AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of the 15th day of August,
1996, by and between Alliance Entertainment Corp., a Delaware corporation having
its principal office at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Company"), and Xxxx X. Xxxxxx, residing at 00000 Xxxxxxxxx Xxxxxx Xxxx, Xxxx
Xxxxx, Xxxxxxx 00000 (the 'Executive").
R E C I T A L S:
WHEREAS, the Company considers it essential and in the best interests of its
xxxxxxxxxxxx.xx more closely align the interests of the Executive with those of
its shareholders and that the Executive support the mission, values and strategy
of the Company and desires to retain the services of the Executive; and
WHEREAS, the Executive desires to accept such employment by the Company, upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties agree as follows:
1. Employment and Duties. The Company agrees to employ the Executive as Vice
Chairman of the Company and the Executive accepts such employment and agrees to
perform all . duties and services consistent with the Executive's position. The
Executive agrees to devote substantially all of the Executive's business time,
attention and energy to perform the Executive's duties and services hereunder.
2. Term of Employment. The term of the Executive's employment under this
Agreement shall commence on March 15, 1995 and shall end on the fifth
anniversary of such date, unless sooner terminated as provided in Section 5
hereof (the "Employment Period"); provided, however, that commencing on March
15, 2000, and each March 15 thereafter, the term of this Agreement shall
automatically be renewed for one (1) additional year unless, not earlier than
210 days nor later than 180 days prior to such date, either party shall have
provided written notice that such party elects not to renew the term of this
Agreement.
3. Compensation and Benefits.
3.1 Base Salary. For the year commencing March 15, 1996, the Company shall pay
the Executive a base salary of Four Hundred Eighty-Four Thousand ($484,000)
Dollars per annum ("Base Salary"). The Base Salary for each year after the first
year may be increased from time to time in the sole discretion of the Board and
in any event will be increased annually to reflect corresponding increases in
the United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, all items (1982-88
= 100). Base Salary shall be payable at such intervals as salaries are paid by
the Company to its other executive employees.
3.2 Bonus. In addition to Base Salary, with respect to each fiscal year during
the Employment Period, the Executive shall be entitled to participate in, and be
eligible for annual bonuses under, the Company's Executive Incentive Plan or
other annual bonus program which shall be no less favorable to the Executive
than the Executive Incentive Plan. Any such bonus amount (a "Bonus') shall be
payable at such time as executive bonuses customarily are paid by the Company,
but in no event later than 30 days after the end of the Company's fiscal year.
The Executive's t.arget Bonus shall be an amount equal to fifty percent (50%) of
Base Salary and the Executive's maximum Bonus shall be equal to seventy-five
percent (75%) of Base Salary, subject to satisfaction of applicable performance
goals established by the Compensation Committee of the Company's
board of directors (the 'Compensation Committee'). Notwithstanding the
foregoing, in any year the Compensation Committee may recommend for good reason
a reduction in bonus for such year.
3.3 Benefit Plans. During the Employment Period, the Company shall provide
Executive with the use of the office in the Company's New York City headquarters
currently occupied by Executive, with appropriate administrative services,
including a secretary, and the Executive shall be entitled to participate in all
plans adopted for the general benefit of the Company's employees or executive
employees, such as pension plans, medical plans, disability plans, investment
plans and group or other insurance plans and benefits, to the extent that the
Executive is and remains eligible to participate therein and subject to the
eligibility provisions of such
plans in effect from time to time; provided, however, that such 100 benefits
shall not be less, in the aggregate, than those in effect on March 15, 1995. The
Executive has received, and shall be eligible to continue to receive, grants of
performance units under the Company's Long-Term Incentive and Share Award Plan
and such other stock option or incentive plans as may be maintained by the
Company, in such amounts and at such times as shall be determined by the
Compensation Committee. The Executive shall be reimbursed for his reasonable
out-of-pocket expenses incurred in the performance of his duties upon submission
of appropriate evidence thereof in conformity with normal Company policy for
executive officers.
3.4 Automobile. The Company shall provide (two) luxury automobiles for the
exclusive use and benefit of the Executive. The automobiles shall be of a type
similar to the automobiles currently provided by the Company for the benefit of
the Executive. With respect to any automobile provided to the Executive pursuant
to this Section 3.4 which is subject to a lease, the Executive shall have the
right to purchase the automobile at the termination of the term of such lease.
With respect to any automobile provided to the Executive pursuant to this
Section 3.4 which is owned by the Company, the Executive shall have the right to
purchase such automobile at its depreciated book value.
4. Vacation. For each year during the Employment Agreement, the Executive shall
be entitled to paid vacation in accordance with the Company's standard policy
for executive officers.
5. Termination.
5.1 Death. This Agreement shall automatically terminate upon the death of the
Executive, whereupon the Company shall be obligated to pay to the Executive's
estate any unpaid Base Salary and pro rata Bonus, if any, as determined by the
Compensation Committee, through the date of death. Amounts payable under this
Section 5.1 shall be payable at the times and intervals set forth in Sections
3.1 and 3.2 hereof.
5.2 Disability. The Company shall have-the right to terminate t . his Agreement
during the continuance of any Disability of the Executive, as hereinafter
defined, upon fifteen (15) days' prior notice to the Executive during the
continuance
of the Disability. "Disability" for purposes . of this Section 5.2 shall mean
an inability by the Executive to perform a substantial portion of the
Executive's duties hereunder by reason of physical or mental incapacity of
disability for a total of one hundred eighty (180) days or more in any
consecutive period of three hundred and sixty-five (365) days, as determined by
the Board of Directors in its good faith judgment. In the event of a termination
by reason of the Executive's Disability, the Company shall be obligated to
assist the Executive in obtaining payment under the existing disability
insurance maintained for the Executive by the Company. Amounts payable under
this Section 5.2 shall be payable at the times and intervals set forth in
Sections 3.1 and 3.2 hereof.
5.3 Termination for Cause. Upon the early termination of this Agreement by the
Company for Cause, the Company shall only be obligated to pay the Executive his
Base Salary pro-rated to the date of termination and any then accrued benefits.
For purposes of this Agreement, "Cause" shall mean (i) any willful and
continuing material failure by the Executive to perform his material duties
under this Agreement, taken as a whole; (ii) the Executive's conviction of or
plea of nolocontenders to a Felony; (iii) the Executive's conviction of fraud or
embezzlement against the Company; (iv) any willful or intentional misconduct
having the effect of materially injuring the business of the Company, or (v) any
willful and material breach by the Executive of any of the provisions of the
Confidentiality and Non-Competition Agreement attached hereto as Exhibit A.
Termination for Cause shall become effective upon notice to the Executive.
5.4 Termination by Executive for Other than Good Reason. Upon the early
termination of this Agreement by the Executive for other than Good Reason, the
Company shall be obligated to: (i) pay the Executive his Base Salary pro-rated
to the date of termination plus any then accrued benefits; (ii) pay the
Executive, on a monthly basis or more frequently, a consulting fee of 75% of the
Executive's Base Salary at the time of termination through March 15, 2000, or if
this Agreement is renewed pursuant to Section 2, through the date to which this
Agreement has been renewed; (iii) provide that all options granted to the
Executive under the Company's Long-Term Incentive and Share Award Plan and such
other stock option or incentive plans as may be maintained by the Company shall
vest upon such termination; (iv) transfer to the Executive all right
and title to the automobiles provided to the Executive pursuant to Section 3.4
herein; (v) provide the Executive coverage under the Company's medical plans and
life insurance plans or other similar medical and life insurance coverage, or
the economic equivalent of such coverage, for so long as the Executive shall
live; (vi) pay all premiums with respect to the split dollar life insurance
policy maintained by the Company on the Executive's
life existing on the date of this Agreement, and (vii) provide coverage for the
Executive under the Company's automobile insurance policy. For purposes of this
Agreement, "Good Reason" shall mean any of the following: (i) a reduction or
adverse change in, or a change which is inconsistent with, the Executive's
responsibilities, duties, authority, power, functions, title, working conditions
or status; or (ii) a reassignment to another geographic location more than fifty
(50) miles from the Executive's place of employment; or (iii) a material breach
by the Company of this Agreement.
5.5 Termination for Other Reason. If the Executive's employment is terminated
during the term of this Agreement by the Executive for Good Reason or by the
Company other than by reason of (i) death, (ii) Disability, or (iii) for Cause,
then the Company shall pay the Executive a cash lump sum in an amount equal to
(i) four (4) times his Base Salary in effect at the time of his termination of
employment, plus (ii) the higher of the Bonus which the Executive received in
the prior fiscal year, or the target Bonus applicable to the Executive in the
fiscal year of such termination. Such amount shall be payable no later than
thirty (30) days following the Executive's termination pursuant to this Section
5.5. For the three year period after the Executive's termination of employment
pursuant to this Section 5.5, the Executive shall be (i) entitled to continued
participation in all of the Company's employee benefit plans, including, without
limitation, continued accrual for retirement benefits, and all of the other
benefits and perquisites provided for under this Agreement (other than those
benefits set forth in clause (vi) below) or (ii) provided the economic
equivalent of such continued participation and perquisites. In addition, the
Company shall be obligated to: (i) provide that all options granted to the
Executive under the Company's Long-Term Incentive and Share Award Plan and such
other stock option or incentive plans as may be maintained by the Company shall
vest upon such termination; (ii) transfer to the Executive all right and title
to the automobiles provided to the Executive pursuant to Section 3.4
herein; and (iii) provide the Executive coverage under the Company's medical
plans and life insurance plans or other similar medical or life insurance
coverage, or the economic equivalent of such coverage, for so long as the
Executive shall live.
5.6 Nature of Payments. Any payments pursuant to the provisions of this Section
5 shall not be subject to any 249 requirement as to mitigation or offset.
5.7 Tax Gross-up. Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution made, or
benefit provided, by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 5.7) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended and
then in effect (the "Code") (or any similar excise tax) or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all Federal, state, local or other
taxes (including any interest or penalties imposed with respect to any such
taxes), including, without limitation, any such income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(i) Subject to the provisions of paragraph (ii) of this Section 5.7, all
determinations required to be made under this Section 5.7, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Coopers & Xxxxxxx (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 20 calendar
days of the receipt of written notice from the Executive that there h-as been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group
effecting the change in control, the Executive shall have the right by written
notice to the Company to appoint another nationally recognized accounting firm
to make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company and shall be paid by the
Company upon demand of the Executive as incurred or billed by the Accounting
Firm. Any Gross-Up Payment, as determined pursuant to this Section 5.7, shall be
paid by the Company to the Executive within five days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with an
unqualified written opinion in form and substance satisfactory to the Executive
that failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or similar
penalty. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies described in paragraph (ii) of this Section 5.7 and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be paid by the Company to or for the benefit of
the Executive within five days of the receipt of the Accounting Firm's
determination. All determinations made by the Accounting Firm in connection with
any Gross-Up Payment or Underpayment shall be final and binding upon the Company
and the Executive.
(ii) The Executive shall notify the Company in writing of any claim asserted in
writing by the Internal Revenue Service to the Executive that, if successful,
would require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but not later than 60 days
after the Executive is informed in writing of such claim and shall apprise the
Company of the nature of such cla@_m and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such notice
to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive shall at the
Company's expense:
a. give the Company any information reasonably requested by the Company relating
to such claim,
b. take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably
selected by the Company
c. cooperate with the Company in good faith in order
effectively to contest such claim, and
d. permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly as incurred all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or any Federal, state, local
or other income or other tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 5.7,
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or Federal,
state, local or other income or other tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and
further provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.
(iii) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to paragraph (ii) of this Section 5.7, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of paragraph
(ii) of this Section 5.7) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto) upon receipt thereof. If, after the receipt by the Executive of an
amount advanced by the Company pursuant to paragraph (ii) of this Section 5.7, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
6. Confidentiality and Non-Competition Agreement. The Executive shall be bound
by the terms of the Confidentiality and Non-Competition Agreement, a copy of
which is annexed hereto as Exhibit A, during the Employment Period and for such
period following the Employment Period as is set forth in the Confidentiality
and Non-Competition Agreement. The Executive and the Company shall execute a
copy of the Confidentiality and Non-Competition Agreement simultaneously with
the execution of this Agreement.
7. Other Payments.
7.1 Settlement of Performance Unit Awards. As consideration for entering into
this Amended and Restated Employment Agreement and for waiving any rights the
Executive
has to receive amounts payable to the Executive under grants made prior to the
date of this Agreement of Performance Unit Awards under the Company's Long-Term
Incentive and Share Award Plan, the Company hereby agrees to pay to the
Executive $1,900,000 on the date of this Agreement.
7.2 Forgiveness of Loan. Commencing on March l5, 1997 and on the anniversary
thereof for the following two years, the Company shall forgive $66,666.67 of the
$200,000 loan owed by the Executive to the Company; provided that if the
Executive's employment is terminated for any reason except by the Company for
Cause, the entire amount of the $200,000 loan shall be forgiven upon such
termination.
8. Miscellaneous Provisions.
8.1 Entire Agreement. This Agreement and the Confidentiality and Non-Competition
Agreement attached hereto as Exhibit A set forth the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersede all prior agreements, arrangements, and understandings between the
parties with respect to the subject matter hereof. Upon execution of this
Agreement and the Confidentiality and Non-Competition Agreement, the employment
agreement between the Executive and the Company dated March 15, 19195, shall be
superseded and shall be of no further force and effect.
8.2 Modification. This Agreement may be amended, modified, superseded, canceled,
renewed or extended, and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties or in the case of a waiver,
by the party waiving compliance.
8.3 Waiver. The failure of either party at any time or times to require
performance of any provision hereof in no manner shall affect the right at a
later time to enforce the same. No waiver by either party of a 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 any other term or covenant
contained in this Agreement. 8.4 Notices. All notices, demands, consents or
other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given) upon the earlier of receipt,
one business day after-being sent by telecopier or three business days after
being sent by registered or certified mail to the parties at the addresses set
forth above or to such other address as either party shall hereafter specify by
notice to the other party. Irrespective of the foregoing, notice of change of
address shall be effective only upon receipt.
8.5 Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the 000 Xxxxx xx Xxx Xxxx applicable to contracts made
and to be per 491 formed wholly within such state.
8.6 Arbitration. Any controversy or claim arising out of or relating to this
Agreement, the making, interpretation or the breach thereof, other than a claim
solely for injunctive relief for any alleged breach of the provisions of the
Confidentiality and Non-Competition Agreement as to which the parties shall have
the right to apply for specific performance to any court having equity
jurisdiction, shall be resolved by arbitration in New York, New York in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association and judgment upon the award tendered by the arbitrators may be
entered in any court having jurisdiction thereof and any party to the
arbitration may, if such party so elects, institute proceedings in any court
having jurisdiction for the specific performance of any such award. The powers
for the arbitrator or arbitrators shall include, but not be limited to, the
awarding of injunctive relief. The arbitrator shall include in any award in the
prevailing party's favor the amount of his or its reasonable attorney's fees and
expenses and all other reasonable costs and expenses of the arbitration. In the
event the arbitrator does not rule in favor of the prevailing party in respect
of all the claims alleged by such party, the arbitrator shall include in any
award in favor of the prevailing party the amount of his or its reasonable costs
and expenses of the arbitration as he deems just and equitable under the
circumstances. Except as provided above, each party shall bear his or its own
attorney's fees and expenses and the parties shall bear equally all other costs
and expenses of the arbitration.
8.7 Assiqnability. This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations hereunder, only to a successor by merger
or by the purchase of all or substantially all of the assets and business of the
Company and such rights and obligations shall inure to, and be binding upon, any
such successor.
8.8 Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective legal representatives, heirs,
permitted successors and permitted assigns.
8.9 Headings and word Meanings. Headings and titles in this Agreement are for
convenience of reference only and shall not control the construction or
interpretation of any provisions hereof. The words "herein," "hereof,"
"hereunder" and words of similar import, when used anywhere in this Agreement,
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear. unless the context otherwise requires. The singular shall include
the plural unless the context otherwise requires.
8.10 Separability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
THE COMPANY
ALLIANCE ENTERTAINMENT CORP.
By:/s/Xxxxxx X. Xxxxxx
---------------------------
THE EXECUTIVE
/s/Xxxx X. Xxxxxx
---------------------------
Xxxx X. Xxxxxx
Exhibit A
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS CONFIDENTIALITY AND NON-COMPETITION AGREEMENT (the "Agreement"), entered
into and effective as of the 15th day of August, 1996, is by and between
ALLIANCE ENTERTAINMENT CORP. (the "Company") and Xxxx X. Xxxxxx ("Employee").
In Consideration of Employee's employment by the Company, and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:
l. Confidential Information. By virtue of Employee's employment at the Company,
Employee may obtain confidential or proprietary information developed, or to be
developed, by the Company. 'Confidential Information" means all information,
whether in oral, written, graphic or machine-readable form, including but not
limited to all: software used or developed in whole or in part by the Company
(including source code); algorithms; computer processing systems and techniques;
price lists; customer lists; procedures; improvements, concepts and ideas;
business plans and proposals; technical plans and proposals; research and
development; budgets and projections; technical memoranda, research reports,
designs and specifications;
new product and service developments; comparative analyses of competitive
products, services and operating procedures; and other information, data and
documents now existing, or later acquired by the Company, regardless of whether
any of such information, data or documents qualify as a "trade secret" under
applicable Federal or State law. All such information is collectively referred
to as the 'Confidential Information'.
Non-Disclosure. The Employee agrees that, except as directed by the Company, he
will not at any time (during the term of Employee's employment by the Company or
at any time thereafter), except as may be expressly authorized by the Company in
writing, disclose to any person or use any Confidential Information whatsoever
for any purpose whatsoever, or permit any person whatsoever to examine and/or
make copies of any reports or any documents or software (whether in written form
or stored on magnetic, optical or other mass storage media) prepared by him or
that come into his possession or under his control by reason of his employment
by the Company or
by reason of any consulting or software development services he has performed or
may in the future perform for the Company which contain or are derived from
Confidential Information.
The Employee further agrees that while employed at the Company, no Confidential
Information shall be removed from the Company's business premises, without the
prior written consent of the Company.
Company Property. As used in this Agreement, the term "Company Property" means
all documents, papers, computer printouts and disks, records, customer or
prospect lists, files, manuals, supplies, computer hardware and software,
equipment, inventory and other materials that have been created, used or
obtained by the Company, or otherwise belonging to the Company, as well as any
other materials containing Confidential Information as defined in Section 1
above. Employee recognizes and agrees that:
3.1 All Company Property shall be and remain the property of the Company;
3.2 Employee will preserve, use and hold Company Property only for the benefit
of the Company and to carry out the Company's business; and
3.3 When Employee's employment is terminated, Employee will immediately deliver
to the Company all Company Property, including all copies or any other types of
reproductions which Employee has in his possession or control.
4. Non-Solicitation. During the period of his employment and for a period of one
(1) year after termination of his employment at Alliance for any reason,
Employee shall not, on his own behalf or on behalf of any person, firm or
corporation, or in any capacity whatsoever, (i) solicit any persons or entities
with which Alliance had contracts or was negotiating contracts regarding
products or services during the term of Employee's employment, or (ii) induce,
suggest, persuade or recommend to any such persons or entities that they
terminate, alter or refrain from renewing or extending, their relationship with
Alliance or become a client of Employee or any third party, and Employee shall
not himself and shall not induce or permit any other person to approach any such
person or entity for any purpose. Should Employee become aware that
any other Employee or third party has engaged in such conduct, Employee agrees
to immediately advise Alliance of the circumstances of any such conduct.
5. Restrictive Covenant. Employee acknowledges that his employment with the
Company will enable him to obtain knowledge about the computer software the
Company develops or uses, as well as of the entertainment and other fields in
which the Company does business, and will also enable him to form certain
relationships with individuals and entities in the geographic area in which the
Company furnishes its services. Employee further acknowledges that the goodwill
and other proprietary interests of the Company will suffer irreparable and
continuing damage in the event Employee enters into competition with the Company
within one (1) year subsequent to the termination of his employment. Therefore,
Employee agrees that during the term of his employment and for a period of one
(1) year thereafter, regardless of the cause of the termination of Employee's
employment, he will not, without prior written consent of the Company, engage
directly or indirectly in any conduct, activity, or business whatsoever which
would provide revenue to Employee or to any third party, with any person or
entity manufacturing, distributing or supplying a product or service competing
with the Company's products or services. Employee further acknowledges that his
employment with the Company constitutes fair and adequate consideration for his
agreement not to engage in such conduct within one (1) year of the termination
of his employment, regardless of the cause of such termination. Employee further
agrees that should the Company, in its sole discretion, determine that it is
desirable or appropriate to make any payment to Employee upon termination of
employment ('Severance Pay"), such Severance Pay shall be deemed additional
consideration for Employee's binding obligation not to engage in such conduct
during the one (1) year period. However, and notwithstanding any other provision
of this Agreement, it is understood and agreed by the Company and Employee that
any decision made by the Company regarding Severance Pay, regardless of whether
termination occurs with or without cause, shall in no way discharge or release
Employee from the obligation not to engage in such conduct during the one (1)
year period.
6. Work Product. Employee agrees that, during the term of his employment with
the Company:
6.1 He will disclose promptly and fully to the Company all works of authorship,
inventions, discoveries, improvements, designs, processes, software, or any
improvements, enhancements, or documentation of or to the same that he makes,
works on or conceives, individually or jointly with others, in the course of his
employment by the Company or with the use of the Company's time, materials or
facilities, in any way related or pertaining to or connected with the present-or
anticipated business, development, work or research of the Company or which
results from or are suggested by any work he may do for the Company and whether
produced during normal business hours or on personal time (collectively the
"Work Product");
6.2 All Work Product of the Employee shall be deemed to be "work made for hire"
within the meaning of ss. 101 of the Copyright Act and all rights to copyright
shall be vested entirely in the Company. If for any reason the Work Product is
deemed not to be "work made for hire," and its rights to copyright are thereby
in doubt, this Agreement shall constitute an irrevocable assignment by the
Employee to the Company of all right, title and interest in the copyright of all
Work Product created under this Agreement. The parties intend that any and all
copyright and other intellectual property rights in the Work Product, including,
without limitation, any and all rights of whatever kind and nature now or
hereafter to distribute and reproduce such Work Product in any and all media
throughout the world, are the sole property of the Company. The Employee hereby
agrees to assist the Company in any manner as shall be reasonably requested by
the Company to protect the Company's interest in such copyright and/or other
intellectual property rights, and to execute and deliver such legal instruments
or documents as the Company shall request in order for the Company to register
the Company's worldwide copyright in the work Product with the U.S. Copyright
office and to register and protect the Company's copyright or other intellectual
property rights in the Work Product throughout the world. Likewise, the Employee
hereby agrees to assist the Company by executing such other documents and
instruments which the Company deems necessary to enable it to evidence, perfect
and protect its right, title and interest in and to the Work Product.
6.3 Employee shall make and maintain adequate and current written records and
evidence of all Work Product, including drawings, work papers, graphs, computer
records and any other document which shall be and remain the property of
the Company, and which shall be surrendered to the Company upon request and
upon the termination of Emp loyee's employment with the Company, regardless of
cause. The provisions of this section and the term Work Product as used herein
do not apply to any invention for which no equipment, supplies, facilities or
confidential, proprietary or trade secret information of the Company was used,
and which was developed entirely on Employee's own time, while not on the
Company's business premises, and which does not relate to the Company's
business, unless: (i) the invention relates to the Company's actual or
demonstratively anticipated research development or (ii) the invention results
from any work performed by Employee for the Company.
7. Enforcement. The breach or threatened breach by Employee of any of the
provisions of this Agreement shall: (i) constitute cause for the termination of
Employee's employment and (ii) entitle the Company to a permanent injunction or
other injunctive relief in order to prevent or restrain any such breach or
threatened breach by Employee or his partners, agents, representatives,
servants, independent contractors, or any and all persons or entities directly
or indirectly acting for or with Employee. The rights and remedies of the
Company under this Agreement shall be in addition to and not in limitation of
any of the rights, remedies, and monetary or other damages or redress available
to it at law or equity.
8. Acknowledgment. Employee acknowledges that he has carefully read and
considered the provisions of this Agreement, and having done so, agrees that the
restrictions set forth are fair and reasonably required for the protection of
the interests of the Company. In the event that, notwithstanding the foregoing,
any part of the covenants set forth shall be held to be invalid or
unenforceable, the remaining parts thereof shall nevertheless continue to be
valid and enforceable as though the invalid or unenforceable parts had not been
included therein. In the event that any provision of this Agreement shall be
declared by a court of competent jurisdiction to be unreasonable or
unenforceable, the court shall enforce the provision in a way which it deems to
be reasonable and enforceable.
9. Survival. This Agreement shall survive any termination of Employee's
employment, whether or not for cause.
10. The Company Defined. As used in this Agreement,
the term 'the Company" includes the Company, any assignee or other successor in
interest of the Company, and any parent, subsidiary, or other corporation or
partnership under common ownership or control with the Company.
11. Notices. All notices in accordance with this Agreement shall be in writing
and given by hand delivery, overnight express delivery, or certified U.S. mail,
return receipt requested, and properly addressed to the party for whom it is
intended at the following addresses or such other address as is most recently
noticed for such party:
If to the Company: Alliance Entertainment Corp.
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
If to Employee: Xxxx X. Xxxxxx
00000 Xxxxxxxxx Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
12. Miscellaneous. This Agreement is legally binding on both Employee and the
Company and benefits their successors and assigns. It may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It represents the
parties' entire understanding regarding the subject matter of this Agreement and
supersedes any and all other prior agreements regarding the same subject matter.
The terms and provisions of this Agreement cannot be terminated, modified, or
amended except in a writing signed by the party against whom enforcement is
sought. This Agreement shall be construed in accordance with the laws of the
State of New York, and any suit, action or proceeding arising out of or relating
to this Agreement shall be commenced and maintained in any court of competent
subject-matter jurisdiction in the State of New York, with exclusive venue in
New York County. In any suit, action or proceeding arising out of or in
connection with this Agreement, the prevailing party shall be entitled to an
award of the amount of attorneys' fees and disbursements actually billed to such
party, including fees and disbursements on one or more appeals.
13. No Guarantee of Employment. Nothing in this Agreement shall be interpreted
or construed to be a guarantee
of ongoing employment, or to otherwise limit the Company's right to terminate
Employee's employment at any time.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
EMPLOYEE:
/s/Xxxx X. Xxxxxx
------------------------------
(signature)
Xxxx X. Xxxxxx
------------------------------
(name printed)
ALLIANCE ENTERTAINMENT CORP.
/s/Xxxxxx X. Xxxxxx
------------------------------
(signature)
Xxxxxx X. Xxxxxx
------------------------------
(name printed)
Chairman & C.E.O.
------------------------------
(title)
August 27, 1996
Alliance Entertainment Corp.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs,
Reference is made to that certain Amended and Restated Employment Agreement
dated as of the 15th day of August, 1996 (the "Agreement") by and between
Alliance Entertainment Corp. (the "Company") and the undersigned. As a further
inducement to the Company to enter into the Agreement and for other good and
valuable consideration, receipt of which is hereby acknowledged, this letter
will confirm the following:
1. It is understood and agreed by the undersigned that the cash payment to
be made by the Company pursuant to Section 7 of the Agreement is being made by
the Company for the purpose of retaining for the Company the services of the
undersigned over the term of the Agreement.
2. In the event that the actions or inactions of the undersigned constitute
a willful and continuing material failure by the undersigned to perform his
material duties under the Agreement, taken as a whole (a "Willful Breach"), the
undersigned will be obligated to pay over to the Company a pro rata portion of
the payment originally received pursuant to Section 7 of the Agreement, such pro
rata amount to be calculated by multiplying the total amount of such payment by
a fraction equal to the remaining portion of the term of the Agreement.
Notwithstanding anything in this paragraph 2 to the contrary, the Company
understands and agrees that the exercise by the undersigned of his rights
pursuant to Section 5.4 of the Agreement shall not constitute a Willful Breach
as such term is used in this letter.
3. The undersigned agrees that he will not take, or cause the Company to
take, any action or inaction which in turn would cause the undersigned to commit
a Willful Breach of the Agreement.
4. In the event that the undersigned ceases to perform his services prior
to the expiration of the term of the Agreement, and a bona fide dispute arises
as to whether such cessation constitutes a Willful Breach, the undersigned shall
not be obligated to make the repayment contemplated by paragraph 2 of this
letter, unless and until it is finally judicially determined that such cessation
was a Willful Breach.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance hereof in the space provided below, whereupon this letter and
you acceptance shall constitute a binding agreement between us.
Very truly yours,
/s/Xxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxx
Accepted and agreed as of the date first written:
By:/s/Xxxxxx X. Xxxxxx
-----------------------------
August 15, 1996
Alliance Entertainment Corp.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Gentlemen:
Reference is made to the Amended and Restated Employment Agreements, dated
as of the date hereof, between Alliance Entertainment Corp. and each of the
undersigned. Each of the undersigned agrees he will not exercise his right to
terminate their respective agreements other than for good reason pursuant to
Section 5.4 thereof in a manner that would violate or cause a default under any
existing credit agreement of the Alliance Entertainment Corp. with any bank.
Yours very truly,
/s/Xxxxxx Xxxxxx
--------------------------------------
Xxxxxx Xxxxxx
/s/Xxxx Xxxxxx
---------------------------------------
Xxxx Xxxxxx