EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT by and among TPEG MERGER COMPANY, A CALIFORNIA CORPORATION
(the "COMPANY"), and XXXXX XXXXXXX ("EXECUTIVE"), a California resident, dated
as of the15th day of July, 1998.
W I T N E S S E T H
WHEREAS, the Company wishes to employ the Executive for the period
provided in this Agreement, and the Executive is willing to serve in the employ
of the Company on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties agree as follows:
1. EMPLOYMENT. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue his employment with
the Company, on the terms and subject to the conditions set forth herein.
2. TERM OF EMPLOYMENT. The term of the Executive's employment under this
Agreement shall commence as of July 15, 1998 and shall end on the earlier of (i)
the five (5) year anniversary thereof (the "EMPLOYMENT PERIOD") or (ii) the date
of termination in accordance with SECTION 5 hereof (the "TERM").
3. TITLES AND RESPONSIBILITIES.
a. TITLES. During the Employment Period, the Executive shall serve
as the Chief Executive Officer of the Company. For purposes of definitions
under this Agreement, the other "Executive Officers" of The Producers
Entertainment Group Ltd. ("TPEG") are defined as the TPEG individuals required
to file Forms 3, 4, and 5 with the Securities and Exchange Commission, due to
their officer positions.
b. RESPONSIBILITIES. Company hereby engages Executive to provide
his exclusive services to supervise the exploitation and sale of such motion
pictures and television programs to financiers, distributors, television
networks, syndicator, cable systems, motion picture studios, video companies,
video distributors and other buyers or licensees of such product throughout the
world.
Executive shall be the Company's most senior executive and shall be
responsible for supervising and overseeing the Company's day to day operations.
Executive shall have control, to the extent appropriate, over decisions and
policies relating to business and financial affairs, strategic planning, program
acquisitions, sales, financial planning and control, relations with third party
suppliers, employee hiring and termination, and general administrative matters,
within the annual
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business plan once approved by the Board of Directors of TPEG each year,
pursuant to the Merger Agreement.
Pursuant to the terms and conditions hereof, Executive hereby accepts
such engagement. The Executive shall report and be responsible to the Board of
Directors of TPEG and must receive board approval from the Company's Board of
Directors on such matters as required by the California General Corporation Law.
In the event that Xxxxx Xxxxxxx does not serve as Chief Executive
Officer of the Company for the entire Employment Period as defined herein, then
Xxx Xxxxxxx shall be elevated from his position of President of the Company to
Chief Executive Officer of the Company and shall assume the responsibilities of
Chief Executive Officer of the Company for the remainder of the Employment
Period.
c. PLACE OF PERFORMANCE. During the Employment Period, the
Executive's office shall be located at the offices of the Company (subject to
travel), which shall be in Los Angeles metropolitan areas, except for required
business travel consistent with the Executive's position. The Company shall
provide the Executive with an office reasonably acceptable to him, and other
support reasonably appropriate to his duties.
d. BUSINESS TIME. During the Employment Period, the Executive
agrees to devote his full business time during normal business hours to the
business and affairs of the Company and to use his best efforts to perform
faithfully, diligently and competently the responsibilities assigned to him
hereunder, to the extent necessary to discharge such responsibilities, except
for (i) time spent serving on corporate, civic or charitable boards or
committees only if and to the extent not substantially interfering with the
performance of such responsibilities, (ii) periods of vacation, disability and
sick leave to which he is entitled, and (iii) reasonable activities having a
charitable, educational or other public interest purpose.
4. COMPENSATION.
a. BASE SALARY; BONUSES. During the Employment Period, the
Executive shall receive an annual base salary ("BASE SALARY") equal to THREE
HUNDRED THOUSAND DOLLARS ($300,000.00), payable in accordance with the customary
payroll procedures as in effect from time to time for senior executives of the
Company. In the event that the Company achieves the profit levels set forth
on EXHIBIT A hereto, for such year, or achieves the profit levels set forth in
the annual business plan approved by the Board of Directors of TPEG, then for
each such year Executive shall be entitled to an annual increase equal to
fifteen percent (15%) of the then applicable Base Salary. Notwithstanding the
foregoing sentence, in no event shall the Base Salary exceed the total sum of
Five Hundred Thousand Dollars ($500,000.00). Additionally, for any year where
the Company achieves the profit levels as defined in the Merger Agreement and as
set forth in EXHIBIT A hereto, for such year, or achieves the profit levels set
forth in the annual business plan approved by the Board of Directors of TPEG,
the compensation committee of the Board of Directors of TPEG shall
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authorize the payment of a bonus, in cash or in kind, in an amount
representing the equivalent of a minimum of ten percent (10%) of Executive's
Base Salary for the preceding year. This bonus shall be calculated based
solely on annual earnings figures and earnings figures shall not be
cumulative with earnings figures from other years.
b. VACATION. During the Employment Period, the Executive shall be
entitled to four (4) weeks paid vacation per year, to be accrued and taken in
accordance with the Company's vacation policy.
c. EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable and required
business-related expenses incurred by the Executive in accordance with the
policies and procedures of TPEG, as applicable to the Executive Officers of
TPEG.
d. AUTOMOBILE REIMBURSEMENT. During the Term, Executive shall be
entitled to receive a monthly automobile reimbursement in the total amount of
One Thousand Dollars ($1,000.00) (the "AUTOMOBILE REIMBURSEMENT"), payable
monthly on the first day of each month commencing on the first day of the month
following the effective date of the Merger (as such term is defined in the
Merger Agreement) (the "REIMBURSEMENT DATE"); PROVIDED, HOWEVER, that the
Automobile Reimbursement shall include the PRO RATA amount dated from the
effective date of the Merger, for the first month only. The Automobile
Reimbursement shall be increased to One Thousand Two Hundred Dollars ($1,200) on
the one year anniversary of the Reimbursement Date.
e. OTHER EXECUTIVE BENEFITS. Without limiting the foregoing
provisions of this SECTION 4, during the Employment Period the Executive shall
be entitled to participate in or be covered under all compensation, bonus,
pension, retirement and welfare and fringe benefit plans, programs and policies
of the Company applicable to the Executive Officers of TPEG. Attached hereto as
EXHIBIT B is a true and correct copy of the Company's Employee Handbook.
Additionally, the Company agrees to purchase disability insurance if available
from an insurance carrier for a price not to exceed Six Thousand Dollars
($6,000) in annual premiums. If Executive wishes to obtain disability insurance
requiring a higher annual premium, he shall be permitted to pay the extra
annual premium amount above the annual premium amount paid by the Company.
5. TERMINATION.
a. DEATH OR DISABILITY. The Executive's employment pursuant to this
Agreement shall terminate automatically upon the Executive's death. The Company
may terminate the Executive's employment for Disability by giving to the
Executive notice of its intention in accordance with SECTION 5(e) unless
Executive returns to the performance of the essential functions of his
employment within thirty (30) days after receipt of such notice. For purposes
of this Agreement, "DISABILITY" means any physical or mental condition that
renders the Executive unable to perform the essential functions of his
employment for 90 consecutive days or for a total of 180 days in any period of
360 consecutive days.
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b. VOLUNTARY TERMINATION AFTER CHANGE IN CONTROL. Notwithstanding
anything in this Agreement to the contrary, the Executive may voluntarily
terminate his employment at any time, after a Change in Control (as defined
below), (i) for any reason upon six months' written notice to the Company, or
(ii) if termination is for Good Reason or on account of the Executive's serious
illness, upon written notice pursuant to SECTION 5(e) but without any notice
period. In the event of any termination pursuant to this SECTION 5(b), the
Executive shall have no further obligation to the Company under this Agreement,
except as provided in SECTION 8.
c. CAUSE. The Company may terminate the Executive's employment for
Cause. For purposes of this Agreement, "CAUSE" means:
Executive's engaging in gross misconduct materially and demonstrably
injurious to the Company; material failure to perform the services
required hereunder after written notice and an opportunity to cure, if
curable; or conviction by final judgment of a felony constituting
fraud, theft, embezzlement or homicide.
d. GOOD REASON. The Executive may terminate his employment for
Good Reason at any time in accordance with SECTION 5(e). For purposes of
this Agreement, "GOOD REASON" means (i) a material reduction in the nature or
scope of the Executive's position, title, status, authority, duties, powers
or functions on the date of this Agreement; (ii) the assignment to the
Executive of any material duties which are not commensurate with or at least
as prestigious as the Executive's duties and responsibilities as contemplated
by this Agreement; (iii) a material breach by the Company of any of the
provisions of this Agreement; (iv) the failure of TPEG to deliver any of the
Contingent Consideration or any of the Escrow Stock (as such terms are
defined in the Agreement of Merger by and among MWI Distribution, Inc., TPEG
and the Company dated July 15, 1998 (the "MERGER AGREEMENT")) as required
pursuant to the terms of the Merger Agreement; or (v) the failure by the
Company to obtain an agreement, reasonably satisfactory to the Executive,
from any successor to assume and agree to perform this Agreement, as
contemplated by SECTION 12(b); or (vi) after a "Change in Control," as
contemplated by SECTION 6(d).
e. NOTICE OF TERMINATION. Any termination by the Company for Cause
or Disability or by the Executive for Good Reason shall be communicated by a
written notice (a "NOTICE OF TERMINATION") to the other party hereto given in
accordance with SECTION 12(d). A "NOTICE OF TERMINATION" shall set forth in
reasonable detail the events giving rise to such termination. The Company may
deliver the Notice of Termination relating to a Disability on any day following
the 89th consecutive day of such Disability or the day following the 179th day
of disability during a period of 360 consecutive days.
f. DATE OF TERMINATION. For purposes of this Agreement, the term
"DATE OF TERMINATION" means (i) in the case of termination for Disability,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the full-time performance of his duties
during such 30-day period); (ii) in the case of termination for Cause, a date
specified in the Notice of Termination (which shall not be less than 30 days nor
more than 60 days
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from the date such Notice of Termination is given); (iii) in the case of any
other termination for which a Notice of Termination is required, the date of
receipt of such Notice of Termination or, if later, the date specified
therein, as the case may be; and (iv) in all other cases, the actual date on
which the Executive's employment terminates during the Employment Period.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
a. DEATH, DISABILITY, CAUSE AND VOLUNTARY TERMINATION. If at any
time before or after a Change in Control the Executive's employment is
terminated by the Company during the Employment Period by reason of the
Executive's death, Disability or for Cause, or is voluntarily terminated by the
Executive (other than for Good Reason), the Company shall have no further
obligation to the Executive or the Executive's legal representatives other than
(i) those obligations earned for Base Salary and payments under any Company
bonus plan which may have accrued at the Date of Termination (the "ACCRUED
OBLIGATIONS"), (ii) those obligations expressly provided under any of the plans
referred to in SECTION 4(e) (the "BENEFIT RIGHTS") and (iii) upon a termination
of the Executive's employment by reason of his death, the payment provided in
SECTION 6(a)(i), if applicable, shall be paid to the Executive's estate in a
lump sum in cash within 15 days of the Date of Termination.
b. Prior to Change in Control, Termination by the Company other
than for Cause or Disability and Termination by the
Executive for Good Reason.
__________________________________________________________
i. LUMP SUM PAYMENTS. If during the Employment Period and
prior to a Change in Control (as defined below), the Company terminates the
Executive's employment other than for Cause or Disability, or the Executive
terminates his employment for Good Reason, the Company shall provide the Benefit
Rights and shall pay to the Executive in a lump sum in cash within fifteen (15)
days of the Date of Termination the sum of the following amounts: (A) the
Accrued Obligations; plus (B) an amount equal to the product of (1) one-twelfth
times (2) the sum of the Executive's Base Salary plus the Executive's average
annual bonus which was received for the three years ended before the Date of
Termination, times (3) the number of full or partial of months remaining in the
unexpired term of the Employment Period, but in no event less than twelve (12)
months (such period being the "SEVERANCE PERIOD").
ii. WELFARE BENEFITS. The Company shall provide or cause to be
provided to the Executive and his family for the Severance Period continued
life, medical, dental and disability insurance benefits at least equal to those
which the Executive was receiving or entitled to receive immediately prior to
the termination of employment described in SECTION 6(b)(i).
iii. OFFICE. For the Severance Period, the Company shall provide
the Executive with an office reasonably acceptable to him.
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iv. STOCK. If during the Employment Period and prior to a
Change in Control (as defined below), the Company terminates the Executive's
Employment other than for Cause or Disability, or the Executive terminates his
employment for Good Reason, Executive shall receive stock with a value at the
Date of Termination of $1.0 million if such termination occurs during the first
year of this Agreement; or Executive shall receive stock with a value of
$750,000 if such termination occurs within the second year of this Agreement; or
Executive shall receive stock with a value of $500,000 if such termination
occurs within the third year of this Agreement.
v. SAVINGS CLAUSE. Notwithstanding anything contained herein
to the contrary, any payment required to be made hereunder shall be reduced to
the maximum amount possible so that no excise tax is imposed on the Executive by
virtue of the receipt of such payment pursuant to the "golden parachute"
provisions of Section 4999 of the Internal Revenue Code of 1986, as amended, or
similar state statutes.
vi. DISCHARGE OF THE COMPANY'S OBLIGATIONS. The Company shall
have no further obligations to the Executive in respect of any termination other
than as described in this SECTION 6.
vii. GUARANTEE. TPEG irrevocably guarantees the payment and
performance of all covenants of and sums payable by the Company that arise under
this Agreement (the "GUARANTEED OBLIGATIONS"). The Guaranteed Obligations
include, without limitation, Base Salary, bonus and all amounts payable upon
termination of Executive's employment hereunder. TPEG is hereby providing a
guaranty of payment and performance of the Guaranteed Obligations and not to
collectibility. TPEG's guaranty hereunder is a continuing guaranty for all
present and future amounts. TPEG's guaranty shall not be affected by, and shall
cover, any amendment or modification to this Agreement, so long as TPEG or the
Company's Board of Directors approves such amendment or modification. TPEG's
liability hereunder shall continue until all the Guaranteed Obligations have
been paid and satisfied in full. TPEG hereby waives: (i) any right to require
Executive to pursue a remedy before proceeding against TPEG (provided that, with
respect to any of the Guaranteed Obligations that do not relate to the payment
or provision of money or benefits, Executive shall first seek recourse against
the Company, and with respect to all other Guaranteed Obligations, Executive
shall first provide the Company with 30 days written notice and a reasonable
opportunity to cure); (ii) subject to the preceding clause (i), demand,
diligence, presentment, and notices of protest, dishonor and nonpayment; (iii)
rights of subrogation or reimbursement; and (iv) defenses arising because of
Executive's election of the application of Section 1111(b)(2) of the Federal
Bankruptcy Code. TPEG agrees that Executive may pursue available remedies
against the Company without impairing TPEG's obligations under this Agreement.
TPEG's guarantee shall remain in full force and effect should any of the
Company's authorized payments to Executive be avoided, set aside or recovered as
a preference, fraudulent transfer or fraudulent conveyance, even if TPEG has
given notice of revocation prior thereto or if the Company had paid and
performed in full the Guaranteed Obligations. TPEG's obligations under this
Agreement shall not be altered,
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limited or affected by any bankruptcy, insolvency, receivership or
liquidation proceeding regarding the Company.
c. Following Change in Control, Termination by the Company
other than for Cause or Disability and Termination by the
Executive for Good Reason.
________________________________________________________
i. LUMP SUM PAYMENTS. If during the Employment Period and
following a Change in Control, the Company terminates the Executive's employment
other than for Cause or Disability, or the Executive terminates his employment
for Good Reason, the Company shall provide the Benefits Rights and shall pay to
the Executive in a lump sum in cash within 15 days of the Date of Termination
the sum of the following amounts: (A) the Accrued Obligations; plus (B) an
amount equal to the product of (1) the greater of (i) 2.99 or (ii) one twelfth
multiplied by the number of full or partial of months remaining in the unexpired
term of the Employment Period, multiplied by (2) the sum of the Executive's Base
Salary plus the Executive's average annual bonus which was received for the
three years ended before the Date of Termination.
ii. WELFARE BENEFITS. The Company shall provide or cause to be
provided to the Executive and his family for a period of 36 months following
such termination continued life, medical and dental and disability insurance
benefits at least equal to those which the Executive was receiving or entitled
to receive immediately prior to the termination of employment described in
SECTION 6(c)(i).
iii. OFFICE. For a period of 36 months following such
termination, the Company shall provide the Executive with an office and an
executive secretary reasonably acceptable to him and other support services
reasonably appropriate to an executive of a public corporation.
iv. DISCHARGE OF THE COMPANY'S OBLIGATIONS. The Company shall
have no further obligations to the Executive in respect of any termination other
than as described in this SECTION 6.
d. CHANGE IN CONTROL. A Change in Control shall be deemed to have
occurred:
i. Following any merger, consolidation or recapitalization of
the Company (or, if the capital stock (the "STOCK") of the
Company is affected, any subsidiary of the Company) or any
sale, lease, or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party
as a single plan) of all or substantially all of the assets
of the Company (each of the foregoing being an "ACQUISITION
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TRANSACTION") where (x) the shareholders of the Company
immediately prior to such Acquisition Transaction would not
immediately after such Acquisition Transaction beneficially
own, directly or indirectly, shares representing in the
aggregate more than 65% of (A) the then outstanding common
stock of the corporation surviving or resulting from such
merger, consolidation or recapitalization or acquiring such
assets of the Company, as the case may be (the "SURVIVING
CORPORATION") (or of its ultimate parent corporation, if
any) and (B) the Combined Voting Power (as defined below) of
the then outstanding Voting Securities (as defined below) of
the Surviving Corporation (or of its ultimate parent
corporation, if any) or (y) the Incumbent Directors at the
time of the initial approval of such Acquisition Transaction
would not immediately after such Acquisition Transaction
constitute a majority of the Board of Directors of the
Surviving Corporation (or of its ultimate parent
corporation, if any); or
ii. any Person (as defined below) shall become the beneficial
owner (as defined in Rule 13d-3 and 13-d-5 under the
Exchange Act), directly or indirectly, of securities of the
Company representing in the aggregate 50% or more of either
(i) the then outstanding shares of Stock, or (ii) the
Combined Voting Power of all then outstanding Voting
Securities of the Company; PROVIDED; HOWEVER, that
notwithstanding the foregoing, a Change in Control of the
Company shall not be deemed to have occurred for purposes of
this SUBSECTION (2) solely as the result of an acquisition
of Stock by the Company which, by reducing the number of
shares of Stock or other Voting Securities outstanding,
increases (i) the proportionate number of shares of Stock
beneficially owned by any Person to 20% or more of the
shares of Stock then outstanding or (ii) the proportionate
voting power represented by the Voting Securities
beneficially owned by any Person to 20% or more of the
Combined Voting Power of all then outstanding Voting
Securities; PROVIDED, HOWEVER, that if any Person referred
to in this clause (2) shall thereafter become the beneficial
owner of any additional shares of Stock or other Voting
Securities of the Company (other than pursuant to a stock
split, stock dividend or similar transaction or an
acquisition exempt under such SUBSECTION (ii), then a Change
in Control shall be deemed to have occurred for purposes of
this clause (ii).
iii. For purposes of this Agreement:
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(1) "PERSON" shall mean any individual,
entity (including, without limitation,
any corporation, partnership, trust,
joint venture, association or
governmental body and any successor to
any such entity) or group (as defined in
Sections 13(d)(3) or 14(d)(2) of the
Exchange Act and the rules and
regulations thereunder); PROVIDED,
HOWEVER, that Person shall not include
Executive, the Company, any of its
majority-owned subsidiaries, any
executive benefit plan of the Company or
any of its majority-owned subsidiaries
or any entity organized, appointed or
established by Executive, the Company or
any of its majority-owned subsidiaries
for or pursuant to the terms of any such
plan, or any of their affiliates;
(2) "VOTING SECURITIES" shall mean all
securities of a corporation having the
right under ordinary circumstances to
vote in an election of the board of
directors of such corporation;
(3) "COMBINED VOTING POWER" shall mean the
aggregate votes entitled to be cast
generally in the election of directors
of a corporation by holders of then
outstanding Voting Securities of such
corporation; and
(4) "COMPANY" shall mean the Company or
TPEG.
7. NO MITIGATION: NO OFFSET. In no event shall the Executive be
obligated to seek other employment by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement. Any amounts
that may be earned by the Executive other than from the Company after the Date
of Termination shall not reduce the Company's obligation to make any
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payments hereunder. The amounts payable by the Company hereunder shall not
be subject to any right of set-off that the Company may assert against the
Executive.
8. NONCOMPETITION.
a. SCOPE. In the case of the Executive's termination of employment,
including due to the expiration of the Employment Period, the Executive shall
not, during the Employment Period and for one year following the Date of
Termination (collectively, "EXECUTIVE RESTRICTED PERIOD"), (a) divert to any
competitor of the Company in the business conducted by the Company (the
"DESIGNATED INDUSTRY") any project of the Company that the Company has an option
to acquire or otherwise has control over; or (b) solicit or encourage any
officer, employee or consultant of the Company to leave their employ for
employment by or with any competitor of the Company in the Designated Industry.
If at any time the provisions of this SECTION 8 shall be determined to be
invalid or unenforceable, by reason of being vague or unreasonable as to area,
duration or scope of activity, this SECTION 8 shall be considered divisible and
shall become and be immediately amended to apply only to such area, duration and
scope of activity as shall be determined to be reasonable and enforceable by the
court or other body having jurisdiction over the matter; Employee agrees that
this SECTION 8 as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein. Nothing in this SECTION 8
shall prevent or restrict Employee from engaging in any business or industry in
the Designated Industry in any capacity.
b. IRREPARABLE HARM. The Executive agrees that the remedy at law
for any breach of this SECTION 8 shall be inadequate and that the Company shall
be entitled to injunctive relief.
c. COVENANT REGARDING CONFIDENTIALITY. All information about
the business and affairs of the Company which is not generally available to
the public or disclosed by the Company, and any information about the Company
which becomes generally available to the public as a result of a breach by
any person of any confidentiality obligation to the Company (including,
without limitation, its secrets and information about its business, financial
condition and performance, prospects, products, technology, know-how,
merchandising and advertising programs and plans, and the names of its
suppliers, customers and lenders and the nature of its dealings with them)
constitute "CONFIDENTIAL INFORMATION." Executive acknowledges that he will
have access to, and knowledge of, Confidential Information, and that improper
use or revelation of same by Executive, whether during or after the
termination of his employment by the Company, could cause serious injury to
the business of the Company. Accordingly, Executive agrees that, except as
required to perform his duties under this Agreement, or as required by law,
rule, or regulation, he will forever keep secret and inviolate, and will not
at any time, reveal, divulge or make known, any Confidential Information,
whether or not such Confidential Information was developed, devised or
otherwise created in whole or in party by the efforts of Executive.
Executive further agrees that he will provide the Company with ten (10) days
written notice prior to any disclosure of Confidential Information in order
to afford the Company sufficient time to seek injunctive relief to enjoin the
disclosure of the Confidential Information. The notice shall include the
date of the intended disclosure, a detailed
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description of the Confidential Information to be disclosed, the reason for
the Disclosure, and the party seeking disclosure of the Confidential
Information. Executive also agrees that he will not use any Confidential
Information for his own benefit or directly or indirectly for the benefit or
any person or organization other than the Company or its affiliates.
If Executive is compelled by subpoena or other formal judicial process
to disclose Confidential Information, he shall promptly give notice to the
Company. Upon receiving such notice, the Company shall provide legal counsel to
respond to the subpoena or other formal judicial process on behalf of Executive
at Company expense. Such legal counsel provided at the expense of the Company
shall make the determination as to the appropriate response to such subpoena or
formal judicial process on behalf of Executive.
9. INDEMNIFICATION. The Company shall indemnify and hold harmless the
Executive, his heirs and personal representatives to the fullest extent
permitted by applicable law, as now or hereafter in effect, with respect to any
acts, omissions or events that occurred while the Executive is or was an
employee of the Company or serves or served the Company or any other corporation
or other enterprise of any kind in any capacity at the request of the Company
(an "Enterprise"). Without limiting the generality of the foregoing, the
Company shall promptly pay, or reimburse the Executive for, or advance to the
Executive amounts for the payment of (a) all of the Executive's reasonable
expenses, including attorneys' fees and court costs, actually and reasonably
incurred in connection with the defense of any action, suit or proceeding,
including any suit seeking recovery under any Company director's and officer's
liability policy, or in connection with any appeal thereof, to which the
Executive may be a party by reason of any action taken or failure to act under
or in connection with his service for the Company or an Enterprise; and (b) all
amounts required to be paid in settlement of or in satisfaction of a judgment in
connection with any such action, suit or proceeding; provided, however, that the
Company shall not be required to indemnify or hold harmless the Executive, his
heirs or personal representatives in any manner whatsoever in the event and to
the extent there is a final and nonappealable judgment by a court of competent
jurisdiction that the liability incurred by the Executive resulted from his
gross negligence, fraud or willful malfeasance.
10. ARBITRATION. If a dispute arises between Executive and/or the Company
and/or TPEG and/or any of the parties or beneficiaries to this Agreement,
respecting the terms of this Agreement or Executive's employment, including,
without limitation, any dispute with respect to the validity of this Agreement
or this arbitration clause, such dispute shall be finally resolved by binding
arbitration as follows. Any party may require that the dispute be submitted to
binding arbitration, and in such event the dispute shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. If a matter is submitted to arbitration, each of the
parties shall choose one arbitrator. The arbitrators selected by the two
parties shall choose a third arbitrator who shall act as chairman and shall be
an attorney and a member of the panel of the American Arbitration Association.
Each party shall agree to a speedy hearing upon the matter in dispute and the
judgment upon the award rendered by the arbitrators may be entered in any
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court having jurisdiction thereof. The place of arbitration shall be Los
Angeles, California. Notwithstanding anything to the contrary contained
herein, no discovery shall be permitted in the arbitration proceeding.
11. SUCCESSORS.
a. This Agreement is personal to the Executive and, without the
prior written consent of the Company, shall not be assignable by the Executive
otherwise than to a trust created for the benefit of the Executive or his
ancestors, descendants or spouse or by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives.
b. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors. The Company shall require any successor to all
or substantially all of the business and/or assets of the Company, whether
direct or indirect, by an agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement.
12. MISCELLANEOUS.
a. EXECUTIVE'S ADDITIONAL TERMINATION RIGHTS. Executive may
terminate this Employment Agreement if (i) TPEG fails to timely file a proxy
statement in connection with an Annual Meeting of TPEG Stockholders to be held
on or before December 31, 1998 requesting approval that the Company be
authorized to issue Parent Common Stock in lieu of Series B Preferred Stock
currently required under the Merger Agreement (as such terms are defined in the
Merger Agreement) (the "Annual Meeting:) or (ii) the TPEG stockholders fail to
approve the matters discussed in (i) above at the Annual Meeting.
Notwithstanding anything contained in this Agreement or in the Merger Agreement,
in the event that the Executive elects to terminate this Agreement pursuant to
this Section 12(a), then the Executive shall not be entitled to receive any
further benefits hereunder and shall forfeit the right to receive the Contingent
Payments (as such term is defined in the Merger Agreement).
b. WITHHOLDING. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law and
any additional withholding to which the Executive has agreed.
c. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of California, applied without reference
to principles of conflict of laws.
12
d. AMENDMENTS. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
e. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered or mailed
to the other party by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Xxxxx Xxxxxxx
c/o The Producers Entertainment Group Ltd.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx 0
Xxx Xxxxxxx, XX 00000
with a copy to:
Xxxxxxx Xxxx, Esq.
Wolf, Xxxxxx & Xxxxxxx, LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
If to the Company:
The Producers Entertainment Group Ltd.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx 0
Xxx Xxxxxxx, XX 00000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only when actually received by the addressee.
f. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
g. WAIVER. Waiver by any party hereto of any breach or default by
any other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived.
h. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters referred to
herein, and no other agreement, verbal or
13
otherwise, shall be binding as between the parties unless it is in writing
and signed by the party against whom enforcement is sought. All prior and
contemporaneous agreements and understandings between the parties with
respect to the subject matter of this Agreement are superseded by this
Agreement.
i. SURVIVAL. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
j. CAPTIONS AND REFERENCES. The captions of this Agreement are not
part of the
provisions hereof and shall have no force or effect. References in this
Agreement to a section number are references to sections of the Agreement unless
otherwise specified.
k. CONSENT TO JURISDICTION. Subject to the right to arbitrate, each
of the parties to this Agreement hereby submits to the exclusive jurisdiction of
the courts of the State of California and the Federal courts of the United
States of America located in such state solely in respect of the interpretation
and enforcement of the provisions of this Agreement, and hereby waives, and
agrees not to assert, as a defense in any action, suit or proceeding for the
interpretation and enforcement of this Agreement, that it is not subject
thereto; that such action, suit or proceeding may not be brought or is not
maintainable in said courts; that this Agreement may not be enforced in or by
said courts; that its property is exempt or immune from execution; that the
suit, action or proceeding is brought in an inconvenient forum; or that the
venue of the suit, action or proceeding is improper. Each of the parties agrees
that service of process in any such action, suit or proceeding shall be deemed
in every respect effective service of process upon it if given in the manner set
forth in SECTION 12(d).
14
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed in its name on its behalf all
as of the day and year first above written.
TPEG MERGER COMPANY THE PRODUCERS ENTERTAINMENT GROUP LTD.
By: /s/ XXXXX XXXXX By:/s/ XXXXX XXXXX
---------------------- -------------------------
Its: President Its: Chief Executive Officer
By: /s/ XXXXXX XXXXXXXXX By: /s/ XXXXXX XXXXXXXXX
---------------------- -------------------------
Its: Secretary Its: Secretary
Dated: July 15, 1998 Dated: July 15, 1998
------------------- ---------------------
XXXXX XXXXXXX
/s/ XXXXX XXXXXXX Dated: July 15, 1998
---------------------- ---------------------
15
EXHIBIT A
FISCAL YEAR ENDED JUNE 30, PRE-TAX NET INCOME(1)
-------------------------- ----------------------
1999 $ 750,000.00
2000 $ 900,000.00
2001 $ 1,100,000.00
2002 $ 1,325,000.00
2003 $ 1,500,000.00
---------------------------------------------------------------------------
(1)PRE-TAX NET INCOME MEANS PRE-TAX NET INCOME AS DEFINED IN THE
MERGER AGREEMENT.
16
