Exhibit 3
CONSULTING AGREEMENT
CONSULTING AGREEMENT (the "Agreement") dated December 10, 1999, between
THE XXXX-XX CORPORATION, a Delaware corporation (the "Company"), LIBERTY MEDIA
CORPORATION, a Delaware corporation ("Liberty"), XXXXX X. XXXXXXXXX
("Executive"), and SMH ENTERTAINMENT, INC., a California corporation ("SMH").
This Agreement provides for the employment of Executive as a consultant
to the Company upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual undertakings contained
herein, the parties agree as follows:
ARTICLE I. CONSULTING
1. RELATIONSHIP OF THE PARTIES
a) The Company agrees to employ Executive as a consultant, and
Executive hereby accepts such with the Company, upon the terms and conditions
set forth in this Agreement for the period beginning on the date of this
Agreement (the "Effective Date") and ending on the date applicable under Section
5 below (the "Agreement Period").
b) The consulting services to be rendered by Executive
pursuant to this Agreement will be provided and rendered on behalf of SMH.
2. POSITION AND DUTIES
During the Agreement Period, Executive shall serve as a
consultant to the Company on a non-exclusive basis. Executive shall devote such
amount of his time to performing his duties and responsibilities as is necessary
for him to serve as an advisor to the Company actively participating in the
strategic development of the Company's business and as reasonably requested from
time to time by the Company's Chief Executive Officer. Executive shall report
directly to the Company's Chief Executive Officer.
3. SALARY, CONSULTING FEES, OPTIONS AND BENEFITS
a) During the Agreement Period, SMH shall be paid the sum of
$150,000 per year, payable in equal monthly installments, as compensation for
making Executive's services available.
b) During the Agreement period, in addition to compensation as
set forth in paragraph (a) above, Executive shall receive the same benefits as
offered to other executives of the Company.
c) Executive shall be granted a stock option to purchase
150,000 shares of common stock, par value $.01 per share of the Company, at
$10.27 per share (the "Option"). The Option will be evidenced by an Option
Agreement in the form attached hereto as Exhibit A (the "Option Agreement") and
vest 50,000 shares on the date of grant; 50,000 shares on the one year
anniversary of the date of grant; and 50,000 shares on the second anniversary of
the date of grant. The Option shall expire on the tenth anniversary of the date
of grant. The Option Agreement shall provide for accelerated vesting in the
event of a Change of Control (as defined in the Option Agreement) of the
Company, death, permanent disability, which Option shall be exercisable by
Executive or Executive's estate within 90 days of accelerated vesting.
d) During the Agreement Period, Executive shall be entitled to
use a Lincoln Continental Towncar automobile leased at the expense of the
Company, and the Company shall pay for the maintenance of the car and for
liability and collision car insurance in the same coverage amounts that were in
effect while Executive was President of the Company. When the lease for the car
currently used by Executive expires on December 31, 1999, the Company shall
lease, for the benefit of Executive, a new car comparable to a Lincoln
Continental Towncar for the remaining portion of the Agreement Period. Executive
shall be entitled to purchase the car at the end of the Agreement Period for the
residual value of the car, as reflected in the applicable lease.
e) Executive will be reimbursed for all reasonable
out-of-pocket expenses incurred in connection with the fulfillment of
Executive's duties pursuant to this Agreement in accordance with the Company's
usual procedures for senior executives. Notwithstanding the foregoing, first
class air travel and first class hotels will be permitted expenses with prior
approval which shall not be unreasonably denied. Executive shall be provided
with a Company credit card on the same basis as the Company's other senior
executives.
4. SOLANA BEACH OFFICES
a) The Company agrees, at the Company's expense, to provide
Executive during the Agreement Period with offices at 514 Via de La Xxxxx,
Suites 208 and 209, Solana Beach, California (the "Offices"). The Company shall
also employ, at the Company's expense, an executive secretary to assist
Executive during the Agreement Period. Such secretary shall be entitled to a
base salary not to exceed $40,000 per year plus employee benefits generally
offered to other employees of the Company.
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b) During the Agreement Period, the Offices (including the
offices at Executive's home) will be equipped to the same extent as they were
during the last year the Executive was President of the Company, including, but
not limited to, furniture, equipment (including fax machines, phones, copiers,
and computers) and other office supplies. Equipment and furniture shall be
maintained in good condition, repaired or replaced at the Company's expense as
necessary in order to keep the Offices fully operational.
5. TERM
a) The Agreement Period shall terminate on the earlier to
occur of: (i) the date of Executive's death, (ii) the date of voluntary
resignation by Executive (other than any voluntary resignation by Executive as a
Director of the Company or any notice that Executive no longer consents to being
nominated to the Board of Directors of the Company), (iii) the third anniversary
of the Effective Date, (iv) the change of control, or (v) the permanent
disability of Executive.
b) If the Agreement Period is terminated under 5(a)(i) or (v)
above, Executive and/or his heirs shall be entitled to receive, in lump sum, an
amount equal to the balance of the consulting fees that would be paid under
Section 3(a) of this Agreement as if the Agreement Period had not been
terminated prior to the third anniversary of the Effective Date, and any shares
not vested under Section 3(c) shall immediately vest.
(c) In the event Executive is terminated for cause, Executive
shall not be entitled to any compensation or benefits, except expenses
incurred prior to termination.
6. CONFIDENTIAL INFORMATION
Executive acknowledges that the information, observations and data
obtained by him while consulting with the Company and its Subsidiaries
concerning the business or affairs of the Company and its Subsidiaries that are
not generally available to the public other than as a result of a breach of this
Agreement by Executive ("Confidential Information") are the property of the
Company and its Subsidiaries. Executive agrees that he shall not disclose to any
unauthorized person or use for his own account any Confidential Information
without the prior written consent of the Company unless, and in such case only
to the extent that, such matters become generally known to the public other than
as a result of Executive's acts or omissions to act. Notwithstanding the
foregoing, in the event Executive becomes legally compelled to disclose
Confidential Information pursuant to judicial or administrative subpoena or
process, or other legal obligation, Executive may make such disclosure only to
the extent required, in the opinion of counsel for Executive, to comply with
such
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subpoena, process or other obligation. Executive shall, as promptly as possible
and in any event prior to the making of such disclosure, notify the Company of
any such subpoena, process or obligation and shall cooperate with the Company in
seeking a protective order or other means of protecting the confidentiality of
the Confidential Information.
7. NONCOMPETITION AGREEMENT
Executive acknowledges that in the course of his consulting with the
Company he will become familiar with the Company's trade secrets and with other
confidential information concerning the Company and its predecessors and that
his services have been and will be of special, unique and extraordinary value to
the Company. Executive agrees that, in consideration of the payments made to the
Executive hereunder, during the Agreement Period or for a period of three (3)
years from the date hereof, whichever is longer, Executive shall not directly or
indirectly own, manage, control, participate in, consult with, render services
for, or in any manner engage in any business in any country in which the Company
or its Subsidiaries are engaged on the Effective Date. Nothing herein shall
prohibit Executive from (i) owning, whether of record or beneficially, all the
equity and other interests in any corporation, partnership or other entity that
Executive owns as of the Effective Date, (ii) becoming a passive owner of not
more than 5% of the outstanding equity interests of competing corporation,
partnership or other entity, so long as Executive has no active participation in
the management of the business of such corporation, partnership or other entity,
other than as permitted by clause (iii) of this sentence, or (iii) serving on
the Board of Directors or in other similar managerial supervisory capacities of
any other non-competing corporation, partnership or other entity.
ARTICLE II. DEFINITIONS
As used in this Agreement, the following terms shall have the
definitions set forth below:
"DISABILITY" means Executive's inability to substantially perform his
duties hereunder for six consecutive months or more, as determined in good faith
by the Board.
"SUBSIDIARY" of an entity shall mean any corporation, limited liability
company, limited partnership or other business organization of which the
securities having a majority of the normal voting power in electing the board of
directors, board of managers, general partner or similar governing body of such
entity are, at the time of determination, owned by such entity directly or
indirectly through one or more Subsidiaries.
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ARTICLE III. GENERAL PROVISIONS
1. ENFORCEMENT. If, at the time of enforcement of Sections 6 or 7 of
Article I, a court holds that the restrictions stated herein are unreasonable
under the circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area. Because Executive's services
are unique and because Executive has access to Confidential Information, the
parties hereto agree that money damages would be an inadequate remedy for any
breach of Sections 6 or 7 of Article I of this Agreement. In the event of a
breach or threatened breach of this Agreement, the Company may apply to any
court of competent jurisdiction for injunctive or other relief in order to
enforce, or prevent any violation of, the provisions hereof (without posting a
bond or other security).
2. BREACH OF AGREEMENT. Any controversy or claim arising out of or
relating to this Agreement, or the breach hereof, except as stated in Section 1
of Article III above, shall be brought before any court of competent
jurisdiction. The prevailing party shall be entitled to all costs and attorneys
fees.
3. SURVIVAL. Section 6 of Article I of this Agreement shall survive and
continue in full force and effect in accordance with the terms notwithstanding
any termination of the Agreement Period.
4. NOTICES. All notices or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, one
business day following when sent via a nationally recognized overnight courier,
or when sent via facsimile, confirmed in writing to the recipient. Such notices
and other communications will be sent to the addresses indicated below:
To the Company:
The Xxxx-XX Corporation
000 Xxx xx xx Xxxxx, Xxxxx 000X
Xxxxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxx, General Counsel
Fax: 000-000-0000
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To Executive and to SMH:
Xxxxx X. Xxxxxxxxx
SMH ENTERTAINMENT, INC.
0000 Xxxxx Xxxxxx
Xxx Xxx, XX 00000
Fax: 000-000-0000
or such other address, or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
5. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, however, if any provision of this Agreement is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction. In such event, this Agreement
will be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
6. ENTIRE AGREEMENT. This Agreement and those documents expressly
referred to herein embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
7. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California, without giving
effect to any choice of law, or conflict of law provision or rule (whether of
the State of California or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of California.
9. COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument.
10. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or of any term or provision hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
THE XXXX-XX CORPORATION
By:
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Name:
Title:
LIBERTY MEDIA CORPORATION
By:
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Name:
Title:
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XXXXX X. XXXXXXXXX
SMH ENTERTAINMENT, INC.
By:
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XXXXX X. XXXXXXXXX
President
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