EXHIBIT 10.23
EMPLOYMENT AGREEMENT
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This Agreement, dated as of October 1, 1996, is entered into by and between
Four Media Company, a Delaware corporation (the "Company"), and Xxxx X. Xxxxxx
("Executive").
INTRODUCTION
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The Company and its operating subsidiaries ("Affiliates") are engaged in
the business of providing technical and creative services to the entertainment
industry. The Company desires to employ Executive, and Executive desires to
accept such employment, under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
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EMPLOYMENT; TERM; DUTIES
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1.1 Employment. Upon the terms and conditions hereinafter set forth, the
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Company hereby employs Executive, and Executive hereby accepts employment, as
President of the Company.
1.2 Term. Subject to Section 4.1, Executive's employment hereunder shall
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be for a term of three (3) years commencing on the date hereof and expiring at
the close of business on the day prior to the third anniversary of the date
hereof (the "Initial Term"). The Initial Term shall be automatically extended
for successive three-year terms (each such extension referred to as a "Renewal
Term") unless either party gives the other party written notice of its or his
desire to terminate, which notice of termination shall be given not less than
six months prior to the expiration of the Initial Term or any Renewal Term, as
the case may be. Notwithstanding the foregoing, Executive shall be obligated to
deliver a written reminder (the "Reminder Notice") to the Company respecting
such termination notice, which Reminder Notice shall be delivered no earlier
than eight months prior to the expiration of the Initial Term or any Renewal
Term, as the case may be, and no later than six and one-half months prior to the
expiration of the Initial Term or any Renewal Term, as the case may be. If
Executive fails to timely deliver the Reminder Notice, then the Initial Term or
any Renewal Term, as the case may be, shall not be automatically
extended for an additional three-year period even if the Company fails to timely
deliver a notice of termination to Executive.
1.3 Duties. During the Initial Term or any Renewal Term (sometimes
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collectively referred to as the "Term"), Executive shall perform such executive
duties for the Company and/or its Affiliates, consistent with his position
hereunder, as may be assigned to him from time to time by the Board of
Directors. Executive shall devote his entire productive business time,
attention and energies to the performance of his duties hereunder. Executive
shall use his best efforts to advance the interests and business of the Company
and its Affiliates. Executive shall abide by all rules, regulations and
policies of the Company, as may be in effect from time to time. Notwithstanding
the foregoing, Executive may act for his own account in passive-type investments
as provided in Section 5.3, or as a member of other boards of directors, where
the time allocated for those activities does not materially interfere with or
create a conflict of interest with the discharge of his duties for the Company.
1.4 Reporting. Executive shall report directly to the Chief Executive
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Officer of the Company.
1.5 Exclusive Agreement. Executive represents and warrants to the Company
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that there are no agreements or arrangements, whether written or oral, in effect
which would prevent Executive from rendering his exclusive services to the
Company during the Term.
ARTICLE II
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COMPENSATION
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2.1 Compensation. For all services rendered by Executive hereunder and
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all covenants and conditions undertaken by him pursuant to this Agreement, the
Company shall pay, and Executive shall accept, as full compensation, the amounts
set forth in this Article II.
2.2 Base Salary. The base salary shall be an annual salary of $252,000
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("Base Salary"), payable by the Company in accordance with the Company's normal
payroll practices.
2.3 Bonus. In addition to the Base Salary, the Company may make
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discretionary bonus payments to Executive, under such terms, conditions and
requirements as may be established by the Company's Board of Directors in its
sole discretion.
2.4 Deductions. The Company shall deduct from the compensation described
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in Sections 2.2 and 2.3 any federal, state or local withholding taxes, social
security contributions and any
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other amounts which may be required to be deducted or withheld by the Company
pursuant to any federal, state or local laws, rules or regulations.
2.5 Disability Adjustment. Any compensation otherwise payable to
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Executive pursuant to Sections 2.2 and 2.3 in respect of any period during which
Executive is disabled (as contemplated in Section 4.3) shall be reduced by any
amounts payable to Executive for loss of earnings or the like under any
insurance plan or policy sponsored by the Company.
ARTICLE III
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BENEFITS; EXPENSES
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3.1 Benefits. During the Term, Executive shall be entitled to participate
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in such group life, health, accident, disability or hospitalization insurance
plans, pension plans and retirement plans as the Company may make available to
its other executive employees as a group, subject to the terms and conditions of
any such plans.
3.2 Expenses. The Company agrees that Executive is authorized to incur
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reasonable expenses in the performance of his duties hereunder and in promoting
the business of the Company. The Company shall from time to time pay or
reimburse Executive for the reasonable and necessary expenses incurred by
Executive in connection with the performance of his duties hereunder if such
expenses have been previously approved by the Company or if reimbursement is
otherwise appropriate in accordance with the Company's established policies and
if the Company receives such verification thereof as the Company may require in
order to qualify such expenses as deductible business expenses.
3.3 Vacation. Executive shall accrue, on a daily basis, a total of four
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(4) work weeks of vacation per year following the date of this Agreement. If
Executive's earned but unused vacation time reaches six (6) work weeks,
Executive will not continue to accrue additional vacation time until he uses
enough vacation to fall below this maximum amount. Thereafter, Executive will
start earning vacation benefits again until the six (6) work week maximum is
again reached. Any accrued but unused vacation time will be paid to Executive
on a pro rata basis at termination of employment.
3.4 Key Man Insurance. The Company may secure in its own name or
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otherwise, and at its own expense, life, health, accident and other insurance
covering Executive alone or with others, and Executive shall not have any right,
title or interest in or to such insurance other than as expressly provided
herein. Executive agrees to assist the Company in procuring such insurance by
submitting to the usual and customary medical and other
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examinations to be conducted by such physicians as the Company or such insurance
company may designate and by signing such applications and other written
instruments as may be required by the insurance companies to which application
is made for such insurance. Executive's failure to submit to such usual and
customary medical and other examinations shall be deemed a material breach of
this Agreement.
ARTICLE IV
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TERMINATION; DEATH; DISABILITY
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4.1 Termination of Employment With Cause. In addition to any other
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remedies available to the Company at law, in equity or as set forth in this
Agreement, the Company shall have the right, upon written notice to Executive,
to immediately terminate his employment hereunder without any further liability
or obligation to him in respect of his employment (other than its obligation to
pay Base Salary accrued but unpaid as of the date of termination) if Executive:
(a) breaches any material provision of this Agreement and, if such breach is
curable, in the sole judgment of the Company, such breach is not cured within
ten (10) days after written notice thereof from the Company; or (b) has
committed an act of gross misconduct in connection with the performance of his
duties hereunder, as determined in good faith by the Board of Directors; or (c)
demonstrates habitual negligence in the performance of his duties, as determined
by the Board of Directors; or (d) is convicted of or pleads nolo contendere to
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any misdemeanor involving moral turpitude or to any felony; or (e) has committed
any act of fraud, misappropriation of funds or embezzlement in connection with
his employment hereunder (a "Termination With Cause").
4.2 Termination of Employment Without Cause. During the Term, the Company
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may at any time, in its sole discretion, terminate the employment of Executive
hereunder without cause by written notice to him. In such event, the Company
shall pay Executive an amount equal to the sum of the following:
(a) any Base Salary accrued but unpaid as of the date of termination;
(b) an amount equal to Executive's monthly Base Salary in effect on
the date of termination for the remainder of the Term, payable as and when
such amounts would have been due and payable hereunder had such termination
not occurred (the "Severance Period"); and
(c) any reimbursement for expenses incurred in accordance with Section
3.2.
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In addition, the Company shall use its best efforts to arrange for the
continuation, through the Severance Period, of such health and/or medical
benefits or plans as are in effect as of the date of termination, if and only if
permissible under such plans. If not so permissible, the Company shall pay to
Executive an amount sufficient to enable Executive to arrange for substantially
equivalent health and/or medical coverage during the Severance Period.
Executive acknowledges that the payments and benefits referred to in
this Section 4.2, together with any rights or benefits under any written plan or
agreement which have vested on or prior to the termination date of Executive's
employment under this Section 4.2, constitute the only payments to which
Executive shall be entitled to receive from the Company hereunder in the event
of any termination of his employment pursuant to this Section 4.2, and that
except for such payments or benefits the Company shall have no further liability
or obligation to him hereunder or otherwise in respect of his employment.
If Executive's employment is terminated under this Section 4.2,
Executive shall use all reasonable efforts to obtain other employment or become
self-employed as promptly as possible. If Executive secures other employment or
becomes self-employed during the Severance Period, the Company's obligations
under this Section 4.2 shall be reduced by the earnings from such employment or
self-employment received by Executive. During the Severance Period, Executive
will notify the Company in writing of any offer of employment within 10 days of
Executive's receipt of same. In addition, Executive will immediately notify the
Company in writing if Executive becomes employed or self-employed during the
Severance Period.
4.3 Death; Disability. In the event that Executive dies or becomes
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Disabled (as defined herein), Executive's employment shall terminate when such
death or Disability occurs and the Company shall pay Executive (or his legal
representative, as the case may be) as follows:
(a) any Base Salary accrued but unpaid as of the date of death or
termination for Disability;
(b) any reimbursement for expenses incurred in accordance with Section
3.2.; and
(c) an amount equal to Executive's monthly Base Salary in effect on
such termination date for the lesser of (i) six months or (ii) the remainder of
the Term, payable as and when such amounts would have been due and payable
hereunder had such termination not occurred. The monthly Base Salary with
respect to any period during which Executive is Disabled shall be reduced by
amounts payable to him under any insurance plan sponsored by the Company,
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provided that Executive's aggregate compensation during the period of Disability
shall be equal to 100% of his monthly Base Salary then in effect.
For the purposes of this Agreement, Executive shall be deemed to be
"Disabled" or have a "Disability" if, because of Executive's physical or mental
disability, (a) he has been substantially unable to perform his duties
hereunder for twelve (12) work weeks in any twelve (12)-month period, and (b) he
has utilized any and all benefits available to him under state and federal laws
and is either (i) unable to reasonably and effectively carry out his duties with
reasonable accommodations by the Company or (ii) unable to reasonably and
effectively carry out his duties because any reasonable accommodation which may
be required would cause the Company undue hardship. In the event of a
disagreement concerning Executive's perceived Disability, Executive shall submit
to such examinations as are deemed appropriate by three practicing physicians
specializing in the area of Executive's Disability, one selected by Executive,
one selected by the Company, and one selected by both such physicians. The
majority decision of such three physicians shall be final and binding on the
parties. Nothing in this paragraph is intended to limit the Company's right to
invoke the provisions of this paragraph with respect to any perceived Disability
of Executive.
Executive acknowledges that the payments referred to in this Section
4.3, together with any rights or benefits under any written plan or agreement
which have vested on or prior to the termination date of Executive's employment
under this Section 4.3, constitute the only payments to which Executive (or his
legal representative, as the case may be) shall be entitled to receive from the
Company hereunder in the event of a termination of his employment for death or
Disability, and that except for such payments the Company shall have no further
liability or obligation to him (or his legal representatives, as the case may
be) hereunder or otherwise in respect of his employment.
4.4 Continued Compliance. The amounts or benefits payable by the Company
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under Sections 4.2(b) and 4.3(c) are subject to Executive's continued compliance
with the provisions of Article V below. If Executive violates the provisions of
Article V, then the Company will have no obligation to make any of the payments
that remain payable by the Company under Sections 4.2(b) and 4.3(c) on or after
the date of such violation.
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ARTICLE V
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OWNERSHIP OF PROCEEDS OF EMPLOYMENT; NON-DISCLOSURE;
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NON-COMPETITION
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5.1 Ownership of Proceeds of Employment. The Company shall be the sole
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and exclusive owner throughout the universe in perpetuity of all of the results
and proceeds of Executive's services, work and labor during the Term in
connection with Executive's employment by the Company, free and clear of any and
all claims, liens or encumbrances. All results and proceeds of Executive's
services, work and labor during the Term shall be deemed to be works-made-for-
hire for the Company within the meaning of the copyright laws of the United
States and the Company shall be deemed to be the sole author thereof in all
territories and for all purposes.
5.2 Non-Disclosure of Confidential Information. As used herein,
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"Confidential Information" means any and all information affecting or relating
to the business of the Company and its Affiliates, including without limitation,
financial data, customer lists and data, licensing arrangements, business
strategies, pricing information, product development, intellectual, artistic,
literary, dramatic or musical rights, works, or other materials of any kind or
nature (whether or not entitled to protection under applicable copyright laws,
or reduced to or embodied in any medium or tangible form), including without
limitation, all copyrights, patents, trademarks, service marks, trade secrets,
contract rights, titles, themes, stories, treatments, ideas, concepts,
technologies, art work, logos, hardware, software, and may be embodied in any
and all computer programs, tapes, diskettes, disks, mailing lists, lists of
actual or prospective customers and/or suppliers, notebooks, documents,
memoranda, reports, files, correspondence, charts, lists and all other written,
printed or otherwise recorded material of any kind whatsoever and any other
information, whether or not reduced to writing, including "know-how", ideas,
concepts, research, processes, and plans. "Confidential Information" does not
include information that is in the public domain, information that is generally
known in the trade, or information that Executive can prove he acquired wholly
independently of his employment with the Company. Executive shall not, at any
time during the Term or thereafter, directly or indirectly, disclose or furnish
to any other person, firm or corporation any Confidential Information, except in
the course of the proper performance of his duties hereunder or as required by
law (in which event Executive shall give prior written notice to Company and
shall cooperate with Company and Company's counsel in complying with such legal
requirements). Promptly upon the expiration or termination of Executive's
employment hereunder for any reason or whenever the Company so requests,
Executive shall surrender to the Company all documents, drawings, work papers,
lists, memoranda, records and
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other data (including all copies) constituting or pertaining in any way to any
of the Confidential Information.
5.3 Non-Competition. Executive shall not, for so long as he is entitled
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to compensation under or pursuant to this Agreement (whether or not he is
actively employed by the Company hereunder), directly or indirectly: (a) compete
with the Company; or (b) be interested in, employed by, engaged in or
participate in the ownership, management, operation or control of, or act in any
advisory or other capacity for, any Competing Entity which conducts its business
within the Territory (as such terms are hereinafter defined); provided, however,
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that notwithstanding the foregoing, Executive may make solely passive
investments in any Competing Entity the common stock of which is "publicly
held," and of which Executive shall not own or control, directly or indirectly,
in the aggregate securities which constitute more than one (1%) percent of the
voting rights or equity ownership of such Competing Entity; or (c) solicit or
divert any business or any customer from the Company or assist any person, firm
or corporation in doing so or attempting to do so; or (d) cause or seek to cause
any person, firm or corporation to refrain from dealing or doing business with
the Company or assist any person, firm or corporation in doing so or attempting
to do so.
For purposes of this Section 5.3, (i) the term "Competing Entity"
shall mean any entity which presently or during the period referred to above
engages in any business activity the Company is then engaged in or proposes to
be engaged in; and (ii) the term "Territory" shall mean any geographic area in
which the Company conducts business during such period.
5.4 Non-Solicitation. Executive shall not, for a period of two (2) years
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from the date of any termination or expiration of his employment hereunder,
directly or indirectly: (a) solicit or hire, or attempt to solicit or hire, any
employee of the Company, or assist any person, firm or corporation in doing so
or attempting to do so; or (b) plan for, acquire any financial interest in or
perform any services for himself or any other entity in connection with a
business in which Executive's interest, duties or activities would inherently
require Executive to reveal any Confidential Information; or (c) solicit or
cause to be solicited the disclosure of or disclose any Confidential Information
for any purpose whatsoever or for any other party.
5.5 Breach of Provisions. In the event that Executive shall breach any of
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the provisions of this Article V, or in the event that any such breach is
threatened by Executive, in addition to and without limiting or waiving any
other remedies available to the Company at law or in equity, the Company shall
be entitled to immediate injunctive relief in any court, domestic or foreign,
having the capacity to grant such relief, without the necessity of posting a
bond, to restrain any such breach or threatened breach
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and to enforce the provisions of this Article V. Executive acknowledges and
agrees that there is no adequate remedy at law for any such breach or threatened
breach and, in the event that any action or proceeding is brought seeking
injunctive relief, Executive shall not use as a defense thereto that there is an
adequate remedy at law.
5.6 Reasonable Restrictions. The parties acknowledge that the foregoing
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restrictions, the duration and the territorial scope thereof as set forth in
this Article V, are under all of the circumstances reasonable and necessary for
the protection of the Company and its business.
5.7 Definition. For purposes of this Article V, the term "Company" shall
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be deemed to include any subsidiary of, affiliate of, predecessor to, or
successor of the Company.
ARTICLE VI
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MISCELLANEOUS
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6.1 Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the parties hereto and their respective legal representatives, heirs,
distributees, successors and assigns; provided that the rights and obligations
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of Executive hereunder shall not be assignable by him.
6.2 Notices. Any notice provided for herein shall be in writing and shall
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be deemed to have been given or made when personally delivered or three (3) days
following deposit for mailing by first class registered or certified mail,
return receipt requested, or if delivered by facsimile transmission, upon
confirmation of receipt of the transmission, to the address of the other party
set forth below or to such other address as may be specified by notice given in
accordance with this Section 6.2:
(a) If to the Company:
Four Media Company
0000 X. Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, C.E.O.
Fax No.: (000) 000-0000
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With a copy to:
Xxxxxxxxx Glusker Fields Claman
& Machtinger LLP
0000 Xxxxxx xx xxx Xxxxx, #0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
(b) If to Executive:
Xxxx X. Xxxxxx
____________________________
____________________________
With a copy to:
_______________________________
_______________________________
_______________________________
_______________________________
Fax No.:
6.3 Severability. If any provision of this Agreement, or portion thereof,
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shall be held invalid or unenforceable by a court of competent jurisdiction,
such invalidity or unenforceability shall attach only to such provision or
portion thereof, and shall not in any manner affect or render invalid or
unenforceable any other provision of this Agreement or portion thereof, and this
Agreement shall be carried out as if any such invalid or unenforceable provision
or portion thereof were not contained herein. In addition, any such invalid or
unenforceable provision or portion thereof shall be deemed, without further
action on the part of the parties hereto, modified, amended or limited to the
extent necessary to render the same valid and enforceable.
6.4 Confidentiality. The parties hereto agree that they will not, during
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the Term or thereafter, disclose to any other person or entity the terms or
conditions of this Agreement (excluding the financial terms hereof) without the
prior written consent of the other party or as required by law, regulatory
authority or as necessary for either party to obtain personal loans or
financing. Approval of the Company and of Executive shall be required with
respect to any press releases regarding this Agreement and the activities of
Executive contemplated hereunder.
6.5 Arbitration. Any controversy, claim or dispute arising out of or in
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any way relating to this Agreement, the alleged breach thereof, and/or
Executive's employment with the Company or
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termination therefrom, including without limitation, any and all claims for
employment discrimination or harassment, shall be determined by binding
arbitration administered by the American Arbitration Association under its
National Rules for Resolution of Employment Disputes ("Rules") which are in
effect at the time of the arbitration or the demand therefor. The Rules are
hereby incorporated by reference. California Code of Civil Procedure
(S)1283.05, which provides for certain discovery rights, shall apply to any such
arbitration, and said code section is also hereby incorporated by reference. In
reaching a decision, the arbitrator shall have no authority to change, extend,
modify or suspend any of the terms of this Agreement. The arbitration shall be
commenced and heard in Los Angeles County, California. The arbitrator(s) shall
apply the substantive law (and the law of remedies, if applicable) of California
or federal law, or both, as applicable to the claim(s) asserted. Judgment on
the award may be entered in any court of competent jurisdiction, even if a party
who received notice under the Rules fails to appear at the arbitration
hearing(s). The parties may seek, from a court of competent jurisdiction,
provisional remedies or injunctive relief in support of their respective rights
and remedies hereunder without waiving any right to arbitration. However, the
merits of any action that involves such provisional remedies or injunctive
relief, including, without limitation, the terms of any permanent injunction,
shall be determined by arbitration under this paragraph.
6.6 Waiver. No waiver by a party hereto of a breach or default hereunder
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by the other party shall be considered valid unless in writing signed by such
first party, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or any other nature.
6.7 Controlling Nature of Agreement. To the extent any terms of this
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Agreement are inconsistent with the terms or provisions of the Company's
Employee Manual or any other personnel policy statements or documents, the terms
of this Agreement shall control. To the extent that any terms and conditions of
Executive's employment are not covered in this Agreement, the terms and
conditions set forth in the Employee Manual or any similar document shall
control such terms.
6.8 Entire Agreement. This Agreement sets forth the entire agreement
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between the parties with respect to the subject matter hereof, and supersedes
any and all prior agreements or understanding between the Company and Executive,
whether written or oral, fully or partially performed relating to any or all
matters covered by and contained or otherwise dealt with in this Agreement.
This Agreement does not constitute a commitment of the Company with regard to
Executive's employment, express or implied, other than to the extent expressly
provided for herein.
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6.9 Amendment. No modification, change or amendment of this Agreement or
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any of its provisions shall be valid unless in writing and signed by the party
against whom such claimed modification, change or amendment is sought to be
enforced.
6.10 Authority. The parties each represent and warrant that they have the
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power, authority and right to enter into this Agreement and to carry out and
perform the terms, covenants and conditions hereof.
6.11 Applicable Law. This Agreement, and all of the rights and obligations
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of the parties in connection with the employment relationship established
hereby, shall be governed by and construed in accordance with the substantive
laws of the State of California without giving effect to principles relating to
conflicts of law.
6.12 Counterparts. Thus Agreement may be executed in counterparts, each of
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which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"COMPANY"
FOUR MEDIA COMPANY
By: /s/ Xxxxxx Xxxxxxx
______________________________
Name: /s/ Xxxxxx Xxxxxxx
____________________________
Title: CEO
___________________________
"EXECUTIVE"
/s/ X X Xxxxxx
__________________________________
Xxxx X. Xxxxxx
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