EXHIBIT 10.1(a)
PRODUCTION SERVICES AGREEMENT
THIS AGREEMENT is made and entered into as of the 18th day of June 2001 by and
between FILM ROMAN, INC, a California corporation, 00000 Xxxxxxxx Xxxxxx, Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000 ("Company") and PRODUCERS SALES ORGANIZATION, a
California corporation, x/x Xxxxxxx Xxxxx, X.X. Xxx 00000 ("Contractor").
This Agreement is made with reference to the following:
A. Contractor is a party to an agreement (the "Executive Engagement
Agreement") with Film Roman, Inc., a Delaware corporation (Company's parent),
dated December 9, 1999 pursuant to which Contractor furnished the services of
Xxxx X. Xxxx to render services in connection with restructuring of both
companies, with the title of President and Chief Executive Officer of Company
and its parent. Under the terms of that agreement, Xx. Xxxx rendered services
in connection with the restructuring of both companies and the securing of a
strategic alliance and financing.
B. Because the restructuring has been accomplished and because of
Company's on-going business plan, Company now desires to employ Xx. Xxxx as its
President and Chief Executive Officer to render services as such pursuant to the
terms of an Executive Employment Agreement that is being executed concurrently
herewith.
C. Xx. Xxxx is currently an employee of Contractor, rendering services to
Company in connection with the operation of Fairlea Ranch and in connection with
intellectual properties owned or controlled by Contractor. Xx. Xxxx also
renders services as a trustee or in other consultative or financial capacities
for financial transactions involving other parties. Xx. Xxxx also renders
services on an exclusive basis as a creator, producer/executive producer of
television and motion picture productions in which Contractor has an interest
and as executive in charge of a music library, and Contractor has exclusive
rights to the use of Xx. Xxxx'x services and name and likeness for all such
purposes.
D. The parties now desire replace the Executive Engagement Agreement with
this agreement and desire further to cause execution of the Executive Employment
Agreement.
Accordingly, the parties agree as follow:
1. The Executive Engagement Agreement shall be and hereby is deemed
assigned to Company and then terminated effective as of the date hereof except
for the specific provisions thereof, which survive pursuant to this agreement.
2. Contractor agrees to release Xx. Xxxx from his exclusive employment
relationship with Contractor so as to enable Xx. Xxxx to enter into the
Executive Employment Agreement and to render services thereunder on a first
priority basis, as set forth therein.
3. Additionally, in consideration for the payments specified below,
Contractor hereby agrees to furnish the services (herein "PSO-furnished
services") of Xx. Xxxx and possibly other employees of Contractor (as and if
requested by Company) during the Term (defined below) to
(i) develop PSO Properties (defined below) that Company may designate for
its consideration under paragraph 8 below and/or other properties that Company
may specify;
(ii) render services on any production that Company may designate as either
producer or executive producer thereof, it being understood that no additional
payments shall be required for the rendition of such services, but that Xx. Xxxx
shall receive appropriate screen credit and advertising credit indicating the
functions performed by him, the style nature and placement of which shall be
determined by Company in consultation with Contractor and any distributor,
exhibitor or other buyer;
(iii) permit the use of Xx. Xxxx'x name and likeness in connection with
any of the foregoing activities.
4. The term ("Term") of this agreement shall commence with commencement of
the Executive Employment Agreement and shall run concurrently therewith up to a
maximum of five (5) successive "contract years" each of fifty-two (52)
consecutive weeks each, with the understanding that if that agreement is
terminated for any reason by either Company or Xx. Xxxx as therein provided or
if Company fails to exercise its option thereunder with respect to the fourth
and fifth contract years, then Company or Xx. Xxxx, as the case may be, shall
have the right to also terminate the Term of this agreement at the same time.
5. Company shall pay Contractor the following sums for the PSO-furnished
services:
(a) Payments aggregating Two Hundred and Five ($205,000) Dollars per annum
for the first contract year;
(b) Payments aggregating Two Hundred and Forty-Five ($245,000) Dollars per
annum for the second contract year;
(c) Payments aggregating Two Hundred and Eighty-Five ($285,000) Dollars per
annum for the third contract year;
(d) If Company exercises its option for the fourth and fifth contract years
under the Executive Employment Agreement, payments aggregating Three Hundred and
Twenty-Five ($325,000) Dollars per annum for the fourth contract year and
payments aggregating Three Hundred and Sixty-Five Thousand ($365,000) Dollars
per annum for the fifth contract year.
It is understood that the payments specified above shall be prorated if
this Agreement is terminated during any contract year except that if the
Executive Employment Agreement is terminated by Company without cause or by Xx.
Xxxx under paragraphs 3.2 (d) or 3.2 (e) thereof, then termination of the Term
hereof shall not effect a termination of Company's obligations to pay Contractor
the balance of monies as and when due hereunder. Payments hereunder shall be
made on a weekly basis or on such other regular basis as the parties may agree
upon. If payments are suspended for any reason under the Executive Employment
Agreement, payments hereunder shall likewise be suspended during the same period
and the Term of this agreement shall be extended to the same extent that the
Executive Employment Agreement is extended because of any such suspension
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6. Contractor shall bear any expenses incurred by Xx. Xxxx or other
employees of Contractor in rendering services hereunder other than expenses that
the parties mutually agree in writing shall be borne by Company.
7. Under the terms of the Executive Engagement Agreement, Contractor
received stock options with respect to five hundred thousand (500, 000) shares
of the stock of Company's parent. The terms relating to such options are
contained in paragraph 7 of the Executive Engagement Agreement and the Non-
Qualified Stock Option Agreements executed pursuant thereto. It is agreed that,
notwithstanding the termination of the Executive Engagement Agreement, the
provisions of paragraph 7 of the Executive Engagement Agreement and of the Non-
Qualified Stock Option Agreements shall remain in full force and effect, it
being understood that, for purposes thereof, this agreement shall be deemed a
continuation of the relationship between the parties such that termination of
the Executive Engagement Agreement does not constitute a termination under said
Stock Option Agreements.
8. (a) Contractor currently owns or controls certain audiovisual or other
intellectual properties or rights in certain audiovisual or other intellectual
properties, including any formerly owned by Xx. Xxxx (all herein for convenience
the "PSO Properties").
(b) If at any time during the Term hereof contract period) Contractor
should determine to make or permit others to make any use whatsoever of any PSO
Property, Contractor shall promptly notify Company to such effect. Thereafter
for a period of fifteen (15) days Contractor shall negotiate only with Company
with respect to Company's acquiring such PSO Property or rights therein for use
by Company. If during the fifteen (15) day "first negotiation" period Contractor
and Company are unable to reach an agreement with respect to such PSO Property,
then Contractor shall be free to enter into negotiations with other parties with
respect to their acquiring such PSO Property, provided however that if
Contractor proposes to enter into any agreement with any third party on terms
equal to or more or less favorable than those last negotiated between Contractor
and Company, Contractor shall first offer such terms to Company and Company
shall have a "right of last refusal" for five (5) business days thereafter
within which to accept or reject the same. Any offer made by Contractor
hereunder shall be capable of being accepted solely by the payment of money, it
being understood that such offers shall not be subject to conditions other than
the payment of money that Company might not be able to meet due to the nature of
the conditions. An offer which is changed in any way shall be deemed a new
offer. It is understood that the first negotiation/last refusal procedure
outlined above shall apply to each PSO Property now owned, created or hereafter
acquired by Contractor and/or Xx. Xxxx.
(c) Notwithstanding anything above to the contrary it is understood
that Xx. Xxxx shall not render any services whatsoever in connection with the
use of any PSO Property (which is not accepted by Company) during the Term if
Company determines, in its discretion that such activity would be in conflict
with Company; however Xx. Xxxx and /or Contractor may receive credit in
connection with any use of such PSO Property, subject to Company's prior
reasonable approval; provided further that this restriction applies only to Xx.
Xxxx.
9. Contractor acknowledges that Company, shall own all right, title and
interest in and to the results of Contractor's or its employees services
furnished to Company hereunder,
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including all material developed or conceived by Contractor within the scope of
paragraph 3(i) above. Except for future negotiations contemplated under
paragraph 8 relating to PSO Properties, Company shall have the right to use all
such materials and the elements thereof and the programs or other productions in
which the material is contained worldwide and in perpetuity, without limitation
or restriction whatsoever, and Company may distribute, broadcast and otherwise
exhibit, use and/or exploit, in whole or in part, worldwide, in perpetuity, the
same in any manner and through any media, whether presently in existence or
subsequently devised, as Company may elect. Contractor on its own behalf and its
employees hereby waives the so-called "moral rights" of an author. Contractor
agrees and acknowledges that for purposes of Section 201 of the United States
Copyright Act and for ownership purposes, all materials and the results and
proceeds of Contractor's and its employees' services shall be considered "works
for hire" and Company shall have all ownership rights in the material and
services of Contractor and its employees hereunder as the author thereof.
Company shall have no obligation to use the product of Contractor's services.
If for any reason any materials and /or the results and proceeds of
Contractor's services hereunder are not considered works for hire which are
owned by Company then Contractor shall, and does hereby, assign to Company, in
perpetuity, all right (including but not limited to rights of copyright), title
and interest in and to such materials and/or the results and proceeds of
Contractor's services, without any restriction or reservation whatsoever.
10. Contractor and Xx. Xxxx each warrant that they have the right to enter
into and fully perform this Agreement. Xx. Xxxx further warrants that Xx. Xxxx
has an agreement with Contractor pursuant to the terms of which Xx. Xxxx is
engaged as an employee of Contractor.
Contractor and Xx. Xxxx agree that Xx. Xxxx shall be considered for all
purposes as an employee of Contractor. Contractor shall assume all obligations
of employer; without limiting the foregoing Contractor shall assume all
obligations to pay any and all taxes due with respect to payments made hereunder
and all obligation to withhold taxes from any payments that may be made by
Contractor to Xx. Xxxx. Additionally, Contractor shall assume and pay the
employer and the employee share (to the extent not paid by Xx. Xxxx) of any
payments required to be paid on account of FICA, SDI, SUI or any other fund. In
the event of any contest or audit with respect to any payments made hereunder,
Contractor shall assume and pay all expenses and/or liabilities incurred in
connection with such audit.
Contractor and Xx. Xxxx shall defend, indemnify and hold Company free and
harmless from and against any claim, demand, loss or liability arising out of
any breach by its/him of any obligations outlined above.
As an inducement to Company to enter into this agreement with Contractor,
by execution below and by execution of the attached Inducement Letter, Xx. Xxxx
warrants and guarantees that Xx. Xxxx will perform any obligations which are
required of him under this agreement and will not do anything or take any action
or fail to take any action which would cause Contractor to be in breach of its
obligations to furnish Xx. Xxxx'x services under the Agreement. Xx. Xxxx further
warrants that in the event, for any reason, Contractor should be dissolved or
otherwise unable to furnish Xx. Xxxx'x service, then Xx. Xxxx shall contract
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directly with Company with respect to the furnishing of such services on the
same terms and conditions as set forth herein.
11. Any controversy or claim arising out of or relating to this agreement
the breach thereof or the coverage of this arbitration provision shall be
settled by arbitration pursuant to the provisions of Section 1280 et seq. of the
California Code of Civil Procedure, or such substitute provisions therefor then
in effect. Any arbitrators selected shall have experience in or knowledge of the
business in which the parties are primarily engaged. Any such arbitration shall
be conducted in Los Angeles, California before a single arbitrator or, if the
parties are unable to agree upon a single arbitrator, then before three
arbitrators, one selected by each party and the third (i.e. neutral) arbitrator
to be selected by the other two arbitrators. If the parties or the arbitrator(s)
appointed by the parties are unable to agree upon the selection of a neutral
arbitrator then any party may at its election require that the neutral
arbitrator shall be selected by the American Arbitration Association, Los
Angeles, California. The arbitration of all issues including the determination
of the amount of any damages suffered by any party hereto by reason of the acts
or omissions of another shall be to the exclusion of any court of law (except
for court actions permitted as provided below). The parties each acknowledge
that they are giving up the right to a trial by jury or by the court. The
arbitrator(s) shall have the full authority to award legal or equitable relief,
such as but not limited to specific performance, as the arbitrator(s) deem
appropriate. However, the arbitrator(s) shall not have authority or jurisdiction
to award punitive damages, the same being waived. There shall be no discovery
except as authorized by the arbitrator(s). The decision of the arbitrator or a
majority of the arbitrators shall be final and binding on all parties and their
respective heirs, executors, administrators, successors and assigns. Any action
to secure judicial confirmation of the arbitration award may be brought in any
state or federal court of competent jurisdiction. The prevailing party in any
proceeding brought under this paragraph or in any proceeding brought to enforce
an arbitration award hereunder shall be entitled to its costs and to its
reasonable attorneys fees incurred in connection with the preparation and
conduct of any such arbitration and/or any other proceeding hereunder.
Arbitration hereunder shall not in any event (i) prevent any party from seeking
and obtaining interim equitable relief including but not limited to prohibitory
or mandatory injunctions, specific performance or extraordinary writs in any
court of law or equity having jurisdiction nor (ii) prevent any party from
enjoining any other party in any action brought by or against a third party with
respect to the subject matter of the arbitration nor (iii) prevent any party
from filing legal action hereunder to effectuate any attachment or garnishment,
provided that such party stipulates in such action, at any other party's
request, to arbitration on the merits of the case, nor (iv) prevent a party from
filing legal action to compel arbitration under the arbitration provisions
hereof.
12. (a) Contractor and Xx. Xxxx warrants that each is free to enter into
this Agreement and will not do or permit any act which will interfere with or
derogate from the full performance of Xx. Xxxx'x services or Company's exercise
of the rights herein.
(b) Contractor and Xx. Xxxx shall hold Company, its licensees and
assigns, and the directors, officers, employees and agents of the foregoing,
harmless from all claims, liabilities, damages, costs and legal fees arising
from any breach by Contractor or Xx. Xxxx of any warranty or agreement made by
Contractor and/or Xx. Xxxx hereunder. Company will hold Contractor and Xx. Xxxx
harmless from all claims, liabilities, damages, costs and legal fees
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arising from the use of any material supplied to Contractor or Xx. Xxxx by
Company and incorporated in a production at Company's discretion. The party
receiving notice of any claim or action subject to indemnity hereunder shall
promptly notify the other party. This indemnity shall survive any termination or
expiration of this agreement.
13. All notices required to be given hereunder shall be in writing and
shall be delivered personally, electronically, or by express, certified or
registered mail to the respective addresses of the parties hereto set forth
elsewhere in this Agreement, or at such other addresses as may be designated by
written notice. Delivery of any notice shall be deemed conclusively made (i) if
personally delivered at the time of delivery, (ii) if delivered by transmittal
over electronic or telephonic transmitting devices (such as telex or telecopy)
to the addressee's telecopy or telex number, at the time of transmittal,
provided that the party to whom the notice is delivered has a compatible device,
(iii) if delivered by any private overnight express mail service, twenty-four
(24) hours after deposit with such service (this period shall be seventy-two
(72) hours if addressed to or from a party outside the United States), (iv) if
mailed, properly addressed and postage prepaid, three (3) business days from
date of mailing (seven (7) business days if mailed to or from a country other
than U.S.). A copy of any notice hereunder to Company shall also be given to the
Law Offices of Xxxxx X. Xxxx, P.C., 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000; a copy of any notice to Contractor shall also be
given to Xxxxxxx Xxxxxxx, Esq., Alschuler, Grossman, Xxxxx & Xxxxx, 0000 Xxxxxxx
Xxxx Xxxx, 00xx Xxxxx, Xxx Xxxxxxx, XX 00000.
14. General Provisions:
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(a) Waiver: A waiver by either party of any of the terms or
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conditions of this agreement in any one instance shall not be construed to be a
waiver of such term or condition for the future, or any subsequent breach
thereof; all remedies, rights, undertakings, obligations and agreements
contained in this agreement shall be cumulative, and none of them shall be in
limitation of any other remedy, right, undertaking, obligation or agreement of
either party.
(b) Construction: This agreement shall be governed by and construed
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in accordance with the laws of the State of California applicable to contracts
entered into and fully to be performed therein. In view of the fact that this
agreement was in whole or in part negotiated and entered into in California, the
parties consent to and agree to submit to the jurisdiction of the courts of the
State of California (and/or the federal courts within California), and each
party agrees that service of process may be effected by mail (certified or
registered mail, return receipt requested), to or by personal service upon such
party (or any officer of a corporate party) at such party's address as set forth
in this agreement or such other address as such party may specify in writing.
Wherever the context of this agreement requires it, each gender shall
be deemed to embrace and include the others, and the singular shall be deemed to
embrace and include the plural.
(c) Severability of Provisions: If any provision hereof as applied to
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either party or to any circumstance shall be adjudged by a court to be void or
unenforceable, the same shall in no way affect any other provisions hereof, the
application of such provision in any other circumstances or the validity or
enforceability hereof.
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(d) Entire Understanding: This agreement contains the entire
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understanding of the parties hereto relating to the subject matter herein
contained and supersedes any and all prior negotiations, understanding and
agreements between the parties (whether oral or in writing); this agreement
cannot be changed, rescinded or terminated except by a writing signed by the
Company.
The parties had entered into an Executive Engagement Agreement dated
January 31,2001 which was intended to replace the Executive Engagement
Agreement; said agreement did not come into effect and the parties acknowledge
that the same is of no force or effect, having been superceded by this agreement
and the Executive Employment Agreement.
(e) Successors and Assigns. Except where expressly provided to the
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contrary, this agreement, and all provisions hereof, shall inure to the benefit
of and be binding upon the parties hereto, their successors in interest,
assigns, administrators, executors, heirs and devisees.
(f) Paragraph Titles: The titles of the paragraphs of this agreement
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are for convenience only and shall not in any way affect the interpretation of
any paragraphs of this agreement or of the agreement itself.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first above written.
FILM ROMAN INC.
"Company"
By: /s/ Xxxxx X. Xxxx
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Its: Secretary
PRODUCERS SALES ORGANIZATION
"Contractor"
By: /s/ Xxxx X. Xxxx
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Its: ______________
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