Exhibit 10.3.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (hereinafter referred to as the "Agreement")
is made and entered into as of April 22, 1997 by and between BLOWOUT
ENTERTAINMENT, INC., a Delaware corporation (hereinafter referred to as
"Employer"), and XXXXXX XXXXXXXXX (hereinafter referred to as "Employee").
W I T N E S S E T H:
WHEREAS, Employer is principally engaged in the business of marketing,
managing, and operating retail video outlets;
WHEREAS, Employer desires to employ Employee in the capacity of Vice
President, Treasurer and Chief Financial Officer, and Employee desires to be so
employed;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereby agree as follows:
SECTION 1. EMPLOYMENT.
1.1 Position and Title. Employer shall employ and engage the services
of Employee, in the positions of Vice-President, Treasurer and
Chief Financial Officer for the Term of this Agreement as defined
in Section 2, pursuant to the terms and conditions set forth in
this Agreement.
1.2 Duties and Place of Employment.
(a) Employee shall be responsible for, and perform duties
associated with his positions and other duties as may be
directed by the Employer, from time to time. Employee
shall: (i) devote his full business time during normal
business hours to the business and affairs of Employer;
(ii) use his best efforts to promote the interests of
Employer; and (iii) perform faithfully and efficiently his
responsibilities. Employee shall perform his duties at the
Employer's principal executive offices which are currently
located at 0000 XX Xxxxxxxxxx Xxxxx, Xxx Xxxxxxx Xxxxxx,
Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxx 00000, or such other
locations as may be directed by Employer from time to
time. Subject to the terms of this Agreement, Employee
shall comply promptly and faithfully with all of
Employer's policies, instructions, directions, requests,
rules and regulations.
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(b) After a Change of Control (as defined below), during the
Term of this Agreement, Employee shall continue to serve
Employer in the same capacity and have the same authority,
responsibilities and status as he had as of the date
immediately prior to the Change of Control. After a Change
of Control, during the Term of this Agreement, Employee's
services shall be performed at the location where Employee
was employed as of the date immediately prior to the
Change of Control, or at such other location as may be
mutually agreed between Employer and Employee.
(c) For purposes of this Agreement, a "Change of Control"
shall be deemed to have occurred upon the first
fulfillment of the conditions set forth in any one of the
following three paragraphs:
(1) any "person" (as such term is defined in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), is
or becomes a beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of
Employer, representing thirty percent (30%) or
more of the combined voting power of Employer's
then outstanding securities; or
(2) a majority of the directors elected at any annual
or special meeting of stockholders' are not
individuals nominated by Employer's then
incumbent Board; or
(3) the stockholders of Employer approve and there is
consummated on or before the End Date (as defined
below): a merger or consolidation of Employer
with any other corporation, other than a merger
or consolidation which would result in the voting
securities of Employer outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) more
than fifty percent (50%) of the combined voting
power of the voting securities of Employer or
such surviving entity outstanding immediately
after such merger or consolidation, or (ii) a
plan of complete liquidation of Employer or (iii)
an agreement for the sale or disposition by
Employer of all or substantially all of its
assets.
SECTION 2. TERM AND TERMINATION.
2.1 Initial Term. Employment of Employee shall commence on
April 22, 1997 and shall expire on April 30, 1999 or such
other date on which Employee's employment under this
Agreement is terminated pursuant
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to this Section 2 ("Term"). All references herein to End
Date shall mean April 30, 1999 or such later date to which
the Term of this Agreement may be extended by mutual
agreement of the parties or as provided in Section 2.2.
2.2 Extension. The Term of this Agreement shall be extended for
consecutive periods of one (1) year each beginning on May 1, 1999
and continuing on every May 1 thereafter unless and until either
(a) the Employer serves notice upon the Employee on or before the
February 1 immediately preceding the next End Date of its
intention not to extend the Term, or (b) the Employer and Employee
mutually agree to extend the Term to an End Date beyond the next
May 1. In the event of a notice under (a) above, the final End
Date and the expiration of the Term shall be April 30 following
the date of the notice.
2.3 At Will Termination. Not withstanding anything herein to the
contrary, but subject to Section 4.4, Employee's employment may be
terminated by Employer at any time during the first six months of
this Agreement without cause upon thirty (30) days written notice
to Employee.
2.4 For Cause Termination. Employee's employment may be terminated by
Employer for "Cause" without notice. Termination for "Cause" is
defined for purposes of this subsection as termination for: (i)
material failure of Employee to substantially perform the
reasonable and attainable instructions of Employer as to his
duties hereunder; or (ii) an act or acts of misconduct by Employee
which is determined by the Employer to be materially injurious to
Employer monetarily or otherwise; or (iii) material violation by
Employee of any provision of this Agreement. For purposes of this
subsection, termination for "Cause" shall not include any act or
failure to act on Employee's part if done or omitted to be done by
him in demonstrable good faith and with the reasonable belief that
his act or omission was in the best interest of the Employer or
pursuant to an express policy of Employer at the time of such act
or omission.
2.5 Disability or Death. Employee's employment shall be terminable
immediately upon Employee's death or disability. "Disability" is
defined for purposes of this subsection as absence from Employee's
full time duties with Employer as a result of Employee's
incapacity due to physical or mental illness for ninety (90) days
calculated on a cumulative basis during any two (2) year period
during the Term of this Agreement. Nothing in this Section 2.5 is
intended to violate any Oregon State law regarding parental or
family leave policies or any other applicable law.
2.6 Termination by Employee for Good Reason. Employee's employment may
be terminated by Employee at any time for "Good Reason" as that
term is defined below. Employee's continued employment shall not
constitute
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consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder. "Good Reason"
shall mean (i) a material breach by Employer of the terms of this
Agreement; provided that Employee shall have no right to
terminate this Agreement pursuant to this clause (i) unless
Employer has received written notice of the reason for
termination and had at least 15 days to cure such failure and
failed to do so, or (ii) the occurrence (without Employee's
express written consent), within two (2) years after any Change
of Control of any one of the following acts by Employer, or
failures by Employer to act:
(a) the assignment to Employee of any duties inconsistent with
Employee's status as an executive officer of Employer or a
substantial adverse alteration in the nature or status of
Employee's title, position, duties, functions, working
conditions or responsibilities from those in effect
immediately prior to the Change of Control other than any
such alteration primarily attributable to the fact that
Employer may no longer be a public company;
(b) a reduction by Employer in Employee's annual Base Salary
as in effect on the date hereof or as the same may be
increased from time to time;
(c) the relocation of Employer's principal executive offices
to a location more than thirty-five miles from the
location of such offices immediately prior to the Change
of Control or Employer's requiring Employee to be based
anywhere other than Employer's principal executive offices
except for required travel on Employer's business to an
extent substantially consistent with Employee's business
travel obligations immediately prior to the Change of
Control;
(d) the failure by Employer, without Employee's consent, to
pay to Employee any portion of Employee's current
compensation;
(e) the failure by Employer to continue in effect any
compensation plan in which Employee participates
immediately prior to the Change of Control which is
material to Employee's total compensation unless an
equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such
plan, or the failure by Employer to continue Employee's
participation therein (or in such substitute or
alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits
provided and the terms and conditions of such benefits,
including, without limitation, the level of Employee's
participation relative to other participants, as such
relative level existed at the time of the Change of
Control;
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(f) the failure by Employer to continue to provide Employee
with benefits substantially similar to those enjoyed by
Employee under any of Employer's pension, life insurance,
medical, health and accident, or disability plans in which
Employee was participating immediately prior to the Change
of Control, the taking of any action by Employer which
would directly or indirectly materially reduce any of such
benefits or deprive Employee of any material fringe
benefit enjoyed by Employee immediately prior to the
Change of Control, or the failure by Employer to provide
Employee with the number of paid vacation days to which
Employee is entitled on the basis of years of service with
Employer in accordance with Employer's normal vacation
policy in effect immediately prior to the Change of
Control; or
(g) the failure of Employer to obtain a satisfactory agreement
from any successor to assume and agree to perform this
Agreement, as contemplated in Section 7.4.
2.7 Other Termination by Employee. Employee's employment may be
terminated by Employee at any time without Good Reason during the
first six months of this Agreement upon thirty (30) days' written
notice to Employer and thereafter upon one hundred eighty (180)
days written notice to Employer.
SECTION 3. COMPENSATION.
3.1 Base Salary. Employee shall be paid an annual base salary in the
amount of one hundred and three thousand dollars ($103,000.00)
("Base Salary"). The Base Salary shall be paid to Employee in
equal semi-monthly installments in arrears on the seventh (7th)
and twenty-second (22nd) day of each month. Should the seventh
(7th) or the twenty-second (22nd) day of any month not be a
business day, Employee's semi-monthly installment of the Base
Salary otherwise due on such date shall be paid to Employee on the
business day closest to the date such semi-monthly installment is
due (i.e., if the seventh (7th) day of the month falls on a
Saturday, the semi-monthly installment shall be paid on the
preceding business day or if the seventh (7th) day of the month
falls on a Sunday, the semi-monthly installment shall be paid on
the next following business day). Employee's Base Salary may be
increased in the discretion of Employer during the Term of this
Agreement.
3.2 Salary Increase. During the Term hereof, the Base Salary shall be
automatically increased on each May 1 beginning in 1998 by the
percentage increase since the prior May, if any, in the Consumer
Price Index for all Urban Consumers (CPI-U), U.S. City Average
(1982-84=100).
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3.3 Bonus Compensation. Nothing herein shall preclude the Employer
from authorizing the payment of additional compensation to
Employee over and above the Base Salary at any time payable to him
under his Agreement, whether as a bonus or otherwise. The payment
of such additional compensation shall not operate as an amendment
obligating Employer to make any similar payment or to pay
additional compensation at any future time or for any future
period, or be deemed to affect Employee's Base Salary in any
manner.
3.4 Benefits.
(a) Vacation and Holiday Pay. Employee shall accrue vacation
time and be eligible to receive pay for Employer-paid
holidays in accordance with Employer's policies and
procedures, as from time to time in effect.
(b) Insurance. Employee shall be entitled to medical, life,
worker's compensation, social security and state
unemployment insurance benefit as provided under
Employer's then current terms, policies and procedures.
Employee shall not be entitled to disability insurance
benefits. For five years following a Change of Control,
Employer shall use its best efforts to continue to provide
directors' and officers' liability insurance covering
Employee (with respect to events occurring prior to
termination of Employment) on terms no less favorable (in
terms of coverage and amounts) than those of such
insurance in effect immediately prior to the Change of
Control. Following a Change of Control, Employer will
indemnify and hold harmless Employee (and advance
expenses) to the full extent provided in the Articles of
Incorporation and Bylaws of Employer as in effect
immediately prior to the Change of Control.
(c) Miscellaneous Benefits. In addition to any other
compensation or benefits to be received by Employee
pursuant to the terms of this Agreement, Employee shall be
entitled to participate in any employee benefits which
Employer may from time to time provide its employees
generally.
(d) Policy Revisions. In the event new policies are adopted by
Employer which would modify the benefits to all employees,
and/or to the executives, Employee shall be allowed to
participate in such modified benefits regardless of any
limitation of such benefits contained in this Agreement.
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SECTION 4. PAYMENTS UPON TERMINATION OF EMPLOYEMENT.
4.1 Termination for Cause. In the event of the termination of
Employee's employment by Employer for Cause pursuant to
Section 2.4, within ten days of termination Employer shall
pay to Employee only the Base Salary accrued pursuant to
Section 3.1 through and including the date of termination.
No other compensation shall be due or payable under this
Agreement in the event of a termination for Cause.
4.2 Termination for Death or Disability. In the event of the
termination of Employee's employment pursuant to Section
2.5 due to his death or disability, within ten days of
termination Employer shall pay to Employee or Employee's
estate or legal representative, as the case may be, in a
lump sum, the Base Salary accrued pursuant to Section 3.1
through and including the date of termination. During the
period of Employee's disability, but prior to Employee's
termination of Employment, Employee shall be entitled to
receive all compensation as set forth in this Agreement.
No other compensation shall be due or payable under this
Agreement in the event of a termination due to the
Employee's death or disability.
4.3 Termination by Employer Without Cause After Change of
Control or by Employee for Good Reason. In the event of
the termination of Employee's employment by Employer for
any reason other than in Sections 2.4 or 2.5 within two
years after a Change of Control or by Employee pursuant to
Section 2.6, within ten days of termination Employer shall
pay to Employee, in a lump sum, the greater of (i) all
Base Salary which Employer's obligated to pay to Employee
pursuant to Section 3.1 through the End Date or (ii) six
months' Base Salary which Employer is obligated to pay to
Employee pursuant to Section 3.1 during the current fiscal
year.
4.4 Other Termination by Employer. In the event of termination
of Employee's employment by Employer pursuant to Section
2.3 prior to a Change of Control, Employer shall pay
Employee the Base Salary accrued pursuant to Section 3.1
as of the date of termination plus severance payments in
an amount equal to one month's Base Salary multiplied by
the number of months from the commencement date of this
Agreement through the date of termination but in no event
less than three (3) month's Base Salary nor more than six
(6) month's Base Salary, payable in installments as if
still employed; provided, however, that during the period
that Employer is making severance payments pursuant to
this Section 4.4, Employer shall have the right to request
Employee to provide reasonable evidence that he is using
his best efforts to obtain other employment, and in the
event that Employee
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fails to provide such reasonable evidence, then Employer
shall not be obligated to pay any severance payments;
and provided further that if Employee is successful in
obtaining such employment, the amount of severance
payments that would have been payable after the time
that Employee obtains such employment shall be reduced
by the amount of any remuneration received from such
employment. For the purposes of this Agreement,
"remuneration" shall be defined to include cash
payments, the face value of any promissory notes issued
to Employee regardless of the terms of payment or
whether payments are ever received, stock or stock
options valued as of the day granted, or any other
compensation given in any form whatsoever.
4.5 Other Termination by Employee. In the event of the
termination of Employee's employment by Employee pursuant
to Section 2.7, within ten days of termination Employer
shall pay to Employee only the amount of Base Salary
accrued pursuant to Section 3.1 through and including the
date of termination. No other compensation shall be due or
payable under this Agreement in the event of a such
termination.
4.6 Insurance Benefits. Employee is entitled to elect to
continue the insurance described in Section 3.4(b) during
a period of two (2) years following an event of
termination described in Section 2.6 and a period of six
(6) months following an event of termination described in
Section 2.3. Employee elects to continue such coverage,
Employer shall reimburse Employee for the premiums paid by
Employee for such insurance as such premiums are paid
until such time as the continued insurance terminates or
Employee obtains replacement full-time employment and is
covered by such new employer's group medical health and
life insurance plan with benefits substantially similar to
those provided by Employer's insurance plan and without
any pre-existing conditions, exclusions, limitations or
restrictions, whichever occurs first. Such reimbursement
shall be reduced for an amount equivalent to the amounts
charged Employee for health coverage immediately prior to
the occurrence of the Change of Control.
4.7 Other Compensation. Except as set forth in this Section 4,
no other compensation shall be due or payable to Employee
upon termination of his employment.
4.8 Right to Decline Payments. Employee, in his sole and
absolute discretion, shall have the right to decline all
or a portion of any payments under this Agreement.
SECTION 5. PERSONAL NATURE. This Agreement is personal, and is being
entered into based upon the singular skill, qualifications and experience of
Employee.
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Employee shall not assign this Agreement or any rights hereunder without the
express written consent of Employer which may be withheld with or without
reason. Employee hereby grants to Employer the right to use Employee's name,
likeness and/or biography in connection with the services performed by Employee
hereunder and in connection with the advertising or exploitation of any project
with respect to which Employee performs services hereunder.
SECTION 6. NOTICES. Any and all notices or other communications
required or permitted by this Agreement or by law shall be deemed duly served
and given when personally delivered to the party to whom such notice or
communication is directed or, in lieu of such personal service, when deposited
in the United States mail, certified, return receipt requested, first class
postage prepaid, addressed set forth on the signature page hereof. Each party
may change its address for purposes of this Section by giving written notice of
such change in the manner provided for in this Section.
SECTION 7. MISCELLANEOUS PROVISIONS.
7.1 Attorneys' Fees: Disputes Concerning Termination.
(a) Subject to Section 7.1(b), in the event that it should
become necessary for any party to bring an action,
including arbitration, either at law or in equity, to
enforce or interpret the terms of this Agreement, each
party shall pay its own attorneys' fees including those
incurred in resolving the dispute prior to in initiation
of any litigation and at trial and on any appeal.
(b) If within fifteen (15) days after any notice of
termination for Good Reason is given by Employee pursuant
to Section 2.6, Employer notifies Employee that a dispute
exists concerning the termination, the date of termination
of this Agreement shall be the date on which the dispute
is finally determined, either by mutual written agreement
of the parties or by a final determination; provided
further that the date of termination shall be extended by
a notice of dispute from Employer only if such notice is
given in good faith and Employer pursues the resolution of
such dispute with reasonable diligence. Following a Change
of Control, Employer shall provide all witnesses and
evidence reasonably required by Employee to present
Employee's case. If a purported termination by Employer
within two years after a Change of Control or by Employee
for Good Reason occurs and such termination is disputed,
Employer shall pay to Employee all reasonable expenses and
legal fees incurred by Employee as a result of a
termination in seeking to obtain or enforce any right or
benefit provided by this Agreement (whether or not
Employee is successful in obtaining or enforcing such
right or benefit).
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(c) If a purported termination by Employer within two years
after a Change of Control or by Employee for Good Reason
occurs and such termination is disputed, Employer shall do
either of the following.
(1) So long as Employee continues to provide
services, Employer shall continue to pay Employee
the full compensation in effect when the notice
giving rise to the dispute was given (including,
but not limited to, salary and estimated bonus)
and continue Employee as a participant in all
compensation, benefit and insurance plans in
which Employee was a participant when the notice
giving rise to the dispute was given, until the
dispute is finally resolved; provided that
Employee's right to continue to provide such
services is solely within the discretion of
Employer, and nothing herein shall prohibit
Employer from terminating such services.
(2) If Employee is no longer providing services,
Employer shall pay Employee fifty percent (50%)
of the amount specified in Sections 4.3 and
Employer will provide Employee with the other
benefits provided in Section 4.6, if, but only
if, Employee agrees in writing that if the
dispute is resolved against Employee, Employee
will promptly refund to Employer all payments
specified in Section 4.3 that Employee receives
under this paragraph (c) plus interest at the
rate provided in Section 1274(d) of the Internal
Revenue Code of 1986, as amended (the "Code"),
compounded quarterly. If the dispute is resolved
in Employee's favor, promptly after resolution of
the dispute Employer will pay Employee the sum
which was withheld during the period of the
dispute plus interest at the rate provided in
Section 1274(d) of the Code, compounded
quarterly.
Amounts paid under this paragraph (c) shall offset
against and reduce other amounts due under this
Agreement. If the dispute is resolved by a
determination that Employee did not have Good
Reason, this Agreement, in accordance with its
terms, will continue to apply to the circumstances
of Employee's employment by Employer and any
termination thereof.
7.2 Applicable Law and Venue. This Agreement is executed and
intended to be performed in the State of Oregon and the
laws of such State shall govern its interpretation and
effect. If suit is instituted by any party hereto or by
any other party for any cause or matter arising from or in
connection with the respective rights or obligations of
the parties hereunder, the sole jurisdiction and venue for
such action shall be the
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Xxxxxxx Xxxxx of the State of Oregon in and for the County
of Multnomah.
7.3 Integration. Employee has executed an Employee
Confidentiality and Noncompetition Agreement, as modified
(a copy of which is attached hereto as Exhibit A), which
remains in effect and is incorporated into the terms and
conditions of employment under this Agreement. Except as
set forth in the preceding sentence, this Agreement
constitutes the entire agreement of the parties with
respect to the subject matter of this Agreement and
supersedes all prior agreements, negotiations, or
understandings, whether oral or written between the
parties with respect thereto.
7.4 Heirs and Assigns. Subject to any restriction on
assignment contained herein, this Agreement shall be
binding upon and shall inure to the benefit of the
respective party's heirs, successors and assigns. Employer
will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all the business and/or assets of Employer,
by agreement in form and substance satisfactory to
Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that
Employer would be required to perform it if no such
succession had taken place. This Agreement shall not be
terminated by Employer's voluntary or involuntary
dissolution or by any merger or consolidation in which
Employer is not the surviving or resulting corporation, or
on any transfer of all or substantially all of the assets
of Employer. In the event of any such merger,
consolidation, or transfer of assets, the provisions of
this Agreement shall be binding on and inure the benefit
of the surviving business entity or the business entity to
which such assets shall be transferred.
7.5 Severability. Any provision in this Agreement which is, by
competent judicial authority, declared illegal, invalid or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
illegality, invalidity or unenforceability without
invalidating the remaining provisions hereof or affecting
the legality, validity or enforceability or such provision
in any other jurisdiction. The parties hereto agree to
negotiate in good faith to replace any illegal, invalid or
unenforceable provision that, to the extent possible, will
preserve the economic bargain of this Agreement, or
otherwise to amend this Agreement.
7.6 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original,
and the counterparts shall together constitute one and the
same agreement, notwithstanding that
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all of the parties are not signatory to the original or
the same counterpart.
7.7 Captions. The headings and captions herein are inserted
solely for the purpose of convenience of reference and are
not intended to govern, limit, or aid in the construction
of any term or provision hereof.
7.8 Execution. Each of the parties hereto shall execute,
acknowledge and deliver any instrument necessary to carry
out the provisions of this Agreement.
7.9 Construction. This Agreement has been prepared by legal
counsel for Employer. Employee has been advised, and by
his execution hereof acknowledges, that he has the right
to and should have this Agreement reviewed by his own
separate legal counsel. This Agreement has been negotiated
at arm's-length with the benefit of or opportunity to seek
legal counsel and, accordingly, shall not be construed
against any of the parties.
7.10 Arbitration. Notwithstanding anything in this Agreement,
express or implied, to the contrary (including, without
limitation, in Sections 7.01 and 7.02), any dispute or
controversy between the parties hereto involving the
construction or application of any terms, covenants or
conditions of this Agreement, or any claim arising out of
or relating to this Agreement (other than matters for
which injunctive relief may be obtained) shall be settled
by arbitration in Portland, Oregon, in accordance with the
rules of the American Arbitration Association then in
effect, and judgment upon the award rendered by the
arbitrators may be entered in any court having
jurisdiction thereof. Any decision of the arbitrators
shall be final and binding upon the parties hereto. The
parties hereby subject themselves to the in personam
jurisdiction of the courts of the State of Oregon for the
purpose of confirming any such award and entering judgment
thereon. Except with respect to matters for which
injunctive relief may be obtained, arbitration hereunder
shall be a condition precedent to the right to maintain
any action or suit based upon the breach of any term of
this Agreement. Upon the request of either party, the
arbitrators shall issue to the parties a written decision
setting forth their findings of fact and conclusions of
law.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
EMPLOYER:
BLOWOUT ENTERTAINMENT, INC.
an Delaware corporation
0000 XX Xxxxxxxxxx Xxxxx
Xxx Xxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: President
By: /s/ XXXXX XXXXX
-------------------------------
Its: PRESIDENT & CEO
-------------------------------
I acknowledge that I have read and agree to the foregoing Agreement,
including, without limitation, the provision allowing termination of my
employment "at will" by Employer.
/s/ XXXXXX XXXXXXXXX
-------------------------------
Xxxxxx Xxxxxxxxx
00
