EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered
into and is effective as of January 1, 2001, by and between BRILLIANT DIGITAL
ENTERTAINMENT, INC., a Delaware corporation (the "COMPANY"), located at 0000
Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxx Xxxxx, XX 00000, and XXXXX XXXXXXXXXX, an
individual ("EXECUTIVE"), of 0000 Xxxx Xxxxx Xxxxx, Xxxxxxxxx, XX 00000.
R E C I T A L
Whereas, the Company and Executive desire to assure that the Company
retains the services of Executive, whose experience, knowledge and abilities are
extremely valuable to the Company.
NOW, THEREFORE, in consideration of the terms, conditions, covenants,
representations, warranties and promises contained in this Agreement, the
Parties agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive and Executive hereby
accepts employment with the Company on the terms and conditions set forth
herein.
2. DUTIES. Throughout the Term (as defined below), Executive shall
faithfully and diligently perform Executive's duties in conformity with the
directions of the Board of Directors of the Company (the "BOARD") and serve the
Company to the best of Executive's ability. Executive shall devote as much of
Executive's working time, attention and energies to the business and affairs of
the Company as Executive determines, in his sole and absolute discretion,
appropriate. Executive shall have the title of President, and shall report to
the Board, and at all times during the Term. Executive shall also be a member of
the Board. Executive shall have at a minimum the duties and responsibilities
commonly incident to the position of a President. At all times while Executive
is an employee of the company, Executive shall be headquartered in California.
Executive is expressly permitted to, directly or indirectly, be employed by,
participate in, or be connected in any manner with the ownership, management,
operation or control of any business, including, but not limited to, a business
similar to, or competitive with, the business of the Company in which the
Company is presently involved or becomes engaged during the Term.
3. TERM. The initial term of this Agreement (the "TERM") shall commence
upon the date hereof and shall terminate two (2) years thereafter (the "SECOND
ANNIVERSARY DATE"), unless sooner terminated as provided herein (the
"TERMINATION DATE").
4. COMPENSATION.
4.1. ANNUAL BASE SALARY. For Executive's services hereunder, the Company
shall initially pay Executive an annual salary of two hundred fifty thousand
dollars ($250,000) (the "BASE SALARY"). The Base Salary shall be paid in
accordance with the Company's normal procedures for paying salaried employees,
but in no event less frequently than semi-monthly.
4.2. MANDATORY BASE SALARY INCREASES. The Base Salary shall be increased
each January 1st (the "ADJUSTMENT DATE"), commencing with January 1, 2001,
pursuant to the Consumer Price Index-U.S. City Average, or any substantially
equivalent successor thereto, for the month of the then current Adjustment Date,
as published by the Bureau of Labor Statistics of the United States Department
of Labor.
4.3. BONUSES. Each year of the Term hereof, the Company shall award to
Executive a bonus of three percent (3%) of the Company's EBITDA (as defined
below) as reported in the Company's audited financial statements (the " BONUS").
The Bonus shall be payable on or within a reasonable time after each December
31st, commencing with December 31, 2001.
4.4. TAXES. All amounts paid to Executive hereunder shall be subject to the
applicable withholding of social security, federal, state, and other taxes and
deductions as required by law.
5. BENEFITS. Executive shall be entitled to participate in all benefits
offered to senior executives or similarly situated officers including, without
limitation, the following:
5.1. GROUP MEDICAL AND DISABILITY INSURANCE BENEFITS. During the Term,
Executive shall be eligible to participate, and the premiums shall be paid by
the Company on behalf of the Executive, in any group medical and disability
insurance programs as provided generally to officers of the Company.
5.2. CELLULAR TELEPHONE. During the Term, Executive shall be entitled to
the use of a cellular telephone and the monthly access charge and any
business-related charges shall be paid by the Company subject to SECTION 5.5
below.
5.3. VACATION. Executive shall be entitled to annual vacation to the same
extent as other similarly situated executives in accordance with the Company's
standard practices and policies.
5.4. RETIREMENT PLANS. During the Term, Executive shall be eligible to
participate in any retirement, pension, or other deferred or supplemental
compensation plans operated by the Company and any subsequent or additional
retirement plans established by the Board to the same extent as similarly
situated executives.
5.5. EXPENSE REIMBURSEMENT. Upon presentment of verifiable invoices and
other documentation as may be requested by the Company, and subject to the
Company's expense reimbursement policies applicable to similarly situated
executives, the Company shall reimburse Executive for the reasonable costs and
expenses which he incurs in connection with the performance of his duties and
obligations under this Agreement.
6. STOCK OPTIONS. Pursuant to the terms and conditions of the Brilliant
Digital Entertainment, Inc. Second Amended and Restated 1996 Stock Option Plan
(the "PLAN"), subject to the approval of the Board or Committee (as such term is
defined in the Plan), which approval shall not be unreasonably withheld, the
Company shall grant Executive an option to purchase two hundred fifty thousand
(250,000) shares of the Common Stock of the Company, which shall vest and become
exercisable as to one hundred thousand (100,000) of the shares of underlying the
option on the first anniversary of the date hereof (the "FIRST ANNIVERSARY
DATE") and twelve thousand five hundred (12,500) of the shares underlying the
option at the end of each month following the month in which the First
Anniversary Date occurs. In the event that the Company undergoes a change of
control, then, on the occurrence of such event, Executive's previously granted
options and options granted hereunder shall immediately accelerate and vest
entirely. To qualify as a change of control, one of the following must occur: i)
a sale of the company to a single
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entity of more than 50% of the company's stock; ii) a merger in which
shareholders of the company's stock hold less than 50% of the surviving entity;
or iii) a sale of substantially all of the company's assets.
7. TERMINATION.
7.1. TERMINATION AT WILL.
7.1.1 BY THE COMPANY. Subject to the provisions of this SECTION 7, the
Company may terminate this Agreement at any time, for any reason, or for no
reason, either with or without Cause (as defined below). In the event that such
termination is without Cause, the Company shall provide Executive with one
hundred and twenty (120) days' prior written notice.
7.1.2 BY EXECUTIVE. Subject to the provisions of SECTION 7, Executive may
terminate this Agreement at any time, for any reason, or for no reason, either
with or without Good Reason (as defined below), by delivering one hundred and
twenty (120) days' prior written notice to the Company; provided, however, that
the Company may reduce such one hundred and twenty (120) day period in its sole
discretion.
7.2. TERMINATION BY THE COMPANY WITHOUT CAUSE, TERMINATION BY EXECUTIVE
WITH GOOD REASON OR TERMINATION OF EXECUTIVE AS A RESULT OF DEATH OR DISABILITY.
If the Company terminates Executive without Cause, Executive terminates his
employment for Good Reason or Executive's employment terminates as a result of
his death or Disability (as defined below), in addition to payment of
Executive's accrued portion of the Base Salary, accrued vacation, reimbursable
expenses and pro rata portion of the Bonus, if any, through the date of
termination, Executive or Executive's representative shall be entitled to the
following:
7.2.1 SEVERANCE PAY. The Company shall pay Executive or Executive's
representative upon such termination a lump-sum amount equal to the greater of:
(1) the sum of twelve (12) months current monthly Base Salary; or (2) the sum of
(i) the monthly portion of the current Base Salary times (ii) the number of
months (including partial months) remaining until the Second Anniversary Date,
as defined in SECTION 3 herein (the "SEVERANCE PAY"). Any Severance Pay due
Executive under this SECTION 7.2.1 shall be paid to Executive within ten (10)
days after the Termination Date.
7.2.2 CONTINUATION COVERAGE. Except in the case of Executive's termination
of employment as a result of his death, the Company shall pay, on behalf of
Executive, for the maximum period for which COBRA coverage is available, the
premiums payable in order to continue the same coverage of Executive and
Executive's family under the Company's health insurance plan which exists as of
the date of termination, unless and until Executive and Executive's family are
otherwise covered by another health insurance plan (the "CONTINUATION
COVERAGE").
7.2.3 ACCELERATED VESTING. Any options to purchase the common stock of the
Company granted to Executive not otherwise vested shall be fully vested as of
the Termination
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Date, and all restrictions regarding the Restricted Stock shall be removed (the
"ACCELERATED VESTING").
7.3. TERMINATION BY THE COMPANY WITH CAUSE. If the Company terminates
Executive's employment with Cause, Executive shall not be eligible to receive
the Severance Pay, Continuation Coverage or Accelerated Vesting. Within a
reasonable amount of time of Executive's termination for Cause, Executive shall
be paid Executive's accrued portion of Base Salary, accrued vacation and
reimbursable expenses through the Termination Date.
7.4. VOLUNTARY TERMINATION BY EXECUTIVE. If Executive voluntarily
terminates Executive's employment with the Company without Good Reason, as
defined herein, Executive shall not be eligible to receive the Severance Pay,
the Continuation Coverage or the accelerated Vesting. Within seventy two (72)
hours following such termination, Executive shall be paid Executive's accrued
portion of the Base Salary and accrued vacation and within ten (10) days
following such termination; Executive shall be paid Executive's reimbursable
expenses payable through the date of the termination of Executive's employment.
8. DEFINITIONS.
8.1. CAUSE. For purposes of this Agreement, the term "CAUSE" shall mean
termination of Executive by the Company for the following, as determined by a
majority vote of the Board at a meeting to which Executive and Executive's
counsel shall be invited upon proper notice: (a) a willful breach by Executive
of any material provision of this Agreement that remains uncured by Executive
within thirty (30) days of written notice of such breach from the Board; (b)
repeated and willful failure or refusal to perform Executive's material duties
hereunder or repeated and gross negligence in the performance by Executive of
his duties hereunder that remains uncured by Executive within thirty (30) days
of written notice from the Board; PROVIDED, HOWEVER, that the Company shall only
be required to give notice one time or (c) if Executive is convicted of a
felony.
8.2. GOOD REASON. For purposes of this Agreement, the term "GOOD REASON"
shall mean Executive's termination of his employment with the Company for one or
more of the following reasons: (a) the reduction of Executive's title,
authority, duties or responsibilities, or the assignment to Executive of duties
inconsistent with Executive's position with the Company as set forth in SECTION
2 hereof that remains uncured by the Company within thirty (30) days of written
notice from Executive to the Board; (b) any requirement that Executive report to
any person other than the Board or its successor that remains uncured by the
Company within thirty (30) days of written notice from Executive to the Board;
(c) a substantial reduction in the Base Salary or Bonus opportunity of Executive
that is materially adverse to Executive and that remains uncured by the Company
within thirty (30) days of written notice from Executive to the Board; (d) the
relocation of Executive's office to a location that is outside of California; or
(e) any other material breach by the Company of this Agreement that remains
uncured by the Company within thirty (30) days of written notice from Executive
to the Board.
8.3. DISABILITY. For the purposes of this Agreement, "DISABILITY" shall
mean any physical or mental disability which causes Executive to be unable to
substantially perform Executive's normal duties as an employee of the Company;
provided, however, that Executive shall not be considered disabled until (i)
Executive has been so disabled for one hundred eighty (180) days; (ii)
Executive's attending physician shall have furnished to the Company
certification that the
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return of Executive to his duties as an employee of the Company is impossible or
improbable; and (iii) Executive is determined to be totally disabled by the
disability insurer then insuring Executive, if any.
8.4. EBITDA. For purposes of this Agreement, the term "EBITDA" shall mean,
for any period, Net Income (as defined below) for such period PLUS, without
duplication and to the extent reflected as a charge in the statement of such Net
Income for such period, the sum of (a) income tax expense, (b) interest expense,
amortization or write-off of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with indebtedness,
(c) depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (e) any
extraordinary, unusual or non-recurring expenses or losses (including, whether
or not otherwise includable as a separate item in the statement of such Net
Income for such period, losses on sales or writ-downs of assets outside of the
ordinary course of business), (f) any other non-cash expenses and charges, (g)
non-cash provisions and reserves for discontinued operations, (h) any loss
accounted for by the equity method of accounting; MINUS, to the extent included
in the statement of such Net Income for such period, the sum of (a) interest
income, (b) any extraordinary, unusual or non-recurring income or gains
(including, whether or not otherwise includable as a separate item in the
statement of such Net Income for such period, gains on the sales of assets
outside of the ordinary course of business) and (c) any other non-cash income,
all as determined on a consolidated basis. For purposes of this Agreement, the
term "NET INCOME" shall mean, for any period, the consolidated net income (or
loss) of the Company, determined on a consolidated basis in accordance with GAAP
for the applicable period.
9. CONFIDENTIALITY AND NON-SOLICITATION. During the Term, Executive will
have access to and become acquainted with what Executive and the Company
acknowledge are trade secrets and other confidential information (the
"CONFIDENTIAL INFORMATION") which are the exclusive property of the Company. In
light of the sensitive and proprietary nature of the Confidential Information,
notwithstanding any provision in this Agreement, including SECTION 2, executive
agrees to execute and be bound by the Company's standard Confidential
Information and Non-Solicitation Agreement.
10. MISCELLANEOUS PROVISIONS.
10.1. INSURANCE FOR EXECUTIVE. Executive shall, at all times, be
indemnified by the Company in connection with his performance of services
hereunder, at the maximum level permitted by law. The Company shall cause
Executive (together with other offices and directors) to be covered at all times
by directors and officers liability insurance with such coverage to be not less
than $1,000,000. The Company shall continue to indemnify Executive as provided
above and maintain such liability insurance coverage for Executive, after the
Term has ended for any claims that may be made against him with respect to his
service as a director or officer of the Company.
10.2. NOTICES. Except as otherwise provided in this Agreement, all notices,
requests, demands, and other communications under this Agreement shall be given
in writing and shall be served either personally, by facsimile or delivered by
first class mail, registered or certified, postage prepaid, and properly
addressed as follows:
Page 5
If to the Company:
c/o Brilliant Digital Entertainment, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Troop Xxxxxxx Xxxxxx Xxxxxxx & Xxxxx, LLP
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
If to Executive:
Xxxxx Xxxxxxxxxx
0000 Xxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxxx Xxxx, Esq.
0000 Xxxxxxx Xxxxxx Xxxx., 0xx xxxxx
Xxxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Notices shall be deemed received at the earliest of actual receipt,
confirmed facsimile or three (3) days following mailing.
10.3. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter contained herein and
supersedes all prior agreements, representations, and understandings of the
parties.
10.4. AMENDMENTS. This Agreement may not be amended, supplemented,
canceled, or discharged except by written instrument executed by the parties
hereto.
10.5. WAIVERS. All waivers hereunder shall be in writing. No waiver by any
party hereto of any breach or anticipated breach of any provision of this
Agreement by any other party shall be deemed a waiver of any other
contemporaneous, preceding, or succeeding breach or anticipated breach, whether
or not similar, on the part of the same or any other party.
10.6. SEVERABILITY. In the event that any provision of this Agreement shall
be unenforceable or inoperative as a matter of law, the remaining portions or
provisions shall remain in full force and effect.
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10.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, executors, administrators, successors, and assigns, provided,
however, that Executive may not assign any or all of his rights or duties
hereunder except following the prior written consent of the Company.
10.8. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same Agreement.
10.9. SECTION HEADINGS. The section headings used in this Agreement are
inserted for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
10.10. GOVERNING LAW. Except where otherwise indicated, this Agreement
shall be construed and enforced in accordance with the laws of the State of
California.
10.11. ADVICE OF COUNSEL. Executive acknowledges that he has been advised
to seek independent legal counsel for advice regarding the effect of the terms
and provisions hereof, and has either obtained such advice of independent legal
counsel, or has voluntarily and without compulsion elected to enter into and be
bound by the terms of this Agreement without such advice of independent legal
counsel.
IN WITNESS WHEREOF, the parties hereto have duly executed this Employment
Agreement as of the date first above written.
BRILLIANT DIGITAL ENTERTAINMENT, INC.
By: /S/ XXXX XXXX
-------------------------------
Title: CEO
-------------------------------
EXECUTIVE
/S/ XXXXX XXXXXXXXXX
-------------------------------------
Name: XXXXX XXXXXXXXXX
