EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of the 1st day of April, 1997, between Hit Entertainment, Inc., with its
principal place of business at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 ("Employer") and Xxxxx Xxxxxxx, whose address is 0000 Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 ("Employee").
1
TERM OF EMPLOYMENT
1.1 Employer hereby employs Employee, and Employee hereby
accepts employment with Employer, beginning on the date first above written and
continuing thereafter until March 31, 2000 (the "Term") subject to earlier
termination as provided in this Agreement. The Term hereunder shall be
automatically extended additional one (1) year periods (each an "Option
Period"), each commencing April 1 and continuing until March 31 of the following
year, unless Employer or Employee notifies the other party by written notice as
provided hereunder on or before January 31 immediately preceding the next Option
Period of an election not to extend the Term and to terminate this Agreement as
of the expiration of the original Term or the current Option Period, as the case
may be.
2
DUTIES OF EMPLOYEE
2.1 Employee is hired and employed as President and Chief
Executive Officer of Employer. Employee shall do and perform all services, acts
or things necessary or advisable to fulfill the duties of a corporate President
and Chief Executive Officer. Employee shall also serve as a member of the Board
of Directors of Employer. Employee shall, at all times, be subject to all
policies established by the Board of Directors of Employer.
2.2 Employee agrees that to the best of his ability and
experience he will at all times loyally and conscientiously perform all of the
duties and obligations required of him either expressly or implicitly by the
terms of this Agreement.
2.3 The specific duties to be performed by Employee shall be
determined from time to time by the Board of Directors of Employer.
2.4 Employee shall be required to devote only so much of his
time and energies to the business of Employer during the employment term as
shall be necessary to fulfill his duties as President and Chief Executive
Officer of Employer.
3
COMPENSATION TO EMPLOYEE
3.1 As compensation for his services hereunder, Employee shall
receive an annual base salary of Two Hundred Six Thousand Four Hundred Dollars
($206,400.00) payable in equal bi-monthly installments in accordance with
Employer's normal payroll policies. The base salary of Employee shall be subject
to annual increases at the sole discretion of the Board of Directors.
3.2 Employer shall have the right to deduct from the
compensation due to Employee hereunder any and all sums required for social
security and withholding taxes, and for any other federal, state or local charge
which may now be in effect or hereafter enacted or required as a charge on the
compensation of Employee.
4
EMPLOYEE BENEFITS
4.1 Employee shall be entitled to coverage under the
Employer's group medical insurance plan, in the same manner as other executive
officers of Employer.
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4.2 Employee shall be eligible to participate in the
Employer's retirement plans (if any) and in any incentive compensation plans now
or hereafter established by Employer, in the same manner as other executive
officers of Employer.
4.3 If Employee becomes disabled during the employment term
because of sickness, physical or mental disability, or for any other reason, so
that he is unable to materially perform his duties hereunder, Employer agrees to
continue Employee's salary during such disability until disability payments
commence under the disability insurance maintained for Employee, if any, but in
no event for more than one hundred and eighty (180) calendar days.
4.4 Employee shall be entitled to such other fringe benefits
(including, but not limited to vacation pay) as are now or hereafter afforded to
other executive officers of Employer, or as shall be agreed to from time to time
by Employer and Employee.
4.5 Employer agrees to provide Employee with a private office,
stenographic and secretarial help, office equipment and supplies, and such other
facilities and services, which are suitable to Employee's position and adequate
for the performance of his duties.
5
REIMBURSEMENT OF EXPENSES INCURRED BY EMPLOYEE
5.1 Employer will promptly reimburse Employee for all
reasonable business expenses incurred by Employee in promoting the business of
Employer, including expenditures for entertainment, gifts, and travel, provided
that:
(a) Each such expenditure is of a nature qualifying it
as a proper deduction on the federal and state income tax return of Employer or
such expenditure was incurred at the express request of Employer, whether or not
deductible; and
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(b) Employee furnishes to Employer adequate records and
other documentary evidence required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the substantiation
of each such expenditure as an income tax deduction, or similar records if the
expenditure is not deductible.
6
TERMINATION OF EMPLOYMENT
6.1 This Agreement may be terminated by Employer "for good
cause" by giving thirty (30) days' written notice of termination to Employee.
Termination "for good cause" shall mean the willful and continued failure to
follow Employer's directions following Employer's written notice to Employee
directing Employee to follow Employer's instructions and requests and Employee's
failure to take appropriate and timely corrective action; dishonesty; improper
disclosure of confidential information; or failure to perform Employee's duties
under this Agreement following Employer's written notice to Employee of such
failure and Employee's failure to take appropriate and timely corrective action.
Upon such termination, Employee shall forfeit any and all rights to compensation
beyond the date upon which this Agreement shall have been so terminated by
Employer. In addition, in the event of any of the above-mentioned offenses, at
the election of Employer the operation of this Agreement may be suspended for
and during the continuance of Employee's period of failure, neglect or refusal,
and Employer may, at its election, add a period of time equal to all or any part
of such period of suspension to the applicable year of the term of this
Agreement, and the dates for the commencement of any subsequent years of the
Agreement, and the dates for the exercise and commencement of any subsequent
option thereof, shall be correspondingly postponed.
6.2 This Agreement shall terminate immediately on the
occurrence of any of the following events:
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(a) Death of Employee;
(b) Loss by Employee of legal capacity;
(c) Permanent mental or physical disability of
Employee such that he is unable to materially perform the
duties of his employment 6.3 If during the term of this
Agreement Employee should become incapable
of fulfilling his obligations hereunder because of injury or physical or mental
illness and such incapacity shall exist for on hundred and eighty (180) calendar
days in the aggregate during any one (1) contract year, Company may, at its
option and upon five (5) days' written notice to Employee, terminate this
Agreement. The reasonable good faith determination by Employer that Employee is
incapable of fulfilling his obligations under this Agreement because of injury
or physical or mental illness shall be final and binding. In addition, during
any period of disability, Employer shall have the right to reduce Employee's
salary by the amount of the disability benefits to which Employee is entitled to
under applicable law.
6.4 This Agreement may be terminated by Employee for any
reason upon sixty (60) days' written notice to Employer.
6.5 In the event of the termination of this Agreement prior to
the completion of the employment term specified herein, Employee shall be
entitled to the full compensation earned by him prior to the date of termination
as provided for in this Agreement, computed pro-rata up to and including that
date.
6.6 This Agreement shall not be terminated by any:
(a) Transfer of all or substantially all of the
assets of Employer; or
(b) Merger by Employer with another company.
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In the event of any such merger or transfer of assets, the surviving corporation
or the transferee of Employer's assets shall be bound by and shall have the
benefit of the provisions of this Agreement; Employer agrees to take all actions
necessary to insure that such corporation or transferee is so bound.
7
GENERAL PROVISIONS
7.1 All notices required or permitted to be given pursuant to
this Agreement shall be in writing, and shall be delivered either personally, by
overnight delivery service or by U.S. certified mail, postage prepaid,
return-receipt requested and addressed to the parties at their respective
addresses as they appear in the first paragraph of this Agreement. The parties
may change their addresses for notice by giving notice of such change in
accordance with this paragraph. Notices sent by overnight delivery service shall
be deemed received on the business day following the date of deposit with the
delivery service. Mailed notices shall be deemed received upon the earlier of
the date of delivery shown on the return receipt, or the second business day
after the date of mailing.
7.2 This Agreement has been executed in and is to be performed
in the State of California, and this Agreement shall be interpreted in
accordance with the laws of the State of California.
7.3 This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective heirs, assigns,
successors-in-interest, and legal representatives, subject to any restrictions
on assignment set forth herein.
7.4 This Agreement may not be amended, modified or altered
except by a written instrument executed by all parties hereto.
7.5 None of the rights of any party hereunder (except the
right to receive money) may be assigned without the prior written consent of the
non-assigning party. None of the duties of
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any party hereunder may be delegated by either party without the prior written
consent of the non- delegating party.
7.6 No party has made any representations, warranties,
covenants or promises relating to the subject matter of this Agreement except as
set forth herein, and any prior agreements or understandings not specifically
set forth herein shall be of no force or effect. This Agreement constitutes the
entire agreement of the parties relative to the subject matter hereof.
7.7 If any provision of this Agreement is declared by a court
of competent jurisdiction to be invalid or unenforceable, the remaining
provisions hereof shall nevertheless be given full force and effect.
7.8 Captions are for convenience only and shall not be
considered in interpreting any of the provisions hereof.
7.9 As used herein, the masculine, feminine or neuter gender,
and the singular or plural number, shall each be deemed to include the others
whenever the context so indicates.
7.10 Should any party be required to bring legal action
(including arbitration) to enforce his rights under this Agreement, the
prevailing party in such action shall be entitled to recover from the losing
party his reasonable attorneys' fees and costs in addition to any other relief
to which he is entitled. Such recovery of attorneys' fees shall include any
attorneys' fees incurred in connection with any bankruptcy or reorganization
proceeding, including stay litigation. The parties further agree that any
attorneys' fees incurred in enforcing any judgment are recoverable as a separate
item, and that this provision is intended to be severable from the other
provisions of this Agreement, shall survive the judgment, and is not to be
deemed merged into the judgment.
7.11 Any controversy or claim arising out of or relating to
this Agreement, or breach thereof, shall be settled by binding arbitration in
Los Angeles, California, in accordance with
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the Commercial Arbitration Rules of the American Arbitration Association then in
effect, and judgment upon the award rendered by the arbitrator(s) may be entered
in any court of competent juris diction. The cost of arbitration shall be borne
by the losing party, or, if there is no losing party, as the arbitrator(s) shall
determine.
In any arbitration proceedings relative to this Agreement, or
breach thereof, all parties shall have the right to take depositions and to
obtain discovery regarding the subject matter of the arbitration pursuant to
California Code of Civil Procedure Section 1283.05, or any successor statute.
Service of any Petition to confirm or vacate the Arbitration
award and Notice of Hearing thereon may be made by certified or registered mail,
return-receipt requested, or by personal delivery.
The arbitrator'(s) award may be limited to a statement that
one party pay to the other a sum of money. The arbitrator(s) will not be deemed
to exceed their powers (per California Code of Civil Procedure Sections 1286.2
or 1286.6) by committing an error of law or legal reasoning, it being agreed
that the decision of the arbitrator(s) shall be final and unreviewable for error
of law or legal reasoning of any kind.
7.12 This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one (1) and the same instrument.
7.13 The failure of any party, at any time, to require timely
performance by any other party of any provision of this Agreement shall not
affect such party's rights thereafter to enforce the same, nor shall the waiver
by any party of any breach of any provision of this Agreement, whether or not
agreed to in writing, be taken or held to be a waiver of the breach of any other
provision or a waiver of any subsequent breach of the same provision of this
Agreement. No extension of time for
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the performance of any obligation or act hereunder shall be deemed to be an
extension of time for the performance of any other obligation or act hereunder.
7.14 The parties agree to perform such further acts and to
execute, acknowledge and deliver such documents as may be necessary to
effectuate the provisions of this Agreement.
Executed at Los Angeles, California, on the day and year first
above-written.
EMPLOYER: HIT ENTERTAINMENT, INC.
By /s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx, its Chairman
EMPLOYEE:
/s/ Xxxxx Xxxxxxx
-------------------------------
Xxxxx Xxxxxxx
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