EXHIBIT 10.6
CONSULTING AGREEMENT
1. Identification
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This Consulting Agreement (the "Agreement"), dated as of March 10, 1997, is
entered into by and between Four Media Company, a Delaware corporation
("Company"), and Xxxxxxx X. Xxxxxxxx, an independent contractor ("Consultant").
2. Recitals
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2.1. Company and its operating subsidiaries ("Affiliates") are engaged in
the business of providing technical and creative services to the entertainment
industry.
2.2. Consultant has extensive experience in the business in which Company
is engaged.
2.3. Company desires to engage Consultant as an independent contractor to
render advice and guidance in connection with Company's business.
3. Term
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3.1. Subject to the terms and conditions set forth herein, Consultant's
services hereunder shall be for a term of three (3) years commencing on the date
hereof and expiring at the close of business on the day prior to the third
anniversary of the date hereof (the "Term").
4. General Terms
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4.1. Nature of Agreement. The parties acknowledge and agree that
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Consultant will be retained by Company as an independent contractor, and not as
an employee, and that, as an independent contractor of Company, Consultant will
be under the control, supervision and direction of Company only as to the
results of the services provided to Company under the terms of this Agreement
and not as to the means by which such services are provided.
4.2. Duties and Services. During the Term, Consultant agrees to perform
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such reasonable consulting services as may be assigned to Consultant by
Company's Board of Directors (the "Board") or Company's Chief Executive Officer.
Except as specifically set forth herein, or as directed by Company, it is agreed
that Consultant shall have no other authority to
act on behalf of Company. The services to be performed by Consultant during the
Term shall be determined solely by Company, and shall include but not be limited
to the provision of advice and counsel, and such related services, as Company
may deem appropriate to assist it in its business. The services to be provided
by Consultant shall be rendered in Los Angeles County. Consultant shall have no
obligation or duty to travel outside of Los Angeles County in rendering such
services. Consultant, in the rendition of such services, shall not be required
to render any particular amount of time or to be available except by telephone
upon reasonable notice.
5. Compensation
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5.1. Compensation for Services. Subject to Consultant's adherence to the
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terms and conditions of this Agreement, Consultant shall be paid an annual fee
of Seventy-five Thousand Dollars ($75,000), payable by Company monthly.
5.2. No Withholding. Because Consultant is retained as Company's
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independent contractor and not as an employee, Company and Consultant
acknowledge and agree that no federal or state taxes, social security
contributions or other deductions shall be made by Company from the payments
made to Consultant pursuant to this Article 5, and that Consultant will remain
solely liable for the payment of all such taxes. Consultant further
acknowledges that Company will report compensation paid pursuant to this
Agreement on a Form 1099 at the end of each year in which Consultant's services
were provided. Consultant expressly covenants to make such tax payments as may
be required by applicable law and to indemnify and hold Company harmless from
and against any liability Company may incur as a consequence of Consultant's
failure to make such failure to make such payments.
6. Benefits
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6.1. No Additional Benefits. Consultant shall receive no additional
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benefits hereunder, and Consultant acknowledges that Company shall not be
responsible for providing Consultant with health insurance, pension benefits or
any other benefits.
7. Termination
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7.1. This Agreement shall terminate upon:
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7.1.(a) The death of Consultant.
7.1.(b) The Disability of Consultant.
7.1.(c) Termination of the employment of Xxxxxxx X. Xxxxxxxx by Company
for any reason whatsoever, it being understood that Consultant's services to a
large extent will be rendered by and through consultation with Xxxxxxx X.
Xxxxxxxx.
7.2. For purposes hereof, the term "disability" shall mean that, because
of Consultant's physical or mental condition (a) he has been substantially
unable to perform his duties hereunder for twelve (12) weeks in any twelve (12)
month period; and (b) he has utilized any and all benefits available to him
under state and federal laws, if applicable, and is either (i) unable to
reasonably and effectively carry out his duties with reasonable accommodation by
Company or (ii) unable to reasonably and effectively carry out his duties
because any reasonable accommodation which may be required would cause Company
undue hardship.
7.3. In the event this Agreement is terminated solely by reason of the
termination of Xxxxxxx X. Xxxxxxxx as an employee of Company the compensation to
Consultant herein shall continue during the Severance Period as defined and set
forth in Xxxxxxx X. Xxxxxxxx'x written Employment Agreement with Company.
7.4. Except as provided in paragraph 7.3 hereof, upon the termination of
this Agreement, Consultant shall be entitled only to compensation accrued
through such date, and to no other payments or benefits.
8. Results and Proceeds
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8.1. Company shall own all results and proceeds of Consultant's services
rendered under this Agreement, in perpetuity and throughout the universe.
Consultant and Company hereby agree that all of such results and proceeds shall
constitute work specifically ordered or commissioned by Company and shall
therefore constitute "works made for hire" for the Company within the meaning of
the copyright laws of the United States and Company shall be deemed to be the
sole author thereof in all territories and for all purposes. Without limiting
the foregoing, to the extent any of the results and proceeds of such services
are not deemed "works made for hire," Consultant hereby irrevocably and
unconditionally assigns each and all the
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copyrights in and to such results and proceeds to Company, throughout the
universe and in perpetuity.
9. Confidential Information; Non-Solicitation; Non-Use
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9.1. Non-Disclosure of Confidential Information. As used herein,
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"Confidential Information" means any and all information affecting or relating
to the business of the Company and its Affiliates, including without limitation,
financial data, customer lists and data, licensing arrangements, business
strategies, pricing information, product development, intellectual, artistic,
literary, dramatic or musical rights, works, or other materials of any kind or
nature (whether or not entitled to protection under applicable copyright laws,
or reduced to or embodied in any medium or tangible form), including without
limitation, all copyrights, patents, trademarks, service marks, trade secrets,
contract rights, titles, themes, stories, treatments, ideas, concepts,
technologies, art work, logos, hardware, software, and may be embodied in any
and all computer programs, tapes, diskettes, disks, mailing lists, lists of
actual or prospective customers and/or suppliers, notebooks, documents,
memoranda, reports, files, correspondence, charts, lists and all other written,
printed or otherwise recorded material of any kind whatsoever and any other
information, whether or not reduced to writing, including "know-how", ideas,
concepts, research, processes, and plans. "Confidential Information" does not
include information that is in the public domain, information that is generally
known in the trade, or information that Consultant can prove he acquired wholly
independently of his relationship with the Company. Consultant shall not, at
any time during the Term or thereafter, directly or indirectly, disclose or
furnish to any other person, firm or corporation any Confidential Information,
except in the course of the proper performance of his duties hereunder or as
required by law (in which event Consultant shall give prior written notice to
Company and shall cooperate with Company and Company's counsel in complying with
such legal requirements). Promptly upon the expiration or termination of
Consultant's engagement hereunder for any reason or whenever the Company so
requests, Consultant shall surrender to the Company all documents, drawings,
work papers, lists, memoranda, records and other data (including all copies)
constituting or pertaining in any way to any of the Confidential Information.
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9.2. Non-Solicitation; Non-Use. Consultant shall not, during the Term and
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for a period of two (2) years from the date of any termination or expiration of
his services hereunder, directly or indirectly: (a) solicit or hire, or attempt
to solicit or hire, any employee of the Company, or assist any person, firm or
corporation in doing so or attempting to do so; or (b) solicit or cause to be
solicited the disclosure of, or use or disclose, any Confidential Information
for any purpose whatsoever or for any other party.
10. Non-Competition
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10.1. Non-Competition. Consultant shall not, for so long as he is
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entitled to compensation under or pursuant to this Agreement (whether or not he
is actively engaged by the Company hereunder), directly or indirectly: (a)
compete with the Company; or (b) be interested in, employed by, engaged in or
participate in the ownership, management, operation or control of, or act in any
advisory or other capacity for, any Competing Entity which conducts its business
within the Territory (as such terms are hereinafter defined); provided, however,
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that notwithstanding the foregoing, Consultant may make solely passive
investments in any Competing Entity the common stock of which is "publicly
held," and of which Consultant shall not own or control, directly or indirectly,
in the aggregate securities which constitute more than one (1%) percent of the
voting rights or equity ownership of such Competing Entity; or (c) solicit or
divert any business or any customer from the Company or assist any person, firm
or corporation in doing so or attempting to do so; or (d) cause or seek to cause
any person, firm or corporation to refrain from dealing or doing business with
the Company or assist any person, firm or corporation in doing so or attempting
to do so.
For purposes of this Article 10, (i) the term "Competing Entity" shall mean
any entity which presently or during the period referred to above engages in any
business activity the Company is then engaged in or proposes to be engaged in;
and (ii) the term "Territory" shall mean any geographic area in which the
Company conducts business during such period.
11. Breach; Restrictions
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11.1. Breach of Provisions. In the event that Consultant shall breach any
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of the provisions of Articles 9 or 10, or in the event that any such breach is
threatened by Consultant,
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in addition to and without limiting or waiving any other remedies available to
the Company at law or in equity, the Company shall be entitled to immediate
injunctive relief in any court, domestic or foreign, having the capacity to
grant such relief, without the necessity of posting a bond, to restrain any such
breach or threatened breach and to enforce the provisions of Articles 9 or 10.
Consultant acknowledges and agrees that there is no adequate remedy at law for
any such breach or threatened breach and, in the event that any action or
proceeding is brought seeking injunctive relief, Consultant shall not use as a
defense thereto that there is an adequate remedy at law.
11.2. Reasonable Restrictions. The parties acknowledge that the foregoing
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restrictions, the duration and the territorial scope thereof as set forth in
Articles 9 and 10, are under all of the circumstances reasonable and necessary
for the protection of the Company and its business.
12. Miscellaneous
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12.1. Binding Effect. This Agreement shall be binding upon and inure to
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the benefit of the parties hereto and their respective legal representatives,
heirs, distributees, successors and assigns; provided that the rights and
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obligations of Consultant hereunder shall not be assignable by him.
12.2. Notices. Any notice provided for herein shall be in writing and
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shall be deemed to have been given or made when personally delivered or three
(3) days following deposit for mailing by first class registered or certified
mail, return receipt requested, or if delivered by facsimile transmission, upon
confirmation of receipt of the transmission, to the address of the other party
set forth below or to such other address as may be specified by notice given in
accordance with this Section 6.2:
If to the Company: Four Media Company
0000 X. Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, C.E.O.
Fax No.: (000) 000-0000
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With a copy to: Xxxxxxxxx Glusker Fields Claman
& Machtinger LLP
0000 Xxxxxx xx xxx Xxxxx, #0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
If to Consultant: Xxxxxxx X. Xxxxxxxx
00000 Xxxxxx Xxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Fax No.:
With a copy to: Xxxxx X. Xxxxxxx, Esq.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
12.3. Severability. If any provision of this Agreement, or portion
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thereof, shall be held invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall attach only to such
provision or portion thereof, and shall not in any manner affect or render
invalid or unenforceable any other provision of this Agreement or portion
thereof, and this Agreement shall be carried out as if any such invalid or
unenforceable provision or portion thereof were not contained herein. In
addition, any such invalid or unenforceable provision or portion thereof shall
be deemed, without further action on the part of the parties hereto, modified,
amended or limited to the extent necessary to render the same valid and
enforceable.
12.4. Arbitration. Any controversy, claim or dispute arising out of or in
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any way relating to this Agreement, the alleged breach thereof, and/or
Consultant's engagement with the Company or termination therefrom, including
without limitation, any and all claims for discrimination or harassment, shall
be determined by binding arbitration administered by the American Arbitration
Association under its National Rules for Resolution of Employment Disputes
("Rules") which are in effect at the time of the arbitration or the demand
therefor. The Rules are hereby incorporated by reference. California Code of
Civil Procedure (S)1283.05, which provides for certain discovery rights, shall
apply to any such arbitration, and said code section is also hereby incorporated
by reference. In reaching a decision, the arbitrator shall have no authority to
change, extend, modify or suspend any of the terms of this Agreement. The
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arbitration shall be commenced and heard in Los Angeles County, California.
The arbitrator(s) shall apply the substantive law (and the law of remedies, if
applicable) of California or federal law, or both, as applicable to the claim(s)
asserted. Judgment on the award may be entered in any court of competent
jurisdiction, even if a party who received notice under the Rules fails to
appear at the arbitration hearing(s). The parties may seek, from a court of
competent jurisdiction, provisional remedies or injunctive relief in support of
their respective rights and remedies hereunder without waiving any right to
arbitration. However, the merits of any action that involves such provisional
remedies or injunctive relief, including, without limitation, the terms of any
permanent injunction, shall be determined by arbitration under this paragraph.
12.5. Attorneys' Fees. The parties agree that the prevailing party in any
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action, controversy or dispute arising out of or relating to this Agreement or
the breach of any provision hereof, shall be entitled to reimbursement by the
losing party of all costs and expenses including but not limited to reasonable
attorneys' fees and costs resulting from any action or proceeding filed in
accordance with the terms of Section 12.4 hereof or otherwise, to enforce any
term of this Agreement or for any damage by reason of an alleged breach of any
term of this Agreement.
12.6. Waiver. No waiver by a party hereto of a breach or default
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hereunder by the other party shall be considered valid unless in writing signed
by such first party, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or any other nature.
12.7. Entire Agreement. This Agreement sets forth the entire agreement
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between the parties with respect to the subject matter hereof, and supersedes
any and all prior agreements or understanding between the Company and
Consultant, whether written or oral, fully or partially performed relating to
any or all matters covered by and contained or otherwise dealt with in this
Agreement. It is expressly understood that this Agreement is deemed delivered
to Company after the delivery by Consultant of a Release and Indemnity Agreement
in favor of Company.
12.8. Amendment. No modification, change or amendment of this Agreement
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or any of its provisions shall be valid unless in writing and signed by the
party against whom such claimed modification, change or amendment is sought to
be enforced.
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12.9. Applicable Law. This Agreement, and all of the rights and
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obligations of the parties in connection with the employment relationship
established hereby, shall be governed by and construed in accordance with the
substantive laws of the State of California without giving effect to principles
relating to conflicts of law.
12.10. Counterparts. Thus Agreement may be executed in counterparts, each
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of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"COMPANY"
FOUR MEDIA COMPANY, a Delaware corporation
By: ____________________________________
Xxxxxx X. Xxxxxxx, Chairman and Chief
Executive Officer
"CONSULTANT"
__________________________________________
Xxxxxxx X. Xxxxxxxx
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