EXHIBIT 10.8
TVN ENTERTAINMENT CORPORATION
EMPLOYMENT AGREEMENT
This Agreement is made by and between TVN Entertainment Corporation (the
"Company"), and Xxxxxx X. Xxxxx ("Executive").
1. Duties and Scope of Employment.
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(a) Position; Employment Commencement Date. The Company shall employ
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Executive as Chairman of the Board and the Chief Executive Officer ("CEO") of
the Company reporting to the Board of Directors of the Company (the "Board").
Executive's employment by the Company pursuant to this Agreement shall commence
on September 1, 1997.
(b) Obligations. In his capacity as CEO, Executive's duties shall
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consist of those usually attendant to that office, including oversight, planning
and management of the Company, all under the direction and control of the Board.
Executive shall devote his full business efforts and time to the Company's
business during the term of employment described in Section 3 below. Executive
agrees not to actively engage in any other employment, occupation or consulting
activity for any direct or indirect remuneration, without the prior approval of
the CEO and the Board; provided, however, that Executive may serve any civic,
educational or charitable organization without the approval of the Board, so
long as such activities do not interfere with the full-time performance of his
duties and obligations under this Agreement.
2. Employee Benefits. During his employment hereunder, Executive shall
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be eligible to participate in the employee benefit plans maintained by the
Company to the full extent provided for under those plans for employees of
similar status except as otherwise specifically provided for herein.
3. Term of Employment. Executive's term of employment hereunder shall be
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for the period commencing on September 1, 1997 and, subject to the terms hereof,
terminating on the third anniversary of such date (the "Initial Term"); and the
Company shall have the option (but not the obligation) to renew and extend
Executive's term of employment under this Agreement for one (1) two-year period
on the terms and subject to the conditions hereof (the "Option Period"), such
Option Period to be exercised by the Company upon written notice to Executive no
later than 90 days prior to the expiration of the Initial Term.
4. Compensation, Fringe Benefits and Stock Option.
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(a) Base Salary. While employed by the Company pursuant to this
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Agreement, the Company shall pay the Executive as compensation for his services
a base salary ("Base Salary") at the annualized rate of $450,000 for the period
September 1, 1997 through August 31, 1998, $475,000 for the period September 1,
1998 through August 31, 1999, $500,000 for the period September 1, 1999 through
August 31, 2000, and such amount as the Board shall approve for the Option
Period (if the option shall be exercised by the Company); provided, however,
that Executive's Base Salary for each
year during the Option Period shall be not less than 110% of Executive's Base
Salary for the immediately preceding year of his employment. Such salary shall
be paid periodically in accordance with normal Company payroll practices and
subject to the usual, required withholding. Executive's salary shall be reviewed
yearly for possible raises and/or bonuses in light of Executive's performance of
his duties, as determined by the Board. Executive understands and agrees that
neither his job performance nor promotions, commendations, bonuses or the like
from the Company shall give rise to or in any way serve as the basis for
modification, amendment, or extension, by implication or otherwise, of this
Agreement.
(b) Option Grant. Executive shall be granted a stock option, which
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shall be, to the extent possible under the $100,000 rule of Section 422(d) of
the Internal Revenue Code of 1986, as amended (the "Code"), an "incentive stock
option" (as defined in Section 422 of the Code) to purchase a total of 291,707
shares of Company Common Stock with a per share exercise price equal to 100% of
the fair market value of such stock on the date of grant ($0.75 per share).
This option shall be for a term of ten (10) years (or shorter upon termination
of employment with the Company) and shall vest at the rate of 20% of the shares
originally subject to the option one year from the commencement date of the
Initial Term and one-sixtieth (1/60th) of the shares originally subject to the
option each month thereafter, conditioned upon Executive's continued employment
with the Company as of each vesting date. This option grant is in all respects
subject to the terms, definitions and provisions of the Company's Stock Option
Plan (the "Option Plan") and the stock option agreement by and between Executive
and the Company (the "Option Agreement"), both of which documents are
incorporated herein by reference.
(c) Incentive Bonus. Executive shall be eligible, with respect to the
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1998-2000 fiscal years of the Company, for an annual incentive bonus of
$250,000. This bonus will be payable if revenue received from the Company's
Digital Cable Television business meets the plan approved by the Board of
Directors for DCTV revenues for that fiscal year. If such revenue does not meet
plan, Executive shall instead receive a minimum annual bonus of $125,000. If
such revenue exceeds the plan for the fiscal year, the bonus may be increased
above $250,000 as is determined by the Board of Directors. Notwithstanding the
foregoing, however, the bonus amount will be $250,000 for the fiscal year ending
March 31, 1998, regardless of whether revenue meets the plan. To be eligible to
receive the bonus, Executive must be employed by the Company through the last
day of each such fiscal year. This bonus, to the extent payable, shall be paid
to Executive within ninety days of the end of each such fiscal year. With
respect to the bonus for fiscal year 1998, such payment shall be made by June
29, 1998. The bonus and the related performance criteria for each year of the
Option Period will be mutually determined by the Company and Executive but in no
event shall the minimum annual bonus be less than $250,000.
Subsequent bonus milestones for Executive shall be established by the Board
following good faith consultation with the Executive.
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(d) Life Insurance. In addition to being covered under the Company's
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group health and dental plans, the Company will obtain and pay premiums for,
during the term of Executive's employment hereunder, term life insurance for
Executive in the amount of $3,000,000 payable to the beneficiary designated by
Executive. Executive shall be fully "grossed-up"by the Company for this benefit
so that the economic effect to Executive is the same as if this benefit was
provided to Executive on a non-taxable basis. Executive also understands and
agrees that the Company may obtain additional term life insurance on Executive
payable to the Company and agrees to cooperate with the Company with respect to
the medical examinations required to obtain such policies.
(e) Vacation and Auto Allowance. Executive shall be entitled to paid
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vacation of four weeks per year in accordance with the Company's vacation
policy, and to an automobile allowance of $1,000 per month, provided that the
cost of maintaining and insuring such auto and all other costs relating thereto
shall be borne by Executive.
(f) Fringe Benefits. Executive shall be entitled to such employee
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perquisites and other fringe benefits as are typically made available to senior
management employees of enterprises in the entertainment business, including but
not limited to first class travel on Company business.
5. Severance Benefits. If the Company terminates Executive's employment
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involuntarily without "Cause" (as defined herein), then (i) Executive shall be
entitled to receive continuing payments of severance pay (less applicable
withholding taxes) at a rate equal to his base salary rate, as then in effect
(but not less than $450,000 per year) for the remainder of the Initial Term, but
in no event to exceed a maximum of two years from the date of such termination
and (ii) Executive shall receive the minimum annual bonus of $125,000 for the
fiscal year in which such termination occurs notwithstanding the fact that
Executive was not employed through the last day of such year. For this purpose,
"Cause" is defined as (i) an act of dishonesty made by Executive in connection
with Executive's responsibilities as an employee and intended to result in
Executive's substantial personal enrichment, (ii) Executive's conviction of a
felony, (iii) a willful act by Executive which constitutes gross misconduct and
which results in material injury to the Company, or (iv) Executive's continued
substantial violations of his employment duties which are demonstrably willful
and deliberate on Executive's part after Executive has received one or more
written demands for performance from the Company which specifically sets forth
the factual basis for the Company's claim that Executive has not substantially
performed his duties, and Executive has had a reasonable time period in which to
cure such defaults to the reasonable satisfaction of the Board of Directors.
Termination of Executive for Cause under this Section shall be effective only
upon delivery to Executive of a copy of a resolution duly adopted by the Board
at a Board meeting duly called and held finding that Executive was guilty of the
conduct set forth in any of clauses (i) through(iv) above and specifying the
particulars thereof, and that in the case of (iv) above Executive has not timely
cured such defaults.
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6. Total Disability of Executive. Upon Executive's becoming totally
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disabled during the term of this Agreement, employment hereunder shall
automatically terminate and Executive shall receive post-termination disability
payments equal to six (6) months of continuation of Base Salary. Executive
shall be deemed to have suffered a "Total Disability" ninety (90) days following
written notice by the Company to Executive of a determination by an independent
physician acceptable to the Board and Executive (which acceptance will not be
unreasonably withheld) that Executive's disability is such that he cannot render
services as provided for hereunder; provided, however, that if Executive resumes
work on a regular basis prior to the end of such 90 day period, Executive shall
not be deemed to have suffered a "Total Disability."
7. Partial Disability of Executive. If, during the term of this
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Agreement, Executive becomes disabled by reason of illness or other incapacity
extending for a period of more than three (3) consecutive months during which
Executive is unable to perform his duties hereunder on a full-time basis (as
determined by an independent physician acceptable to both Executive and the
Board), but is able to perform his duties hereunder on a part-time basis
("Partial Disability"), all salary amounts otherwise payable and option shares
otherwise vesting to Executive hereunder shall be proportionately reduced with
respect to amounts paid or shares vested subsequent to the end of said three (3)
month period in relation to Executive's reduced level of performance.
8. Death of Executive. If Executive dies during the term of this
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Agreement, this Agreement shall terminate immediately; provided, however, that
in such event, Executive's spouse, if living, shall receive six (6) months of
continued Base Salary payments hereunder.
9. Enforcement. Any dispute between the parties under this Agreement
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shall be resolved by binding arbitration under the rules of commercial
arbitration of the American Arbitration Association in Los Angeles, California.
In the event of any arbitration to enforce the terms of this Agreement, the
prevailing party in such arbitration shall be entitled to such party's
reasonable costs and expenses of enforcement including, without limitation,
reasonable attorneys' fees. Payments for Total Disability or upon Death shall
be in addition to any unpaid Base Salary or Incentive Compensation which is
unpaid or has been earned at the time of such event.
10. Assignment. This Agreement shall be binding upon and inure to the
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benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company. Any such successor of
the Company shall be deemed substituted for the Company under the terms of this
Agreement for all purposes. As used herein, "successor" shall include any
person, firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. Executive shall
personally perform and may not delegate to third parties his duties hereunder,
except as approved in writing by the Board.
11. Notices. All notices, requests, demands and other communications
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called for hereunder shall be in writing and shall be deemed given if delivered
personally or three (3) days after being mailed by registered or certified mail,
return receipt requested, prepaid and addressed to the
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parties or their successors in interest at the following addresses, or at such
other addresses as the parties may designate by written notice in the manner
aforesaid:
If to the Company: TVN Entertainment Corporation
0000 X. Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Attention: President
with copies to: Xxxxxx Xxxxxx
TVN Entertainment Corporation
0000 X. Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
If to Executive: Xxxxxx X. Xxxxx
at his last residential address given by him to
the Company.
12. Severability. In the event that any provision hereof becomes or is
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declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
13. Entire Agreement. This Agreement and the Non-Disclosure Agreement
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dated January 17, 1996 represent the entire agreement and understanding between
the Company and Executive concerning Executive's employment relationship with
the Company, and they supersede and replace any and all prior negotiations, or
agreements and understandings oral or written concerning Executive's employment
relationship with the Company.
14. No Oral Modification, Cancellation or Discharge. This Agreement may
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be amended, canceled or discharged only in writing signed by Executive and the
Company.
15. Governing Law. This Agreement shall be governed by and construed
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under the laws of the State of California applicable to contracts which are to
be wholly performed in such State.
16. Effective Date. This Agreement is effective immediately after it has
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been signed, although the term of Employment and Executive's services and
Company's compensation obligations hereunder shall commence as of the date shown
above in Section 3 hereof.
17. Acknowledgment. Executive acknowledges that he has had the
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opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.
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18. Nondisclosure of Confidential Information; Non-Competition.
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(a) Executive acknowledges that, as a consequence of his
employment and position with the Company, he will have access to and become
acquainted with confidential information of the Company, its affiliates,
vendors, bankers and customers. During the term of this Agreement and at all
times thereafter, and in addition to his obligations pursuant to the
Confidentiality and Non-Disclosure Agreement entered into by Executive
concurrent herewith, Executive shall not, without the prior written consent of
the Company, use, divulge, disclose or make accessible to any other person,
firm, partnership, corporation or other entity any of such Confidential
Information (as hereinafter defined) pertaining to the business of the Company
or any of its affiliates, except (i) while employed by the Company, in the
business of and solely for the benefit of the Company, or (ii) when required to
do so by a court of competent jurisdiction, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
body or legislative body (including a committee thereof) with jurisdiction to
order Executive to divulge, disclose or make accessible such information. For
purposes of this Section 18(a), "Confidential Information" shall mean nonpublic
information concerning the Company's financial data, designs, strategic business
plans, product development (or other propriety product data), customer lists,
information relating to suppliers and methods of production, business know-how,
sales and marketing information and plans, and other nonpublic, proprietary and
confidential information of the Company, its affiliates, vendors, bankers or its
customers.
(b) During the Initial Term and the Option Period, if
applicable, Executive agrees that, without the prior written consent of the
Company: (i) he shall not, directly or indirectly, either as principal, manager,
agent, consultant, officers, stockholder, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in or have any financial interest
in, any entity which is now or at the time in competition with the Business
Activities (as defined below) of the Company and/or its affiliates (a "Competing
Entity"); and (ii) he shall not, on his own behalf or on behalf of any person,
firm or company, directly or indirectly, (A) interfere with any contractual
relationship between any vendors or suppliers of the Company and the Company or
its affiliates which could reasonably be expected to have an adverse effect on
the Company or its affiliates, or (B) solicit or offer employment to any person
who has been employed by the Company at any time during the six (6) months
immediately preceding such solicitation. The term "Business Activities" in
clause (i) of the preceding sentence shall mean the business of the Company as
such business exists on the date hereof or at any time during Executive's
employment.
Notwithstanding the foregoing, Executive may own, directly
or indirectly, less than five percent (5%) in the aggregate of the outstanding
voting stock of a corporation coming within the restrictions of the previous
paragraph, the securities of which are listed on a U.S.
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or foreign national securities exchange or are traded on NASDAQ, if Executive
does not participate in the management of, perform services for or have any
other beneficial interest in such corporation.
(c) Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and authorize
to excise or modify such provision or provisions of this covenant which as to
the court shall appear not reasonable and to enforce the remainder of the
covenant as so amended. Executive agrees that any breach of the covenants
contained in this Section 18 would irreparably injure the Company. Accordingly,
Executive agrees that the Company may, in addition to pursuing any other
remedies it may have in law or in equity, obtain an injunction against Executive
from any court having jurisdiction over the matter, restraining any further
violation of this Agreement by Executive.
19. Principal Office. Without Executive's consent, the Company
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shall not require Executive to maintain his principal office or to conduct his
principal business activities hereunder for the Company in any location other
than the greater metropolitan area of Los Angeles or Burbank/Glendale,
California.
20. Beneficiaries; References. Executive shall be entitled to select
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(and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive compensation or benefits payable hereunder, if any,
following his death or total disability, and may change such election, in either
case by giving the Company written notice thereof. In the event of Executive's
death or a judicial determination of his incompetence, reference in this
Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative, for purposes of receipt of
benefits to which Executive is entitled hereunder.
21. Survivorship. The respective rights and obligations of the
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parties hereunder shall survive any termination of this Agreement to the extent
necessary to preserve the parties' intentions with respect to such rights and
obligations. The provisions of this Section 21 are in addition to the
survivorship provisions of any other section of this Agreement.
22. Withholding. The Company shall be entitled to withhold from
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payment to Executive any amount of withholding or other deduction required to be
withheld and/or deducted by applicable law.
23. Counterparts. This Agreement may be executed in multiple
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counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one Agreement. Mutually executed facsimile copies may
be used for purposes as originals.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below
TVN ENTERTAINMENT CORPORATION
By: Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
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Signature
Title: Senior Executive Vice President
Date: 8/29/97
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Print Name: Xxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx
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Signature
Date: 8/29/97
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