Exhibit 10.2
AMENDED EMPLOYMENT AGREEMENT
FOR
XXXXX XXXX
THIS AMENDED EMPLOYMENT AGREEMENT ("Agreement") is made and
entered into as of the first day of February, 1997, between ON STAGE
ENTERTAINMENT, INC., a Nevada Corporation formally known as LEGENDS IN CONCERT,
INC., (the "Company"), and XXXXX XXXX, an individual "Hope").
RECITALS
WHEREAS, Hope has been employed by the Company since April 15,
1996, pursuant to the terms of an employment agreement and various amendments;
and
WHEREAS, Hope desires to continue to be employed by the
Company and the Company desires to continue to employ Hope; and
WHEREAS, the Company and Hope desire to clarify and amend
Hope's employment terms in a single document; and
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the Company and Hope agree as follows:
AGREEMENT
1. RECITALS. The above-listed Recitals are incorporated into
this Agreement in their entirety and expressly made a part hereof.
2. POSITION AND TITLE. The Company agrees to employ Hope in
the position of President and Chief Operating Officer, with authority specified
by the Board of Directors. Hope's duties and responsibilities shall include
day-to-day management and operation of the Company, profitability, strategic
direction and completion of monthly reports to the Board of Directors. Hope
shall supervise all Company employees, who shall report to him, except for
performers (i.e., impersonators, singers, dancers, musicians, etc.). Hope is
authorized to use the services of an Executive Secretary and Market Analyst.
Hope shall have the authority to hire and fire staff, subject to approval by the
Board of Directors, if required by law or by the Board. Hope accepts this
employment and agrees to devote his full work time, attention and energies to
the Company's business.
3. SUPERVISOR. Hope will report to the Chairman of the Board
and Chief Executive Officer, Xxxx X. Xxxxxx.
4. TERM AND TERMINATION.
(a) Length of Employment. Hope's employment shall be
for a period of three years and four months commencing on the date of this
Agreement and ending on May 31, 2000, unless another date is agreed to in
writing by the parties.
(b) Termination for Cause. The Company shall have the
right to terminate this Agreement and Hope's employment at any time for Cause.
"Cause" for termination shall include: (1) Hope's material breach of this
agreement; (2) conduct materially injurious to the Company; (3) fraud, theft,
embezzlement, misappropriation or similar activity; (4) conviction or pleading
guilty or no contest to any criminal offense, excluding minor offenses such as
traffic offenses; or (5) gross neglect of employment duties. However, if the
cause for termination is one of the reasons listed in (1), (2) or (5) above,
prior to terminating Hope, the Company shall first notify Hope in writing of his
offense and afford him 30 days to correct the problem. If Hope has failed to
correct the situation to the reasonable satisfaction of the Board of Directors
within 30 days of such notification, the Company may terminate Hope's
employment.
(c) Severance Pay. The Company shall have the right
to terminate this Agreement and Hope's employment at any time without cause,
provided that the Company shall: (1) pay Hope a lump sum payment (without
mitigation for subsequent employment) on the date of such termination in an
amount equal to the greater of (a) Hope's Base Salary, car allowance and
insurance allowance due from the date of termination up until April 30, 1999,
plus reimburse Hope for any accrued but unused vacation days as of the date of
termination; or (b) one year's Base Salary, car allowance and insurance
allowance, plus reimburse Hope for any accrued but unused vacation days as of
the date of termination; and (2) immediately vest all of Hope's non-vested
options. In addition, Hope shall in either case be entitled to any accrued bonus
due to Hope as of the termination date which will be paid to Hope no later than
sixty (60) days after the release of the Companies audited financial statements
for that respective year.
(d) Termination by Hope. If there shall be a change
in voting control in the Company, other than through an initial public offering
or subsequent secondary offerings, then Hope shall have the right to terminate
this Agreement and Hope's employment at any time without cause, and the Company
shall: (1) pay Hope a lump sum payment (without mitigation for subsequent
employment) on the date of such termination in an amount equal to the greater of
(a) Hope's Base Salary, car allowance and insurance allowance due from the date
of termination up until April 30, 1999, plus reimburse Hope for any accrued but
unused vacation days as of the date of termination; or (b) one year's Base
Salary, car allowance and insurance allowance, plus reimburse Hope for any
accrued but unused vacation days as of the date of termination; and (2)
immediately vest all of Hope's non-vested options. In addition, Hope shall in
either case be entitled to any accrued bonus due to Hope as of the termination
date which will be paid to Hope no later than sixty (60) days after the release
of the Companies audited financial statements for that respective year.
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5. COMPENSATION.
(a) Salary. As compensation for his services, Hope
will receive $200,000 per annum (the "Base Salary"), payable in equal bi-monthly
installments. On April 15 of each year, Hope's annual Base Salary shall be
increased by ten percent (10%) of the previous year's Base Salary, contingent
upon Hope meeting reasonable financial performance goals agreed to by the Board
of Directors and Hope. By the signing of this Agreement the Board of Directors
and Hope hereby agree that Hope did meet said financial performance goals for
the year ended December 31, 1996, and is therefore eligible for this ten percent
(10%) increase on April 15, 1997.
(b) Bonus. An annual bonus pool of five percent (5%)
of the Company's pre-tax earnings (excluding extraordinary items and
non-recurring charges including but not limited to the forgiveness of founder's
debt, and costs related to the Company's financing activities) ("Pre-tax
Earnings") will be established for key executives of the Company provided the
Company meets or exceeds it's projected pre-tax earnings for each year which has
been approved by the Board of Directors and is attached hereto as Exhibit 1. Any
bonus due to Hope for any year under this Agreement will be paid to Hope no
later than sixty (60) days after the release of the Companies audited financial
statements for the respective year. Hope is entitled to participate in the
annual bonus pool based on the following formula:
(i) For the year ended December 31, 1996, 1
1/2 percent of the first $1,000,000 in Pre-tax Earnings and then three percent
(3%) of Pre-tax Earnings thereafter; and
(ii) For the years ended December 31, 1997,
December 31, 1998, and December 31, 1999, two percent (2%) of the Company's
Pre-tax Earnings for each such year, provided the Company meets or exceeds their
projected Pre-tax Earnings for that year as listed on Exhibit 1.
(c) Vacation. Hope shall be eligible for 15 days of
paid vacation benefits each employment year, accrued on a pro rata basis.
(d) Insurance. The Company will reimburse Hope for
the reasonable actual cost of his full family medical and dental policy now in
effect, or the equivalent, up to a cap of $600 per month, until such time as the
Company establishes its own similar medical and dental plan, at which time the
Company will provide the same to Hope at no cost to him.
(e) Car Allowance. Hope shall be paid a car allowance
of $500 per month.
(f) Cellular Telephone. The Company will reimburse
Hope for business related cellular telephone calls and for standard monthly
cellular telephone fees.
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(g) Laptop Computer. The Company shall furnish Hope
with a laptop computer for his use.
(h) Stock Options. As of August 7, 1996, the Company
granted to Hope options to purchase 565,000 shares of Common Stock (pre-reverse
split) at an exercise price of $2.20 per share (the "Option") under the
Company's 1996 Stock Option Plan (the "Plan"). Subject to Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), Hope shall specify what
portion of the stock options granted to Hope shall be incentive stock options
and what portion shall be non-qualified stock options.
The Option provides that the right to exercise with
respect to the shares under option shall vest as follows: (1) for non-qualified
options 50% on the date of grant of the option; an additional 25% on the first
anniversary date of the date of the grant of the option; and an additional 25%
on the second anniversary date of the date of the grant of the option; (2) for
qualified options 33% on the date of grant of the option; an additional 34% on
the first anniversary date of the date of the grant of the option; and an
additional 33% on the second anniversary date of the date of the grant of the
option. The Option provides that in the event of any sale of 20% or more of the
Company's common stock (other than through an initial public offering), a
reverse merger, significant sale of assets (not in the ordinary course of
business) or a change in control (defined as a change in the voting control as
it existed on the date of the execution of this Agreement) all of Hope's
outstanding options shall vest immediately. Hope shall have a 10 (ten) year
period in which to exercise the Option, to the extend vested, from the date of
grant.
In the event Hope is terminated at a time when the
Company's stock is not publicly traded and such termination is for other than
"Cause" (as defined in Section 3(b)), Hope may "put" any shares he has obtained
through the exercise of the foregoing Options to the Company at a price equal to
the then-current fair market value of such stock, which amount shall be paid to
Hope within twenty-four (24) months, with interest on any unpaid balance at the
prime rate as announced in the Wall Street Journal on the date the Company
purchases the stock. The fair market value shall be agreed upon by Hope and the
Board of Directors of the Company. If no such agreement is reached within 30
days, fair market value shall be as determined by a valuation firm acceptable to
Hope and the Company.
(i) Expense Reimbursement. The Company shall
reimburse Hope for those expenses incurred by him in connection with the
performance of his duties on behalf of the Company that are in accordance with
the Company's expense reimbursement procedures currently in place; provided,
that such expenses are reasonable for an executive of Hope's status and are
appropriately documented.
(j) Executive Benefit Plan. If financial conditions
permit, the Company agrees to implement an executive benefit plan, which will
include life and disability insurance benefits. The Company may, at the sole
discretion of the Board of Directors, make contributions to an executive benefit
plan.
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6. CONFIDENTIAL INFORMATION. Hope acknowledges that during his
employment by the Company he will have access to various trade secrets and other
proprietary and confidential information. Hope agrees as a material condition of
this Agreement to execute a Confidentiality And Non-Competition Agreement in the
form of the attached Exhibit A, immediately subsequent to the signing of this
Agreement.
7. ARBITRATION. Any disputes between Hope and the Company
arising out of this agreement or Hope's employment by the Company including but
not limited to alleged violations of federal, state and/or local statutes (for
example, claims for discrimination including but not limited to discrimination
based on race, sex, sexual orientation, religion, national origin, age, marital
status, handicap or disability; and claims relating to leaves of absence
mandated by state or federal law), breach of any contract or covenant (express
or implied), tort claims, violation of public policy or any other alleged
violation of Hope's statutory, contractual or common law rights (and including
claims against the Company's officers, directors, employees or agents), which
Hope and the Company or other party are unable to resolve through direct
discussion, regardless of the kind or type of dispute (excluding claims for
workers' compensation, unemployment insurance and any solely monetary dispute
within the jurisdiction of small claims court) shall be decided exclusively by
conclusive and binding arbitration in the State of Nevada in accordance with the
American Arbitration Association's ("AAA") Employment Dispute Resolution Rules
(the "Rules"). Except for those claims specifically excluded from coverage under
this arbitration provision, Hope and the Company hereby waive the right to
pursue any claims, including but not limited to employment termination-related
claims, through civil litigation outside the arbitration procedures of this
provision, unless otherwise required by law. Hope and the Company each have the
right to be represented by counsel with respect to arbitration of any dispute
pursuant to this paragraph. Each party shall have the right to take depositions,
make requests for production of documents to any person or entity, and to
subpoena witnesses and documents for the arbitration. Additional discovery may
be had only where the arbitrator so orders, upon a showing of substantial need.
The arbitrator shall be selected by agreement between Hope and the Company, but
if they do not agree on the selection of an arbitrator within 30 days after the
date of the request for arbitration, the arbitrator shall be selected pursuant
to the Rules. Each party shall pay its own expenses for the arbitration and the
fee and expenses of the arbitrator shall be shared equally.
8. ENTIRE AGREEMENT.This agreement contains the entire
understanding between Hope and the Company and it supersedes any prior oral or
written agreements and understandings between them. This agreement may be
modified only in writing signed by both parties.
9. SEVERABILITY. If a court of competent jurisdiction holds
that any provision of this agreement is void or unenforceable, the remaining
provisions shall continue in full force and effect.
10. NOTICES.
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(a) Any notice under this agreement given by the
Company to Hope shall be personally delivered to him or sent by certified mail
to his most recent home address as shown in the Company's records.
(b) Any notice by Hope to the Company shall be sent
by certified mail to the following address:
On Stage Entertainment, Inc.
0000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxx
(c) Any notice sent by certified mail shall be
effective when mailed.
11. GOVERNING LAW. This Agreement shall be governed by and
interpreted and enforced in accordance with the substantive laws of the State of
Nevada without reference to the principles governing conflict of laws applicable
in that or any other jurisdiction.
Dated: February 1, 1997 /s/ Xxxxx Xxxx
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By: Xxxxx Xxxx
Dated: February 1, 1997 /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Chief Executive Officer
On Stage Entertainment, Inc.
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