EMPLOYMENT AGREEMENT
AGREEMENT made as of October 14, 1997 (the "Effective Date")
(this "Agreement"), between MARQUEE MUSIC, INC., a Delaware corporation (the
"Employer"), and THE MARQUEE GROUP, INC., a Delaware corporation (the
"Parent") and the owner of all the outstanding capital stock of the Employer,
and XXXXXX XXXX (the "Executive").
WHEREAS, the Executive is desirous of serving the Employer
on the terms and conditions herein provided;
NOW, THEREFORE, for good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the Employer, the
Parent and the Executive agree as follows:
1. Employment. Upon the terms and subject to the conditions of
this Agreement, the Employer hereby employs the Executive and the Executive
hereby accepts employment by the Employer on the terms hereinafter set forth.
2. Term. The term of the Executive's employment hereunder shall
commence on the date first set forth above (the "Effective Date") and continue
until the fifth anniversary of October 1, 1997, and shall terminate at the
close of business on such date (the "Termination Date") unless terminated
earlier in accordance with the provisions of this Agreement (such period of
employment shall be hereinafter referred to as the "Term").
3. Executive's Position, Duties and Authority.
3.1 Position. The Employer shall employ the Executive, and
the Executive shall serve, as the Chairman, President and Chief Executive
Officer of the Employer and of any
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successor to the Employer by merger, acquisition of all or substantially all
of the assets of the Employer or otherwise. The Executive shall also serve as
a member of the Board of Directors of the Employer at no additional
remuneration.
3.2 Description. The Executive shall: (i) be responsible for
procuring new clients for the Employer who seek representation in the booking
of stage performances and for the negotiation and booking of musical concerts
and stage performances for the Employer's clients; (ii) subject to the
ultimate authority of the Board of Directors of the Parent, be responsible
for, and have full authority and control for, all operations of the Employer
including, without limitation, the full power and authority to act for and
bind the Employer in the normal and ordinary course of business; (iii) have
the exclusive authority to appoint or remove, any employee of the Employer,
fill any vacancy in any office, establish compensation for each employee
(provided that compensation of any employee in excess of $100,000 per annum
shall require the approval of Employer's Board of Directors) and establish,
alter or amend the duties of any employee of the Employer; (iv) full power and
authority to make expenditures on behalf of the Employer in accordance with
the Employer's annual budget; and (v) subject to the Employer's annual budget,
the exclusive authority to draw upon the Credit Line (as defined below). The
Executive shall, at all times, be the highest ranking officer of the Employer
and a member of the Board of Directors of the Employer. The Executive shall
report solely to the Chief Executive Officer of the Parent and the Board of
the Directors of the Parent; provided, however, that such reporting obligation
shall not diminish or reduce the Executive's authority hereunder.
4. Full-Time Services.
4.1 General. The Executive shall devote substantially all of
his business time, labor, skill and energy to conducting the business and
affairs of the Employer and to satisfying the duties and responsibilities
referred to in Section 3.2 of this Agreement. Notwithstanding the foregoing,
the Executive shall have the right to devote a portion of his business time to
personal investments and commitments not related to the business of the
Employer or the Parent; provided, that the time
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devoted thereto shall not interfere in any material respect with the
performance of the Executive's services hereunder. In addition, except as
provided in Section 14, the Executive may serve on boards of directors of
not-for-profit organizations and companies which do not compete with the
business of the Employer or the Parent, and, with the consent of the Parent,
on boards of directors of any other organizations or companies; provided, that
the service on any such boards of directors shall not interfere in any
material respect with the performance of the Executive's services hereunder.
4.2 Opportunities; Investments. The Executive covenants and
agrees that, during the Term, he shall inform the Employer of each business
opportunity related to the business of the Employer and any of the Employer's
subsidiaries, the Parent or any of the Parent's subsidiaries in each case of
which he becomes aware, and that he will not, directly or indirectly, exploit
any such opportunity for his own account, nor will he render any services to
any other person or business, or acquire any interest of any type in any other
business, that competes with any material business of the Employer or any of
the Employer's subsidiaries, the Parent or any of the Parent's subsidiaries;
provided, however, that the foregoing shall not be deemed to prohibit the
Executive from acquiring, solely as a passive investor, up to 10% of any
securities or other interests in any partnership, trust, corporation or other
entity; provided that, the Executive may not acquire any interest in any
entity that derives revenues from the business of booking concerts unless such
revenues are not material in relation to the other revenues of such entity
with the exception of up to 2% interest in any entity having a class of
securities which are publicly traded on a national or regional securities
exchange.
5. Location of Employment. Unless the Executive consents
otherwise in writing, the headquarters for performance of his services
hereunder, shall be at a suitable office facility within New York City.
6. Base Salary/Bonus.
6.1 Base Salary. During the Term, the Employer shall pay or
cause to be paid to the Executive a base salary at the annual rate of not less
than $200,000 (the "Base Salary"),
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payable in accordance with the Employer's normal payroll practices. The Base
Salary will be increased annually on the anniversary of the date of this
Agreement by the greater of 5% per annum or a percentage equal to the
percentage increase, if any, in the Consumer Price Index for all Urban
Consumers, for all items in the New York, New York Consolidated Statistical
Area, as promulgated by the Department of Labor, Bureau of Statistics (the
"CPI"), for the immediately preceding twelve-month period. In addition, the
Executive's Base Salary shall be subject to review by the Board at least once
per calendar year during the Term and shall be increased by such amounts as
the Board shall determine in its discretion. Any such higher annual rate shall
thereafter be deemed to be the Base Salary for all purposes of this Agreement.
The Base Salary shall be payable in equal installments in accordance with the
Employer's regular payroll practices during the Term for senior executives
(but in no event less than monthly).
6.2 Discretionary Bonus. The Executive shall be entitled to
receive an annual incentive cash bonus (the "Discretionary Bonus") during the
continuance of the Executive's employment hereunder at the sole discretion of
the Board of Directors of the Parent based upon criteria to be established by
the Board of Directors of the Parent, which criteria shall include, but shall
not be limited to, the performance of the Executive and business opportunities
and ideas introduced to the Parent and its subsidiaries and affiliates by the
Executive. The Discretionary Bonus shall be payable within a reasonable period
of time not to exceed ninety (90) days following the end of each fiscal year
of the Employer.
6.3 Income Bonus. (a) The Executive shall be entitled to
receive an annual incentive cash bonus (the "Income Bonus") during each Fiscal
Year (as hereinafter defined) during the Term equal to 10% of the first
$1,500,000 of Operating Income (as defined below) of the Employer for such
fiscal year and 15% of the Employer's Operating Income in excess $1,500,000
and up to $2,000,000 for such fiscal year. Notwithstanding the foregoing, if
the Employer's Operating Income is in excess of $2,000,000 during any Fiscal
Year during the Term, the Income Bonus shall be equal to 15% of the Employer's
Operating Income for such Fiscal Year. The Income Bonus shall be payable
within a reasonable period of time not to exceed ninety (90) days following
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the end of each Fiscal Year of the Employer during the Term.
(b) As used herein, the following terms shall have the
following respective meanings:
(i) "Operating Income" shall, as to any period,
mean the result of (A) the sum of the revenues of Employer derived during such
period derived from those clients or business opportunities of Employer as of
the date hereof, and from clients or business opportunities who are introduced
to Employer by Executive or by agents employed by Employer in the ordinary
course of business (which shall include Xxxx Xxxxxxxx) with the exception of
Acquisition Clients (as hereinafter defined) plus fifty percent (50%) of
revenues of Employer from all clients or business opportunities introduced to
Employer by Parent or an Affiliate of Parent (other than Employer) with the
exception of Acquisition Clients plus ten percent (10%) of revenues of
Employer from Acquisition Clients less (B) the sum of Employer's direct
operating expenses, plus Employer's Allocable Share of the Parent's corporate
overhead expenses; provided, however, that the calculation of Operating Income
shall be made without deduction for: (i) Federal, state and local income
taxes; (ii) the cost and expense and amortization expense relating to the
transactions contemplated by the Purchase Agreement (as hereinafter defined)
and 90% of the cost and expense of any other Acquisition (as hereinafter
defined), including without limitation, depreciation and amortization expense
relating to any of the foregoing transactions; (iii) extraordinary
depreciation and amortization expense; (iv) any advances, signing bonuses,
salaries, benefits and other compensation paid to agents other than Executive
and Xxxxxxxx who become employees of the Employer except to the extent that
revenues generated by such agents are included in Operating Income, in which
case any such advances, signing bonuses, salaries, benefits and other
compensation will be included on a proportionate basis based on the ratio of
the revenues of such agents included in Operating Income to all revenues
generated by such agents; (v) any bonuses paid to Executive (including,
without limitation, the Income Bonus and Operating Bonus), and provided,
further, that any allocation of general corporate overhead expense to Employer
from Parent shall be at the more favorable of an allocation determined by the
Chief Executive Officer of Employer or a percentage of such general corporate
overhead expenses based
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on the ratio of Employer's revenues to all revenues of Parent on a
consolidated basis. Notwithstanding anything contained herein to the contrary,
if the Effective Date shall be a date later than October 1, 1997, the
Operating Income for the Fiscal Year ending September 30, 1998 shall be for
all purposes of this Agreement, deemed to be the actual Operating Income for
such period multiplied by the ratio of 12 months to the actual number of
calendar months occurring in such Fiscal Year.
(ii) "Allocable Share" shall mean the ratio,
expressed as a percentage, of the revenues of Employer included in the
calculation of Operating Income to all revenues of the Parent.
(iii) "Acquisition" shall mean any acquisition by
Employer of the equity interests or assets of a person, corporation or
business entity, or similar transaction (i.e. long term employment
agreements).
(iv) "Acquisition Clients" shall mean the clients
of any agent or agency as of the date of the acquisition of such agent or
agency by means of a transaction in which Employer made payments (which are
not intended to be a salary whether or not so characterized) of cash in excess
of $300,000 or payments of stock of the Parent (which stock shall not be
subject to vesting) having a Market Value in excess of $300,000 or any
combination thereof in excess of $300,000 in the aggregate; and any clients
introduced to Employer by an agent or agency after the consummation of an
Acquisition shall not be Acquisition Clients for all purposes of this
Agreement and shall not be deemed to have been introduced to Employer by
agents employed by Employer in the ordinary course of business.
(v) "Market Value" shall mean the value of the
stock of Parent of Employer determined by the official average closing price
per share of said stock for the twenty (20) trading days immediately preceding
the date of determination in the market in which it is publicly traded.
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(vi) "Fiscal Year" shall mean each consecutive
twelve month period commencing October 1st and ending September 30th,
commencing with the Fiscal Year beginning October 1, 1997 (it being understood
that the Fiscal Year ending September 30, 1998 may commence after October 1,
1997).
(vii) "Purchase Agreement" shall mean the Asset
Purchase Agreement dated as of July 21, 1997 among Employer, Parent, Executive
and QBQ Entertainment, Inc. ("QBQ").
6.4 Cash Flow Bonus. The Executive shall be entitled to
receive an annual incentive cash bonus (the "Cash Flow Bonus") during each
Fiscal Year during the Term equal to $50,000 if the Employer's Operating
Income for such Fiscal Year equals or exceeds $1,000,000. Notwithstanding the
foregoing, if the Employer's Operating Income is less than $1,000,000 during
any Fiscal Year during the Term, but at the end of any future Fiscal Year end
during the Term the average of the Employer's Operating Income during each
Fiscal Year of the Term is in excess of $1,000,000 per Fiscal Year, the
Executive shall be entitled to receive any Cash Flow Bonus not previously paid
with respect to any prior Fiscal Year, because of Operating Income shortfalls
in a previous year. The Cash Flow Bonus shall be payable within a reasonable
period of time not to exceed ninety (90) days following the end of each Fiscal
Year during the Term.
6.5 Options. During the Term, the Executive shall be granted
options to purchase shares of the Parent's Class A Common Stock at the rate of
5,000 options per $100,000 of Income Bonus earned by the Executive during any
Fiscal Year of the Term. Each such option shall have terms not less favorable
to the Executive then the following: an exercise price equal to the Market
Value per share on the date of the grant, they shall be exercisable for ten
years, and shall vest in two equal installments on each anniversary of the
date of grant (provided, that each such option shall vest in full in the event
that Executive's employment shall be terminated by reason of death, Total
Disability (as defined below), or a termination by Executive for Good Reason
(as defined below) or an Acceleration Event (as defined in the Purchase
Agreement), and shall be not less favorable than
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as set forth in the form of Option Agreement attached hereto as Exhibit 6.5.
6.6 Calculation of Bonuses. (a) Employer shall deliver to
Executive, within sixty (60) days after the end of each Fiscal Year, a written
calculation (the "Annual Statement"), in reasonable detail, of the Operating
Income, Cash Flow Bonus, Income Bonus and stock options issuable with respect
to such Fiscal Year, which Annual Statement shall include a profit and loss
statement, statement of cash flow and a balance sheet, and shall be certified
by the Chief Financial Officer of Employer as being accurate. Except as
otherwise required pursuant to this Agreement, the calculation of Operating
Income to be made hereunder shall be determined in accordance with generally
accepted accounting principles consistently applied, shall be in accordance
with the books and records of Employer and shall be consistent with the
audited financial statements of Employer.
(b) In the event that Executive shall dispute the
calculation of the Operating Income, Income Bonus, Cash Flow Bonus or stock
options issuable with respect to Income Bonus for any Fiscal Year, Executive
shall notify Employer in writing no later than sixty (60) days after receipt
of the Annual Statement. In the event of such dispute such calculation shall
be submitted to a Big Six Firm mutually agreed upon by Employer and Executive
for review and recalculation (or, if the Employer and the Executive cannot
agree on such Big-Six Firm within twenty (20) days after such written
notification has been delivered to the Employer, Employer and Executive shall
within twenty (20) days thereafter each select a Big-Six Firm and such two
Big-Six Firms shall select a third Big-Six Firm, and such dispute shall be
submitted to such third Big-Six Firm as aforesaid for review and recalculation
or, if such third Big-Six Firm shall not for any reason have been designated
within such twenty (20) day period, then a Big-Six Firm (which shall in any
event not be a Big Six Firm regularly employed by the Employer) shall be
designated as promptly as is practicable by the American Arbitration
Association in accordance with its rules then obtaining and such dispute shall
be submitted to such Big-Six Firm so designated for review and recalculation).
The Big-Six Firm(s) ultimately undertaking such review and recalculation is
hereinafter sometimes hereinafter referred to as the "Accountants" and the
determination of the
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Accountants as to the amount of Operating Income, Income Bonus, Cash Flow
Bonus an/or stock options issuable shall be final and binding upon the
parties. Any such review and recalculation shall be made in accordance with
the definition of Operating Income and other guidelines contained in this
Agreement. The fees, costs and expenses of such review and recalculation shall
be borne by Executive unless the Operating Income (or bonus compensation)
calculated by the Accountants shall exceed the Operating Income (or bonus
compensation) set forth in the Annual Statement by more than seven and
one-half percent (7.5%) in which case such fees, costs and expenses shall be
borne by Employer. Employer agrees to cooperate with the Accountants and to
provide all such information as is reasonably necessary to the Accountants in
the performance of their review and recalculation.
6.7 Withholding. The Employer shall, in accordance with
applicable law, withhold from the Base Salary and all other cash amounts
payable by the Employer under the provisions of this Agreement to the
Executive, or, if applicable, to his estate, legal representatives or other
beneficiary designated in writing by the Executive, all social security taxes,
all Federal, state and municipal taxes and all other charges and deductions
which now or hereafter are required by law to be charges on the compensation
of the Executive or charges on cash benefits payable by the Employer hereunder
to his estate, legal representatives or other beneficiary.
7. Loan.
7.1 Loan. Upon the full execution and delivery of this
agreement, the Parent shall make a non-recourse loan to the Executive in the
amount of $1,500,000 (the "Loan") evidenced by a Promissory Note in the form
attached hereto as Exhibit A (the "Note"). The Loan shall accrue interest at
the rate of 7% per annum and will mature on the fifth anniversary of the date
hereof (but shall be prepayable) with quarterly interest only payments. The
Loan shall be secured by a pledge of 100% of the shares of the "Consideration
Stock" issued pursuant to Purchase Agreement. At the Executive's option,
interest payments may be accrued but not paid provided that at the time that
such payment is due, the value of the Consideration Stock pledged to the
Employer is such that it shall
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represent not less than 125% of the unpaid balance of the Loan including
accrued and unpaid interest thereon. The value of the Stock shall be
determined by the Market Value (as defined in the Note) of such stock.
8. Expenses and Vacation.
8.1 The Employer shall reimburse the Executive, upon
production of reasonably detailed accounts and vouchers or other reasonable
evidence of payment by the Executive, all in accordance with the Employer's
regular procedures in effect from time to time and in form suitable to
establish the validity of such expenses for tax purposes, all ordinary,
reasonable and necessary travel, entertainment and other expenses as shall be
incurred by him in the performance of his duties hereunder and in accordance
with the Employer's policies and procedures. Without limiting the generality
of the foregoing, it is understood and agreed that Executive shall be entitled
to first class travel and accommodations.
8.2 The Employer hereby agrees that, during the Term, it
shall have available a working capital line of credit, either from the Parent
or an outside source, of not less than $1,500,000 (the "Credit Line").
8.3 Executive shall be entitled to vacation with pay during
the Term in accordance with the Employer's vacation policy in effect from time
to time; provided, however, that the Executive shall be entitled to paid
vacation time at the rate of not less than four weeks per calendar year during
the Term.
9. Benefits. During the Term, the Executive shall be entitled to
participate in any pension or profit-sharing plan or program of the Parent now
existing or established hereafter, on terms no less favorable than those made
available to the other senior executives of the Parent. The Executive shall
also be eligible to participate in any group life insurance, hospitalization,
medical, health and accident, disability or similar plan or program of the
Parent now existing or established hereafter, on terms no less favorable than
those made available to the other senior executives of the
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Parent. Employer shall, at all times during the Term, pay Executive an
automobile allowance of $900 per month within ten (10) days of the
commencement of each month.
10. Insurance. The Executive agrees to submit himself, upon request
of the Parent and within a reasonable period of time from such request for
physical examination by any physician designated by the Parent's Board as
required or advisable in connection with the obtaining of any key man
insurance policy or similar coverage which the Parent may wish to obtain. The
Executive knows of no reason why he is not insurable at commercially
reasonable rates for a person of his age.
11. Indemnification. The Employer shall indemnify the Executive and
his legal representatives to the fullest extent permitted by the laws of the
State of Delaware, and the Executive shall be entitled to the protection of
such insurance policies which the Employer hereby agrees to maintain for the
benefit of its directors and officers, against all costs, charges or expenses
whatsoever incurred or sustained by him or his legal representatives in
connection with any action, suit or proceeding to which he or his legal
representatives may be made a party by reason of his being or having been a
director or officer of the Employer or the Parent (or any subsidiary or
affiliate thereof), or because of actions taken purportedly on behalf of the
Employer or the Parent (or any subsidiary or affiliate thereof) after the
Effective Date. The Employer shall, upon request by the Executive, promptly
advance or pay any amount for costs, charges or expenses (including, without
limitation, legal fees and expenses incurred by counsel retained by the
Executive) in respect of his right to indemnification hereunder, subject to a
later determination as to the Executive's ultimate right to receive such
payment. This Section 11 shall survive any termination of the Term of this
Agreement.
12. Confidential Information. All records, papers, models, programs
and other documents and those kept or made by the Executive relating to the
business or affairs of the Employer and/or its clients or customers (which
shall contain confidential and proprietary information) shall be and remain
the property of the Employer, and to the extent available shall be delivered
by the Executive to the Employer as required by the Board and, in any event,
upon the expiration or earlier termination of the Executive's employment by
the Employer.
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13. Termination.
13.1.1 Notwithstanding the provisions of Sections 1 and 2
hereof, this Agreement may be terminated prior to the expiration of the Term
by the Chief Executive Officer of the Parent only upon the happening of any of
the following events (and for no other reason):
(i) Upon the death of the Executive;
(ii) Upon the Total Disability of the Executive
(defined as the inability of the Executive to perform his duties on account of
illness or other incapacity for 6 consecutive months in any period of 12
consecutive months);
(iii) For Cause, which shall be defined as:
(a) Executive is convicted of a felony or the
Executive commits any act of embezzlement against the Employer;
(b) a final non-appealable determination by a
court of competent jurisdiction that the Executive has made a fraudulent
material misrepresentation in the Purchase Agreement; or
(c) upon the occurrence of any willful
material breach of any material covenant of the Executive contained in this
Agreement, or in the event of willful malfeasance, gross negligence, or gross
or willful misconduct in the performance of his duties hereunder in each case
having a material adverse effect on the business of the Employer, which is not
cured within 30 days after written notice is given to the Executive specifying
such material breach, gross negligence, willful malfeasance or gross or
willful misconduct.
13.1.2 Notwithstanding the provisions of Section 1 and 2
hereof, this Agreement may be terminated by Executive with Good Reason (as
hereinafter defined) prior to the expiration
of the Term upon written notice to the Employer. As used herein:
(a) "Good Reason" shall mean a breach of a material
obligation of Employer or Parent of this Agreement, the Purchase Agreement or
any of the other Transaction Agreements (as such term is defined in the
Purchase Agreement) which (if curable) is not cured within thirty (30)
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days after receipt of written notice from Executive. Such a breach described
in this Section 13.1.2 shall include any of the following events: (i) the
removal of Executive from his position as Chairman, President and/or Chief
Executive Officer of Employer (other than a termination of Executive's
employment for Cause); (ii) Executive shall not be elected as a director of
Employer; (iii) Executive shall have been required to report to anyone other
than as provided in Section 3.2 of this Agreement; (iv) a material decrease in
Executive's responsibilities or authority as provided under this Agreement
without his consent; (v) a Change in Control; (vi) a reduction in Executive's
Base Salary without his consent or the failure of the Employer to pay to
Executive without his consent any amounts owed to Executive pursuant to this
Agreement within ten (10) days of the date such payment was due to Executive;
(vii) if the Employer shall require Executive's principal place of employment
to be located other than as provided in Section 5; (viii) the failure of the
Parent and Employer to provide and maintain the Credit Line of $1,500,000.
(b) "Change of Control" shall mean (i) the
acquisition of all or substantially all of the assets of Employer or the
Parent (whether by means of a merger, consolidation, sale of stock, sale of
assets or otherwise) other than by an affiliate (as such term is defined in
Rule 405 of the Securities Act of 1933, as amended) of the Employer or Parent,
(ii) the acquisition by any party (or group, as such term is defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) not
currently a holder of more than 5% of Employer's or Parent's capital stock
entitled to vote for the election of directors of such number of additional
shares of capital stock (whether in one transaction or in a series of
transactions), which results in such party (or such group) owning 50% or more
of such stock other than by an affiliate of the Employer or Parent, or (iii)
any merger, combination, consolidation or similar transaction involving Parent
following which the holders of the capital stock of Employer or Parent
immediately prior to such transaction will not own more than 50% of Employer's
or Parent's capital stock entitled to vote for directors of the resulting
entity other than by a merger, combination, consolidation or similar
transaction by an affiliate of the Employer or Parent (provided, that an
affiliate of Employer or Parent shall not include any person or group which
becomes an affiliate solely by virtue of its acquisition of 10% or more of the
capital stock of the Parent), or (iv) the Parent's Board of Directors ceasing
to consist of the Continuing Directors (as
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hereinafter defined).
(c) "Continuing Directors" shall mean all of the
directors of Parent as of the Effective Date and all subsequent directors of
Parent who were nominated or otherwise approved by a majority of the directors
who were directors on the Effective Date or were nominated or approved in
accordance with this definition.
13.2 Consequences of Termination of this Agreement.
13.2.1 In the event that this Agreement is terminated in
accordance with Sections 13.1.1 (i) or (ii) above, the Executive, his estate,
legal representatives or designee shall be entitled to receive from Employer,
in full satisfaction of all obligations due to the Executive from the Employer
hereunder, all accrued but unpaid Base Salary and any unpaid Bonus in respect
of a Fiscal Year ended prior to the Executive's death and a lump sum amount
equal to 12 months Base Salary and upon payment of said sum the Employer shall
have no further obligations or liabilities to the Executive hereunder.
Notwithstanding the foregoing, the Employer shall be entitled to offset
against any amounts due the Executive pursuant to this Section, any amounts
then outstanding under the Loan.
13.2.2 In the event that this Agreement is terminated in
accordance with Section 13.1(iii) above, the Executive shall be entitled to
receive from Employer, in full satisfaction of all obligations due to the
Executive from the Employer hereunder, all accrued but unpaid Base Salary and
any unpaid Bonus if any, in respect of a Fiscal Year ended prior to the
Executives's termination and upon payment of said sum the Employer shall have
no further obligations or liabilities to the Executive hereunder.
Notwithstanding the foregoing, the Employer shall be entitled to off-set
against any amounts due the executive pursuant to this Section, any amounts
then outstanding under the Loan.
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13.2.3 If Executive shall terminate his employment during
the Term for Good Reason, he shall be paid (or be issued or be entitled to, as
applicable) the following by or from the Employer: (a) all accrued and unpaid
Base Salary and any unpaid Income Bonus or Cash Flow Bonus in respect of a
Fiscal Year ended prior to such termination; (b) a lump sum amount equal to
the Base Salary payable for the lesser of twenty-four (24) months or the
remainder of the Term (assuming for such purpose that the Term ended on
October 1, 2002), provided, however, that such amount shall in no event be
less than the Base Salary for one (1) full calendar year; (c) an additional
lump sum amount equal to the amount of the Income Bonus and the Cash Flow
Bonus paid or payable with respect to the full Fiscal Year in which such
termination shall occur (which amount shall be calculated using the greater of
the Income Bonus and Cash Flow Bonus, as applicable, for the last two full
Fiscal Years ended prior to such termination); (d) the Additional Stock (as
defined in the Purchase Agreement), which shall be released from the Escrow
Account (as defined in the Purchase Agreement); and (e) the Seller (as defined
in the Purchase Agreement) shall have the right to exercise the put rights
pursuant to Sections 18.1.1 and 18.2.1 of the Purchase Agreement for thirty
(30) days after such termination. If the Income Bonus or Cash Flow Bonus
actually calculated with respect to the full Fiscal Year in which such
termination occurs shall be greater than the amount paid to Executive pursuant
to Section 13.2.3 (c), then the Company shall pay the difference to the
Executive. Notwithstanding the foregoing, the Employer shall be entitled to
off-set against any amounts due the Executive pursuant to this Section, any
amounts then outstanding under the Loan.
13.2.4 Upon any termination of the Term the Employer shall
be obligated to the Executive as follows: (a) Executive will be entitled to
receive any benefits then vested, and to make all elections and receive all
rights, under all employee benefit, pension, profit sharing, insurance and
other plans in which Executive participated in accordance with the provisions
of the plan concerned; (b) Executive will be entitled to the payment of all
reimbursable business expenses that have not been reimbursed, at the time of
such termination; and (c) Employer shall pay any monies owing to Executive
hereunder not later than ten (10) business days following such termination;
provided, however, that the payment of any monies accrued under any benefit
plan shall be subject to the terms of the applicable plan and any elections
Executive has made; and provided, further, that, in the event
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any of the aforesaid unreimbursed business expenses cannot be computed and
paid at such date of termination, such monies shall be paid as soon thereafter
as reasonably practical. Anything contained herein to the contrary
notwithstanding, the obligations of the Employer (and Parent) to make payments
to Executive pursuant to this Agreement shall survive any termination of the
Term or this Agreement. Notwithstanding the foregoing, the Employer shall be
entitled to off-set against any amounts due the executive pursuant to this
Section, any amounts then outstanding under the Loan.
13.2.5 Anything contained herein to the contrary
notwithstanding, if Executive's employment is terminated for any reason,
Executive shall in no event be required to seek any other employment or take
any other action by way of mitigation or otherwise with respect to the amounts
payable to Executive under this Agreement, or to pay any amounts to the
Employer (or Parent) that Executive may receive from any other employment or
otherwise at any time after the termination of Executive's employment (nor
shall any such amounts be applied to reduce any payment which Executive are
entitled to receive from the Employer or Parent), or to account to the
Employer (or Parent) for any such amounts.
14. Noncompetition.
14.1 By Executive During Term. Subject to Section 4.2 above,
during the period of Executive's employment hereunder, the Executive will not,
without the prior written approval of the Board, become employed by, or become
an officer, director or general partner of, any partnership, corporation or
other entity that competes with any business of the Employer, any subsidiary
of the Employer, the Parent or any subsidiary of the Parent, whether now or
hereafter conducted.
14.2 By Executive After Term. Subject to Section 4.2 above,
for a period of one year following the termination of the Executive's
employment hereunder prior to the Termination Date by the Employer pursuant to
Section 13.1.1(iii) or by the Executive on his own initiative other than for
Good Reason, the Executive will not become employed by, or become an officer,
director or
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general partner of, any partnership, corporation or other entity that competes
with the Booking Business (as defined in the Purchase Agreement) of Employer
on the date of such termination nor will he render any services to any other
person or business, or acquire any interest of any type in any other business,
that competes with the Booking Business of Employer on the date of such
termination. This Section 14.2 shall not apply if the Executive's employment
hereunder shall terminate for any reason other than as specified in the
immediately preceding sentence, including, without limitation, by reason of
the passage of time.
14.3 Liquidated Damages. If Executive shall breach Section
14.2, Employer and Parent shall suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. Therefore, because of
the expense and delay which would be incurred in such event by Employer and
Parent, Executive shall pay to Employer and Parent an aggregate amount of Five
Hundred Thousand Dollars ($500,000), which amount shall constitute liquidated
damages. It is understood and agreed that such liquidated damage amount
represents Executive's and Employer's and Parent's reasonable estimate of
actual damages and does not constitute a penalty. Recovery of these liquidated
damages shall be the sole and exclusive remedy of Employer and Parent against
Executive, contractual or otherwise (and whether at law, equity or otherwise)
for a material breach of Section 14.2 and shall be applicable regardless of
the actual amount of damages sustained.
15. Notices. Any notice, direction or instruction required or
permitted to be given hereunder shall be given in writing and may be given by
telex, telegram, facsimile transmission or similar method if confirmed by mail
as herein provided; by mail if sent postage prepaid by registered mail, return
receipt requested; or by hand delivery to any party at the address of the
party set forth below. If notice, direction or instruction is given by telex,
telegram or facsimile transmission or similar method or by hand delivery, it
shall be deemed to have been given or made on the day on which it was given,
and if mailed, shall be deemed to have been given or made on the fifth
business day following the day after which it was mailed. Any party may, from
time to time, by like notice give notice of any change of address and in such
event, the address of such party shall be deemed to be changed accordingly.
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(a) If to the Employer or the Parent:
The Marquee Group, Inc.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Copy to:
The Sillerman Companies
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxx
(b) If to the Executive:
QBQ Entertainment, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxx
Copy to:
Grubman Indursky & Xxxxxxxxx, P.C.
000 Xxxx 00 Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
16. General.
16.1 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
New York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws.
16.2 Captions. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
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16.3 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, between or among the parties, except as specifically provided
herein. There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind as conditions or
inducements to the execution hereof or in effect among the parties. No custom
or trade usage, nor course of conduct among the parties, shall be relied upon
to vary the terms hereof.
16.4 Successors and Assigns. This Agreement, and the
Executive's rights and obligations hereunder, may not be assigned by the
Executive or the Employer or Parent, except that the Executive may designate
pursuant to Section 16.6 one or more beneficiaries to receive any amounts that
would otherwise be payable hereunder to the Executive's estate. This Agreement
shall be binding on any successor to the Employer or the Parent, as the case
may be, but only in the event a merger, consolidation or acquisition of all or
substantially all of the Employer's or the Parent's assets or business, as
fully as if such successor were a signatory hereto, and the Employer or the
Parent, as the case may be, shall cause such successor to, and such successor
shall, expressly assume the Employer's or the Parent's, as the case may be,
obligations hereunder. The terms "Employer" and "Parent" as used in this
Agreement shall include all such successors.
16.5 Amendments; Waivers. This Agreement cannot be changed,
modified or amended, and no provision or requirement hereof may be waived,
without an affirmative vote of the Board and the Parent's Board, and the
consent in writing of the Executive, the Employer and the Parent. The failure
of a party at any time or times to require performance of any provision hereof
shall in no manner affect the right of such party at a later time to enforce
the same. No waiver by a party of the breach of any term or covenant contained
in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant contained in this Agreement.
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16.6 Beneficiaries. Whenever this Agreement provides for any
payment to the Executive's estate, such payment may be made instead to such
beneficiary or beneficiaries as the Executive may have designated in a writing
filed with the Employer. The Executive shall have the right to revoke any such
designation and to redesignate a beneficiary or beneficiaries by written
notice to the Employer (and any applicable insurance company) to such effect.
16.7 Further Assurances. The parties hereto agree that,
after the execution of this Agreement, they will make, do, execute or cause or
permit to be made, done or executed all such further and other lawful acts,
deeds, things, devices, conveyances and assurances in law whatsoever as may be
required to carry out the true intention and to give full force and effect to
this Agreement.
16.8 Severability. Should any provision of this Agreement be
unenforceable or prohibited by any applicable law, this Agreement shall be
considered divisible as to such provision which shall be inoperative, and the
remainder of this Agreement shall be valid and binding as though such
provision were not included herein.
16.9 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original. It shall
not be necessary when making proof of this Agreement to account for more than
one counterpart.
16.10 Survival of Certain Provisions. The provisions of
Section 11, 12, 13, 14 and this Section 16 shall, to the extent applicable,
continue in full force and effect notwithstanding the expiration or earlier
termination of this Agreement or of the Executive's employment in accordance
with the terms of this Agreement.
16.11 Joint and Several Liability. Employer and Parent shall be
jointly and severally liable for all obligations and liabilities of Employer
hereunder.
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16.12 During the Term, the Executive shall have the right to use the
name "QBQ Entertainment" in the conduct of the business of the Employer, such
use to be consistent with the usual and customary use of a name of a company
including stationery, business cards and telephone answering.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
MARQUEE MUSIC, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------
Name:
Title:
THE MARQUEE GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------
Name:
Title:
/s/ Xxxxxx Xxxx
-------------------------------
Xxxxxx Xxxx
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