AGREEMENT
THIS AGREEMENT ("Agreement"), entered into as of the first day of
April, 1997, between XXXXXX X. XXXXX (hereinafter "Xxxxx") and MOOVIES, INC.
(hereinafter, "Company").
W I T N E S S E T H:
WHEREAS, Xxxxx is currently employed by Company and serves on its
Board of Directors (the "Board"); and
WHEREAS, Xxxxx and Company have agreed that it is in their mutual best
interest to terminate their employer/employee relationship and to resolve by
full and final settlement all matters arising out of or pertaining to the past,
present or future employment of Xxxxx with Company and certain other matters and
for Xxxxx to resign from the Board and from his offices with Company and its
subsidiaries and affiliates, in accordance with the terms hereof.
NOW, THEREFORE, IN CONSIDERATION of the mutual promises and
undertakings contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Effective as of April 1, 1997 (the "Effective Date"), the
employment of Xxxxx with Company is terminated by mutual agreement. The
Employment Agreement, made effective as of October 1, 1995, as amended, between
Xxxxx and Company (the "Employment Agreement"), is hereby terminated effective
as of the Effective Date (except for Sections 5, 7 and 8 of the Employment
Agreement, which provisions survive the termination of the Employment Agreement
and, as modified hereby, remain in full force and effect). The 1996 "change of
control" severance agreement between Company and Xxxxx is also hereby terminated
effective as of the Effective Date. By his execution of this Agreement, Xxxxx
hereby tenders his resignation, effective as of the Effective Date, from all
corporate offices held by Xxxxx with Company or any subsidiary or affiliate of
Company and resigns, effective as of the Effective Date, as a member of the
Board of Directors of Company and such resignations are hereby accepted on
behalf of Company and every such subsidiary and affiliate. Xxxxx and the Company
acknowledge that Xxxxx did not attend or otherwise participate in any Board of
Directors meetings that my have been held on or after the Effective Date.
2. Xxxxx and Company agree that all vested and unvested stock options
for the purchase of shares of Company's common stock at any time heretofore
granted to Xxxxx (other than the "New Options: (as hereinafter defined)) are
hereby cancelled and terminated and are non-exercisable, null and void,
effective as of the Effective Date. Company hereby agrees that Xxxxx'x vested
stock options (the "New Options") for the purchase of shares of Company's common
stock granted pursuant to that certain Moovies, Inc. Non-Qualified Stock Option
Agreement substantially in the form attached as Exhibit A hereto (the "New
Option Agreement") shall remain in full force and effect and be exercisable in
accordance with its terms, provided such exercise is effected in any event no
later than March 31, 1999 (or such earlier date as provided therein) (the
"Option Termination Date"). Thereafter, any portion of such New Options which
has not been exercised shall be cancelled, terminated and made null and void.
3. Starting from the Effective Date, Xxxxx shall receive (a) 12
months' salary/compensation payments (at the rate of $175,000 per annum), less
all applicable taxes and withholdings, if any, payable in bi-weekly or monthly
installments in accordance with customary Company procedures; and (b) car
allowance (at the rate of $1,500 per month) for 12 months, payable monthly; and
(c) 3 weeks' vacation pay (at the rate of $175,000 per annum), payable on or
before March 31, 1998. (In the event that, at any time after May 31, 1997,
Company fails to timely make when due a payment described in the foregoing
sentence, and such default continues uncured for more than 10 business days
following written notice thereof from Xxxxx to Company, then all unpaid amounts
described in the foregoing sentence not previously paid to Xxxxx shall become
immediately due and payable and, if thereafter Company receives a second written
notice thereof from Xxxxx and such default continues uncured for more than
twenty (20) days following such second written notice, then Xxxxx may
immediately exercise his one-time special election (as provided for in Section 7
of the New Option Agreement).) Xxxxx may elect COBRA coverage as provided for by
law; if such coverage is elected, Company agrees to reimburse Xxxxx, promptly
following submission of appropriate documentation, to the extent that Xxxxx'x
actual monthly COBRA contribution payments exceed the contribution amounts which
Xxxxx would have paid under the Company's health plan if Xxxxx had remained a
full time employee of Company during the period of actual COBRA coverage.
Company will make reasonable efforts to assist Xxxxx in obtaining health
insurance coverage for up to an additional 18 months so long as such coverage
would involve no additional cost, exposure or risk to Company and, if it affects
the Company's health plan, Company's reinsurer shall have given its prior
written consent.
4. Xxxxx agrees to provide consulting services to Company for up to 20
hours per month for 6 months following the Effective Date as reasonably
requested by Company on any matter, and thereafter as reasonably requested by
Company but only in connection with defense or settlement of claims or
litigation which related to matters or events occurring during the period of
Xxxxx'x employment with Company. (If the above-mentioned 20-hour per month limit
is exceeded, Xxxxx'x fee for additional services in such month would be at the
rate of $750 per diem.) As a consultant, Xxxxx shall perform and carry out such
projects and assignments as reasonably directed by the President of Company and
shall report to the President of Company. All such consulting services shall be
provided by Xxxxx to Company on an independent contractor basis. Company agrees
to reimburse Xxxxx, promptly following submission of appropriate documentation,
for all reasonable out-of-pocket travel expenses (air (coach), car, hotel,
meals) incurred at Company's request in connection with such consulting
services, claims or litigation. In addition, Company will provide to Xxxxx (i)
use of an office until June 30, 1997 and (ii) continuing answering/voicemail of
the direct dial phone number previously designated for Xxxxx'x use until March
31, 1998.
5. Employee hereby acknowledges that Company is engaged in the
business of owning, operating and licensing video specialty stores for the
rental and sale of videos and video games and other related products, the rental
and sale of video recorders, players and video game equipment and the sale of
video accessories, cleaning equipment and confectionery items (the "Business of
the Company") at Company's "Video Rental Store Locations" (as defined below).
Xxxxx covenants and agrees that, for a period starting as of the Effective Date
and continuing until one (1) year after the "Final Payment Date" (as herein
defined), he will not, within a five (5) mile radius of any of Company's Video
Rental Store Locations (which 5-mile radius of each of such Video Rental Store
Locations the parties hereto agree is the "Territory"), without the prior
written consent of Company, directly or indirectly, (a) for himself or (b) as a
consultant, management, supervisory or executive employee or owner of a business
engaging in the same or substantially similar business as the Business of the
Company ("Competing Business"), or (c) as an independent contractor, engage in
any business for which he provides services to or on behalf of a Competing
Business which are the same or substantially similar to the duties he executed
or the services he provided during his employment with Company. As used herein,
"Video Rental Store Locations" shall mean those locations listed on Schedule A
delivered on or about the date of execution of this Agreement (which locations
the parties hereto agree are those in respect of which Xxxxx has provided
services or executed duties during his employment with Company). As used herein,
the "Final Payment Date" shall mean the earlier of (i) the actual date of
payment, if any, by Company of the amount described in Section 7(b) of the New
Option Agreement or (ii) September 30, 1998. Notwithstanding the foregoing, (a)
"Competing Business" shall specifically exclude any business whose revenues,
direct or indirect, from rental or sale of videos, video games and/or related
products are less than 50% of its total revenues and (b) any and all references
herein to "within the Territory" shall be deemed deleted with respect to any of
the following companies and their affiliates (each of which shall be deemed to
be a "Competing Business" on a national basis): Movie Gallery, Inc., Video
Update, Inc., Hollywood Entertainment Corporation, Blockbuster Entertainment
Corporation and West Coast Entertainment Corporation.
6. All payments and benefits hereunder, as well as the exercisability
of the New Options and the one-time special election provided for in Section 7
of the New Option Agreement, are conditioned upon and subject to no "Default" or
"Event of Default" (as such terms are hereinafter defined) having occurred and
being then existing. The payments and benefits expressly provided to Xxxxx
hereunder are in lieu of all other entitlements which Xxxxx may have at law, in
equity or by contract. As used herein, an "Event of Default" shall mean:
(i) default or failure by Xxxxx to comply with any of the terms of (x)
this Agreement and/or (y) the Non- Competition Agreement dated August 9, 1995 by
and between Company and Xxxxx (the "Non-Competition Agreement") and/or (z)
Section 5, 7 and/or 8 of the Employment Agreement as modified hereby; and
(ii) such default or failure to comply shall continue uncured for a
period of 30 days following the giving of notice thereof by Company to Xxxxx.
As used herein, a "Default" shall mean any event, act or condition which, with
notice or lapse of time, or both, would constitute an Event of Default
hereunder.
7. All Company property in Xxxxx'x possession, including, but not
limited to, keys, credit cards, computers, mobile or portable phones, files,
documents, correspondence, data and any other Company property and information,
will be returned to Company immediately and Xxxxx will not retain any copies or
reproductions of an property of Company. All amounts owing by Xxxxx to Company,
if any, will be repaid immediately. Xxxxx agrees that any and all amounts which
may be refundable in connection with any termination of or change in membership
status at Thornblade Country Club shall belong to (and shall be paid over to)
Company rather than Xxxxx.
8. Xxxxx accepts the terms of the Agreement in full, final and complete
satisfaction and settlement of any and all claims which in any way related or
pertain to or arise out of any past or present employment of Xxxxx with Company
or any of its subsidiaries or affiliates. Accordingly, except as specifically
provided in the Agreement, each of Xxxxx and each member of his family does
hereby release and discharge in full, final and complete satisfaction and
settlement the Company and any and all of its subsidiaries and affiliates and
any and all of their past or present employees, officers, agents, directors,
attorneys or others acting on behalf of any of the foregoing from any and all
actions, causes of action, suits, debts, dues, sums, covenants, agreements,
damages, judgments, obligations, liabilities, claims and demands whatsoever, in
law or in equity, of whatever nature or description (collectively, "Claims")
that any of them may have which in any way relate or pertain to or arise out of
the past or present employment of Xxxxx with Company or any of its subsidiaries
or affiliates; provided, however, that Xxxxx retains any and all Claims which he
may hereafter have against Company for breach by Company of this Agreement.
Except as specifically provided in this Agreement, Company does hereby release
and discharge in full, final and complete satisfaction and settlement each of
Xxxxx and each member of his family from any and all Claims that Company may
have which in any way relate or pertain to or arise out of the past or present
employment of Xxxxx with Company or any of its subsidiaries or affiliates;
provided, however, that Company retains any and all Claims which it may
hereafter have against Xxxxx for breach by Xxxxx of this Agreement or if any
Default or Event of Default shall occur.
9. It is further understood and agreed that this Agreement is intended
to be a total accord, settlement and satisfaction of any and all claims which
Xxxxx has or may have against Company or any of its subsidiaries or affiliates
or any of their past or present employees, officers, agents, directors,
attorneys or others acting for or on behalf of the foregoing in respect of his
employment, including but not limited to under any federal, state or local
statute, ordinance or under the common law, including, but not limited to, the
Age Discrimination in Employment Act of 1967, as amended, the Older Workers'
Benefit Protection Act, Title VII of the Civil Rights Act of 1964, as amended,
the Civil Rights Act of 1991, the Employee Retirement Income Security Act, 29
U.S.C., et seq., 42 U.S.C. Section 1981, the Americans with Disabilities Act,
the Equal Pay Act, the Fair Labor Standards Act, the Workers Compensation Act
and any other employment discrimination law, as well as any other claims based
on contract or any constitutional, statutory, common law or regulatory grounds,
that he has now or may have in the future against Company or any of its
subsidiaries or affiliates, whether known or unknown, which are based on acts or
facts arising or occurring prior to the date of this Agreement. Xxxxx
acknowledges that, pursuant to the Older Workers Benefit Protection Act of 1990,
he has the right to, and has been advised to, consult with an attorney before
signing this Agreement. He further acknowledges his understanding that he has 45
days to consider the release contained in Section 9 before signing this
Agreement, that he may revoke the release contained in this Section 9 of this
Agreement with seven calendar days after signing it, and the release contained
in this Section 9 of this Agreement will not be effective or enforceable until
expiration of that seven-day revocation period.
10. Xxxxx acknowledges that Xxxxx has had the opportunity to consult
with an attorney with respect to the terms of this Agreement including the
general release set forth above.
11. (a) For a period of two years starting with the Effective Date,
Xxxxx agrees to fully cooperate with Company and to provide all information and
sign any corporate records and instruments that Company may hereafter reasonably
request with respect to any matter involving Xxxxx'x present or former
relationship with Company, the work Xxxxx has performed, the compensation he has
received, or present or former employees, customers, vendors or service
providers of Company, defense or settlement of any claim or litigation asserted
against Company, this Agreement, the Purchase Agreement and related documents,
and is required or, in the Company's reasonable good faith belief, is desirable
in respect of any filings or reports made, or information given, by Company in
respect of state or federal securities or other laws.
(b) For a period of two years starting with the Effective Date, Xxxxx
agrees not to make slanderous or disparaging remarks concerning Company or any
of its subsidiaries or affiliates or any of their past or present officers,
directors, employees, agents, attorneys to any person or entity and, more
specifically, Xxxxx will not make any such statements to, or otherwise attempt
to be a negative influence on, any past or present employee of Company. For a
period of two years starting with the Effective Date, Company agrees not to make
slanderous or disparaging remarks concerning Xxxxx.
(c) Xxxxx understands and agrees that as a condition precedent to the
receipt by Xxxxx of consideration described in this Agreement, the terms and
conditions of this Agreement, the New Option Agreement and any underlying or
related agreements or documents, shall be kept confidential by Xxxxx, except
when disclosure may be required by law or by order of any court or other body
with the authority to make such an order.
(d) Except as specifically modified, amended or terminated as provided
herein, Xxxxx and Company acknowledge and agree that the Purchase Agreement, the
Non-Competition Agreement and all other agreements, documents and instruments
delivered pursuant to or in connection with the Purchase Agreement (other than
the Employment Agreement) remain in full force and effect and unchanged hereby;
except for Section 5, 7 and 8 of the Employment Agreement (which provisions
survive the termination of the Employment Agreement and, as modified hereby,
remain in full force and effect), the Employment Agreement is hereby terminated
as of the Effective Date. No amendment or waiver of this Agreement or any
provision hereof shall be effective unless in writing signed by the party to be
so bound. In the event that any provision of this Agreement shall be held void
or unenforceable, the remaining portions hereof shall remain in full force and
effect and this Agreement shall be deemed amended to excuse such provisions to
the extent that they were held void or unenforceable and, as amended, shall
continue in full force and effect. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and assigns. Company may
assign this Agreement provided, however, that any assignment of this Agreement
by Company without the written consent of Xxxxx will not release Company from
its obligations hereunder.
(e) All notices, requests, demands, claims or other communications
hereunder will be in writing and shall be deemed duly given if personally
delivered, sent by telefax, or sent by a recognized overnight delivery service
which guarantees next day delivery ("Overnight Delivery") or mailed registered
or certified mail, return receipt requested, postage prepaid, transmitted or
addressed to the intended recipient as set forth below:
If to Xxxxx: Xx. Xxxxxx X. Xxxxx
00 Xxxxxx Xxx
Xxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
Kleinbard, Ball & Brecker
Xxxxx 000
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telefax: (000) 000-0000
If to Company: Moovies, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President
Telefax: (000) 000-0000
and
Moovies, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Telefax: (000) 000-0000
(i) by personal delivery or telefax, will be deemed received on the day sent or
on the first business day thereafter if not sent on a business day, (ii) by
Overnight Delivery, will be deemed received on the first business day
immediately following the date sent, and (iii) by U.S. mail, will be deemed
received three (3) business days immediately following the date sent. For
purposes of this Agreement, a "business day" is a day on which Company is open
for business but shall not include a Saturday or Sunday or legal holiday.
Notwithstanding anything to the contrary in this Agreement, no action is
required on a day which is not a business day, such action shall be required to
be performed on the next succeeding day which is a business day.
RECEIPT: I acknowledge receipt of a copy of this Agreement this ___ day of May,
1997. Unless and until I execute this Agreement in the other space provided
below, I have not agreed to it.
-----------------------------------
Xxxxxx X. Xxxxx
Signature for Purposes of Receipt Only
I HAVE READ THIS AGREEMENT AND UNDERSTAND THAT I AM GIVING UP IMPORTANT RIGHTS.
I AM AWARE OF MY RIGHT TO CONSULT AN ATTORNEY BEFORE SIGNING AND HAVE SIGNED
BELOW KNOWINGLY AND VOLUNTARILY.
XXXXXX X. XXXXX
------------------------------------
PRINTED NAME
------------------------------------
SIGNATURE
Date Signed: May ___, 1997
Sworn to and subscribed before me
this ___ day of May, 1997.
----------------------------
Notary Public
MOOVIES, INC.
By: ______________________________
Its: President
Date Signed: May ___, 1997
Sworn to and subscribed before me
this ___ day of May, 1997.
----------------------------
Notary Public
