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EXHIBIT 10.66
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of this 22nd day
of September, 1999, by and between THE XXXXXX ENTERTAINMENT COMPANY, a
California corporation (the "Company"), and XXXXX XXXXXXXXXX (the "Employee").
Whereas, Company desires to engage the services of Employee, whose
experience, knowledge and abilities are extremely valuable to Company, and
Employee desires to enter the employ of Company,
Now, therefore, Company and Employee agree as follows:
1. Position and Duties: Reporting.
(a) Company hereby employs Employee, and Employee hereby accepts
employment, as Senior Vice President and General Counsel of Company during the
Term hereof as specified in Paragraph 6 below, with powers and duties consistent
with such position. Employee shall perform such additional, different and/or
incidental duties, and accept the election or appointment to such other offices
or positions, as are consistent with Employee's position and reasonably
designated by the Chairman and Chief Executive Officer of Company. Employee
shall perform such duties and responsibilities incidental to his employment as
may from time-to-time be reasonably requested by Company, consistent with
Employee's position, stature and experience, and shall faithfully observe
Company's policies and procedures consistent with the provisions hereof. The
provisions of this Paragraph 1(a) shall be subject to the terms of Paragraph 6
hereof. Employee shall report to the Chairman/CEO of the Company.
(b) Employee shall devote his full working time to the promotion
of Company's business and welfare, and as such his services in the entertainment
industry shall be exclusive to Company hereunder during the Term.
Notwithstanding any contrary provisions hereof, Employee may engage in other
business activities with Company's prior written consent provided the same shall
not adversely affect the performance of Employee's services hereunder and
provided further, during the Term hereunder, Employee shall not, directly or
indirectly, (i) engage in any business for his own account which is competitive
with the businesses of Company or Company's subsidiaries or affiliates
(collectively, "Competitive Business") so long as Company or the Company's
subsidiaries or affiliates (as the case may be) continue to engage in such
business; (ii) enter the employ of, or render any services to, any person
engaged in a Competitive Business; or (iii) become interested in a Competitive
Business in any capacity including, without limitation, as an individual,
partner, shareholder, officer, director, principal, agent, trustee or
consultant. In addition, during the Term and the one-year period following
termination of his employment hereunder, Employee shall not, directly or
indirectly (i) induce any customer or supplier of Company or Company's
subsidiaries or affiliates to terminate its relationship with Company or
Company's subsidiaries or affiliates (as the case may be), or (ii) solicit or
induce any of Company's employees to
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terminate their employment with Company, or hire or cause any of the then
current employees of Company to be hired by any other company (except companies
controlled by Company). Notwithstanding anything to the contrary, without the
consent of the Company Employee may acquire and/or retain, solely as an
investment, and take customary actions to maintain and preserve Employee's
ownership of:
(i) securities of any corporation which are registered
under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended, and which are publicly traded, as long as Employee is not part of any
control group of such corporation; and
(ii) any securities of a partnership, trust, corporation
or other person, the ownership of income producing real estate or other passive
investments, so long as Employee remains a passive investor in that entity and
does not become part of any control group thereof (except in a passive capacity)
and so long as such entity is not, directly or indirectly, in competition with
the Company or its subsidiaries or affiliates.
2. Compensation.
(a) Annual Guaranteed Salary. During the term of his employment
hereunder, Company shall pay to Employee a salary, in equal installments not
less frequently than monthly, at the rate of $145,000 per year for the first
year of the Term, $155,000 per year for the second year of the Term, and
$165,000 per year for the third year of the Term.
(b) Incentive Compensation. Employee shall be eligible for
consideration to receive an annual bonus based on Company's performance, which
bonus (if any) shall be determined by the Board of Directors in its sole
discretion; however, the bonus shall be no less than the bonus to be paid to any
other senior management executive of Company of similar stature or position as
Employee.
3. Warrants and Stocks.
(a) Warrants to Purchase Common Stock. On the effective date
hereof, Employee shall be granted warrants ("Warrants") to purchase forty
thousand (40,000) shares of common stock no par value per share ("Common
Stock"), of Company pursuant to the terms of the Warrant Agreement dated as of
April 5, 1999, among the Company, Xxxxx Xxxxxxx and the other signatories
thereto (the "Warrant Agreement"). The Warrants granted to Employee shall
consist equally of Series A Warrants, Series B Warrants and Series C Warrants of
Company. The Warrants shall vest as provided in Schedule I attached hereto.
(b) Stock Options. Employee shall have the right to participate
in stock option plans available to any other senior executive employee of
Company of equal or lesser stature to Employee. With the exception of the number
of options, such
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participation shall be on terms no less favorable than those provided to any
other senior executive employee of comparable or lesser level to Employee in
Company. Any such stock options granted hereunder shall vest if Employee is
terminated other than for Cause. The time Employee has to exercise his options
after termination shall be governed by the Company's stock option plan.
Notwithstanding the foregoing, subject to approval of the Company's Stock Option
Committee and the approval of the proposal put forth to the Company's
shareholders at the 1999 Annual Shareholders' meeting regarding the increase in
the amount of stock options available for grant under the Company's 1997 Stock
Option Plan, management shall use its best efforts to convince the Company's
Stock Option Committee to promptly grant Employee options ("Options") to
purchase fifteen thousand (15,000 ) shares of Common Stock of the Company at a
price equal to the Common Stock closing price on the date of the Option grant.
The vesting period of such Option grant will be made in accordance with the 1997
Stock Option Plan or as determined by the Stock Option Committee.
(4). Expenses. Company will reimburse or pay Employee for all usual,
reasonable and necessary expenses paid or incurred by Employee in the
performance of his duties hereunder, consistent with Company's expense
reimbursement policies and subject to receipt by Company of appropriate
documentary proof of all expenditures for which reimbursement is sought.
(5). Employee Benefits. Employee shall be entitled to participate to the
full extent of the participation by any other senior executive employee of
Company of comparable level or below to Employee in any profit-sharing, pension,
vacation, health insurance, life insurance and disability or other plans,
benefits or policies available to the senior executive employees of comparable
level or below to Employee established by Company (in its sole and absolute
discretion) from time to time and not duplicative of those provided herein.
(6). Term.
(a) The period of Employee's employment by Company hereunder (the
"Term") shall commence on the effective date hereof and shall terminate upon the
first to occur of the following events: (i) three (3) years from the Effective
Date as set forth in Xxxxxxxxx 00 xxxxxx, (xx) the death of Employee, (iii) at
the option of Company upon twenty (20) days prior written notice to Employee, in
the event of the inability of Employee to perform his duties hereunder, whether
by reason of injury, illness (physical or mental) or otherwise, for a period of
four (4) consecutive months or six (6) months in the aggregate ("disability"),
or (iv) the discharge of Employee for Cause. Cause shall mean, and be limited
to, (x) acts of deliberate dishonesty constituting either the commission of a
felony or the misappropriation of substantial corporate assets for personal
benefit, (y) willful failure to observe or follow reasonable and explicit
instructions or directives of Company, or (z) willful malfeasance or willful
failure to act involving material nonfeasance, if in either case such
malfeasance or nonfeasance would have a material adverse effect on Company.
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Company agrees to give written notice to Employee specifying the claimed
Cause and, provided such Cause is curable, to permit Employee to correct the
claimed Cause as soon as practical thereafter but no later than seven (7)
business days after receipt of the applicable notice. However, in no event shall
the occurrence of Cause within clause (x) of this Paragraph 6(a) be subject to
cure. Upon the termination of Employee's employment pursuant to this Paragraph
6(a), Company shall have no further liability or obligation of any kind or
nature whatsoever to Employee under this Agreement, except that any salary or
other benefits accrued or earned by Employee to the date of termination but not
paid shall be paid by Company to Employee or his estate, and Employee shall be
entitled to such benefits, if any, under Sections 4 and 5 hereof to which he has
become entitled prior to the date of his termination of employment.
(b) If, without Cause, Company without Employee's consent
determines to remove Employee from the office of the Senior Vice President and
General Counsel of Company, Employee shall have the right to elect to treat such
event as a termination of his employment by Company without Cause with the
consequences provided in this Paragraph 6(b). If Employee's employment is
terminated by Company without Cause, Employee shall be entitled to receive from
Company until the ending date of the period of employment hereunder (determined
as provided in Paragraph 6(a) hereof) the salary, benefits and emoluments in
effect at the date of such termination, including without limitation, the
immediate vesting of any unvested stock options and/or Warrants theretofore
granted. Upon the payment of the amounts provided in this Paragraph 6(b),
Company shall have no further liability or obligation of any kind or nature
whatsoever to Employee under this Agreement.
7. Mitigation. Except as noted below, Employee shall be obligated to
mitigate the damages he may incur in the event of termination by Company without
cause. Employee agrees that if Employee furnishes his services for other
engagements or employment after such termination without Cause by Company
hereunder, the total compensation actually earned or received by Employee
together with any welfare or other benefits earned by Employee through the date
when this Agreement would have terminated had it not been terminated without
Cause, shall reduce any amounts and benefits which Company would otherwise be
required to pay or provide to Employee. Employee agrees that he shall give
written notice to Company (promptly after accepting employment or furnishing his
services after such termination of his employment with Company) of any amounts
earned or received (or to be earned or received) by Employee and any benefits
provided (or to be provided) to Employee pursuant to his new employment
agreement. Notwithstanding the foregoing, Employee's obligation to mitigate
shall not become effective until a period beginning six months from the date of
termination by Company without cause.
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8. Nondisclosure of Confidential Information.
(a) "Confidential Information" shall include, but not be limited
to, all of Company's and its subsidiaries' and affiliates' performance, sales,
financial, pricing, cost, manufacturing, contractual and marketing information,
ideas, knowledge and data, and all processes, products, formulae, designs,
practices, techniques, trade secrets, research, know-how, merchandising
agreements, licensing agreements, distribution agreements, customer lists,
technical requirements of customers and identity and purchasing terms of
suppliers.
(b) Employee acknowledges that Company, and its subsidiaries and
affiliates, have exclusive rights to all of their respective Confidential
Information and agrees to assign all rights he might otherwise possess in any
Confidential Information to the Company. Except as required in the performance
of his duties hereunder, Employee shall not at any time during or after the term
of his employment, directly or indirectly use, communicate, disclose or
disseminate, lecture upon/publish articles or otherwise put in the public
domain, any Confidential Information or any other information of a secret,
proprietary, confidential or generally undisclosed nature relating to Company,
or its subsidiaries or affiliates, or their products, operations and activities
until such Confidential Information is disclosed by law or legal process or
becomes generally available to the public by independent discovery, development
or publication or generally known within the industry other than as a result of
Employee's breach hereof.
(c) All documents, records, notebooks, notes, memoranda, computer
records and other repositories of or containing Confidential Information or any
other information of a secret, proprietary, confidential or generally
undisclosed nature relating to Company, or its subsidiaries or affiliates, or to
its products, operations and activities made or compiled by Employee at any time
or made available to Employee prior to or during the term of his employment by
Company, including any and all copies thereof shall be the property of Company,
shall be held by Employee in trust solely for the benefit of the Company, and
shall be delivered to Company by Employee on the termination of Employee's
employment or at any other time on the request of Company.
9. Warranties/Indemnities. Employee hereby represents and warrants that
he: (i) is free to enter into this Agreement and to furnish Company all of the
services and grant all of the rights herein set forth; (ii) is in good health
and free from any disability or other condition which will or could interfere
with the full performance of his obligations hereunder; and (iii) has not made
nor will make any commitments or do any acts in conflict with this Agreement or
in derogation of Company's rights hereunder. Employee shall defend, indemnify
and hold harmless Company and all those claiming under Company from and against
any claims, damages, liabilities, costs and expenses (including reasonable
attorneys' fees and costs, whether or not in connection with litigation) arising
out of any breach or default by Employee hereunder. Employee agrees that Company
shall have the sole right to control the legal defense against any such claims,
demands or
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litigation, including the right to select counsel of its choice and to
compromise or settle any such claims, demands or litigation.
10. Ownership of Properties. Company, as employer, shall own, and
Employee hereby transfers and assigns to Company, all rights in and to any
material and/or ideas written, suggested or submitted by Employee during the
Term and all other results and proceeds of his services for Company
("Properties"). Company and its licensees and assigns shall have the right to
adapt, change, revise, delete from, add to and/or rearrange the Properties or
any part thereof written or submitted by Employee and to combine the same with
other works to any extent, and to change or substitute the title thereof, and in
this connection Employee hereby waives any so-called "moral rights" of authors.
Employee agrees to execute and deliver to Company such assignments or other
instruments as Company may require from time to time to evidence its ownership
of the results and proceeds of Employee's services, failing which Company shall
have the irrevocable right to do so as Employee's attorney-in-fact; provided,
however, that nothing in this Paragraph 10 shall be deemed in any manner to
restrict or qualify Employee's ownership or right to exploit Employee's personal
memoirs.
11. Right to Injunction/Remedies. Employee acknowledges that Company's
remedies at law for a breach by him of the provisions of Paragraphs 1, 8 and 10
hereof will be inadequate. Accordingly, in the event of the breach or threatened
breach by Employee of any such provisions, Company shall be entitled to seek
injunctive relief in addition to any other remedy it may have. In the event of
any breach by Company of this Agreement, Employee shall be limited to his remedy
at law for damages, if any, and shall not have the right to terminate or rescind
this Agreement or in any way to enjoin or restrain the production, distribution,
advertising or other exploitation of any motion pictures or other productions,
it being specifically agreed that all rights granted and agreed to be granted to
Company under this Agreement shall be irrevocably vested in Company and shall
not be subject to rescission for any cause.
12. Assignment. Employee may not assign, transfer or convey this
Agreement or any interest therein. This Agreement and all of Company's rights
and obligations hereunder may be assigned or transferred by it, in whole but not
in part, to and shall be binding upon and inure to the benefit of any successor
of Company, but any such assignment shall not relieve Company of any of its
obligations. The term successors shall mean only any corporation or other
business entity which by merger, consolidation, purchase of assets or otherwise
succeeds to or otherwise acquires all or substantially all of the assets of
Company; provided that nothing herein shall limit the provisions Paragraph 6(b)
hereof.
13. Arbitration.
(a) Without limiting Company's right to seek injunctive relief as
described in Paragraph 11, in the event of a disagreement or dispute between
Company and Employee related to this Agreement, the matter will be finally
settled in Los Angeles,
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California by arbitration by a single arbitrator (unless the parties cannot
agree on such arbitrator in which case each party will select an arbitrator and
the two arbitrators so selected shall select the third arbitrator) in a
proceeding conducted under the rules of the American Arbitration Association or
any similar successor body, the arbitrator also apportioning the costs of the
arbitration. The decision of the arbitrator(s) in writing shall be final and
binding upon the parties and will not be subject to appeal. If either party
fails to abide by such decision, the other party may seek the order of any
federal or state court having jurisdiction thereof which shall enter judgment on
the decision of the arbitrator(s), and the party so failing to abide shall be
responsible for the payment of the expenses of the court proceeding and all
resulting enforcement expenses, including actual attorneys' fees. The parties
agree to use their best efforts to complete any arbitration hereunder
expeditiously.
(b) The prevailing party in any arbitration shall be entitled to
be reimbursed for attorneys fees and costs in connection with the pursuit of
such arbitration, subject to the following limitation: such reimbursement shall
not exceed the total attorneys fees and costs incurred by whichever of the two
parties to such arbitration has the lesser aggregate attorneys fees and costs.
By way of example, if Employee brings an arbitration against Company and Company
prevails in such arbitration, (thus entitling Company to reimbursement of
attorneys fees and costs), and if Employee's legal fees and costs amount to
$50,000 and Company's legal fees and costs amount to $85,000, Company's recovery
of legal fees and costs against Employee in such instance shall be limited to
$50,000.
14. Indemnification. Employee shall be entitled to the benefit of
indemnification to the fullest extent permitted by applicable law at the time of
assertion of any liability against Employee.
15. Notices. All notices hereunder shall be in writing and shall be
given either by personal delivery, telegram or telecopy (toll prepaid) or by
registered or certified mail (postage prepaid) to the appropriate party at the
address listed below, and the date of such personal delivery, mailing,
telegraphing or telecopying shall be the date of the giving of such notice.
If to Company: The Xxxxxx Entertainment Company
1999 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chairman of the Board
with a copy to: The Xxxxxx Entertainment Company
1999 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
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If to Employee: Xxxxx Xxxxxxxxxx
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
16. Miscellaneous.
(a) In the event there is any conflict between the provisions of
this Agreement and any statute, law or regulation, the latter shall prevail;
provided, however, that in such event the provision(s) of this Agreement so
affected shall be curtailed and limited only to the minimum extent necessary to
permit compliance with the minimum mandatory requirement(s) thereof, and no
other provision(s) of this Agreement shall be affected thereby, and all such
other provisions will continue in full force and effect.
(b) This Agreement shall be governed by the laws of the State of
California applicable to agreements executed and to be wholly performed therein
and shall not be modified except by a written document executed by the parties
hereto.
(c) This Agreement expresses the entire understanding of the
parties hereto and replaces any and all former agreements, negotiations or
understandings, written or oral, relating to the subject matter hereof.
(d) The remedies herein provided are cumulative and the exercise
of one shall not preclude the exercise of any other.
(e) No waiver by either party hereto of any failure by the other
party to keep or perform any covenant or condition of this Agreement shall be
deemed a waiver of any preceding, succeeding or continuing breach of the same,
or any other covenant or condition.
(f) Paragraph headings are for the convenience of the parties
only and shall not be used in construing meaning.
(g) This Agreement shall not be construed to create a joint
venture or partnership between the parties, and shall not be interpreted in
favor of or against either party on grounds that said party drafted this
Agreement.
(h) This Agreement shall be executed in a number of identical
counterparts, each of which shall be construed as an original for all purposes,
but all of which taken together shall constitute one and the same Agreement.
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17. This Employment Agreement shall become effective (the "Effective
Date") as of October 4, 1999.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EMPLOYEE: THE XXXXXX ENTERTAINMENT
COMPANY
___________________________________ By: _______________________________
XXXXX XXXXXXXXXX
Title: ____________________________
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Schedule I (Xxxxx Xxxxxxxxxx)
Employee's right to exercise the Warrants granted pursuant to Paragraph
3 of the Agreement to which this Schedule I is attached shall vest in accordance
with the following schedule:
Length of Employment Employee's Warrants that Vest
-------------------- -----------------------------
On signing this Agreement 20,000
One year after the Effective Date
described in Paragraph 17 10,000
End of the second year of the Term 5,000
End of the third year of the Term 5,000
Notwithstanding anything to the contrary herein or in the Warrant
Agreement, in the event of the termination of Employee's employment by Company
without Cause or as a result of Employee's death or disability during the term
of and pursuant to the attached Employment Agreement, all unvested Warrants held
individually by Employee shall immediately vest and shall remain exercisable for
a period equal to the then balance of the term of the Warrants (i.e., the
balance of the six year, seven year or eight year term depending on the relevant
Warrants).
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