EXHIBIT (C)(6)
AGREEMENT NOT TO COMPETE
This Agreement Not to Compete (this "AGREEMENT") is entered into as of
October 1, 1997, by and between All American Communications, Inc., a Delaware
corporation ("COMPANY"), on the one hand, and Xxxxxxx X. Xxxxxx, an individual
("XXXXXX"), on the other hand.
R E C I T A L S
WHEREAS, Company, Xxxxxxx plc and Pearson Merger Company, Inc.
("MERGER SUB") have entered into an Agreement and Plan of Merger ("MERGER
AGREEMENT") dated as of October 1, 1997 relating to the merger of Merger Sub
into Company;
WHEREAS, Company and Xxxxxx are parties to that certain letter
agreement dated February 25, 1991, as amended and extended (including, without
limitation, by that certain undated "Amendment to Employment Agreement", that
certain "Second Amendment to Employment Agreement" dated as of January 18, 1993,
that certain "Third Amendment to Employment Agreement" dated May 1, 1994, that
certain "Fourth Amendment to Employment Agreement" dated as of February 26, 1996
and that certain "Fifth Amendment to Employment Agreement" of even date
herewith) (said letter agreement, together with any and all amendments thereto
and extensions thereof, being referred to herein as the "EMPLOYMENT AGREEMENT");
WHEREAS, it is contemplated that, in connection with the Merger
Agreement and/or the Stockholders Agreement, Xxxxxx'x Shares of Company will be
acquired by Merger Sub;
WHEREAS, in connection with the purchase of Xxxxxx'x Shares by Merger
Sub, Company and Xxxxxx each desire to set forth in this Agreement the terms and
conditions of Xxxxxx'x voluntary resignation from Company and Xxxxxx'x agreement
not to engage in certain businesses which compete with Company or Company's
Affiliates as of and after the Transition Time (as defined below);
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound, the parties agree as follows:
A. CONDITION PRECEDENT. The rights and obligations of each of
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Company and Xxxxxx under this Agreement shall become effective only upon the
occurrence of the Transition Time (as defined in Paragraph 2 below). In the
event the Transition Time does not occur, for whatever reason, this Agreement
shall be of no force and effect, and neither Company nor Xxxxxx shall have any
rights or obligations hereunder.
1. TERMS/DEFINITIONS. Capitalized terms used and not defined
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herein have the meanings given to them in the Merger Agreement. For the
purposes of this Agreement: (a)
"AFFILIATE" means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
a specified Person; (b) "AREAS" means (i) the County of Los Angeles, (ii) all
counties in the State of California, the names of which are all deemed to be
specifically included herein by this reference, (iii) the County of New York,
New York, (iv) all counties in the State of New York, the names of which are all
deemed to be specifically included herein by this reference, (v) the United
States, (vi) the United Kingdom, and (vii) all communities, municipalities and
counties, wherever located throughout the world; (c) "PERSON" means an
association, a corporation, an individual, a partnership, a trust or any other
entity or organization, including a governmental entity; (d) "GAME SHOW
BUSINESS" means any business, in whole or in part, involving the development,
production, licensing, distribution, broadcast, marketing, promotion,
merchandising and/or other exploitation of game shows and/or game show formats
in any medium or media now known or hereafter devised, and/or any combination of
the foregoing; and (e) "MUSIC BUSINESS" means any business, in whole or in part,
involving (i) the development, recording, production, pressing, manufacturing,
marketing, promotion, distribution, merchandising and/or other exploitation of
musical recordings in any medium or media now known or hereafter devised
(including, without limitation, the exploitation of musical recordings by means
of CDs, cassettes, albums, music videos or any other audio or audiovisual work
or device, in any medium or media now known or hereafter devised), (ii) the
publishing, licensing, administration, merchandising and/or other exploitation
of musical compositions in any medium or media now known or hereafter devised,
(iii) the development, production, promotion, exhibition, merchandising and/or
other exploitation of live musical performances in any medium or media now known
or hereafter devised, and/or (iv) any combination of the foregoing; provided,
however, that "Music Business" shall not include any business activities to the
extent they relate to (x) musical compositions written in whole or in part by,
or musical performances of, any of Xxxxxx'x individual family members (including
family members of Xxxxxx'x spouse), or (y) musical recordings and compositions
which are a part of theatrical motion pictures or television programs (other
than game shows and music videos) produced by Xxxxxx.
2. RESIGNATION. Reference is hereby made to Paragraph 3.2.1.A of
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the Employment Agreement. Company and Xxxxxx acknowledge and agree that the
transaction contemplated by the Merger Agreement shall constitute an "EVENT" (as
defined in the Employment Agreement and in Company's 1994 Stock Incentive Plan).
Effective as of the date on which Merger Sub purchases more than fifty percent
(50%) of the Shares of Common Stock and Class B Common Stock combined (the
"TRANSITION TIME"), Xxxxxx (1) hereby exercises his right to terminate the Term
(as defined in the Employment Agreement), which termination shall become
effective immediately upon the Transition Time, and (2) agrees to assign and to
cause each and every Xxxxxx Affiliate to assign to Company or any designee of
Company all equity securities of any Company Subsidiary owned by any of them.
Accordingly, effective as of the Transition Time, Xxxxxx hereby voluntarily
resigns (i) as Chief Executive Officer of Company, (ii) from the Board of
Directors of Company (and all committees thereof), (iii) the Boards of Directors
(and all committees thereof) of all Company Subsidiaries of which Xxxxxx is a
member, and (iv) any other position of employment or engagement which Xxxxxx may
occupy in Company or any Affiliate of Company. Xxxxxx hereby acknowledges and
agrees that his termination of the Term does not constitute and shall not be
deemed to constitute a termination by Company, for
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"good cause" or otherwise, or a termination by Xxxxxx for "good cause"; and that
all of Xxxxxx'x rights under the Employment Agreement shall be determined in
accordance with Paragraph 3.2.2.(b) of the Employment Agreement. Xxxxxx
acknowledges and agrees that he shall be entitled to no payments or benefits
pursuant to the Employment Agreement other than as set forth in said Paragraph
3.2.2.(b). In this regard, Xxxxxx hereby (i) waives his right to receive any
further compensation and benefits from Company pursuant to the Employment
Agreement or any other agreement with Company (other than this Agreement); and
(ii agrees that all other obligations of Company pursuant to the Employment
Agreement (including, without limitation, all payment obligations pursuant to
Section 2 of the Employment Agreement, and all obligations arising out of the
termination of the Term of the Employment Agreement pursuant to Section 3 of the
Employment Agreement) are hereby discharged. In addition, Xxxxxx acknowledges
and agrees that Paragraph 1.3.2 of the Employment Agreement has been superseded
by Section 6.12 of the Merger Agreement and is of no force and effect.
3. COVENANT NOT TO COMPETE AND NOT TO SOLICIT.
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(a) COVENANT. In consideration of the Noncompetition Payment and
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as a material inducement to Company to enter into the Merger Agreement,
Xxxxxx agrees as follows:
(i) During the period commencing at the Transition Time and
continuing until December 1, 1999 (the "NONCOMPETE TERM"), Xxxxxx
shall not directly (or indirectly through an Affiliate of Xxxxxx) in
the Areas, engage in, assist any Person in engaging in or acquire an
interest in any Person engaging in, the Game Show Business or the
Music Business, whether as an owner, shareholder, joint venturer,
partner, employee, independent contractor, agent or otherwise.
Notwithstanding the foregoing, nothing herein shall prevent Xxxxxx
from working for, assisting or advising any Person that is engaged in
the Game Show Business or the Music Business so long as Xxxxxx does
not render any services for such Person in connection with the Game
Show Business or the Music Business.
(ii) During and prior to the Noncompete Term, Xxxxxx shall
not directly or indirectly (through an Affiliate of Xxxxxx or
otherwise) solicit, entice, persuade, or induce any employee or
independent contractor of Company or any performer (whether music,
television, theatrical or otherwise) who is under contract (whether
directly or through a loanout company or other arrangement) with
Company or any Affiliate of Company prior to or during the Noncompete
Term to terminate his or her employment by, or other contract with,
Company or such Affiliate or to refrain from extending or renewing the
same (upon the same or new terms) or to become employed by or to enter
into any contract with a person or business other than Company or an
Affiliate of Company.
(iii) Xxxxxx shall not directly or indirectly (through an
Affiliate of Xxxxxx or otherwise) negotiate with respect to, or
otherwise discuss with any third party, any television project
(excluding those television projects relating to the
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Game Show Business, which are subject to subparagraph 3(a)(ii) above)
which was in development by Company or an Affiliate of Company, or
submitted or otherwise presented (orally, in writing or otherwise) to
Company or an Affiliate of Company prior to the Transition Time,
unless and until such time (if ever) as (x) Company, after the
Transition Time, approves such negotiation or discussion, or (y) such
television project has been re-submitted or otherwise re-presented to
Company after the Transition Time, and such television project has
thereafter been rejected in writing by Company.
The foregoing agreement contained in this subparagraph (a) is referred to
in this Agreement as the "COVENANT". Xxxxxx represents and warrants that
Xxxxxx has not, prior to the date hereof, acted or failed to act in a way
which would constitute a breach of the Covenant.
(b) COMPANY RELIANCE. Xxxxxx represents that Xxxxxx'x experience and
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capabilities are such that the provisions of this Paragraph 3 will not
prevent Xxxxxx from earning a livelihood. It is understood and agreed that
this Agreement and the Merger Agreement are being made and entered into by
Company in reliance on the Covenant in view of the irreparable injury that
would befall Company should Xxxxxx engage in any activities which are
prohibited by the Covenant during the effectiveness of the Covenant.
(c) PAYMENT FOR COVENANT. In consideration for the Covenant, and
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subject to the occurrence of the Transition Time, Company will pay to
Xxxxxx Two Million Nine Hundred Seven Thousand Six Hundred Sixty-Five
Dollars ($2,907,665) ("NONCOMPETITION PAYMENT") within ten (10) business
days following the Transition Time; provided, however, that if the
Transition Time occurs prior to December 1, 1997, the Noncompetition
Payment shall be increased by Two Thousand Seven Hundred Thirty-Five
Dollars ($2,735) for each such day prior to December 1, 1997, and if the
Transition Time occurs after December 1, 1997, the Noncompetition Payment
shall be decreased by Two Thousand Seven Hundred Thirty-Five Dollars
($2,735) for each such day after December 1, 1997; and provided further
that any obligation of Company to make payments to Xxxxxx will be subject
to Paragraph 6 below.
4. OWNERSHIP OF COMPANY EXCEPTION. Nothing contained in Paragraph 3
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above shall prohibit Xxxxxx from acquiring and/or retaining, solely as an
investment, and taking customary actions to maintain and preserve Xxxxxx'x
ownership of, securities of any corporation as long as Xxxxxx is not part of any
control group of such corporation or legally or beneficially the direct or
indirect owner of 5% or more of the outstanding voting securities of such
corporation and so long as Xxxxxx does not render any services for such
corporation in connection with the Game Show Business or the Music Business.
5. AIRCRAFT LEASE. Reference is hereby made to that certain Option
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Agreement dated as of July 7, 1997 between Company and Xxxxxx (the "OPTION
AGREEMENT"), and the following agreements relating to that certain Gulfstream G-
1159B Aircraft Equipped with two (2) Rolls-Royce Spey MK511-8 Engines (the
"AIRCRAFT"): (i) the Aircraft Purchase and Sale
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Agreement dated as of June 30, 1997, between Atlantic Richfield Company ("ARCO")
and Company, (ii) the Purchase Agreement Assignment Agreement, dated as of July
7, 1997, between Company, as assignor, and C.I.T. Leasing Corporation
("LESSOR"), as assignee, as consented to by ARCO in the Consent and Agreement
dated as of July 7, 1997, (iii) the Aircraft Lease Agreement dated as of July 7,
1997, between Lessor and Company) (the "LEASE AGREEMENT"), (iv) the Tax
Indemnity Agreement, dated as of July 7, 1997, between Lessor and Company, and
(v) the Management Agreement, dated as of July 7, 1997, between Company and
Xxxxxxx de Vere Group Avia, Inc. (the agreements referred to in (i) through (v)
above being referred to collectively as the "AIRCRAFT AGREEMENTS"). Effective as
of the Transition Time and subject to payment of the Noncompetition Payment,
Xxxxxx hereby exercises the option granted to Xxxxxx under the Option Agreement,
subject to the terms hereof. Notwithstanding anything to the contrary contained
in the Option Agreement, Company shall (subject to obtaining all necessary
consents, unless Company in its sole discretion elects to proceed without such
consents) sublease, effective as of January 1, 1998, the Aircraft to Xxxxxx for
a term co-terminous with the term of the Lease Agreement, in which event Xxxxxx
shall assume all duties, obligations and liabilities of Company pursuant to the
Aircraft Agreements relating to the period after January 1, 1998, and Xxxxxx
shall, prior to the Transition Time (unless later requested by Company, but not
in any event later than January 1, 1998), sign a sublease agreement containing
customary terms and conditions consistent with those contained in the Aircraft
Agreements. Xxxxxx shall use reasonable best efforts to obtain any and all
necessary consents for the sublease of the Aircraft, provided that Company shall
reasonably cooperate with Xxxxxx in obtaining such consents (unless Company in
its sole discretion elects to proceed without such consents). Commencing as of
the Transition Time and prior to January 1, 1998, Xxxxxx shall have the
exclusive right to use the Aircraft, provided that Xxxxxx shall pay or reimburse
Company for all costs incurred in connection with the Aircraft after the
Transition Time (including, without limitation, the payment of Basic Rent (as
defined in the Aircraft Agreements) allocable to the period after the Transition
Time); and prior to the Transition Time, Xxxxxx shall sign an aircraft use
agreement containing standard terms and conditions consistent with those
contained in the Aircraft Agreements. Company shall pay all costs incurred in
connection with the Aircraft prior to the Transition Time. Xxxxxx hereby agrees
to defend, indemnify and hold harmless Company and each and every Affiliate of
Company, and each of their officers, directors, employees, trustees,
shareholders, partners and principals, and the successors and assigns of all of
them, from and against any and all losses, costs (including without limitation
attorneys' fees), liabilities, damages and claims of any nature arising from or
in connection with any breach or alleged breach of the Aircraft Agreements after
January 1, 1998 or the use of the Aircraft after the Transition Time.
6. REMEDIES AND ENFORCEMENT. Company and Xxxxxx agree that a breach
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by Xxxxxx of any of the covenants set forth in this Agreement (including,
without limitation, the Covenant) will cause irreparable harm to Company, that
Company's remedies at law in the event of such breach are inadequate, and that,
accordingly, in the event of such breach, a restraining order or injunction or
both may be issued against Xxxxxx or any of Xxxxxx'x Affiliates, in addition to
any other rights and remedies that are available to Company. In connection with
any such action or proceeding for injunctive relief, Xxxxxx hereby waives the
claim or defense that a remedy at law alone is adequate and agrees, to the
maximum extent permitted by law, to have each provision of this Agreement
specifically enforced against Xxxxxx or any of Xxxxxx'x Affiliates, and
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consents to the entry of injunctive relief against Xxxxxx or any of Xxxxxx'x
Affiliates, enforcing or restraining any breach or threatened breach of this
Agreement. Any breach of the obligation of Company to make payments hereunder
will result solely in a right for Xxxxxx to receive payment (or in the absence
of payment, to pursue any action solely for the amount of such payment), and
Xxxxxx shall not in any event have any right to terminate this Agreement or seek
or be entitled to rescission, injunctive or other equitable relief.
7. SEPARATE COVENANTS. If this Agreement is more restrictive than
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permitted by the laws of any jurisdiction in which Company seeks enforcement
hereof, this Agreement shall be limited to the extent required to permit
enforcement under such laws. In particular, the parties intend that the
covenants contained in this Agreement shall be construed as a series of separate
covenants, one for each community, county or city in which the businesses of
Company and Company's Affiliates have been carried on. Except for geographic
coverage, each such separate covenant shall be deemed identical in terms. If,
in any proceeding, a court shall refuse to enforce any of the separate
covenants, then such unenforceable covenant shall be deemed eliminated from this
Agreement for the purpose of those proceedings to the extent necessary to permit
the remaining separate covenants to be enforced. If the provisions of this
Agreement shall ever be deemed to exceed the duration, geographical limitations
or scope permitted by applicable law, then such provisions shall be reformed to
the maximum time or geographic limitations in scope, as the case may be,
permitted by applicable law.
8. CONFIDENTIALITY. Xxxxxx shall, during and after the term hereof,
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keep in confidence and shall not use for Xxxxxx or others, or divulge to others
(except, on a confidential basis only, to Xxxxxx'x legal and financial advisors,
provided that Xxxxxx shall cause such advisors to comply with this Paragraph 8),
any secret or confidential information, knowledge, or data, of Company or any
Affiliate of Company, obtained by Xxxxxx as a result of Xxxxxx'x employment,
unless authorized by Company or required by law or regulatory agencies. Xxxxxx
further agrees that Company shall be entitled to injunctive or other appropriate
equitable relief to prevent the disclosure of such secrets or information.
9. REPRESENTATION AND WARRANTIES. Xxxxxx hereby represents and
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warrants that he is free to enter into this Agreement and that he is not subject
to any obligations or disabilities which will or might prevent or interfere with
keeping and performing all of the agreements, covenants and conditions to be
kept or performed hereunder.
10. AMENDMENTS; WAIVERS. This Agreement may be amended only by
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agreement in writing of each of the parties hereto. No waiver of any provision
nor consent to any exception to the terms of this Agreement shall be effective
unless in writing and signed by the party to be bound and then only to the
specific purpose, extent and instance so provided.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
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agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior understandings and agreements of such parties pertaining
thereto.
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12. FURTHER ACTION. The parties shall execute and deliver all
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documents, provide all information and take or forbear from taking all action as
may be necessary or appropriate to achieve the purposes of this Agreement.
13. GOVERNING LAW. This Agreement shall be governed by and construed
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in accordance with the laws of the State of California applicable to contracts
made and performed in the State of California and without regard to conflicts of
laws doctrines, except to the extent that certain matters are preempted by
federal law or are governed by the law of the jurisdiction of incorporation of
the respective parties.
14. SUCCESSION. This Agreement shall be binding upon and enforceable
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by, and shall inure to the benefit of, Company and its respective successors and
assigns. The obligations and duties of Xxxxxx hereunder are personal and not
assignable, and any attempt of assignment or transfer of Xxxxxx'x duties or
obligations shall be void.
15. HEADINGS. The headings of the several paragraphs herein are
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inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning of this Agreement.
16. NOTICES. Any notice or other communication hereunder must be
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given in writing and (a) delivered in person, (b) transmitted by telex, telefax
or other telecommunications mechanism (provided that any notice so given is also
mailed as provided in clause (c)) or (c) mailed by certified or registered mail,
postage prepaid, receipt requested as follows:
IF TO COMPANY, ADDRESSED TO:
ALL AMERICAN COMMUNICATIONS, INC.
000 Xxxxxxxx Xxxxxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
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Attention: Chief Executive Officer
IF TO XXXXXX, ADDRESSED TO:
Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
or to such other address or to such other Person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number so specified in (or pursuant to) this
Xxxxxxxxx 00, (xx) if given by mail, three days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
or (iii) if given by any other means, when actually delivered at such address.
17. ATTORNEYS' FEES. If any litigation is commenced among the
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parties or their representatives concerning any provision of this Agreement, or
the rights and duties of any person or entity in relation thereto, the party
prevailing in such litigation shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum for attorneys' fees reasonably
incurred in such litigation.
18. COUNTERPARTS. This Agreement may be executed in one or more
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counterparts, and by different parties in separate counterparts. All of such
counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ALL AMERICAN COMMUNICATIONS, INC.
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: Senior Vice President
/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX
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