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EXHIBIT 10.2
AGREEMENT
THIS AGREEMENT, dated as of April 23, 2001 (the "Effective Date") by
and between XXXXXXX ENTERTAINMENT COMPANY, a Delaware corporation having its
corporate headquarters at Xxx Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000
(together with all subsidiaries and other affiliates referred to as "the
Company") and XXXXXXX X. XXXX ("Xxxx").
WHEREAS, the Company desires to enter into an agreement regarding
Rose's service as Chairman of the Company's Board of Directors, and Rose desires
to serve as Chairman of the Company's Board of Directors and enter into such an
agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
1. TERM; REPRESENTATION.
(a) Term. The term of this Agreement shall commence on
the Effective Date and shall continue for a period of two (2) years
(the "Initial Term"). This Agreement shall automatically renew for one
(1) year terms (each referred to an "Additional Term") (the Initial
Term and each Additional Term collectively referred to as the "Term")
unless either party notifies the other party at least 90 days prior to
the expiration of the Initial Term or the first renewal term.
(b) Representation. Rose hereby represents to the Company
that the execution and delivery of this Agreement and the performance
by Rose of his duties hereunder shall not constitute a breach of, or
otherwise contravene, the terms of any agreement or policy to which
Rose is a party or otherwise bound.
2. POSITION; RESPONSIBILITIES. During the Term, and subject to
approvals required by the Delaware Business Corporation Act and the
Company's Certificate of Incorporation and Bylaws, Rose shall serve as
a member of the Board of Directors of the Company and, subsequent to
the May 2001 Annual Meeting of the Shareholders of the Company, shall
perform the duties of the Chairman of the Board as described by the
Company's Restated Bylaws, as amended from time to time, and such other
duties as may be prescribed by the Board of Directors.
3. REMUNERATION. During the Term, the Company shall pay Rose
$350,000 per year (the "Base Remuneration") for his services as Chairman of the
Board. Such payment shall be in lieu of any other fees or other compensation
payable to other directors of the Company.
4. STOCK OPTION GRANT. Subject to the vesting schedule provided
for herein, the Company hereby grants to Rose options to purchase 100,000 shares
of common stock of the Company ("Company Common Stock") (the "Stock Options").
The Stock Options shall (i) be granted pursuant to the Company's 1997 Omnibus
Stock Option and Incentive Plan as may hereafter be further amended (the
"Omnibus Plan"); (ii) be subject to the terms of a stock option agreement
between the Company and Rose in the form attached as Exhibit A; (iii) vest in
25,000 share increments on the first through fourth anniversary of the Effective
Date, (iv) be exercisable at the closing price of the Company's Common Stock as
reported in the Wall Street Journal for the trading
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day immediately preceding the award of the option grant by the Board of
Directors; and (v) have a term of ten years from the Effective Date.
5. RESTRICTED STOCK GRANT. Subject to the provisions of Section
12, the Company hereby grants to Rose 20,000 restricted shares of Company Common
Stock (the "Restricted Stock Grant"). The restrictions on the Restricted Stock
Grant shares shall terminate (i.e., the shares will become available for
distribution to Rose) in 5,000 share increments on the first through the fourth
anniversaries of the Effective Date. The Restricted Stock Grant shares shall be
granted pursuant to the Omnibus Plan, and shall otherwise be subject to the
terms of a restricted stock grant agreement between the Company and Rose in the
form attached as Exhibit B-1. If and when a restriction terminates as to a 5,000
share increment, the Company shall deliver such shares to Rose.
6. CONTINGENT RESTRICTED STOCK GRANT. Subject to the provisions
of Section 12, if the Company's Common Stock trades at an average closing price
of $32 or higher as reported in the Wall Street Journal for any period of thirty
(30) consecutive trading days during the Initial Term, the Company shall grant
to Rose an additional 20,000 restricted shares of Company Common Stock (the
"Contingent Restricted Stock Grant"). If the Contingent Restricted Stock Grant
is awarded, the restrictions on the Contingent Restricted Stock Grant shares
shall terminate (i.e., the shares will become available for distribution to
Rose) in 5,000 share increments on the first through the fourth anniversaries of
the day on which the condition for the award of the Contingent Restricted Stock
Grant is met. The Contingent Restricted Stock Grant shall be granted pursuant to
the Omnibus Plan, and shall otherwise be subject to the terms of a contingent
restricted stock grant agreement between the Company and Rose in the form
attached as Exhibit B-2. If and when a restriction terminates as to a 5,000
share increment, the Company shall deliver such shares to Rose.
7. ADDITIONAL BENEFITS. Rose shall be entitled to the following:
(a) Vehicle Allowance. During the Term, Rose shall be
entitled to receive from the Company a vehicle allowance of $1,050 per
month, subject to future increases as may be granted to senior
executives.
(b) Use of Company Aircraft. During the Term and subject
to availability, the Company shall make available a corporate aircraft
to Rose for travel. In addition, the Company shall reimburse Rose for
Rose's use of his personal aircraft in connection with the performance
of his duties for the Company. To the extent Rose is required to travel
on a commercial airline in connection with the performance of his
duties for the Company, Rose shall be entitled to travel on a
first-class basis.
(c) Attorney's Fees. Rose shall be entitled to
reimbursement for reasonable attorney's fees incurred by Rose in the
review and negotiation of this Agreement, upon submission of
documentation evidencing such expenses.
(d) Benefit Plans. Rose shall be entitled to participate
in all Company benefit plans, programs and arrangements of the Company
for which other senior members of management are eligible.
8. BUSINESS EXPENSES. During the Term, the Company shall
reimburse Rose, in accordance with the Company's policies and procedures, for
all reasonable expenses incurred by Rose in connection with the performance of
his duties for the Company.
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9. ADMINISTRATIVE ASSISTANT. The Company shall employ, on an
at-will basis, Rose's administrative assistant, Xxxxx Xxxxxx, on terms
substantially similar to those of similarly situated employees in the Company.
Xx. Xxxxxx'x compensation shall be $55,000 per year, and she shall be entitled
to participate in any employee benefit plans available to similarly situated
employees.
10. FINANCIAL COUNSELING. The Company shall reimburse Rose up to a
maximum of $15,000 per year for his expenses in obtaining financial counseling,
upon submission of documentation evidencing such expenses.
11. TERMINATION. Rose's service as Chairman of the Board of
Directors may be terminated prior to the end of the Term as follows:
(a) Termination by Death. Upon the death of Rose
("Death"), Rose's service as Chairman of the Board shall automatically
terminate as of the date of Death.
(b) Termination by Company for Permanent Disability. At
the option of the Board of Directors, Rose's service as Chairman of the
Board of Directors may be terminated by written notice to Rose or his
personal representative in the event of the Permanent Disability of
Rose. As used herein, the term "Permanent Disability" shall mean a
physical or mental incapacity or disability which renders Rose unable
substantially to render the services contemplated hereunder for a
period of ninety (90) consecutive days or one hundred eighty (180) days
during any twelve (12) month period as determined in good faith by the
Board of Directors.
(c) By the Board of Directors With Cause. Rose's
termination as Chairman of the Board by the Board of Directors shall be
considered "With Cause" upon the occurrence of any one or more of the
following events (each, a "Cause"):
(i) any action by Rose constituting material
fraud, material self-dealing, material dishonesty or
embezzlement in the course of his service hereunder; or
(ii) any conviction of Rose of a crime involving
moral turpitude.
(d) By the Board of Directors Without Cause. In the event
that Rose's service as Chairman of the Board of Directors is terminated
by the Board for any reason other than a Cause, such termination shall
be "Without Cause."
(e) By Rose for Good Reason. At the option of Xxxx, Xxxx
may terminate his service as Chairman of the Board by written notice to
the Company given within a reasonable time after the occurrence of a
material breach by the Company of any of its obligations under this
Agreement and the failure by the Company to cure such breach within
thirty (30) days of such notice ("Good Reason").
(f) Expiration of the Term. The expiration of the Initial
Term or any Additional Term shall not for any purpose be deemed a
termination under Section 11(c), (d) or (e) hereinabove.
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12. EFFECT OF TERMINATION; TREATMENT OF STOCK OPTIONS AND
RESTRICTED STOCK GRANTS UPON EXPIRATION OF TERM.
(a) Effect of Termination by Death. Upon the termination
of Rose's service as Chairman of the Board of Directors because of
Death, Rose's estate shall be entitled to receive an amount equal to
the accrued but unpaid Base Remuneration through the date of
termination as well as any unreimbursed reasonable business expenses
incurred by Rose through the date of termination. In addition, all
restrictions shall be removed from the Restricted Stock Grant shares
and the Contingent Restricted Stock Grant shares, if any, and the
vesting and exercise of Rose's Stock Options shall be governed by the
Omnibus Plan.
(b) Effect of Termination for Permanent Disability. Upon
the termination of Rose's service as Chairman of the Board of Directors
because of Permanent Disability, Rose shall be entitled to receive his
Base Remuneration until he becomes eligible for long term disability
benefits as well as any unreimbursed reasonable business expenses
incurred by Rose through the date of termination. Rose shall be
entitled to the Restricted Stock Grant shares or Contingent Restricted
Stock Grant shares that are free from restrictions as of the date of
termination, and the vesting and exercise of Rose's Stock Options shall
be governed by the Omnibus Plan. Rose shall be entitled to continue to
receive group medical insurance benefits from the date of termination
until the time he is eligible to receive long term disability benefits.
(c) Effect of Termination by the Company With Cause or by
Rose Without Good Reason. Upon the termination of Rose's service as
Chairman of the Board of Directors With Cause or by Rose for any reason
other than Good Reason, Rose shall be entitled to receive an amount
equal to the accrued but unpaid Base Remuneration through the date of
termination as well as any unreimbursed reasonable business expenses
incurred by Rose through the date of termination. Rose shall be
entitled only to the Restricted Stock Grant shares or Contingent
Restricted Stock Grant shares that are free from restrictions as of the
date of termination. All Stock Options, to the extent not theretofore
exercised, shall terminate on the date of termination of Rose's service
as Chairman of the Board of Directors by the Company With Cause or by
Rose without Good Reason.
(d) Effect of Termination by the Company Without Cause or
by Rose for Good Reason. Upon the termination of Rose's service as
Chairman of the Board of Directors Without Cause or by Rose for Good
Reason, Rose shall be entitled to receive an amount equal to the
accrued but unpaid Base Remuneration through the date of such
termination, as well as any unreimbursed reasonable business expenses
incurred by Rose through the date of termination, all unvested Stock
Options shall immediately vest, and all restrictions shall be removed
from the Restricted Stock Grant shares and the Contingent Restricted
Stock Grant shares, if any. Rose shall have two (2) years from the date
of such termination Without Cause or by Rose for Good Reason during the
Initial Term to exercise all vested Stock Options.
(e) Expiration of Initial Term. Unless Rose's service as
Chairman of the Board of Directors is terminated prior to the end of
the Initial Term, upon expiration of the Initial Term, Rose's Stock
Options, Restricted Stock Grant shares, and Contingent Restricted Stock
Grant shares, if any, shall be treated as follows:
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(i) All contingencies with respect to the
Contingent Restricted Stock Grant shares shall be removed;
(ii) If Rose continues to serve the Company in
any capacity following the expiration of the Initial Term, all
unvested Stock Options shall continue to vest and the
restrictions shall continue to be removed from the Restricted
Stock Grant shares and Contingent Stock Grant shares as
provided in Sections 4-6 of this Agreement and in the stock
option agreement and restricted stock grant agreement(s)
provided for therein.
(iii) If Rose ceases to serve the Company in any
capacity at any time following expiration of the Initial Term,
then, at the time Rose ceases to serve, all unvested Stock
Options shall immediately vest, all restrictions shall be
removed from the Restricted Stock Grant shares and all
restrictions shall be removed from the Contingent Restricted
Stock Grant shares. In such event, Rose shall be entitled to
exercise the Stock Options at any time prior to the expiration
date of the Stock Option term notwithstanding anything to the
contrary in the Omnibus Plan or in this Agreement.
13. CHANGE OF CONTROL.
(a) Definition. A "Change of Control" shall be deemed to
have taken place if:
(i) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934, other than the Company, a wholly-owned subsidiary
thereof, Xxxxxx X. Xxxxxxx or any member of his immediate
family or any trusts or other entities controlled by Xxxxxx X.
Xxxxxxx or any member of his immediate family, or any employee
benefit plan of the Company or any of its subsidiaries,
hereafter becomes the beneficial owner of Company securities
having 50% or more of the combined voting power of the then
outstanding securities of the Company that may be cast for the
election of directors of the Company (other than as a result
of the issuance of securities initiated by the Company in the
ordinary course of business);
(ii) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934, becomes the beneficial owner of Company securities
having greater voting power than the Company securities held
by Xxxxxx X. Xxxxxxx, any member of his immediate family, and
any trusts or other entities controlled by Xxxxxx X. Xxxxxxx
or any member of his immediate family; or
(iii) as the result of, or in connection with, any
cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing transactions, the holders of all
the Company's securities entitled to vote generally in the
election of directors of the Company immediately prior to such
transaction constitute, following such transaction, less than
a majority of the combined voting power of the
then-outstanding securities of the Company or any successor
corporation or entity entitled to vote generally in the
election of the directors of the Company or such other
corporation or entity after such transactions; or
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(iv) the Company sells all or substantially all
of the assets of the Company.
(b) Effect of Change of Control. In the event that within
one year following a Change of Control the Board of Directors
terminates Rose's service as Chairman of the Board Without Cause, or
Rose terminates his service as Chairman of the Board for Good Reason,
Rose shall be entitled to the greater of (i) a lump-sum payment of one
year's Base Remuneration from the date of termination or (ii) a
lump-sum payment of Rose's Base Remuneration for the remainder of the
Initial Term or Additional Term, as applicable, of this Agreement. In
addition, upon such termination, all unvested Stock Options shall vest
and all restrictions shall be removed from the Restricted Stock Grant
shares and the Contingent Restricted Stock Grant shares, if any. Rose
shall have two (2) years from the date of such termination during the
Initial Term to exercise all vested Stock Options.
(c) Going Private Transaction. Notwithstanding the
foregoing, if Xxxxxx X. Xxxxxxx or any member of his immediate family
or any trusts or other entities controlled by Xxxxxx X. Xxxxxxx or any
member of his immediate family initiates any Rule 13e-3 transaction, as
that term is defined in Rule 13e-3 promulgated under the Securities
Exchange Act of 1934 (the "Rule 13e-3 Transaction"), and all conditions
precedent to the Company's obligation to consummate the Rule 13e-3
Transaction shall have been satisfied, all unvested Stock Options shall
vest and all restrictions shall be removed from the Restricted Stock
Grant shares and the Contingent Restricted Stock Grant shares, if any;
provided, however, that if the Rule 13e-3 Transaction is not thereafter
consummated, the acceleration of Stock Option vesting and removal of
Restricted Stock Grant or Contingent Restricted Stock Grant share
restrictions shall be deemed to be null and void.
14. Covenants.
(a) General. Rose and the Company understand and agree
that the purpose of the provisions of this Section 14 is to protect
legitimate business interests of the Company, as more fully described
below, and is not intended to impair or infringe upon Rose's right to
work, earn a living, or acquire and possess property from the fruits of
his labor. Rose hereby acknowledges that the post-employment
restrictions set forth in this Section 14 are reasonable and that they
do not, and will not, unduly impair his ability to earn a living after
the termination of his employment with the Company. Therefore, subject
to the limitations of reasonableness imposed by law upon restrictions
set forth herein, Rose shall be subject to the restrictions set forth
in this Section 14.
(b) Definitions. The following capitalized terms used in
this Section 14 shall have the meanings assigned to them below, which
definitions shall apply to both the singular and the plural forms of
such terms: "Confidential Information" means any confidential or
proprietary information possessed by the Company without limitation,
any confidential "know-how," customer lists, details of client and
consultant contracts, current and anticipated customer requirements,
pricing policies, price lists, market studies, business plans,
operational methods, marketing plans or strategies, product development
techniques or plans, computer software programs (including object code
and source code), data and documentation, data base technologies,
systems, structures and architectures, inventions and ideas, past,
current and planned research and development, compilations, devices,
methods,
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techniques, processes, financial information and data, business
acquisition plans, new personnel acquisition plans and any other
information that would constitute a trade secret under the common law
or statutory law of the State of Tennessee.
"Person" means any individual or any corporation,
partnership, joint venture, association or other entity or
enterprise.
"Protected Employees" means employees of the Company
or its affiliated companies who are employed by the Company or
its affiliated companies at any time within six (6) months
prior to the date of termination of Rose for any reason
whatsoever or any earlier date (during the Restricted Period)
of an alleged breach of the Restrictive Covenants by Rose.
"Restricted Period" means the period of Rose's
employment by the Company plus a period extending two (2)
years from the date of termination of employment; provided,
however, the Restricted Period shall be extended for a period
equal to the time during which Rose is in breach of his
obligations to the Company under this Section 14.
"Restrictive Covenants" means the restrictive
covenants contained in Section 14(c) hereof:
(c) Restrictive Covenants.
(i) Restriction on Disclosure and Use of
Confidential Information. Rose understands and agrees that the
Confidential Information constitutes a valuable asset of the
Company and its affiliated entities, and may not be converted
to Rose's own use or converted by Rose for the use of any
other Person. Accordingly, Rose hereby agrees that Rose shall
not, directly or indirectly, at any time during the Restricted
Period or thereafter, reveal, divulge or disclose to any
Person not expressly authorized by the Company any
Confidential Information, and Rose shall not, at any time
during the Restricted Period or thereafter, directly or
indirectly, use or make use of any Confidential Information in
connection with any business activity other than that of the
Company. The parties acknowledge and agree that this Agreement
is not intended to, and does not, alter either the Company's
rights or Rose's obligations under any state or federal
statutory or common law regarding trade secrets and unfair
trade practices,
(ii) Non-solicitation of Protected Employees.
Rose understands and agrees that the relationship between the
Company and each of its Protected Employees constitutes a
valuable asset of the Company and may not be converted to
Rose's own use or converted by Rose for the use of any other
Person. Accordingly, Rose hereby agrees that during the
Restricted Period Rose shall not directly or indirectly on
Rose's own behalf or on behalf of any Person solicit any
Protected Employee to terminate his or her employment with the
Company.
(iii) Non-interference with Company Opportunities.
Rose understands and agrees that all business opportunities
with which he is involved during his employment with the
Company constitute valuable assets of the Company and its
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affiliated entities, and may not be converted to Rose's own
use or converted by Rose for the use of any other Person.
Accordingly, Rose hereby agrees that during the Restricted
Period or thereafter, Rose shall not directly or indirectly on
Rose's own behalf or on behalf of any Person, interfere with,
solicit, pursue, or in any way make use of any such business
opportunities.
(d) Exceptions from Disclosure Restrictions. Anything
herein to the contrary notwithstanding, Rose shall not be restricted
from disclosing or using Confidential Information that: (i) is or
becomes generally available to the public other than as a result of an
unauthorized disclosure by Rose or his agent; (ii) becomes available to
Rose in a manner that is not in contravention of applicable law from a
source (other than the Company or its affiliated entities or one of its
or their officers, employees, agents or representatives) that is not
known by Rose, after reasonable investigation, to be bound by a
confidential relationship with the Company or its affiliated entities
or by a confidentiality or other similar agreement; or (iii) is
required to be disclosed by law, court order or other legal process;
provided, however, that in the event disclosure is required by law,
court order or legal process, Rose shall provide the Company with
prompt notice of such requirement so that the Company may seek an
appropriate protective order prior to any such required disclosure by
Rose.
(e) Enforcement of the Restrictive Covenants.
(i) Rights and Remedies upon Breach. In the
event Rose breaches, or threatens to commit a breach of, any
of the provisions of the Restrictive Covenants, the Company
shall have the right and remedy to enjoin, preliminarily and
permanently, Rose from violating or threatening to violate the
Restrictive Covenants and to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction,
it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the
Company and that money damages would not provide an adequate
remedy to the Company. The rights referred to herein shall be
independent of any others and severally enforceable, and shall
be in addition to, and not in lieu of, any other rights and
remedies available to the Company at law or in equity.
(ii) Severability of Covenant. Rose acknowledges
and agrees that the Restrictive Covenants are reasonable and
valid in all respects. If any court determines that any
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.
15. COOPERATION IN FUTURE MATTERS. Rose hereby agrees that, for a
period of three (3) years following the date of the termination of his service
as Chairman of the Board, he shall cooperate with the Company's reasonable
requests relating to matters that pertain to Rose's service as Chairman of the
Board of the Company, including, without limitation, providing information of
limited consultation as to such matters, participating in legal proceedings,
investigations or audits on behalf of the Company, or otherwise making himself
reasonably available to the Company for other related purposes. Any such
cooperation shall be performed at times scheduled taking into consideration
Rose's other commitments, and Rose shall be compensated at a per diem rate of
$2,000 to the extent such cooperation is required on more than an occasional and
limited basis. Rose shall also be reimbursed for all reasonable out of pocket
expenses. Rose shall not be required to perform
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such cooperation to the extent it conflicts with any requirements of exclusivity
of service for any other entity, nor in any manner that in the good faith belief
of Rose would conflict with his rights under or ability to enforce this
Agreement.
16. INDEMNIFICATION. The Company shall indemnify Rose and hold him
harmless from and against any and all costs, expenses, losses, claims, damages,
obligations or liabilities (including actual attorneys fees and expenses)
arising out of any acts or failures to act by the Company, its directors,
employees or agents that occurred prior to the Effective Date, or arising out of
or relating to any acts, or omissions to act, made by Rose on behalf of or in
the course of performing services for the Company to the fullest extent
permitted by the Bylaws of the Company, or, if greater, as permitted by
applicable law, as the same shall be in effect from time to time. If any claim,
action, suit or proceeding is brought, or any claim relating thereto is made,
against Rose with respect to which indemnity may be sought against the Company
pursuant to this Section, Rose shall notify the Company in writing thereof, and
the Company shall have the right to participate in, and to the extent that it
shall wish, in its discretion, assume and control the defense thereof, with
counsel satisfactory to Rose.
17. BINDING ARBITRATION AND LEGAL FEES. Any controversy or claim
between or among the parties hereto, including but not limited to those arising
out of or relating to this Agreement or any related agreements or instruments,
including any claim based on or arising from an alleged tort, shall be
determined by binding arbitration in accordance with the Federal Arbitration Act
(or if not applicable, the law of the state of Tennessee), the Commercial
Arbitration Rules of the American Arbitration Association in effect as of the
date hereof, and the provisions set forth below. In the event of any
inconsistency, the provisions herein shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any party to
the Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this Agreement
applies in any court having jurisdiction over such action; provided, however,
that all arbitration proceedings shall take place in Nashville, Tennessee. The
arbitration body shall set forth its findings of fact and conclusions of law
with citations to the evidence presented and the applicable law, and shall
render an award based thereon. In making its determinations and award(s), the
arbitration body shall base its award on applicable law and precedent, and shall
not entertain arguments regarding punitive damages, nor shall the arbitration
body award punitive damages to any person. Each party shall bear its own
attorneys' fees, costs, and expenses in the arbitration.
18. MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Tennessee
without reference to principles of conflicts of laws.
(b) Entire Agreement/Amendments. This Agreement contains
the entire understanding of the parties with respect to its subject
matter. There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written
instrument signed by the parties hereto.
(c) No Waiver. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion shall
not be considered a waiver of such party's rights or
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deprive such party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(d) Severability. In the event that any one or more of
the provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions of this Agreement shall not be affected
thereby.
(e) Assignment. This Agreement shall not be assignable by
Rose. This Agreement may be assigned by the Company to a company which
is a successor in interest to substantially all of the business
operations of the Company. Such assignment shall become effective when
the Company notifies the Rose of such assignment or at such later date
as may be specified in such notice. Upon such assignment, the rights
and obligations of the Company hereunder shall become the rights and
obligations of such successor company, provided that any assignee
expressly assumes the obligations, rights and privileges of this
Agreement.
(f) Headings. The section headings contained herein are
for the purposes of convenience only and are not intended to define or
limit the contents of the sections.
(g) Successors; Binding Agreement. This Agreement shall
inure to the benefit of and be binding upon personal or legal
representatives, executors, administrators, successors, heirs,
distributes, devises and legatees.
(h) Notice. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth below,
or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change
of address shall be effective only upon receipt.
If to Company, to:
Xxxxxxx Entertainment Company
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxx Xxxxxx
Facsimile Number: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxx & Xxx, PLC
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile Number: (000) 000-0000
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If to Rose, to:
MIDARO INVESTMENTS, INC.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
With a copy to:
Xxxxx X. Lake, Esq.
Xxxxx, Xxxxxx & Xxxxxxx PLLC
000 X Xxxxx Xxx
Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Facsimile Number: (000) 000-0000
(i) Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
(j) No Third Party Beneficiary. This Agreement shall not
confer any rights or remedies upon any person or entity other than the
parties hereto and their respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
/s/ Xxxxxxx X. Xxxx
-----------------------------------------
Xxxxxxx X. Xxxx
XXXXXXX ENTERTAINMENT COMPANY
By: /s/ X. X. Xxxxxxx XX
-----------------------------------------
X. X. Xxxxxxx XX, Chairman
Board of Directors
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EXHIBIT A
STOCK OPTION AGREEMENT
XXXXXXX ENTERTAINMENT COMPANY
1997 OMNIBUS STOCK OPTION AND INCENTIVE PLAN
This STOCK OPTION AGREEMENT (the "Agreement") is by and between Xxxxxxx
Entertainment Company, a Delaware corporation (the "Company"), and Xxxxxxx X.
Xxxx (the "Grantee"), under the Company's 1997 Omnibus Stock Option and
Incentive Plan, as amended (the "Plan").
Pursuant to the terms of that certain Agreement, dated as of April 23,
2001, between the Company and Grantee (the "Chairman Agreement"), in order to
provide an incentive to the Grantee to exert his utmost efforts on behalf of the
Company, the Grantee has been awarded a nonqualified stock option (the "Option")
to purchase certain shares of Common Stock of the Company, par value $.01 per
share ("Common Stock"), on the terms and conditions set forth in the Plan and
this Agreement.
SECTION 1. THE OPTION GRANT. The Grantee is hereby granted a
Nonqualified Stock Option to purchase 100,000 shares of Common Stock of the
Company at a purchase price of $25.25 per share. Said Nonqualified Stock Option
is subject to the terms set forth below.
SECTION 2. EXERCISE OF OPTION RIGHTS.
2.1 Times When the Option Can Be Exercised. The Option shall vest
and become exercisable pursuant to the terms of the Chairman Agreement.
2.2 Term of Option. The term during which the Option may be
exercised shall terminate on April 22, 2011 subject to earlier termination as
provided for in the Chairman Agreement or Section 3 of this Agreement (the
"Option Term").
2.3 Notice of Exercise. If the Grantee wishes to exercise his
rights hereunder, the Grantee must give notice of exercise to the Company at the
Company's principal office. The Grantee must give the notice in writing in form
satisfactory to the Compensation Committee of the Board of Directors of the
Company (the "Committee"). The Grantee must include with the notice full payment
for any shares being purchased under the Option (unless, in accordance with the
Plan, the Committee shall have provided otherwise), and any taxes due under
Section 2.4.2 hereof.
2.4 Payment.
2.4.1 Payment for any Common Stock being purchased under
the Option must be made in cash, by certified or bank check, or by delivering to
the Company Common Stock of the Company which the Grantee already owns. If the
Grantee pays by delivering Common Stock of the Company, the Grantee must include
with the notice of exercise the certificates for the Common Stock duly endorsed
for transfer. The Company will value the Common Stock delivered by the
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Grantee at its Fair Market Value as of the date of receipt as set forth in the
Plan and, if the value of the Common Stock delivered by the Grantee exceeds the
amount required under this Section 2.4.1, will return to the Grantee cash in an
amount equal to the value, so determined, of any fractional portion of a share
of Common Stock exceeding the amount required and will issue a certificate for
any whole share of Common Stock exceeding the amount required.
2.4.2 The Grantee cannot buy any Common Stock under the
Option unless, at the time the Grantee gives notice of exercise to the Company,
the Grantee includes with such notice payment in cash, by certified or bank
check, of all local, state, or federal withholding taxes due, if any, on account
of buying Common Stock under the Option or gives other assurance to the Company
satisfactory to the Committee of the payment of those withholding taxes.
2.5 Transfer.
2.5.1 The Company shall deliver certificates for Common
Stock bought under the Option as soon as practicable after receiving payment for
the Common Stock and for any taxes under Section 2.4.2 hereof, and all documents
required under the Plan and this Agreement. The certificates will be made out in
the name of the Grantee.
2.5.2 If the Plan or any law, regulation, or interpretation
requires the Company to take any action regarding the Common Stock before the
Company issues certificates for the Common Stock being purchased, the Company
may delay delivering the certificates for the Common Stock for the period
necessary to take that action.
SECTION 3. TERMINATION.
3.1 Generally. Except as otherwise provided in the Chairman
Agreement, this Agreement and the Plan, the Option may not be exercised unless
the Grantee is then in the service of the Company as its Chairman of the Board
of Directors ("Chairman"), and unless the Grantee has remained continuously as
the Company's Chairman since the date of grant of the Option. Unless otherwise
set forth in the Chairman Agreement or determined by the Committee at or after
the date of grant, in the event that the Grantee ceases to serve as Chairman,
any portion of the Option that is exercisable at the time of such termination
may be exercised by Grantee for a period of 90 days from the date of such
termination or until the expiration of the stated term of the Option, whichever
period is shorter. Provided, however, if Grantee remains Chairman until the
expiration of the Initial Term, Grantee shall have until the expiration of the
Option Term to exercise the Options.
3.2 Death or Disability. If the Grantee dies while serving as
Chairman (or within the period of extended exercisability provided herein), or
if the Grantee's service as Chairman terminates by reason of Disability, the
Option will become fully vested and exercisable (notwithstanding the provisions
of Section 2.1 hereof), and may be exercised by the Grantee, by the legal
representative of the Grantee's estate, or by the legatee under the Grantee's
will at any time until the expiration of the term of the Option provided in
Section 2.2 hereof.
3.3 Retirement. If the Grantee's service as Chairman terminates by
reason of Retirement, any portion of the Option may be exercised by Grantee, to
the extent such portion was exercisable at the time of such Retirement or on
such accelerated basis as the Committee may determine at or after the date of
grant (but before the date of such Retirement) at any time until the expiration
of the term of the Option provided in Section 2.2 hereof.
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3.4 Cause or by Grantee Without Good Reason. If the Grantee's
service as Chairman is terminated by the Company for Cause or by Grantee Without
Good Reason, as determined by the Committee in its sole discretion, the Option,
to the extent not theretofore exercised, shall terminate on the date of such
termination.
3.5 Committee Discretion. Notwithstanding the provisions of
subsections 3.1 through 3.4 above, but subject to the provisions of Section 4
below, the Committee may, in its sole discretion, at or after the date of grant
(but before the date of termination), establish different terms and conditions
pertaining to the effect on any Option of termination of a Grantee's service as
Chairman, to the extent permitted by applicable federal and state law and
provided that such differing terms and conditions are not to the Grantee's
detriment.
SECTION 4. GOVERNING PROVISIONS. This Agreement is made under
and subject to the provisions of the Plan, and all of the provisions of the Plan
are also provisions of this Agreement. Capitalized terms used but not defined
herein shall have the same meanings ascribed to such terms in the Plan. If there
is a difference or conflict between the provisions of this Agreement and the
provisions of the Plan, the provisions of the Plan will govern. If there is a
difference or conflict between the provisions of this Agreement and/or the
provisions of the Plan and the provisions of the Chairman Agreement, the
provisions of the Chairman Agreement will govern. By signing this Agreement, the
Grantee confirms that he has received a copy of the Plan.
SECTION 5. MISCELLANEOUS.
5.1 Entire Agreement. This Agreement, the Chairman Agreement and
the Plan contain all of the understandings between the Company and Grantee
concerning the Option and include any earlier negotiations and understandings.
The Company and Grantee have made no promises, agreements, conditions, or
understandings relating to the Option, either orally or in writing, that are not
included in this Agreement, the Chairman Agreement or the Plan.
5.2 No Right to Future Service. None of the provisions of this
Agreement or the Plan will interfere with or limit the right of the Company to
end the Grantee's service as Chairman pursuant to the terms of the Chairman
Agreement.
5.3 Captions. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience. They do not define,
limit, construe, or describe the scope or intent of the provisions of this
Agreement.
5.4 Counterparts. This Agreement may be executed in counterparts,
each of which when signed by the Company and the Grantee will be deemed an
original and all of which together will be deemed the same agreement.
5.5 Notice. Any notice or communication having to do with this
Agreement must be given by personal delivery or by certified mail, return
receipt requested, addressed, if to the Company or the Committee, to the
principal office of the Company and, if to Grantee, to the Grantee's last known
address on the personnel records of the Company.
5.6 Amendment. This Agreement may be amended by the Company,
provided that unless the Grantee consents in writing, the Company cannot amend
this Agreement if the amendment
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will materially change or impair the Grantee's rights under this Agreement and
such change is not to the Grantee's benefit.
5.7 Succession and Transfer. Each and all of the provisions of
this Agreement are binding upon and inure to the benefit of the Company and the
Grantee and their heirs, successors and assigns; however, neither the Option nor
this Agreement is transferable, without the prior written consent of the
Committee, other than (i) by will or by the laws of descent and distribution,
(ii) by the Grantee to a member of his Immediate Family, or (iii) to a trust for
the benefit of the Grantee or a member of his Immediate Family.
5.8 Governing Law. This Agreement shall be governed and construed
exclusively in accordance with the law of the State of Delaware applicable to
agreements to be performed in the State of Delaware to the extent it may apply.
The Company and the Grantee have caused this Agreement to be signed and
delivered as of the __ day of ________________, 2001.
XXXXXXX ENTERTAINMENT COMPANY
By:
-------------------------- --------------------------------------
Xxxxxxx X. Xxxx Xxx Xxxxxx, Senior Vice President and
Chief Administrative Officer
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EXHIBIT B-1
RESTRICTED STOCK AGREEMENT
XXXXXXX ENTERTAINMENT COMPANY
1997 OMNIBUS STOCK OPTION AND INCENTIVE PLAN
This RESTRICTED STOCK AGREEMENT (the "Agreement") is by and between
Xxxxxxx Entertainment Company, a Delaware corporation (the "Company"), and
Xxxxxxx X. Xxxx, (the "Grantee"), pursuant to the Company's 1997 Omnibus Stock
Option and Incentive Plan (the "Plan").
SECTION 1. RESTRICTED STOCK AWARD. Effective April 23, 2001, the
Grantee is hereby awarded the right to receive 20,000 shares (the "Restricted
Stock") of the Company's Common Stock, Par Value $ .01 per share (the "Common
Stock"), subject to the terms and conditions of this Agreement and the Plan.
SECTION 2. VESTING OF THE AWARD. The Grantee shall become vested
in the number of shares of Restricted Stock as provided in the Agreement between
the Company and Grantee dated as of April 23, 2001 (the "Chairman Agreement")
(such number of shares referred to herein as the "Vested Stock") on the
corresponding date set forth in the Chairman Agreement (such date referred to
herein as the "Vested Date"); provided that, as of the Vested Date, there has
been no prior termination of Grantee's service as Chairman of the Company's
Board of Directors that, under the terms of the Chairman Agreement, would
preclude vesting of all or any part of the Restricted Stock.
SECTION 3. DISTRIBUTION OF VESTED STOCK. Subject to the terms of
the Chairman Agreement, shares of Vested Stock will be distributed to the
Grantee as soon as practicable after the Vested Date.
SECTION 4. VOTING RIGHTS AND DIVIDENDS. Prior to the
distribution of the Restricted Stock, certificates representing shares of the
Restricted Stock will bear an appropriate legend in accordance with Section
10(b) of the Plan and will be held by the Company, as escrow agent, in the name
of the Grantee. The Company will take such action as is necessary and
appropriate to enable the Grantee to vote the Restricted Stock and receive
dividends thereon.
SECTION 5. GOVERNING PROVISIONS. This Agreement is made under
and subject to the provisions of the Plan, and all of the provisions of the Plan
are also provisions of this Agreement. Capitalized terms used but not defined
herein shall have the same meanings ascribed to such terms in the Plan. If there
is a difference or conflict between the provisions of this Agreement and the
provisions of the Plan, the provisions of the Plan will govern. If there is a
difference or conflict between the provisions of this Agreement and/or the
provisions of the Plan and the provisions of the Chairman Agreement, the
provisions of the Chairman Agreement will govern. By signing this Agreement, the
Grantee confirms that he has received a copy of the Plan.
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SECTION 6. MISCELLANEOUS.
6.1 Entire Agreement. This Agreement, the Chairman
Agreement, and the Plan contain the entire understanding and agreement
between the Company and the Grantee concerning the Restricted Stock
granted hereby and supersede any prior or contemporaneous negotiations
and understandings. The Company and the Grantee have made no promises,
agreements, conditions, or understandings relating to the Restricted
Stock, either orally or in writing, that are not included in this
Agreement, the Plan, or the Chairman Agreement.
6.2 Future Service. None of the provisions of this
Agreement or the Plan will interfere with or limit the right of the
Company to terminate the Grantee's service as Chairman pursuant to the
terms of the Chairman Agreement.
6.3 Captions. The captions and section numbers appearing
in this Agreement are inserted only as a matter of convenience. They do
not define, limit, construe, or describe the scope or intent of the
provisions of this Agreement.
6.4 Counterparts. This Agreement may be executed in
counterparts, each of which when signed by the Company and the Grantee
will be deemed an original and all of which together will be deemed the
same agreement.
6.5 Notice. Any notice or communication having to do with
this Agreement must be given by personal delivery or by certified mail,
return receipt requested, addressed, if to the Company, to the
principal office of the Company and, if to the Grantee, to the
Grantee's last known address on the personnel records of the Company.
6.6 Amendment. This Agreement may be amended by the
Company, provided that unless the Grantee consents in writing, the
Company cannot amend this Agreement if the amendment will materially
change or impair the Grantee's rights under this Agreement and such
change is not to the Grantee's benefit. Nevertheless, the Committee
shall have the authority to cancel all or any portion of any
outstanding restrictions prior to the Vested Date with respect to any
or all of the shares of the Restricted Stock awarded on such terms and
conditions as the Committee shall deem appropriate.
6.7 Succession and Transfer. Each and all of the
provisions of this Agreement are binding upon and inure to the benefit
of the Company and the Grantee and their heirs, successors, and
assigns. However, neither the Restricted Stock nor this Agreement is
transferable prior to the Vested Date other than by will or by the laws
of descent and distribution.
6.8 Governing Law. This Agreement shall be governed and
construed exclusively in accordance with the law of the State of
Delaware applicable to agreements to be performed in the State of
Delaware to the extent it may apply.
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IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement to be effective as of _____________, 2001.
GRANTEE: XXXXXXX ENTERTAINMENT COMPANY
By:
------------------------------- --------------------------------------
Xxxxxxx X. Xxxx Xxx Xxxxxx, Senior Vice President and
Chief Administrative Officer
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EXHIBIT B-2
CONTINGENT RESTRICTED STOCK AGREEMENT
(PERFORMANCE SHARES)
XXXXXXX ENTERTAINMENT COMPANY
1997 OMNIBUS STOCK OPTION AND INCENTIVE PLAN
This CONTINGENT RESTRICTED STOCK AGREEMENT (the "Agreement") is by and
between Xxxxxxx Entertainment Company, a Delaware corporation (the "Company"),
and Xxxxxxx X. Xxxx, (the "Grantee"), pursuant to the Company's 1997 Omnibus
Stock Option and Incentive Plan (the "Plan").
SECTION 1. CONTINGENT RESTRICTED STOCK AWARD. Upon the
occurrence of the earlier of: (i) the Company's Common Stock maintaining an
average closing price of $32 or higher for a period of 30 consecutive trading
days or (ii) the expiration of the Initial Term of the Agreement, dated as of
April 23, 2001, by and between the Company and Grantee (the "Chairman
Agreement") so long as the Grantee has continuously served as Chairman
throughout the Initial Term, the Grantee shall be awarded the right to receive
20,000 shares (the "Restricted Stock") of the Company's Common Stock, Par Value
$ .01 per share (the "Common Stock"), subject to the terms and conditions of the
Chairman Agreement, this Agreement and the Plan.
SECTION 2. VESTING OF THE AWARD. The Grantee shall become vested
in the number of shares of Restricted Stock as provided in the Chairman
Agreement (such number of shares referred to herein as the "Vested Stock") on
the corresponding date set forth in the Chairman Agreement (such date referred
to herein as the "Vested Date"); provided that, as of the Vested Date, there has
been no prior termination of Grantee's service as Chairman of the Company's
Board of Directors that, under the terms of the Chairman Agreement, would
preclude vesting of all or any part of the Restricted Stock.
SECTION 3. DISTRIBUTION OF VESTED STOCK. Subject to the
terms of the Chairman Agreement, shares of Vested Stock will be distributed to
the Grantee as soon as practicable after the Vested Date.
SECTION 4. VOTING RIGHTS AND DIVIDENDS. Prior to the
distribution of the Restricted Stock, certificates representing shares of the
Restricted Stock will bear an appropriate legend in accordance with Section
10(b) of the Plan and will be held by the Company, as escrow agent, in the name
of the Grantee. The Company will take such action as is necessary and
appropriate to enable the Grantee to vote the Restricted Stock and receive
dividends thereon.
SECTION 5. GOVERNING PROVISIONS. This Agreement is made under
and subject to the provisions of the Plan, and all of the provisions of the Plan
are also provisions of this Agreement. Capitalized terms used but not defined
herein shall have the same meanings ascribed to such terms in the Plan. If there
is a difference or conflict between the provisions of this Agreement and the
provisions of the Plan, the provisions of the Plan will govern. If there is a
difference or conflict between the provisions of this Agreement and/or the
provisions of the Plan and the provisions of the Chairman Agreement, the
provisions of the
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Chairman Agreement will govern. By signing this Agreement, the Grantee confirms
that he has received a copy of the Plan.
SECTION 6. MISCELLANEOUS.
6.1 Entire Agreement. This Agreement, the Chairman
Agreement, and the Plan contain the entire understanding and agreement
between the Company and the Grantee concerning the Restricted Stock
granted hereby and supersede any prior or contemporaneous negotiations
and understandings. The Company and the Grantee have made no promises,
agreements, conditions, or understandings relating to the Restricted
Stock, either orally or in writing, that are not included in this
Agreement, the Plan, or the Chairman Agreement.
6.2 Future Service. None of the provisions of this
Agreement or the Plan will interfere with or limit the right of the
Company to terminate the Grantee's service as Chairman pursuant to the
terms of the Chairman Agreement.
6.3 Captions. The captions and section numbers appearing
in this Agreement are inserted only as a matter of convenience. They do
not define, limit, construe, or describe the scope or intent of the
provisions of this Agreement.
6.4 Counterparts. This Agreement may be executed in
counterparts, each of which when signed by the Company and the Grantee
will be deemed an original and all of which together will be deemed the
same agreement.
6.5 Notice. Any notice or communication having to do with
this Agreement must be given by personal delivery or by certified mail,
return receipt requested, addressed, if to the Company, to the
principal office of the Company and, if to the Grantee, to the
Grantee's last known address on the personnel records of the Company.
6.6 Amendment. This Agreement may be amended by the
Company, provided that unless the Grantee consents in writing, the
Company cannot amend this Agreement if the amendment will materially
change or impair the Grantee's rights under this Agreement and such
change is not to the Grantee's benefit. Nevertheless, the Committee
shall have the authority to cancel all or any portion of any
outstanding restrictions prior to the Vested Date with respect to any
or all of the shares of the Restricted Stock awarded on such terms and
conditions as the Committee shall deem appropriate.
6.7 Succession and Transfer. Each and all of the
provisions of this Agreement are binding upon and inure to the benefit
of the Company and the Grantee and their heirs, successors, and
assigns. However, neither the Restricted Stock nor this Agreement is
transferable prior to the Vested Date other than by will or by the laws
of descent and distribution.
6.8 Governing Law. This Agreement shall be governed and
construed exclusively in accordance with the law of the State of
Delaware applicable to agreements to be performed in the State of
Delaware to the extent it may apply.
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IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement to be effective as of _____________, 2001.
GRANTEE: XXXXXXX ENTERTAINMENT COMPANY
By:
---------------------------- --------------------------------------
Xxxxxxx X. Xxxx Xxx Xxxxxx, Senior Vice President and
Chief Administrative Officer
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