EXHIBIT 10.4
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is made and entered into as of the 21st
day of June, 1996, by and between MSH ENTERTAINMENT CORPORATION, INC., a Utah
corporation (the "Company"), and Xxxx Xxxxxxx (the "Executive").
PRELIMINARY STATEMENTS:
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A. The Executive is currently functioning as the Chief Financial Officer
of East End Communications, Inc. ("EEC"), a California corporation.
B. The Executive possesses intimate knowledge of the business and affairs
of EEC, its policies, methods and personnel.
C. The Company (the "Board"), EEC, and the Executive (as agent for and
attorney-in-fact for the shareholders of EEC) have entered into an Agreement
dated as of June 21, 1996 (the "Agreement"), in which the Company purchased the
assets of EEC.
D. The Board of Directors of the Company (the "Board") recognizes that
the Executive has contributed to the growth and success of EEC and desires to
assure the Company of the Executive's employment with the Company and to
compensate him therefore.
E. The Board has determined that this Agreement will reinforce and
encourage the Executive's continued attention and dedication to the Company.
F. The Executive is willing to make his services available to the Company
on the terms and conditions hereinafter set forth.
AGREEMENTS:
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NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the parties agree as follows:
1. Employment.
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1.1 General. The Company hereby agrees to employ the Executive, and
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the Executive hereby agrees to serve the Company, on the terms and subject to
the conditions set forth herein.
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1.2 Duties of Executive. During the term of this Agreement, the
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Executive shall serve as the Chief Financial Officer ("CFO") of the Company, and
shall diligently perform all the services as may be assigned to him by the
Board, and shall exercise such power and authority as may from time to time be
delegated to him by the Board. The Executive agrees to devote his full time and
attention to the business and affairs of the Company, render such services to
the best of his ability, and use his best efforts to promote the interests of
the Company.
2. Term.
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2.1 Initial Term. The initial term of this Agreement and the
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employment of the Executive hereunder shall be for the three (3) year period
commencing on the date of the transactions contemplated by the Agreement are
consummated (the "Initial Term"), unless sooner terminated in accordance with
the terms and conditions hereof.
2.2 Renewal Terms. The Initial Term of this Agreement, and the
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employment of the Executive hereunder, may be renewed and extended for such
period or periods as may be mutually agreed to by the Company and the Executive
in a written supplement to this Agreement signed by the Executive and the
Company (the "Written Supplement"). If this Agreement is not so renewed and
extended prior to the expiration of the Initial Term, this Agreement, and the
employment of the Executive hereunder, shall automatically terminate upon the
expiration of the Initial Term.
3. Compensation.
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3.1 Base Salary. The Executive shall receive a base salary at the
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annual rate of Seventy-Five Thousand Dollars ($75,000.00) (the "Base Salary")
during the Initial Term of this Agreement, with such Base Salary payable, in
installments consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes. If the term of this Agreement shall be
renewed and extended as provided in Section 2.2 hereof, then during such renewal
term of his employment hereunder the Executive shall be paid a base salary as
set forth in the Written Supplement.
3.2 Incentive Compensation.
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(a) In addition to the Base Salary, the Executive shall be
entitled to receive annual incentive compensation equal to 2.5% of the Base
Salary for each fiscal year of the Company ending after the date of this
Agreement and during the term of the Executive's employment hereunder.
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(b) For purposes of this Agreement, the amount of the Incentive
Compensation payable with respect to any fiscal year (net of any tax or other
amount properly withheld therefrom) shall be paid by the Company to Executive
within one hundred and twenty days (120) after the end of the fiscal year.
(c) In the event that the Executive's employment is terminated upon
the expiration of the Initial Term, the Executive shall not be entitled to any
Incentive Compensation for the fiscal year then in effect. Instead, the
Executive shall be entitled to payment of an amount equal to the Incentive
Compensation, if any, paid to him in respect of the immediately preceding fiscal
year, prorated for the period of service by the Executive from the end of the
immediately preceding fiscal year to the end of the Initial Term.
4. Expense Reimbursement and Other Benefits.
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4.1 Expense Reimbursement. The Executive shall be entitled to
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reimbursement by the Company for all reasonable business expenses incurred by
him in connection with the performance of his duties hereunder, provided,
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however, that such entitlement is conditioned upon the Executive providing the
Company with appropriate documentation of such expenses in accordance with
Company policy.
4.2 Other Benefits. The Executive shall be entitled to participation
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in all medical, hospitalization, disability and group life insurance plans, and
any and all other employee benefit plans, as are presently and hereinafter
provided by the Company to its executives. The Executive shall be entitled to
four (4) weeks vacation per year in accordance with the Company's prevailing
policy for its executives; provided, however, that in no event may a vacation
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be taken when to do so could reasonably be expected to materially and adversely
affect the Company's business. In addition, the Executive shall be entitled to
the benefits set forth on Exhibit "A" attached hereto. Notwithstanding the
foregoing, except as set forth in Exhibit A, the Executive shall be entitled to
employee benefits which are no less favorable than those currently in operation
in the Company.
4.3 Working Facilities. The Company shall furnish the Executive with
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an office, secretarial help and other facilities and services suitable to his
position and adequate for the performance of his duties hereunder.
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5. Termination.
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5.1 Termination For Cause. The Company shall at all times have the
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right, upon written notice to the Executive, to terminate the Executive's
employment hereunder for cause (as hereinafter defined). For purposes of this
Agreement, the term "Cause" shall mean (a) a willful breach by the Executive
of any of the material terms or provisions of this Agreement; (b) the charging
or indictment of the Executive in connection with a felony; (c) commission by
the Executive of an act or acts involving fraud, embezzlement, misappropriation,
theft, breach of fiduciary duty or dishonesty against property or personnel of
the Company; or (d) willful or reckless conduct by the Executive which the
Board in good faith determines could reasonably be expected to have a material
adverse effect on the business, assets, properties, results of operations,
financial condition or prospects of the Company. Upon any termination pursuant
to this Section 5.1, the Executive shall be entitled to be paid his Base Salary
to the date of termination and the Company shall have no further liability under
this Agreement (other than for the reimbursement for reasonable pre-approved
business expenses incurred prior to the date of termination, subject, however,
to the provisions of Section 4.1).
5.2 Disability. The Company shall at all times have the right, upon
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written notice to the Executive, to terminate the Executive's employment
hereunder, if the Executive shall, as the result of mental or physical
incapacity, illness or disability become unable to perform his duties hereunder
for in excess of sixty (60) consecutive calendar days or ninety (90) calendar
days in any twelve (12) month period. Upon any termination pursuant to this
Section 5.2, (a) the Company shall pay to the Executive (I) immediately any
unpaid amounts of his Base Salary accrued through the effective date of
termination, plus (ii) in accordance with Section 3.2 (b), an amount equal to
the Incentive Compensation, if any, payable to him in respect of the fiscal year
of the Company in which such termination occurs, prorated for the period of
service by the Executive from the beginning of such fiscal year through the date
of termination, and (b) the Company shall have no further liability under this
Agreement (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however, to the provisions
of Section 4.1).
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5.3 Death. In the event of the death of the Executive during the term of
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his employment hereunder, (a) the Company shall pay to the estate of the
deceased Executive (i) immediately any unpaid amounts of his Base Salary
accrued through the date of death, plus (ii) in accordance with Section
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3.2(b), an amount equal to the Incentive Compensation, if any, payable to him in
respect of the fiscal year of the Company in which such death occurs, prorated
for the period of service by the Executive from the beginning of such fiscal
year through the date of his death, and (b) the Company shall have no further
liability under this Agreement (other than for reimbursement for reasonable pre-
approved business expenses incurred prior to the date of the Executive's death,
subject, however, to the provisions of Section 4.1).
5.4 Termination Without Cause. At any time the Company shall have the
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right to terminate the Executive's employment hereunder by written notice to the
Executive, provided, however, that the Company shall (i) on the effective date
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of termination specified in the notice, pay to the Executive any unpaid Base
Salary accrued through the effective date of termination, (ii) pay to the
Executive one-half of his then effective Base Salary, in equal installments
consistent with the Company's normal payroll practices until the date (the
"Severance Date") which is six (6) months following the effective date of
termination, and (iii) in accordance with Section 3.2(b), pay the Executive an
amount equal to the Incentive Compensation, if any, payable to him in respect of
the fiscal year of the Company in which the termination occurs, prorated for the
period of service by the Executive from the beginning of such fiscal year
through the date of termination. Upon such termination and payments, the Company
shall have no further liability under this Agreement (other than for
reimbursement for reasonable pre-approved business expenses incurred prior to
the date of termination, subject, however to the provisions of Section 4.1).
6. Restrictive Covenants.
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6.1 Non-competition. While employed by the Company and during the
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Non-competition Period (as hereinafter defined), the Executive shall not,
directly or indirectly, engage in or have any interest in any sole
proprietorship, partnership, corporation or business or any other person or
entity (whether as an employee, officer, director, partner, agent, security
holder, creditor, consultant or otherwise) that directly or indirectly engages
in any type of entertainment production, business, marketing, computer or cell
animation, graphics, distribution, producing, writing, directing and/or
manufacturing of any type of entertainment product including, but not limited
to, toys, records, videos, CD-ROM and merchandising items anywhere throughout
the universe. For purpose of this Section 6.1, the term "Non-competition
Period" shall mean (a) in the event the Executive's employment is terminated
pursuant to Section 5.4, the
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period beginning on the effective date of termination and ending one (1) year
thereafter, or (b) in the event the Executive's employment hereunder is
terminated for any other reason, a period of two (2) years following the date of
his employment is terminated.
6.2 Nondisclosure. The Executive shall not divulge, communicate, or
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use to the detriment of the Company or for the benefit of any other person or
persons, or misuse in any way, any confidential information or data now known or
hereafter acquired by the Executive with respect to the business of the Company
(which shall include, but not be limited to, information concerning the
Company's financial condition, prospects, customers, sources of leads, methods
of doing business, and the manner of design, manufacture, financing, marketing
and distribution of the Company's productions) shall be deemed a valuable,
special and unique asset of the Company that is received by the Executive in
confidence and as a fiduciary, and the Executive shall remain a fiduciary to the
Company with respect to all such information.
6.3 Non-solicitation of Employees and Customers. While employed by
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the Company and for two (2) years following the termination of his employment
for any reason, the Executive shall not, directly or indirectly, for himself or
for any other person, firm, corporation, partnership, association or other
entity, (a) attempt to employ or enter into any contractual arrangement with
any employee or former employee of the Company, unless such employee or former
employee has not been employed by the Company for a period in excess of one (1)
year, or (b) call or solicit any of the actual or targeted prospective
customers or clients of the Company, nor shall the Executive make known the
names and addresses of such customers or clients or any information relating in
any manner to the Company's trade or business relationships with such customers
and clients.
6.4 Books and Records. All books, records and accounts relating in
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any manner to the business, customers, suppliers or clients of the Company and
all other documents, disks, software or other items containing confidential
information relating to the Company, whether prepared by the Executive or
otherwise coming into the Executive's possession, shall be the exclusive
property of the Company and shall be returned immediately, together with any
copies, to the Company on the termination of the Executive's employment
hereunder, or on the Company's request at any time.
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7. Injunction. It is recognized and hereby acknowledged by the parties
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hereto that a breach by the Executive of any of the covenants contained in
Section 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Section 6 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
8. Governing Law. This Agreement shall be governed by and construed in
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accordance with the internal laws of the State of California.
9. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties hereto with respect to the subject matter hereof and, upon
its effectiveness, shall supersede all prior agreements, understandings and
arrangements, both oral and written, between and among the Executive, the
Company and/or any of their affiliates with respect to the subject matter
contained herein. Except for the obligation to pay any accrued but unpaid salary
due the Executive, all such prior agreements, understandings and arrangements
for the provision of services by the Executive to the Company and/or any of its
affiliates and the compensation of the Executive in any form shall automatically
terminate upon the consummation of the transactions contemplated by the Purchase
Agreement, and each party shall thereupon and thereby, without any further
action, release and forever discharge the other (and the other's affiliates)
from any and all liabilities and obligations of any nature arising out of or in
connection with any and all such prior agreements, understandings or
arrangements. This Agreement may not be modified in any way unless by a written
instrument signed by both the Company and the Executive.
10. Notices. Any notice required or permitted to be given hereunder shall
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be deemed given when delivered by hand, by facsmile or three (3) business days
after being deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, (i) if to the Company, to the
address of the Company's principal offices in 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx and (ii) to the Executive, to his address as reflected on the
payroll records of the Company, or to such other address as either party hereto
may from time to time give notice of to the other.
11. Benefits; Binding Effect. This Agreement shall be for the benefit of
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and binding upon the parties hereto and their respective heirs, personal
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representatives, legal representatives, successors and, where applicable,
assigns, including without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise; provide,
however, that under no circumstances may the Executive delegate his employment
obligations hereunder or any portion thereof.
12. Severability. The invalidity of any one or more of the words,
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phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more words, phrases, sentences, clauses
or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
13. Waiver. The waiver by either party hereto of a breach or violation of
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any term or provision of this Agreement shall not operate nor be construed as a
waiver of any subsequent breach or violation.
14. Damages; Prevailing Party. Nothing contained herein shall be
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construed to prevent the Company or the Executive from seeking and recovering
from the other damages sustained by either or both of them as a result of its or
his breach of any term or provision of this Agreement. If there is any legal
action or proceeding to enforce or interpret any provision of this Agreement or
to protect or to establish any right or remedy of any party, the nonprevailing
party to such action or proceeding shall pay to the prevailing party all costs
and expenses, including reasonable attorney's fees and costs, incurred by such
prevailing party in such action or proceeding, in enforcing its judgment, and in
connection with any appeal from such judgment. Reasonable attorney's fees and
costs incurred in enforcing any judgment or in connection with any appeal shall
be recoverable separately from and in addition to any other amount included in
such judgment. The prevailing party's rights under this Section 14 shall not
merge into any judgment and shall survive until all such fees and costs have
been paid.
15. Section Headings. The section headings contained in this Agreement
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are for reference purposes only and shall not affect in any way the meaning or
interpretation of this agreement.
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16. No Third Party Beneficiary. Nothing expressed or implied in this
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Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
17. Subsidiaries. All reference to the "Company" in this Agreement,
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including but not limited to those in Section 6, shall be deemed to include any
and all of the Company's direct and indirect subsidiaries to the extent the
context may require.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
MSH Entertainment Corporation, Inc.
By: /s/ XXXXXX XXXXX
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Xxxxxx Xxxxx
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(Print Name)
Its: Chairman
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Agreed to Accepted:
By: /s/ Xxxx Xxxxxxx
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Executive
EXHIBIT A
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Employee Benefits
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1. The Company shall provide to the Executive for his use a leased
automobile comparable to the automobiles provided to the senior executives of
the Company (the "Automobile"). The Automobile shall be comparable to and shall
not exceed the monthly lease payment of any leased automobile of any senior
executive of the Company. All reasonable expenses, including car insurance, for
the maintenance and operation of the Automobile shall be paid by the Company.
2. If, in the performance of his duties on behalf of the Company, the
Executive should utilize a place of abode owned by the Executive or a member of
his immediate family while on a business trip away from his principal residence
in San Francisco, the Company shall pay to the Executive a lodging allowance of
One Hundred and Seventy-Five Dollars ($175.00) per night. Under no
circumstances, however, shall the Executive be entitled to such payment with
respect to any place of abode owned by him or by a member of his immediate
family in the San Francisco metropolitan area. For trips to foreign countries
related to trade and industry festivals, Executive shall be entitled to
reimbursement by Company for pre-approved reasonable business expenses incurred
by him in connection with the performance of his duties hereunder.
3. The Company shall not pay the Executive's personal expenses including,
but not limited to, insurance (except as noted below), legal and accounting
expenses.
4. Executive shall participate in the Stock-option plan of the Company,
whereby additional options may be granted to Executive depending upon the
performance of the Executive and the Company.
5. Executive shall be provided with major medical insurance and agrees to
pay 50% of the monthly premium.
/s/ FA /s/ RM
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Executive Initials Company Initials
