Exhibit 6(c)(iii)
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Employment Agreement") is entered into as of
this 30th day of September, 1996 ("Effective Date"), by and between, The
CineMasters Group, Inc., a New York corporation (the "Company") and the owner of
all of the outstanding capital stock of Avenue Pictures, Inc. ("Avenue"), and
▇▇▇▇ ▇▇▇▇▇▇▇, an individual resident of the State of New York (the "Executive").
WHEREAS, the Company desires to employ the Executive as its Chairman and
as the President of its Wombat Division and wishes to acquire and be assured of
his services on the terms and conditions hereinafter set forth; and
WHEREAS, the Executive desires to be employed by the Company as its
Chairman and as the President of its Wombat Division and to perform and to serve
the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, agreements and covenants contained herein, the parties hereto agree as
follows:
1. Employment.
(a) Duties. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts such employment, as the Chairman of the Company and as
the President of the Company's Wombat Division and agrees to serve at the
request of the Board of Directors of the Company (the "Board of Directors"). The
Executive shall be responsible, subject to the direction of the Board of
Directors, for such duties and functions of a supervisory or managerial nature
as may be directed from time to time by the Board of Directors, provided that
such duties are reasonable and customary for a President of a corporate
division. The Executive agrees that he shall, during the term of this Employment
Agreement, faithfully serve the Company as a full-time employee and, except
during reasonable vacation periods, periods of illness and the like, devote his
full business time, attention and ability to his duties and responsibilities
hereunder; provided, however, that nothing contained herein shall be construed
to prohibit or restrict the Executive from (i) serving as a director of any
corporation, with or without compensation therefor; (ii) serving in various
capacities in community, civic, religious or charitable organizations or trade
associations or leagues; or (iii) attending to personal business or investment
matters; provided that no such service or activity permitted in this Section
1(a) shall materially interfere with the performance by the Executive of his
duties hereunder. The Executive shall only report directly to the Board of
Directors.
(b) Term. The Executive's term of employment shall commence on the
Effective Date and shall terminate at the close of business on December 31, 2001
(the "Employment Term"), unless terminated earlier pursuant to Section 3 hereof.
(c) Location. Executive shall, during this Employment Term, have a primary
office located at the offices of the Company in New York, New York.
2. Compensation.
(a) Salary. Subject to the provisions of Section 2(b) below, Executive
shall receive a base salary of $150,000.00 for each calendar year which shall be
pro-rated for the partial 1996 calendar year occurring within the Employment
Term. The Executive's base salary may be increased by the Compensation Committee
of the Board of Directors (the "Compensation Committee") in its discretion based
on the performance of the Executive and the Company. The annual salary payable
to the Executive pursuant to Section 2 hereof from time to time in effect is
hereinafter referred to as the "Base Salary."
(b) Special Base Salary Payment Provisions. The Executive's Base Salary
shall be funded solely out of the "Wombat Division Net Cash Flow," as defined in
Section 2(c) below. The Executive's Base Salary will be due and payable to him
during the Employment Term in accordance with the Company's customary payroll
payment practices but no less frequently than once each month ("Applicable Base
Salary Payment Date"). If the Company determines that it does not have
sufficient funds to pay the Executive's Base Salary on an ongoing basis out of
the Wombat Division Net Cash Flow, the Company shall (1) promptly determine the
dollar amount, if any, of the Base Salary that can be funded out of the Wombat
Division Net Cash Flow each Applicable Base Salary Payment Date and reduce the
dollar amount of the Base Salary accordingly ("Reduced Base Salary"), with the
unpaid balance to be treated for all federal and state income tax reporting
purposes as deferred compensation; and (2) give notice to the Board of Directors
as provided in Section 10 hereof that the Wombat Division Net Cash Flow is not
sufficient to pay 100% of the Executive's Base Salary on an ongoing basis;
provided that in the event that Executive's Base Salary shall be reduced
pursuant to this Section 2(b), such reduction shall not be considered a breach
by the Company of this Employment Agreement. The notice to be provided shall
specify the dollar amount of the Reduced Base Salary and anticipated duration
for payment of the Reduced Base Salary. The Company shall cause the positive net
difference between the Base Salary and Reduced Base Salary to be accounted for
each Applicable Base Salary Payment Date ("Unpaid Base Salary"). As soon as
administratively feasible following the determination that the Wombat Division
Net Cash Flow is sufficient to fund 100% of the Executive's Base Salary, the
Executive shall be paid 100% of his Base Salary on an ongoing basis. The Unpaid
Base Salary (or any portion thereof) shall be paid to the Executive as soon the
Company has sufficient funds to pay the same provided that such payment(s) do
not cause the Executive to be paid a Reduced Base Salary.
(c) Definition of "Wombat Division Net Cash Flow". For purposes of Section
2(b) hereof, the term "Wombat Division Net Cash Flow" shall mean (i) the gross
receipts and other miscellaneous revenue generated by the operations of the
Wombat Division of the Company reduced by (ii) all cash expenditures paid by the
Wombat Division and all cash expenditures paid by the Company that relate to the
operation of the Wombat Division including, without limitation, tax and debt
service payments made by the Company on behalf of, or allocable to, the Wombat
Division and its operations.
(d) Bonus. Executive shall be eligible for an annual bonus for each
calendar year during the term of the Employment Agreement based upon the
performance of the Executive and the Company for such calendar year; provided,
however, that for purposes of this Section 2(d) and Section 4(c)(v) hereof, the
period commencing on the Effective Date of this Employment Agreement and ending
on December 31, 1997 shall be deemed to be a "calendar year". The amount of the
annual bonus shall be determined in the discretion of the Compensation Committee
at the end of the calendar year to which such bonus relates; provided, however,
that the dollar amount of the bonus shall not exceed twice the Executive's Base
Salary for such calendar year. Any such annual bonus shall be determined and
paid to Executive within 90 days after the end of the calendar year to which it
relates.
(e) Expense Account and Reimbursements. During the Employment Term, the
Company shall provide the Executive with Company credit cards and a reasonable
business, travel and entertainment expense allowance for use by the Executive in
connection with the performance of his duties hereunder, it being understood
that the Executive shall submit verification of the nature and amount of the
expenses charged on Company credit cards or paid from such account in accordance
with the policies established by the Company.
(f) Benefits; General Rights. The Company shall provide the Executive with
all customary perquisites offered to other senior executives employed by
comparable employers in the same industry, including but not limited to, an
automobile allowance of $500.00 per month. The Company shall also provide the
Executive with a term life insurance policy on the life of the Executive in the
principal amount of $1,000,000, provided that the life of the Executive can be
insured at standard life insurance premium rates. The Executive shall also be
entitled to participate in all employee pension, savings, major medical,
hospitalization and health benefit plans offered to executive officers of the
Company (with all waiting periods for any welfare benefit plan coverage being
waived, provided that such waiting periods may be waived). The Executive shall
be entitled to four weeks paid vacation per year. The Executive shall also be
entitled to any other benefits provided by the Company to executive officers
generally, including, without limitation, first class travel and lodging
arrangements.
3. Termination of Employment; Events of Termination.
Notwithstanding the provisions of Sections 1 and 2 of this Employment
Agreement, the Executive's employment hereunder shall terminate on the earliest
of the following dates:
(a) The date of death of the Executive; or
(b) Ten days after the date on which the Company shall have given
the Executive notice of the termination of his employment by reason of his
physical or mental incapacity or disability on a permanent basis. For purposes
of this Employment Agreement, the Executive shall be deemed to be physically or
mentally incapacitated or disabled on a permanent basis if he is unable to
perform his duties hereunder for a period exceeding six (6) months in any twelve
(12) month period; or
(c) Ten days after the date on which the Company shall have given
the Executive notice of the termination of his employment for "Cause" or ten
days after the date on which the Executive shall have given the Board of
Directors notice of his voluntary resignation. For purposes of this Employment
Agreement, "Cause" shall mean (i) the Executive's conviction of a crime
constituting a felony under any federal or state law; (ii) the commission by the
Executive of fraud, embezzlement or an act of serious, criminal moral turpitude
that results in a conviction; (iii) the commission of an act by the Executive
constituting material financial dishonesty against the Company that results in a
conviction; or (iv) Executive's willful gross neglect in carrying out his
material duties and responsibilities under this Employment Agreement; provided
that the Executive will be given written notice of such willful gross neglect
and will be given an opportunity to cure such breach to the reasonable
satisfaction of the Board of Directors within thirty (30) days of receipt of
such written notice; or
(d) The date the Executive terminates his employment by tendering
his resignation to the Board of Directors following a "Change of Control" of the
Company. A "Change of Control" of the Company shall be deemed to have occurred
upon the happening of any of the following events: (i) approval by the
stockholders of the Company of a transaction that would result in the
reorganization, merger, or consolidation of the Company with one or more other
"Persons" within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 ("Securities Act"), other than a transaction following
which:
(A) at least 51% of the equity ownership interests of the
entity resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) in substantially the
same relative proportions by Persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51% of the outstanding equity ownership interests in the
Company; and
(B) at least 51% of the securities entitled to vote generally
in the election of directors of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions by Persons who,
immediately prior to such transaction, beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Company;
(ii) the acquisition of all or substantially all of the assets of the
Company;
(iii) a complete liquidation or dissolution of the Company, or
approval by the stockholders of the Company of a plan for such liquidation or
dissolution;
(iv) the occurrence of any event if, immediately following such event,
at least 50% of the members of the Board of Directors of the Company do not
belong to any of the following groups:
(A) individuals who were members of the Company's Board of Directors
on the date of this Employment Agreement; or
(B) individuals who first became members of the Board of Directors
after the date of this Employment Agreement either:
(I) upon election to serve as a member of the Board of Directors of
the Company by affirmative vote of three-quarters of the members of such Board,
or of a nominating committee thereof, in office at the time of such first
election; or
(II) upon election by the stockholders of the Company to serve as a
member of the Board of Directors of the Company, but only if nominated for
election by affirmative vote of three-quarters of the members of the Board of
Directors of the Company, or of a nominating committee thereof, in office at the
time of such first nomination; provided, however, that such individual's
election or nomination did not result from an actual or threatened election
contest (within the meaning of Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of proxies or
consents (within the meaning of Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) other than by or on behalf of the Board of Directors of the
Company.
Notwithstanding the provisions of subsection 3(d)(i) through (iv)
above, for purposes of this Employment Agreement, a "Change of Control" of the
Company shall not be deemed to have occurred with respect to the Executive in
the event that either (x) the Executive, either in his capacity as a member of
the Board of Directors or as a stockholder of the Company or (y) a majority of
the Directors nominated by the ▇▇▇▇▇▇▇ Group (as defined in that certain
Stockholders Agreement, dated as of the date hereof, among the Company and
certain of its stockholders), approves or votes in favor of the transaction or
event resulting in a "Change of Control" of the Company under subsection
3(d)(i), (ii), (iii) or (iv) above, provided that such "Change of Control" was
contested by a majority of the Board of Directors of the Company.
Any dispute with respect to a termination for "Cause" pursuant to clause
(iv) of Section 3(c) hereof shall be submitted to arbitration before the
American Arbitration Association in accordance with the Rules of the American
Arbitration Association then pending. The arbitration shall take place in the
County and State of New York and the substantive law applicable to the
arbitration shall be that of the State of New York. The arbitration award shall
be final and binding upon the parties. Such award may be confirmed in any court
having jurisdiction and reduced to final judgment. The Board of Directors may
elect to use a single arbitrator and, failing to agree on such person, the
dispute shall be determined by a panel of three (3) neutral arbitrators selected
under the Rules of the American Arbitration Association.
4. Payments and Other Rights Upon Termination.
(a) Death or Disability. If the Executive's employment is terminated
due to death or disability pursuant to Sections 3(a) or (b) hereof, the
Executive (or, in the event of his death, his estate or beneficiaries) shall be
entitled to the Base Salary through the date of termination of employment for
the year in which death or disability occurs. Any vested options held but not
exercised by the Executive under the Company's 1995 Non-Qualified Stock Option
Plan ("Stock Option Plan") prior to the termination of his employment due to
death or disability shall be exercisable by the Executive (or his estate or
beneficiaries) for the six (6) month period beginning on the date of the
Executive's termination of employment due to death or disability. Any non-vested
options shall immediately expire on the date of the Executive's termination of
employment due to death or disability in accordance with Section 5 of the Stock
Option Plan.
(b) Termination of Employment for Cause or Voluntary Termination by
the Executive. If the Company terminates the Executive's employment for Cause or
in the event the Executive voluntarily terminates his employment prior to a
Change of Control, the Executive shall be entitled only to the Base Salary and
any accrued annual bonus that has been determined and awarded, but not paid,
through the date of the termination of his employment. Any vested options not
exercised by the Executive prior to such employment termination shall be
exercisable by the Executive until the end of the ninetieth day following the
termination of his employment. In accordance with Section 5 of the Stock Option
Plan, any non-vested options shall immediately expire on the date of the
termination of the Executive's employment pursuant to Section 3(c) hereof. The
Company shall retain all other rights and remedies provided at law or in equity
as a result of the termination of the Executive's employment by the Company for
Cause or by the Executive prior to a Change of Control.
(c) Change of Control. If the Executive terminates his employment
with the Company following a Change of Control of the Company pursuant to
Section 3(d) hereof, the Company shall pay and provide to the Executive (or, in
the event of his death, his estate or beneficiaries):
(i) his earned but unpaid compensation as of the date of the Change of
Control, such payment to be made upon the occurrence of a Change of Control;
(ii) the benefits to which he is entitled under the Company's Stock
Option Plan, if applicable, and the employee benefit plans and programs and
compensation plans and programs maintained for the benefit of the Company's
officers and employees;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accident and long term disability insurance
benefits, in addition to that provided pursuant to Section 4(c)(ii), for the
remaining unexpired Employment Term with such coverage to be equivalent to the
coverage to which he would have been entitled under such plans as if he had
continued working for Company during the remaining unexpired Employment Term at
his then current annual rate of Base Salary;
(iv) a lump sum payment on the date of a Change of Control in an
amount equal to the future Base Salary that the Executive would have earned if
he had continued working for the Company during the remaining unexpired
Employment Term at his then current annual rate of Base Salary (irrespective of
Section 2(b) hereof) without discount for early payment, and such lump sum
payment shall not be reduced in the event the Executive obtains other
employment. Such lump sum amount shall be paid in lieu of all other payments of
Base Salary provided for under this Employment Agreement in respect of the
period following a Change of Control; and
(v) bonus payments or other payments that would have been made to the
Executive under any cash bonus, long-term or short-term cash incentive
compensation plan maintained by, or covering employees of, the Company as if he
had continued working for the Company during the remaining unexpired Employment
Term and had earned the maximum bonus or incentive award in each calendar year
that ends during the remaining unexpired Employment Term, such payments to be
equal to the product of:
(A) the maximum percentage rate at which a bonus or award was ever
paid or made to Executive by the Board of Directors pursuant to Section 2(d)
hereof or under such incentive compensation plan (as applicable); multiplied by
(B) the Base Salary that would have been paid to the Executive during
each calendar year at his then current annual rate of Base Salary (irrespective
of Section 2(b) hereof); such payments to be made (without discount for early
payment) upon the occurrence of a Change of Control. In the event that any
payment made hereunder as a result of a Change of Control constitutes an "excess
parachute payment" as defined in Section 4999(b) of the Internal Revenue Code of
1986, as amended or any successor provision thereto ("Code"), the Company shall
pay to the Executive an additional amount (the "Gross-up Payment") such that the
net amount of such payment or other benefit retained by the Executive, after
deduction of any excise tax on the payment or other benefits and any federal,
state and local income tax and excise tax upon the Gross-up Payment, shall be
equal to the original amount of such payments or other benefits.
5. Governing Law. This Employment Agreement shall be construed in
accordance with, and its validity, interpretation, performance and enforcement
and shall be governed by, the laws of the State of New York without regard to
conflicts of law principles thereof. The Executive and the Company hereby
irrevocably submit to the jurisdiction of any New York or Federal court sitting
in New York in any action or proceeding arising out of or relating to this
Employment Agreement, the Executive and the Company each hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York court or such Federal court.
6. Entire Agreement. This instrument contains the entire understanding and
agreement among the parties relating to the subject matter hereof, except as
otherwise referred to herein, and neither this Employment Agreement nor any
provisions hereof may be waived or modified, except by an agreement in writing
signed by the party against whom enforcement of any waiver or modification is
sought.
7. Counterparts. This Employment Agreement may be executed in
counterparts, each of which shall be deemed an original, and such counterparts
shall together constitute a single Employment Agreement.
8. Provisions Severable. In case any one or more of the provisions of this
Employment Agreement shall be invalid, illegal or unenforceable in any respect,
or to any extent, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. Furthermore, if any one or more of the provisions contained in this
Employment Agreement shall for any reason be determined by a court of competent
jurisdiction to be invalid and unenforceable, such provision or provisions shall
be construed so as to be enforceable to the extent compatible with then
applicable law.
9. Assignment of Rights by Executive. The Executive may not assign any
rights hereunder without the prior written consent of the Board of Directors.
Any such assignment in the absence of such written consent shall be void.
10. Notices. Any notice required or permitted to be given under the
provisions of this Employment Agreement shall be in writing and delivered by
courier or personal delivery, facsimile transmission (to be followed promptly by
written confirmation mailed by certified mail as provided below) or mailed by
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company:
The CineMasters Group, Inc.
c/o National Patent Development Corporation
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
The CineMasters Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile Number:
With a copy to:
Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Executive:
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇
c/o The CineMasters Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
National Patent Development Corporation
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
If delivered personally, by courier or facsimile transmission (confirmed as
aforesaid and provided written confirmation and receipt is obtained by the
sender), the date on which a notice is delivered or transmitted shall be the
date on which such delivery is made. Notices given by mail as aforesaid shall be
effective and deemed received upon the date of actual receipt or upon the third
business day subsequent to deposit in the U.S. mail, whichever is earlier.
Either party hereto may change its or his address specified for notices herein
by designating a new address by notice in accordance with this Section 10.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have executed the within instrument
on the day and year first above written.
EXECUTIVE:
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THE CINEMASTERS GROUP, INC.
By: ______________________________
Name:
Title:
