other than as a consequence of
the Executive's voluntarily quitting, the Company shall reimburse to the
Executive, upon presentation of reasonable supporting documentation, any loss on
disposition of the principal residence he purchases in the Woodland Hills,
California vicinity. For purposes of determining loss on disposition for
purposes of this clause (v), there shall be added to the cost basis of the
Executive's principal residence in the Woodland Hills, California vicinity
closing costs on Executive's purchase thereof and selling costs on Executive's
disposition thereof. The Executive's right to reimbursement for loss on sale
pursuant to this clause (v) is subject to the following limitations: (A) the
Executive's principal residence shall have become subject to a contract for sale
no later than one (1) year after expiration or termination of the Term and the
closing shall have occurred no later than ninety (90) days thereafter and (B)
the Company shall have the right to reject the selling price as being too low
provided that, if the Company does so, it shall purchase the home from the
Executive at a price which results in neither gain nor loss (as determined
pursuant to the preceding sentence) to the Executive.
(vi) Upon expiration or termination of the Term for
any reason other than pursuant to Section 4.3 or other than as a consequence of
the Executive's voluntarily quitting, the Company shall pay the actual and
reasonable expenses of relocating the Executive and his family from the Woodland
Hills, California vicinity to a locale in the continental United States of the
Executive's choice. Should the Executive rent a residence in the locale to which
he and his family relocate and subsequently purchase a principal residence in
that locale, relocation expenses shall include the cost of storage of personal
belongings while the Executive and his family reside in the rented premises, as
well as the expenses of moving from the rented premises to the principal
residence. The Executive's right to have relocation expenses paid pursuant to
this clause (vi) is subject to the limitation that the Executive and his family
have relocated no later than the earlier to occur of (i) ten (10) days following
the sale of the Executive's principal residence in the Woodland Hills,
California vicinity and (ii) fifteen(15) months following expiration or
termination of the Term as described above in this clause (vi).
(vii) Should any of the benefits described in
clauses (i), (ii), (iii), (iv) or (vi) above, or any payment by the Company
described in clause (v) above, require income to be imputed to the Executive,
the Company shall "gross up" the income imputed to the Executive under federal
and any applicable state income tax laws on account of such benefits and
payment, such that the Executive effectively suffers no personal cost for such
benefits or payment.
5. Airline Club. The Company shall pay the cost of
membership for the Executive in an "executive" or similar commercial airline
"club" or preferred passenger program.
