LIVE ENTERTAINMENT INC.
00000 XXXXXXX XXX
XXXXX 000
XXX XXXX, XXXXXXXXXX 00000
DATE: As of August 15, 1996
Xx. Xxxxxx X. Xxxxxx
c/o LIVE Entertainment Inc.
00000 Xxxxxxx Xxx
Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Re: Employment Agreement
Dear Xx. Xxxxxx:
When executed by you ("Employee") and by a duly authorized
representative of LIVE Entertainment Inc. and LIVE Film and
Mediaworks Inc., a Delaware corporation (together, the "Company"),
this letter will set forth the terms and conditions of Employee's
employment. This Employment Agreement supersedes and fully
replaces any prior Employment Agreement between Company and
Employee.
1. Services
1.1 Employment. Company employs Employee during the Term (as
hereinafter defined) to serve as Executive Vice President/Chief
Financial Officer and Corporate Secretary of Company, and to render
such other services ("Services") as Company or corporations
controlled by, under common control with or controlling, directly
or indirectly, Company ("Company's Affiliates"), may from time to
time reasonably request which are consistent with the duties
Employee is to perform. Employee shall comply with all of the
reasonable and customary employment policies of Company and its
Affiliates. The Services shall be generally performed at the
principal offices of Company, currently in Van Nuys, California.
In addition, the Services may be performed by Employee from time to
time on a temporary travel basis at such other locations as Company
shall reasonably request consistent with its reasonable business
needs. Employee agrees to perform such Services in a competent and
professional manner, consistent with the skills to be possessed by
a senior officer in Company's business.
1.2 Reporting Requirements. Employee shall report to Xxxxx
X. Xxxxxxx the Chief Executive Officer and Chairman of Company.
1.3 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 the Services ("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; provided, however, that
nothing in this Section 1.3 shall be deemed in any manner to
restrict or qualify Employee's ownership or right to exploit
Employee's personal memoirs.
1.4 Term/Exclusivity
1.4.1 The Term of this Agreement shall commence on
the date hereof and shall end on December 31, 1999 unless extended
or sooner terminated in accordance with the provisions of this
Agreement (the "Term").
1.4.2 The Services shall be rendered on a full time
basis during normal working hours and all services of Employee
shall be exclusive to Company. Employee acknowledges that
Employee's performances and services hereunder are of a special,
unique, unusual, extraordinary and intellectual character which
gives them peculiar value, the loss of which cannot be reasonably
or adequately compensated in an action at law for damages and that
a breach by Employee of the terms hereof (including without
limitation this Section 1.4 and Section 1.5) will cause Company
irreparable injury. Employee agrees that Company is entitled to
injunctive and other equitable relief to prevent a breach or
threatened breach of this Agreement, which shall be in addition to
any other rights or remedies to which Company may be entitled.
1.4.3 During the term of this Agreement and of
Employee's employment by Company (the "Restricted Period"),
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 Affiliates (collectively,
"Competitive Business") so long as Company or Company's 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; (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; or (iv) induce any customer or
supplier of Company or Company's Affiliates to terminate its
relationship with Company or Company's Affiliates (as the case may
be). Notwithstanding anything to the contrary, Employee may
acquire and/or retain, solely as an investment, and take customary
actions to maintain and preserve Employee's ownership of:
A. 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
B. any securities of a partnership, trust,
corporation or other person 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 Company
or its Affiliates.
1.4.4. (i) A Change of Control will occur if, in a
transaction or related series of transactions, another person or
a group of persons acting together, other than Pioneer Electronic
Corporation and its affiliates, acquire more than 50% of the voting
securities of the Company or if substantially all of the assets of
theCompany are sold in one or a related series of transactions.
(ii) In the event of a Change of Control followed
within 180 days by a without cause termination of employment or a
without cause material reduction of Employee's duties and
responsibilities, Employee will receive, in lieu of the benefit
provided in Section 3.2.2(i), in one lump sum, the greater of the
remainder of Employee's Fixed Annual Compensation for the term of
the Agreement or $50,000, less withholding as required. In
addition, the mitigation provisions of Section 3.4 shall not apply
in such event.
(iii) In the event of a Change of Control followed
within 180 days by the termination or resignation of Xxxxx X.
Xxxxxxx as Chief Executive Officer and Chairman of Company,
Employee may resign his position within 30 days after such
termination and, in such event Employee will receive the same
benefits and payments as are set forth in the immediately preceding
paragraph as if Employee was terminated without cause.
1.5 Confidentiality. Employee acknowledges that his Services
will, throughout the Term, bring Employee into close contact with
many confidential affairs of Company and its Affiliates, including
information about costs, profits, markets, sales, products, key
personnel, pricing policies, operational methods, technical
processes and other business affairs and methods and other
information not readily available to the public, and plans for
future development. Employee further acknowledges that the
businesses of Company and its Affiliates are international in
scope, that their products are marketed throughout the world, that
Company and its Affiliates compete in nearly all of their business
activities with other organizations which are or could be located
in nearly any part of the world and that the nature of Employee's
Services, position and expertise are such that he is capable of
competing with Company and its Affiliates from nearly any location
in the world. In recognition of the foregoing, Employee covenants
and agrees:
1.5.1 that Employee will keep secret all material
confidential matters of Company and its Affiliates which are not
otherwise in the public domain and will not intentionally disclose
them to anyone outside of Company or its Affiliates, either during
or after the Term, except with Company's written consent and except
for such disclosure as is necessary in the performance of
Employee's duties during the Term; and
1.5.2 that Employee will deliver promptly to Company
on termination of the Term or at any other time Company may so
request, at Company's expense, all confidential memoranda, notes,
records, reports and other documents (and all copies thereof)
relating to Company's and its Affiliates' business, which Employee
obtained while employed by, or otherwise serving or acting on
behalf of, Company, or which Employee may then possess or have
under his control.
2. Compensation
As compensation and consideration for all Services provided by
Employee during the Term pursuant to this Agreement, Company agrees
to pay to Employee the compensation set forth below.
2.1 Fixed Annual Compensation. Fixed Annual Compensation of
no less than the following amounts during the following periods
shall be payable in equal installments on Company's regular pay
dates:
January 1, 1996 through December 31, 1996 - $210,000
January 1, 1997 through December 31, 1997 - $220,000
January 1, 1998 through December 31, 1998 - $230,000
January 1, 1999 through December 31, 1999 - $240,000
2.2 Incentive Compensation. Employee shall be eligible to
participate in Company's discretionary Corporate Bonus Program, as
determined, modified and published by Company from time to time.
In addition, Employee's eligibility for a discretionary bonus and
salary increases in excess of the fixed Annual Compensation set
forth above shall be based, in part, upon the following criteria:
(i) overall profitability of the Company; (ii) effectiveness of the
Company's accounting functions; (iii) Employee's active involvement
and participation in the management of the Company, including
setting financial goals and performance evaluations, proactive
involvement in restructuring the Company's capital structure, and
aggressive involvement in all other financial aspects of the
Company's business including budgeting, monitoring the financial
performance of the Company's other divisions and related items
("Incentive Compensation").
2.3 Stock Options.
2.3.1 Employee hereby confirms that Company has granted
to Employee options to acquire 5,000 shares of Company's common
stock at the at the price per share equal to the average of the bid
and asked prices of Company's Common Stock on the OTC Bulletin
Board at the closing of the market on December 31, 1994 of this
Agreement (the "12/94 Options"), with such 12/94 Options to vest as
follows:
(i) 2,500 Options vested on December 31, 1995; and
(ii) 2,500 Options will vest on December 31, 1996;
Employee hereby also confirms that Company has granted to Employee
options to acquire 20,000 shares of the Company's common stock at
a price per share equal to the closing price of the Company's
common stock on the NASD Small Cap Market on December 7, 1995
("12/95 Options") with such 12/95 Options to vest as follows:
(i) 7,000 options will vest on December 31, 1996; and
(ii) 7,000 options will vest on December 31, 1997; and
(iii) 6,000 options will vest on December 31, 1998.
In addition, upon (a) approval by the Stock Option Committee of the
Board of Directors of Company, (b) the occurrence of the Effective
Date, and (c) Employee's execution of the stock option agreement
referred to hereinafter in this Section 2.3, as a special
inducement to Employee, Company will grant to Employee options to
acquire 10,000 shares of Company's common stock on the Nasdaq
National Market at the closing price of the market on September 12,
1996 ("9/96 Options"), with such 9/96 Options to vest as follows:
(i) 3,334 options will vest on September 12, 1997
(ii) 3,333 options will vest on September 12, 1998
(iii) 3,333 options will vest on September 12, 1999
The Options will be subject to such additional terms and conditions
as may be set forth in Company's 1988 Stock Option and Stock
Appreciation Rights Plan, as amended (the "Option Plan"), as well
as the form of stock option agreement as may be adopted by
Company's Board of Directors or the Stock Option Committee thereof
from time to time pursuant to the Option Plan.
In the event of a Change of Control (as defined above), all
unvested options will immediately vest.
2.4 Vacation Benefits. During each year of the Term,
Employee shall be entitled to a vacation of three (3) weeks,
without deduction of salary. Such vacations shall be taken at such
time or times during the applicable year as may be determined by
Employee subject to Company's business needs. Employee shall be
entitled to take any unused portion of his paid vacation in any
subsequent year of the Term, subject to Company's business needs
and policy and consistent with applicable laws ("Vacation
Benefits"). Notwithstanding the foregoing, Employee shall at no
time have more than six (6) weeks of accrued vacation, and at such
time as six (6) weeks of vacation are accrued by Employee, no
additional vacation will accrue unless and until vacation time is
taken and the amount of Employee's accrued vacation time becomes
less than six (6) weeks. Any additional vacation period shall be
determined by Company consistent with the general customs and
practices of the Company applicable to its executives.
2.5 Intentionally Deleted.
2.6 Additional Benefits. Without limiting any other
provision hereof, Employee shall be entitled to participate in
any profit-sharing, pension, health, vacation, insurance or other
plans, benefits or policies available to the employees of Company
of similar stature and seniority on the terms generally applicable
to such employees and will be entitled to reimbursement of his
reasonable and customary business expenses incurred on behalf of
Company or Company's Affiliates ("Additional Benefits"). Employee
acknowledges that such benefits can change from time to time without
notice to Employee, and Employee shall retain no residual rights
in any superseded benefit plan.
2.7 Extension of Term. Unless earlier terminated in
accordance with the provisions hereof, the Term of this Agreement
shall automatically be extended from and after December 31, 1999
unless and until the date that is four (4) months following
Employee's receipt of written notice that Company desires to
terminate Employee's employment hereunder (the "Period of
Extension"), which notice may be given to Employee no sooner than
August 31, 1999; provided, however, that at any time during the
Period of Extension, Employee shall have the right, by giving
written notice to Company, to elect to terminate his employment
hereunder, without any obligation to Company, whereupon the Period
of Extension shall end. During the Period of Extension, and during
a period of three (3) months thereafter (i.e., the first three
months following the end of Employee's employment hereunder),
subject to the provisions of Section 3.4 below, Company shall
continue to pay Employee's Fixed Annual Compensation, as well as
provide Employee with health insurance benefits.
3. Termination
3.1 Termination by Company.
3.1.1 Employee Material Breach. Company shall have
the right, at its election, to terminate the Term, by written
notice to Employee to that effect, only for "good cause" defined
for this purpose to mean (i) material and repeated instances of
misconduct or habitual inability to perform the Services, or
violation of Company's published policies or procedures, (ii) a
single act so grievous as to constitute the equivalent of such
repeated instances (including, without limitation, theft,
misappropriation of Company's assets, or sexual harassment), (iii)
unauthorized disclosure of confidential information related to
customers, employees or general business strategies, or (iv) a
material breach of any covenant, condition, agreement or term of
this Agreement ("Employee's Material Breach") and only if Company
shall have given written notice to Employee specifying the claimed
cause or breach and, provided such breach is curable, Employee
fails to correct the claimed breach or fails to alter the
objectional pattern of conduct specified in the applicable written
notice as soon as practical thereafter but no later than thirty
(30) days after receipt of the applicable notice or such longer
time as may be reasonably required by the nature of the claimed
breach. However, in no event shall a material breach of the
provisions of Section 1.3, 1.5 or 3.1.1(i), (ii) or (iii) be
subject to cure.
3.1.2 Effect of Termination by Company. Should the
Term be terminated by Company by reason of Employee's Material
Breach, Employee shall have no right to any further Fixed Annual
Compensation from and after termination, or to any Incentive
Compensation or Additional Benefits accruing for the fiscal year of
termination or thereafter.
3.2 Termination by Employee.
3.2.1 Company's Material Breach. Employee shall have
the right, at his election, to terminate the Term by written notice
to Company to that effect if Company shall have failed to
substantially perform a material condition or covenant of this Agreement,
or if Company shall terminate Employee's employment or materially
reduce Employee's job duties or responsibilities in the absence of
Employee's Material Breach ("Company's Material Breach"); provided
that, if such breach is curable, termination for Company's Material
Breach will not be effective until Employee shall have given
written notice specifying the claimed breach and Company fails to
correct the claimed breach within thirty (30) days after the
receipt of the applicable notice or such longer time as may be
reasonably required by the nature of the claimed breach (but within
ten (10) days, if the failure to perform is a failure to pay monies
when due under the terms of this Agreement).
3.2.2 Effect of Termination by Employee. Subject to
the provisions of Section 3.4 below, should Employee terminate the
Term due to Company's Material Breach, Company shall pay to
Employee or provide Employee with:
(i) Employee's Fixed Annual Compensation for the
remainder of the Term, paid in equal installments
on Company's regular pay dates during the term of
such payments, and
(ii) Health insurance for the remainder of the Term.
In addition, all Options shall vest on the date of termination.
Employee shall also receive such Incentive Compensation as has been
accrued through the date of termination, and, to the extent that
the accrued vacation pay of Employee as of the date of termination
exceeds the amount of Employee's Fixed Annual Compensation for the
remainder of the Term, Employee shall also receive an amount equal
to such excess. All other benefits shall cease on the date of
termination of employment, except as otherwise required by law.
Except with regard to a termination of the Term by reason
of Employee's Death or Disability (as both terms are defined in
Section 3.3), should Employee terminate the Term other than for
Company's Material Breach, such termination shall be treated as a
termination by Company for Employee's Material Breach.
3.3 Employee's Death or Disability.
3.3.1 Death. The Term shall immediately terminate
upon Employee's death as certified in accordance with the
provisions of California law ("Death").
3.3.2 Disability. In the event that during the Term
Employee becomes unable to perform the Services as a result of his
permanent or temporary, total or partial, physical or mental
disability (as defined in Company's disability insurance policy, if
any) ("Disability"):
3.3.2.1 the Fixed Annual Compensation otherwise
payable during the Disability Period (as herein defined) shall
nevertheless be payable on the terms set forth herein to Employee
as a disability benefit ("Disability Benefit");
3.3.2.2 any disability insurance proceeds actually
received by Employee during the Disability Period with respect to
such Disability shall reduce on a dollar-for-dollar basis the
Disability Benefit otherwise payable by Company during the
Disability Period pursuant to this Section 3.3.2; and
3.3.2.3 Company shall not have the right
(notwithstanding any other provision of this Agreement to the
contrary) to terminate the Term due to such Disability prior to the
expiration of the Disability Period.
As used herein, the term "Disability Period" shall have such
meaning as shall be defined in Company's disability insurance
policy in effect as of the date hereof, and if no such policy is in
effect it shall mean the period commencing on the first day of the
calendar month following the month during which such Disability
occurs and ending on the first to occur of the following: (i) the
expiration of the Term; (ii) if the Disability is continuous
throughout the six (6) consecutive months following the month
during which the Disability occurs, then the last day of such sixth
consecutive calendar month; and (iii) if the Disability is
intermittent and shall exist throughout each of any twelve (12)
calendar months following the month during which the Disability
occurs, then the last day of such twelfth calendar month. Company
shall have the right to terminate the Term at the expiration of the
Disability Period if and only if the Disability of Employee is then
continuing.
3.3.3 Effect of Death or Disability.
(a) Fixed Annual Compensation and Additional
Benefits: Should the Term be terminated in accordance with the
provisions of Sections 3.3.1 or 3.3.2 by reason of Employee's Death
or Disability, Employee or his estate (as the case may be) shall
have no right to any further Fixed Annual Compensation, any
Incentive Compensation, any Additional Benefits or any other sums
or benefits accruing to Employee hereunder, except as otherwise
required by law; provided, however, that the sums identified in
Section 3.3.2 and Section 3.3.3(b) shall be paid to Employee on the
terms set forth therein.
(b) Incentive Compensation and Options: Should the
Term be terminated in accordance with the provisions of Sections
3.3.1 or 3.3.2 by reason of Employee's Death or Disability,
Employee or his estate (as the case may be) shall be entitled to
receive such Incentive Compensation that shall have accrued during
that portion of the fiscal year prior to such Death or Disability.
All Options shall vest on the date of termination by reason of
Employee's Death or Disability, and Employee's estate shall be
entitled to exercise all Options which have vested on or prior to
the date of termination by reason of Employee's Death.
3.4 Mitigation. Employee agrees that if Employee furnishes
his services for other engagements or employment after termination
hereunder, the total compensation actually earned by Employee
together with any welfare or other benefits earned by Employee
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 termination of his
employment with Company) of any amounts earned (or to be earned) by
Employee and any benefits provided (or to be provided) to Employee
pursuant to his new employment arrangement.
4. General
4.1 Applicable Law Controls. Nothing contained in this
Agreement shall be construed to require the commission of any act
contrary to law and wherever there is any conflict between any
provisions of this Agreement and any material statute, law,
ordinance or regulation contrary to which the parties have no legal
right to contract, then the latter shall prevail; provided,
however, that in any such event the provisions of this Agreement so
affected shall be curtailed and limited only to the extent
necessary to bring them within applicable legal requirements, and
provided further that if any obligation to pay the Fixed Annual
Compensation or any other amount due Employee hereunder is so
curtailed, then such compensation or amount shall be paid as soon
thereafter, either during or subsequent to the Term, as
permissible.
4.2 Waiver/Estoppel. Either party hereto may waive the
benefit of any term, condition or covenant in this Agreement or any
right or remedy at law or in equity to which either party may be
entitled but only by an instrument in writing signed by the party
to be charged. No estoppel may be raised against either party
except to the extent the other party relies on an instrument in
writing, signed by the party to be charged, specifically reciting
that the other party may rely thereon. The parties' rights and
remedies under and pursuant to this Agreement or at law or in
equity shall be cumulative and the exercise of any rights or
remedies under one provision hereof or rights or remedies at law or
in equity shall not be deemed an election of remedies; and any
waiver or forbearance of any breach of this Agreement or remedy
granted hereunder or at law or in equity shall not be deemed a
waiver of any preceding or succeeding breach of the same or any
other provision hereof or of the opportunity to exercise such right
or remedy or any other right or remedy, whether or not similar, at
any preceding or subsequent time.
4.3 Notices. Any notice which Company is required or may
desire to give to Employee hereunder shall be in writing and may be
served by delivering it personally to Employee, or by sending it to
Employee by certified mail, return receipt requested, or by
overnight courier service, at the address set forth on page 1
hereof, or such substitute address as Employee may from time to
time designate by notice to Company. Any notice which Employee is
required or may desire to serve upon Company hereunder shall be
served in writing and may be served by delivering it personally or
by sending it by certified mail, return receipt requested, or by
overnight courier service, to the address set forth on page 1
hereof, attention of the Chief Executive Officer, or such other
substitute address as Company may from time to time designate by
notice to Employee.
4.4 Governing Law. This Agreement shall be governed by,
construed and enforced and the legality and validity of each term
and condition shall be determined in accordance with the internal,
substantive laws of the State of California applicable to
agreements fully executed and performed entirely in California.
4.5 Captions. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
4.6 No Joint Venture. Nothing herein contained shall
constitute a partnership between or joint venture by the parties
hereto. Neither party shall hold itself out contrary to the terms
of this Section. This Agreement is not for the benefit of any
third party who is not referred to herein and shall not be deemed
to give any right or remedy to any such third party.
4.7 Modification/Entire Agreement. This Agreement may not be
altered, modified or amended except by an instrument in writing
signed by both of the parties hereto. No person, whether or not an
officer, agent, employee or representative of either party, has
made or has any authority to make for or on behalf of that party
any agreement, representation, warranty, statement, promise,
arrangement or understanding not expressly set forth in this
Agreement or in any other document executed by the parties
concurrently herewith ("Parol Agreements"). This Agreement and all
other documents executed by the parties concurrently herewith
constitute the entire agreement between the parties and supersede
all express or implied, prior or concurrent, Parol Agreements and
prior written agreements with respect to the subject matter hereof.
The parties acknowledge that in entering into this Agreement, they
have not relied and will not in any way rely upon any Parol
Agreements.
5. Resolution of Disputes by Binding Arbitration
Employee and the Company each acknowledge and agree that, any
controversy or claim arising out of or relating to this Employment
Agreement shall be settled by final and binding arbitration in
accordance with the National Rules for the Resolution of Employment
Disputes of The American Arbitration Association ("AAA") to the
extent that such Rules do not conflict with any provisions of this
Employment Agreement. Any arbitration proceeding hereunder must be
instituted within one year after the controversy claim arose.
Failure to institute an arbitration proceeding within such period
shall constitute an absolute bar to the institution of any
proceedings respecting such controversy or claim, and a waiver
thereof. The arbitrator shall interpret the Employment Agreement
in accordance with the laws of California. Any award, order of
judgment pursuant to such arbitration shall be deemed final and
binding and may be entered and enforced in any state or Federal
Court of competent jurisdiction. Each party agrees to submit to
the jurisdiction of any such court for purposes of the enforcement
of any such award, order of judgement. All costs of the
arbitration shall be borne equally by the parties.
Please confirm your agreement to the foregoing by signing
below where indicated.
Dated as of August 15, 1996 Very truly yours,
LIVE ENTERTAINMENT INC.
a Delaware corporation
By: _____________________________
Xxxxx X. Xxxxxxx
Chief Executive Officer
and Chairman
AGREED AND ACCEPTED
_______________________________
XXXXXX X. XXXXXX
