EMPLOYMENT AGREEMENT
This Agreement is made and entered into at Phoenix, Arizona, effective
as of December 22, 1997, by and between Pacific Rim Entertainment, Inc., a
Delaware corporation (hereinafter referred to as "Employer") and Xxxxxxx Xxxxx,
a resident of Pima County, Arizona (hereinafter referred to as "Employee"),
whose respective addresses appear below.
IN CONSIDERATION of the mutual promises of the parties, and other
valuable consideration, the parties agree as follows:
1. Term.
The Employer does hereby employ and retain the services of
Employee for a term of one (1) year commencing December 22, 1997 and ending
December 21, 1998 (hereinafter "Initial Term"). The Initial Term shall be
automatically extended and renewed for successive one-year periods (each year
beyond the Initial Term referred to as an "Extended Term") upon such terms and
conditions as are set forth within this Agreement, however, the Agreement may be
terminated by either party hereto provided no less than sixty (60) days notice
is given prior to the scheduled expiration of the Initial Term or Extended Term,
whichever the case may be.
2. Duties.
During the term of employment, Employee shall be employed as
Executive Vice-President of Employer and shall in that capacity share
responsibility for the day-to-day operations of the business of Employer
together with the Employer's Chief Executive Officer and Chief Operating
Officer, and shall undertake whatever other tasks as shall in good faith be
assigned to him by the Employer's Chief Executive Officer or by Employer's Board
of Directors. Said Employee shall devote his full productive time, energies and
abilities to the proper and efficient operation of the business of Employer
under and in accordance with the direction of the Employer's Chief Executive
Officer and Board of Directors, as may be made in good faith, notwithstanding
that Employee may also serve as a Director of Employer.
3A. Compensation.
The full compensation and remuneration of Employee for the
services provided for herein during each year of employment hereunder, shall be
as follows:
a) an annual base salary in the sum of Two Hundred Thousand
Dollars ($200,000), payable in monthly installments of Sixteen Thousand Six
Hundred Sixty Six Dollars and 67/100 ($16,666.67), which salary if unpaid for
any reason shall accrue cumulatively from month to month plus 10% interest per
annum on the unpaid portion;
b) interim and annual bonuses in such amounts and upon such
terms and conditions as may be determined by the Employer's Board of Directors
from time to time; and
c) an annual cost of living increase of five percent (5%) of
the preceding year's annual base salary.
d) Common Stock Options (the "Employment Options") to purchase
an aggregate of One Hundred Thousand (100,000) Options, one-half (/ /) of
which (50,000 Options) shall be subject to vesting pursuant to the provisions of
section 2.3(i), and one-half (/ /) (50,000 Options) shall be subject to
vesting pursuant to the provisions of 2.3(ii) of that certain Option to Purchase
Common Stock of Pacific Rim Entertainment, Inc. ("Option Agreement"), a true
copy of which Option Agreement has been delivered to Employee, and a true copy
of which is attached hereto as Exhibit "A"; and Employee is subject to and
agrees to be bound by all of the terms, conditions and provisions of said Option
Agreement as though Employee were named therein as "Holder", and the issuance of
options to Employee is fully conditioned upon the issuance thereof to the Holder
subject to all contingencies stated in said Option Agreement.
e) 200,000 shares of Employer's common stock (the "Employment
Shares"), one half (/ /) of which shall vest and be delivered to Employee at
the end of Employee's first complete annual anniversary of employment with
Employer and one-half (/ /) of which shall vest and be delivered to Employee
at the end of Employee's second complete annual anniversary of employment with
Employer.
f) Notwithstanding anything to the contrary contained herein,
in the event that Employees' employment is terminated hereunder at any time
prior to the first annual anniversary of employment with Employer, for any
reason other than those reasons identified within paragraph 5(c) hereafter,
then, and in that event, upon the first annual anniversary of employment,
notwithstanding any prior termination in accordance with the terms identified
above, Employee shall vest in that number of Employment Options and Employment
Shares as he would have been entitled to had he otherwise remained an employee
through the first annual anniversary of employment.
g) In the event that Employee remains employed by Employer
beyond the first annual anniversary of employment, and his employment is
terminated hereunder at any time prior to the second annual anniversary of
employment with Employer, for any reason other than those reasons identified
within paragraph 5(c) hereafter, then, and in that event, upon the second annual
anniversary of employment, Employee shall vest in and to that number of
Employment Shares and Employment Options as he would have otherwise be entitled
had he remained employed through the second annual anniversary of employment
with Employer.
3B. Severance Arrangements.
If for any reason other than those reasons identified within
paragraph 5 and paragraph 10 of this Agreement, Employee's employment is
terminated by Employer prior to the second annual anniversary of employment,
then, and in that event, Employee shall be entitled to continue to receive the
salary payments and other covered benefits provided for in this Agreement, as
severance benefits and in complete settlement of all amounts due hereunder, for
the longer of: (i) the scheduled expiration of the current term of employment,
or (ii) 6 months.
4. Fringe Benefits.
a) Employee shall be entitled, subject to the terms and
conditions of particular plans and programs adopted by the Board of Directors,
to all fringe benefits afforded to other senior executives of the Employer,
including but not by way of limitation, the right to participate in any pension,
stock option, retirement, major medical, group health, disability, accident and
life insurance, and other employee benefit programs made generally available,
from time to time, by the Employer.
b) During the term of this Agreement, Employer shall include
Employee and his family in family health insurance coverage provided for
executive level employees of Employer, and shall pay one hundred percent (100%)
of all health insurance premiums.
c) As additional salary, Employer shall reimburse Employee for
Employee's entire monthly premium cost to purchase a disability insurance
policy, if available on terms deemed by Employer to be commercially reasonable,
that shall pay to Employee the sum of $10,000 per month until age sixty-five
(65), in the event of Employee's disability as defined in said policy.
5. Termination.
Employer shall have the right to terminate this Agreement by
thirty (30) days written notice after which such termination, Employer shall
have no further obligations hereunder other than the payment of accrued base
salary and reimbursement of accrued expenses, upon the occurrence of any of the
following events or circumstances:
a) death of Employee;
b) if Employee is unable, for reasons of illness, disability
or similar causes, to carry out or perform the duties required of him hereunder
continuously for three (3) months or intermittently for an aggregate of one
hundred twenty (120) days in a calendar year during the term of this Agreement;
or
c) if Employee is terminated for "cause" for any of the
following events: (i) any act or omission perpetrated as the result of gross
negligence or with intent to harm the Employer or Osage or any of its
affiliates, or the business of either; (ii) commission of a felony for which
Employee is convicted by a court of law; (iii) perpetration of a dishonest act
or a common law fraud against the Employer or Osage, or any of its affiliates,
found by a court of law; (iv) the continued refusal to follow the directives of
the Board of Directors Employer or Osage which are made in good faith and not
contrary to law; (v) if Employee has so conducted himself (whether in connection
with his employment or otherwise) as to render Employee unfit to serve as an
officer or a trusted employee of Employer or Osage or has violated or broken any
of the covenants or obligations imposed on Employee by the Agreement; and
d) in the Event of termination for cause, Employer shall give
Employee prompt notice of the facts or circumstances constituting same and a
period of sixty (60) days in which to cure, rectify or reverse such facts of
circumstances, if applicable, and to present evidence to the Board of Directors
in mitigation thereof.
6. Discoveries and Inventions.
Employee, in partial consideration of his employment and
salary to be paid to him, hereby agrees to disclose promptly to Employer, or any
subsidiary, parent, or affiliated company or its nominees, each and every
discovery, improvement and/or invention made, conceived and/or developed by him
whether during working hours or otherwise, during the entire period of his said
employment, which discoveries, improvements and/or inventions are capable of use
in any way in connection with the business of the Employer and for the same
consideration, Employee does hereby grant and convey to Employer or its nominee,
the entire right, title and interest, domestic and foreign, or such lesser
interests as such Employer at its option in any particular case may choose to
accept, in and to reach or all of said discoveries, improvements and/or
inventions; and he does further agree to sign all applications for patents or
copyrights, and to execute and deliver all assignments and other documents, and
to perform all acts and do all things necessary to make this Agreement and the
said grant and conveyance effective with respect to particular discoveries,
improvements and/or inventions.
7. Expenses.
(a) Employee is authorized to incur reasonable expenses for
promoting the business of Employer, including expenses for entertainment,
travel, and similar items. Employer will reimburse Employee for all such
expenses upon the presentation by Employee, from time to time, of an itemized
account of such expenditures.
(b) Employer will furnish Employee with a suitable late model
automobile for Employee's full time use and benefit and will pay all maintenance
and insurance premiums.
(c) Employer agrees to promptly reimburse Employee, through
payments to Employee's attorney at X'Xxxxxx & Xxxxxxxx, Tucson, Arizona, the
amount of $11,546.46 consisting of counsel fees and repayments to the prior
employer of Employee.
8. Vacation.
Employee shall be entitled each year to a vacation of up to
four (4) weeks, during which time his compensation shall be paid in full.
Employee shall use his best efforts, however, not to schedule any such vacations
at a time when either the Chief Executive Officer of Employer is also on
vacation or is otherwise out of the office. Furthermore, Employee shall not,
without the consent of Employer, schedule a vacation of more than two (2) weeks
in any three (3) month period.
9. Confidential Information.
a) Employee acknowledges and agrees that all confidential
information, trade secrets, names of customers, suppliers, financial, accounting
or administrative information, business procedures or other information or
knowledge which is made known to Employee during the course of his employment by
Employer or Osage is confidential and the property of the Employer;
b) Employee agrees that during the term of his employment by
Employer, and at all times thereafter forever, except in the ordinary course of
fulfilling Employee's assigned duties and obligations, Employee shall not,
without the prior express, written consent of the Employer, publish, disclose or
make known to anyone, or make any use of or authorize, assist, or enable anyone
else to publish or disclose or make use of, any confidential information or
Employer property, including, but not limited to, trade secrets, names of
customers, suppliers, financial, accounting or administrative information,
business procedures or any other information or knowledge which becomes known to
Employee as the result of or during his employment by the Employer.
10. Other Termination Provisions.
Notwithstanding anything herein contained to the contrary,
Employer may terminate this Agreement upon thirty (30) days' written notice to
Employee upon the happening of any of the following events:
a) the sale by Employer of substantially all of its assets;
b) a bona fide decision by Employer to terminate its business
and liquidate its assets; or
c) the merger or consolidation of Employer in a transaction in
which the shareholders of Employer receive less than fifty percent (50%) of the
outstanding voting shares of the new or continuing corporation.
11. Life and Disability Insurance.
During the Initial Term or any Extended Term, Employer shall
insure the life of Employee for such amount as the parties shall mutually agree
upon. The amount of such insurance shall be One Million Dollars ($1,000,000).
The premiums on such insurance shall be the obligation of Employer, which shall
be the owner of said policy. Upon Employee's death, one-half (1/2) of the face
value ($500,000) shall be paid to Employer, and the other one-half ($500,000) to
the Employee's designated beneficiary.
12. Indemnification.
In the event that Employee shall personally guarantee any
loan(s) of Employer, Employer may not terminate this Agreement until said
loan(s) has been paid in full or Employee is released from any personal
liability pursuant to said guarantee(s), and notwithstanding anything herein to
the contrary, Employer does hereby indemnify and agree to hold Employee harmless
from and against all losses, claims and expenses which Employee may sustain by
reason of any guarantee(s) executed by Employee for the benefit of Employer,
including reasonable attorneys' fees in defending against same.
13. Negative Covenant. Provided Employee has remained employed by
Employer for a consecutive period of three (3) years from the date hereof, then,
and in that event, for a period of one (1) year following termination of this
Agreement either due to expiration of the Term, or for any other reason
identified in Paragraph 5(c) hereof, Employee will not, on his own behalf or as
partner, officer, director, employee, consultant, or stockholder (holding more
than ten percent (10%) of the issued and outstanding stock of any firm or
company) of any other business, either directly or indirectly, solicit any
"active customers" of Employer, or any affiliates or subsidiaries of Employer
(for the purposes of this Paragraph 13, defined in the aggregate as the
"Company"), or perform any work, services, or labor for or on behalf of any firm
or company engaged in any business competitive with or similar to the business
of the Company in any state or foreign country where the Company does business.
Accordingly, the Company is granted the right by Employee to apply to any court
of competent jurisdiction for one or more temporary or permanent injunctions
enjoining Employee, his agents and employees, from violating the provisions of
this Agreement and/or from continuing to breach such provisions. The negative
covenant imposed, shall not be effective for any purpose whatsoever if Employee
is terminated without cause. If Employee voluntarily terminates his employment
at any time during the Term of this Agreement, then, and in that event, Employee
will not on his own behalf or as a partner, officer, director, employee,
consultant, or stockholder (holding more than 10% of the issued and outstanding
stock of any firm or company) of any business, either directly or indirectly,
solicit "active customers" of the Company for a period of one year following the
date of such voluntary termination of employment. For the purposes of this
paragraph 13, the term "active customer" shall mean any current customers of the
Company, or any customers of the Company within the twelve preceding months.
14. Commercially Reasonable Terms.
This employment agreement requires Employer to secure
insurance coverage for Employee relative to: (i) Health (paragraph 4); (ii)
Automobile (paragraph 7(b)); (iii) Life (paragraph 11(a)); and (iv) Disability
(paragraph 11(b)). Notwithstanding anything to the contrary contained herein,
Employer's obligation shall only extend to the securing of insurance coverage on
commercially reasonable terms covering levels of risks that are determined to be
"standard" within the industry. Should Employer be unable to secure the agreed
upon coverage on these terms, Employer's only obligation is to notify Employee
of its inability to do so and provide Employee with an opportunity to identify
satisfactory coverage on such terms; or if Employee is unable to identify
appropriate coverage, Employer's responsibility under this employment agreement
will be to permit Employee to secure his own insurance coverage and to reimburse
him that amount that is determined to be commercially reasonable covering
standard levels of risk.
15. Registration of Shares.
Employee has been advised that the Employer intends to use its
best efforts to file a registration statement with the Securities and Exchange
Commission during 1998, the purpose of which is to register the resale of
certain shares of its common stock, including the Employment Shares and the
shares underlying the Employment Options (even though these shares may remain
subject to vesting conditions). Employee also recognizes that as a part of such
registration process, he will be requested to execute a lock-up letter
restricting his ability to sell the shares, notwithstanding any such
registration event. Employer agrees that if for any reason Employee's employment
is terminated (for other than those reasons identified within paragraph 5(c) of
this Agreement) prior to the expiration of any lock-up period restricting the
resale of the Employment Shares or Employment Options (or shares of common stock
issuable upon exercise of such options) then, and in that event, Employer agrees
to waive and release Employee from any and all such restrictions upon resale
other than those to which he is subject under federal and state securities laws.
16. Miscellaneous.
a) Entire Agreement. This Agreement embodies the entire
agreement between the parties hereto relative to the subject matter hereof and
shall not be modified, changed or altered in any respect except in writing
signed by both parties to this Agreement.
b) Benefits. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective next of kin, legatees,
administrators, executors, legal representatives, successors and permitted
assigns.
c) Attorneys Fees. In the event either party is required to
obtain the services of any attorney to enforce the provisions of this Agreement,
the prevailing party shall be entitled to its reasonable costs and attorney's
fees including expert witness fees, and costs of investigation.
d) Illegal Contract. In case any provision of this Agreement
shall be held invalid, illegal or unenforceable, in whole or in part, neither
the validity of the remaining part of such provision, nor the validity of any
other provision of this Agreement shall in any way be affected thereby.
e) Waiver. A waiver of any breach of this Agreement, or of any
of the terms or conditions by either party thereto, shall not be deemed a waiver
of any repetition of such breach or in any way affect any other terms or
conditions hereof. No waiver shall be valid or binding unless it shall be in
writing signed by the parties.
f) Binding Effect. This Agreement, when executed by one duly
authorized officer of the corporation, shall bind the corporation and its
successors and assigns.
g) Successors and Assigns. Unless otherwise provided for, this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors in interest and assigns, but in no event shall
any party be relieved of its obligations hereunder without the express written
consent of each other party.
h) Governing Law. This Agreement shall be governed by, the
laws of the State of Arizona. Each party hereby expressly and irrevocably
consents to the jurisdiction of the Arizona courts, and any action hereunder may
be commenced and tried only in a court of competent jurisdiction located in
Maricopa County, Arizona.
i) Time. Time is of the essence of this Agreement and each and
every provision hereof. Any extension of time granted for the performance of any
duty under this Agreement shall not be considered an extension of time for the
performance of any other duty under this Agreement.
j) Notices. Any notice to any party under this Agreement shall
be in writing, shall be effective on the earlier of (i) the date when received
by such party, or (ii) the date which is three (3) days after mailing (postage
prepaid) by certified or registered mail, return receipt requested, to the
address of such party set forth as follows:
To: EMPLOYER
President
Pacific Rim Entertainment, Inc.
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx XX 00000
With a copy to:
Xxxxxx X. Xxxxxxx, Esq.
0000 X. 00xx Xxxxxx, Xxxxx #000
Xxxxxxx, Xxxxxxx 00000
To: EMPLOYEE
Xxxxxxx Xxxxx
0000 Xxxxx Xxx Xxx Xxxxxxxx
Xxxxxx, Xxxxxxx 00000
k) Additional Acts and Documents. Each party hereto agrees to
do all such things and take all such actions, and to make, execute and deliver
such other documents and instruments, as shall be reasonably requested to carry
out the provisions, intent and purpose of this Agreement.
l) Directors and Officers Insurance. Employer agrees to use
its best efforts to secure, as promptly as possible, an insurance policy
covering the acts of the directors and officers, on whatever terms as are deemed
commercially reasonable.
m) Northwestern University Graduate School of Management. The
Company shall pay the full amount of tuition, plus all related travel, lodging
and meal expenses, plus such time off from work as may be reasonably required by
Northwestern University, for Employee to complete the Northwestern University
Graduate School Management Program. Employee may enroll in the program beginning
no sooner than September, 1998, and not later than the semester which begins in
or about September, 2000. Notwithstanding the foregoing, in the event Employee
voluntarily terminates his employment with Employer or is terminated for cause
pursuant to paragraph 5(c) of this Agreement, Employer shall have no further
obligation under this paragraph.
n) Resignation as Director. In the event Employee either
voluntarily terminates his employment hereunder, or is terminated by Employer
pursuant to paragraph 5(c) hereunder, then, in either of those events, Employee
shall be deemed to have offered his resignation as a member of the Board of
Directors of Employer without any further notification to or from Employee, and
without any formal letter of resignation beyond his signature at the end of this
Agreement which shall provide such notification.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
the day and year first above written.
EMPLOYER:
PACIFIC RIM ENTERTAINMENT, INC.
By: _______________________________
Its: President
EMPLOYEE:
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Xxxxxxx Xxxxx
