AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") is entered
into as of the 20th day of June, 2000 between Xxxxxxx X. Xxxxxxx ("Employee")
and Overseas Filmgroup, Inc., a Delaware corporation (the "Company").
WHEREAS, Employee is currently employed by the Company under an Employment
Agreement dated as of October 31, 1996 and is a party to a related
Non-Competition Agreement among Employee, Company and Entertainment Media
Acquisition Corporation entered into concurrently therewith (collectively, the
"Existing Employment Agreement");
WHEREAS, pursuant to a Securities Purchase Agreement dated the date hereof
(the "Securities Purchase Agreement"), between the Company and Xxxxxxxx Street
Productions, LLC ("Xxxxxxxx LLC"), Xxxxxxxx LLC is purchasing certain securities
of the Company;
WHEREAS, in order to induce Xxxxxxxx LLC to enter into the Securities
Purchase Agreement, the parties hereto have agreed to amend and restate the
Existing Employment Agreement in its entirety to set forth the terms and
conditions of Employee's continued employment with the Company following the
consummation of the transactions contemplated by the Securities Purchase
Agreement;
WHEREAS, the Company desires to secure the continued employment of
Employee, and Employee desires to be employed by the Company, all on the terms
and conditions set forth herein; and
WHEREAS, it is a condition precedent to the closing of the transactions
contemplated by the Securities Purchase Agreement that the parties hereto shall
have entered into this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties to this Agreement hereby agree as follows:
1. EXISTING EMPLOYMENT AGREEMENT.
The Existing Employment Agreement is hereby amended and restated in its
entirety as set forth herein and, upon execution hereof, the terms of this
Agreement shall supersede the terms of the Existing Employment Agreement;
provided, however, that the execution of this Agreement shall not be deemed a
termination of employment under the terms of the Existing Employment Agreement.
Employee hereby releases and discharges the Company from any and all
liabilities, claims, demands, causes of action, damages and judgments relating
to or arising out of the Existing Employment Agreement and the terms thereof.
2. SERVICES.
2.1 Employment. During the Term (as defined below), the Company hires
Employee to perform such services as the Company may from time to time
reasonably request consistent with Employee's position with the Company (as set
forth in Section 2.5 hereof) and Employee's stature and experience in the motion
picture industry (the "Services").
2.2 Location. During the Term, Employee's Services shall be performed at
the Company's principal office (currently located in Los Angeles, California);
provided, however, that if the Board of Directors of the Company decides to
relocate the principal office to New York, the Company may send Employee a
written notice (the "Relocation Notice") requesting that Employee perform his
Services at the Company's New York office. Employee shall have sixty (60) days
to inform the Company in writing whether or not he will relocate to New York. If
Employee elects not to relocate or does not respond in writing to the Company
within such twenty-day-period, Employee's employment shall be deemed terminated
for Cause (as hereinafter defined) ; provided, however, such termination shall
not take effect until the earlier of (a) the date which is six (6) months from
the date of the Relocation Notice or (b) the end of the Initial Term, or the end
of the Extended Term if the Relocation Notice is dated during the Extended Term.
In the event that the Company requests that Employee relocate to New York and
Employee agrees to perform his Services in New York, the Company shall pay
Employee's reasonable moving expenses associated with such relocation. In
addition, the parties acknowledge and agree that the nature of Employee's duties
hereunder may require domestic and international travel from time to time,
including without limitation, such travel to New York as his duties may require.
2.3 Term. The term of Employee's employment under this Agreement (the
"Initial Term") shall commence on the date hereof (the "Effective Date") and,
unless sooner terminated in accordance with the provisions of this Agreement,
shall continue for a period of three (3) years thereafter; provided, that (i) if
the Initial Term is not earlier terminated and if the Company shall have
achieved the Profits Target (as defined in Section 7.15), then the Initial Term
shall automatically be extended for an additional period of two (2) years or
(ii) if the Initial Term is not earlier terminated, and regardless of whether
the Company has achieved the Profits Target, the Company may give Employee
written notice not less than six (6) months prior to the expiration of the
Initial Term that the Company elects to extend the Initial Term for an
additional period of two (2) years (in either case such additional two year
period shall hereinafter be referred to as the "Extended Term"); provided,
further, that the Company shall have the right to extend the Initial Term for a
period of three (3) months (the "Determination Period") to allow the Company to
determine whether it has achieved the Profits Target. If for whatever reason the
Initial Term is not renewed for the Extended Term, then Employee shall be
entitled to receive the amount of $300,000 (the "Non-Renewal Payment") in cash,
payable in six (6) equal monthly installments of $50,000 each, with the first
such payment to be made within thirty (30) days after the termination of the
Initial Term, or, if the Company has extended the Initial Term for the
Determination Period, the Determination Period; it being understood that if
Employee's employment is terminated for failure to relocate to New York in
accordance with Section 2.2 above, Employee shall not be entitled to the
Non-Renewal Payment even if the date of Employee's termination extends until the
end of the Initial Term. The Initial Term, the Determination Period and the
Extended Term shall be referred to herein collectively as the "Term."
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2.4 Exclusivity.
2.4.1 During the Term, the Services shall be rendered on a full-time
basis during normal working hours and all Services of Employee shall be
exclusive to the Company and its Affiliates (as defined in Section 7.15).
2.4.2 Employee agrees that as long as he is an employee of the Company
and for a period of one (1) year thereafter (the "Non-Compete Period"), Employee
shall not, directly or indirectly: (i) engage in any business for his own
account which is competitive with the businesses of the Company or the Company's
Affiliates (collectively, "Competitive Business") so long as the Company or the
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; (iv) induce any
customer or supplier of the Company or the Company's Affiliates to terminate its
relationship with the Company or any of its Affiliates (as the case may be); or
(v) hire, engage or solicit (or attempt to hire, engage or solicit) any person
who is, or at any time during the six-month period preceding the solicitation
was, an employee of the Company. Notwithstanding anything to the contrary stated
in this Agreement, Employee may acquire and/or retain, as an investment, and
take customary actions (including the exercise or conversion of any securities
or rights) to maintain and preserve Employee's ownership of any one or more of
the following (provided such actions, other than passive investment activities,
do not unreasonably interfere with Employee's Services hereunder): (i)
securities of any corporation that are registered under Sections 12(b) or 12(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
that are publicly traded as long as Employee is not part of any control group of
such corporation and, in the case of public corporations in competition with the
Company, such securities do not constitute more than one percent of the voting
power of that public company; (ii) any securities of a partnership, trust,
corporation or other person so long as Employee remains a passive investor in
that entity and so long as such entity is not, directly or indirectly, in
competition with the Company; (iii) securities or other interests now owned or
controlled, in whole or in part, directly or indirectly, by Employee in any
corporation or other person and which are identified on Schedule 2.4 hereto; and
(iv) securities of the Company or any of its Affiliates. Nothing in this
Agreement shall be deemed to prevent or restrict Employee's ownership interest
in the Company and its Affiliates or Employee's ability to render charitable or
community services. Any executive producer or similar producer fees earned by
Employee from a third party during the Term in connection with the Services
shall be assigned by Employee to the Company, and the Company shall fully
indemnify Employee with respect to any and all taxes to be paid by Employee in
connection therewith (i.e., Employee shall be placed in the same after-tax
position that he would have been in had such fees not been paid to Employee).
Notwithstanding the foregoing, if Employee leaves the Company without Good
Reason (as hereinafter defined) or is terminated by the Company for Cause (as
hereinafter defined), then the Non-Compete Period shall run until the date of
termination and for a period of eighteen (18) months thereafter; provided that
if Employee is terminated by the Company for Cause pursuant to Section 2.2
hereof, the Non-Compete Period shall run until the date of termination and for a
period of twelve (12) months thereafter. Notwithstanding the foregoing, if
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Employee leaves the Company upon the expiration of the Extended Term, then the
Non-Compete period shall cease as of the date of termination.
2.4.3 Employee acknowledges and agrees that (i) his services are of a
special, unique and extraordinary character and are vital to the future success
and viability of the Company and (ii) Xxxxxxxx LLC is consummating the
transactions contemplated by the Securities Purchase Agreement in reliance upon
the provisions of this Section 2.4 and that such provisions are essential to
protect the business being acquired by Xxxxxxxx LLC. Employee further
acknowledges that because of the nature of the business engaged in by the
Company, it is impractical and unreasonable to put a geographic limitation on
the covenants contained herein.
2.5 Power and Authority.
2.5.1 During the Term, Employee shall be Chief Operating Officer and
Chief Financial Officer of the Company. Employee shall report to the Chief
Executive Officer of the Company ("CEO"). The parties acknowledge that as of the
date hereof, Xxxxxxxxxxx Xxxxxx shall be the CEO of the Company.
2.5.2 The Company may from time to time during the Term appoint
Employee to one or more additional offices of the Company. Employee agrees to
accept such offices if consistent with Employee's stature and experience and
with the type of offices with the Company held by Employee.
2.6 Confidentiality. Employee acknowledges that in furnishing his Services
to the Company, he will, through the Term, come into close contact with many
confidential affairs of the Company, including confidential information about
costs, profits, sales, pricing policies, operational methods, and other
confidential information not readily available to the public (the "Confidential
Materials"). In recognition of the foregoing, Employee covenants and agrees that
Employee will not intentionally disclose any Confidential Materials to anyone
outside the Company and its Affiliates during the Term and at any time
thereafter except in the course of rendering the Services or in enforcing
Employee's rights under this Agreement or under the related agreements in
connection with the investment in the Company by Xxxxxxxx LLC, or with the
Company's written consent. For purposes of this Agreement, the term
"Confidential Materials" does not include information which at the time of
disclosure has previously been made generally available to the public by any
means other than the wrongful act of Employee in violation of this Section 2.6.
Employee may use and disclose Confidential Materials to the extent necessary to
assert any right or defend against any claim pertaining to Confidential
Materials or their use, to the extent necessary to comply with any applicable
statute, constitution, treaty, rule, regulation, ordinance or order, whether of
the United States, any state thereof, or any other jurisdiction applicable to
Employee after giving prior notice to the Company (time permitting), or if
Employee receives a request to disclose all or any part of the information
contained in the Confidential Materials under the terms of a subpoena, order,
civil investigative demand or similar process issued by a court of competent
jurisdiction or by a governmental body or agency, whether of the United States
or any state thereof, or any other jurisdiction applicable to Employee after
giving prior notice to the Company (time permitting).
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2.7 Injunctive Relief. If Employee breaches, or threatens to commit a
breach of, any of the provisions of Section 2.4 or 2.6 of this Agreement, the
Company (and, with respect to Section 2.4, Xxxxxxxx LLC) shall have the right to
have such provisions specifically enforced by any court having jurisdiction, it
being acknowledged and agreed that no adequate remedy of law would be available
for any such breach or threatened breach. Such right and remedy shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company or Xxxxxxxx LLC, as the case may be.
2.8 Indemnification. The Company shall at all times indemnify, defend and
hold harmless Employee to the fullest extent permitted by applicable law,
including without limitation the General Corporation Law of the State of
Delaware, for all actions taken by Employee in good faith, on behalf of the
Company, so long as such actions are not in violation of law or Company policy,
do not constitute "Cause" for termination pursuant to Section 5.2 hereof and are
not a breach by Employee of the representation and warranty made by Employee in
Section 7.14 hereof. Without limiting the foregoing, Employee shall be entitled
to the benefit of the indemnification provisions contained on the date hereof in
the Bylaws of the Company and any applicable Bylaws of any Affiliate.
3. COMPENSATION.
As compensation and consideration for the Services provided by Employee
during the Term pursuant to this Agreement, the Company agrees to pay to
Employee the compensation set forth in this Section 3.
3.1 Fixed Annual Compensation. The Company shall pay to Employee salary
("Fixed Annual Compensation") at the rate of $225,000 per annum. Fixed Annual
Compensation payable to Employee by the Company hereunder shall be paid at such
times and in such amounts as the Company may designate in accordance with the
Company's usual salary practices, but in no event less than once monthly.
3.2 Guaranteed Bonus. During each Employment Year (as defined in Section
7.15) during the Term, Employee shall be entitled to a guaranteed bonus of
$50,000 (the "Minimum Annual Bonus"); provided, that such guaranteed bonus shall
be increased by $15,000 on a cumulative basis for each Employment Year in which
the Pre-Tax Profits of the Company exceed $500,000 (the "Incremental Annual
Bonus", referred to collectively with the Minimum Annual Bonus as the "Annual
Bonus"). The Minimum Annual Bonus shall be payable in equal monthly installments
during the applicable Employment Year. The Incremental Annual Bonus shall be
payable within thirty (30) days of the end of the applicable Employment Year.
3.3 Profit-Based Bonus. Employee shall also be entitled to such additional
bonus, if any (the "Profit-Based Bonus"), as may be established for Employee at
the beginning of each Employment Year by the Company's Board of Directors based
on the Company's achieving certain profit targets.
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4. EXPENSES; ADDITIONAL BENEFITS
4.1 Vacation. During the Term, Employee shall be entitled for each
Employment Year to an aggregate of four (4) weeks of vacation with full pay.
Employee shall accrue vacation in accordance with the Company's policies with
respect thereto applicable to the Company's employees generally.
4.2 Business Expense Reimbursement. Employee shall be entitled to
reimbursement of all reasonable, ordinary business or entertainment expenses
incurred by Employee during the Term in the performance of Employee's Services
for which Employee makes an adequate accounting to the Company. Without limiting
the foregoing, Employee shall be entitled to reimbursement for business class
air travel for all trips (domestic and foreign) Employee makes in connection
with Employee's Services to the Company or its Affiliates; it being understood
that if no business class fare exists for a particular destination. Employee
shall be entitled to reimbursement for first class air travel. The Company may
in its discretion use frequent flyer miles or other similar means to upgrade
Employee's air travel to business class (or, if necessary, first class), in
which event Employee's reimbursement shall be limited to the cost of the ticket
prior to the upgrade. The determination of the adequacy of the accounting of the
foregoing expenses shall be within the reasonable discretion of the Company's
independent certified accountants taking into consideration the substantiation
requirements of the Internal Revenue Code of 1986, as amended (the "Code"). In
addition, Employee shall be entitled to be reimbursed for reasonable travel and
lodging expenses for Employee and his wife and children, if Employee elects to
have his family accompany him to New York for business; provided, however, that
the Company shall only reimburse the travel and lodging expenses of Employee's
family for a maximum of three (3) trips in each contract year of the Term.
4.3 Directors and Officers Liability Insurance. Employee shall be entitled
to the protection of any insurance policies the Company or any of its Affiliates
may elect to maintain generally for the benefit of its directors and officers
against all costs, charges and expenses whatsoever incurred or sustained by
Employee or his legal representatives in connection with any action, suit or
proceeding to which Employee (or his legal representatives or other successors)
may be made a party by reason of Employee being or having been a director or
officer of the Company or any of its Affiliates or Employee serving or having
served any other enterprises as a director, officer or employee at the request
of the Company. The Company shall provide and maintain at all times during the
Term and for a period of six years thereafter such a directors and officers
insurance policy covering Employee and his legal representatives, issued by a
reputable and financially-sound insurance carrier of national standing which is
acceptable to Employee, and providing coverage in the amount of at least
$5,000,000.
4.4 Additional Benefits. In addition to the other benefits described in
this Section 4 during the Term, Employee shall be entitled to (i) a
non-accountable expense allowance of $1,200 per month, which Employee may use to
cover automobile expenses, (ii) an expense allowance of $5.135.00 per year to
cover premiums to provide a life insurance policy for Employee, and (iii) an
expense allowance of $2000.00 per year to cover premiums to provide a disability
policy for Employee, provided that Employee provides reasonable written
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substantiation of the expenses in (ii) and (iii) to the Company; it being
understood that the payment of all such expenses shall be treated as income paid
to Employee.
4.5 Options. Concurrently with the execution of this Agreement and in
consideration for the execution thereof, the Company shall grant Employee
options to purchase 75,000 shares of common stock of the Company (the
"Options"). The Options shall vest and become exercisable in thirty-six (36)
monthly installments as follows: the first installment shall be in the amount of
2,095 Options and shall vest on May 1, 2000; thereafter, the Options shall vest
on the last day of each of the next thirty-five (35) consecutive months in
thirty-five (35) monthly installments, each in the amount of 2,083 Options;
provided that, Employee continues to be employed by the Company at all times
during such period.
4.6 General. Employee shall be entitled to participate in any
profit-sharing, pension, health, insurance or other plans, benefits or policies
(not duplicative of the benefits provided hereunder) available to the employees
of the Company or its Affiliates on the terms generally applicable to such
employees.
4.7 Life Insurance. With respect to the existing life insurance policies
insuring Employee, Employee shall have the exclusive right to purchase such
policies for the cash surrender value thereof, upon a termination of Employee's
employment for any reason.
5. TERMINATION.
If any of the events described in this Section 5 shall occur, Employee
shall be entitled to the benefits provided in Section 6 hereof upon the
subsequent termination of Employee's employment during the Term. As used in this
Agreement, "Date of Termination" means (i) if employment is terminated for
Disability (as defined in Section 5.1 below), thirty (30) days after Notice of
Termination is given (provided that Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period), (ii) if employment is terminated by reason of Employee's death, the
date of death and (iii) if employment is terminated for any other reason, the
date specified in the Notice of Termination. "Notice of Termination" means a
written notice that shall indicate the specific termination provision in this
Agreement relied upon and shall, except in the case of a termination pursuant to
Section 5.5, set forth in reasonable detail the basis for termination of
employment under the provision so indicated.
5.1 Employee Disability. If, as a result of Employee's incapacity because
of physical or mental illness, Employee shall have been absent from his duties
with the Company for four (4) months or for more than an aggregate of six (6)
months in any Employment Year, and within thirty days after written Notice of
Termination is given he shall not have returned to the full-time performance of
his duties, Employee's employment with the Company shall automatically be
terminated for "Disability" on the Date of Termination.
5.2 Termination by the Company for "Cause". The Company may terminate
Employee's employment for "Cause" (as hereinafter defined) upon delivery of a
Notice of Termination to Employee. For purposes hereof, "Cause" shall mean: (i)
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Employee's material failure to comply with the reasonable directives of the
Company which are consistent with his position and responsibilities after
written notice that such failure will be deemed to be "Cause" and a reasonable
opportunity to cure (other than any such failure resulting from Employee's
incapacity because of physical or mental illness or from matters constituting
Good Reason (as defined below)); (ii) dishonesty in connection with the Company,
its Affiliates or their respective clients, including but not limited to
embezzlement or misappropriation of funds; (iii) commission of any willful or
intentional act which materially injures the reputation, business or business
relationships of the Company and/or any of its Affiliates; (iv) Employee's
excessive drinking of alcohol or use of illegal drugs that impairs his ability
to perform his duties under this Agreement; (v) conviction of, or entering a
plea of guilty or no contest to, a felony or any crime involving moral
turpitude, fraud, dishonesty or theft; (vi) engaging in any act which is a
violation of any law or regulation protecting rights of employees or a violation
of any material Company policy or operating procedure; (vii) failure to relocate
to New York in accordance with Section 2.2; it being understood that the
effective Date of Termination shall be the earlier of (a) the date which is six
(6) months from the date of the Relocation Notice or (b) the end of the Initial
Term, or the end of the Extended Term if the Relocation Notice is dated during
the Extended Term; or (viii) a continued breach by Employee of any material
provision of this Agreement (not covered by any of the foregoing clauses (i)
through (vii)) after written notice that such breach will be deemed "Cause" and
thirty (30) days (or such lesser period as the exigencies of the situation may
require) to cure (other than any such failure resulting from Employee's
incapacity because of physical or mental illness or from matters constituting
Good Reason)).
5.3 Death. In the case of Employee's death, Employee's employment shall
terminate as of the date of Employee's death.
5.4 Employee's Termination for "Good Reason". Provided that Employee is not
otherwise in breach of this Agreement, Employee shall be entitled to terminate
his employment for Good Reason at any time during the Term by delivering a
Notice of Termination to the Company not more than 10 days after an event which
Employee believes constitutes Good Reason. The Company shall have thirty (30)
days after receipt of the Notice of Termination to cure (if curable) the event
specified in the Notice of Termination. For purposes of this Agreement, "Good
Reason" shall mean the commission or omission of any of the following actions:
(A) a substantial and material diminution of the position, authority
or Services of Employee, as set forth in Sections 2.1 and 2.5 hereof;
(B) a reduction by the Company in the Fixed Annual Compensation set
forth in Section 3.1, or a reduction in the Annual Bonus set forth in
Section 3.2;
(C) any purported termination of Employee's employment that is not
effected pursuant to a Notice of Termination (and for purposes of this
Agreement, no such purported termination shall be effective);
(D) a material breach by Xxxxxxxx LLC of the related agreements under
which Xxxxxxxx LLC is investing in the Company; and
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(E) the acquisition (after the date hereof) of the beneficial
ownership of a majority of the Company's voting securities or
substantially all of the assets of the Company by a single person or
entity or a group of affiliated persons or entities.
5.5 Other Termination by the Company. Notwithstanding any other provision
of this Agreement, the Company shall also have the right to terminate Employee's
employment at any time for whatever reason it deems appropriate by giving
Employee a Notice of Termination.
6. COMPENSATION UPON TERMINATION.
6.1 Death of Employee. Upon the death of Employee, the Company shall pay to
Employee's estate (i) the Fixed Annual Compensation to the end of the month in
which such death occurs, (ii) an amount equal to the Annual Bonus prorated to
correspond to the portion of the Employment Year that shall have expired as of
the end of the month in which such death occurs, (iii) the Profit-Based Bonus
(if earned) prorated to correspond to the portion of the Employment Year that
shall have expired as of the end of the month in which such death occurs
(payable after determination of the Company's profits for the applicable year)
and (iv) any unreimbursed expenses through the Date of Termination payable
pursuant to Section 4.2 hereof. Rights and benefits of Employee under any
employee benefit plans and programs of the Company will be determined in
accordance with the terms and provisions of such plans and programs. Upon such
payments, the Company shall have no further liability or obligation hereunder to
the deceased Employee's estate, his executors or administrators, his heirs or
assigns or any other person claiming under or through him.
6.2 Disability of Employee. Upon the termination of Employee's employment
as a result of his Disability, Employee shall be entitled to receive (i) the
Fixed Annual Compensation to the Date of Termination, (ii) an amount equal to
the Annual Bonus prorated to correspond to the portion of the Employment Year
that shall have expired as of the Date of Termination, (iii) an amount equal to
the Profit-Based Bonus (if earned) prorated to correspond to the portion of the
Employment Year that shall have expired as of the Date of Termination (payable
after determination of the Company's profits for the applicable year) and (iv)
any unreimbursed expenses through the Date of Termination payable pursuant to
Section 4.2 hereof. Rights and benefits of Employee under any employee benefit
plans and programs of the Company will be determined in accordance with the
terms and provisions of such plans and programs.
6.3 Termination for Cause. If Employee's employment shall be terminated for
Cause, the Company shall pay to Employee (i) the Fixed Annual Compensation
payable to the Date of Termination (ii) the Minimum Annual Bonus payable to the
Date of Termination and (iii) any unreimbursed expenses through the Date of
Termination payable pursuant to Section 4.2.
6.4 Termination Other Than for Cause, Death or Disability.
6.4.1 If Employee's employment shall be terminated other than for
Cause, the Company make a severance payment (the "Severance Payment") to
Employee in the amount equal to (i) the Fixed Annual Compensation (including the
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Non-Renewal Payment under Section 2.3, in the event the Company has not extended
the Initial Term at the time of Employee's termination) that would have been
paid to Employee during the Severance Period (as hereinafter defined) if no
termination had occurred and (ii) the Annual Bonus that would have been paid to
Employee during the Severance Period if no termination had occurred. The
"Severance Period" shall mean the period commencing on the Date of Termination
and ending on the date the Initial term would have otherwise expired or, if this
Agreement has been renewed for the Extended term, the date the Extended Term
would have otherwise expired. The Severance Payment shall be reduced and offset
by fifty percent (50%) of any amounts earned by Employee from any other
employment or work of any kind obtained by Employee during the Severance Period.
The Severance Payment shall be paid to Employee in three (3) equal installments
with the first payment being made on the Date of Termination, the second payment
being made after one-half of the Severance Period has expired and the third
payment being made at the end of the Severance Period. In addition, the Company
shall reimburse Employee for any unreimbursed expenses through the Date of
Termination payable pursuant to Section 4.2 and all of Employee's Options shall
immediately vest as of the Date of Termination. Right and benefits of Employee
under any employee benefit plans and programs of the Company will be determined
in accordance with the terms and provisions of such plans and programs. The
Company's failure to renew Employee's employment for the Extended Term shall not
be deemed a termination of Employee's employment for purposes of this Section
6.4.1.
6.4.2 In the event that this Agreement expires by its terms three (3)
years from the date hereof, and the Initial Term is not extended, the Company
shall have no obligation to Employee (except as specifically set forth in
Section 2.3), and Employee shall have no obligation to the Company (except as
specifically set forth in Section 2.4 and 2.6), under this Agreement.
7. GENERAL.
7.1 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 the 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, Annual Bonus 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.
7.2 Waiver/Estoppel. Any 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 any party may be entitled, but only by an instrument in writing
signed by the parties to be charged. No estoppel may be raised against any party
except to the extent the other parties rely on an instrument in writing, signed
by the party to be charged, specifically reciting that the other parties 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
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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.
7.3 Attorneys' Fees and Costs. In any action, suit or proceeding brought by
any party hereto with respect to this Agreement, its subject matter or the
actions, statements or conduct of any or each of the parties in the negotiation,
execution or performance of this Agreement, the prevailing party shall be
entitled to recover from the other parties all reasonable costs and expenses
incurred in connection therewith, including but not limited to attorneys' fees,
attorneys' costs and court costs.
7.4 Notices. Any notice that the Company is required or may desire to give
to Employee hereunder shall be in writing and may be served by delivering it to
Employee, or by sending it to Employee by certified mail, return receipt
requested (effective five days after mailing) or overnight delivery of the same
by delivery service capable of providing verified receipt (effective the next
business day), or facsimile (effective twenty-four hours after receipt is
confirmed by person or machine), at the address set forth below, or such
substitute address as Employee may from time to time designate by notice to the
Company. Any notice that Employee is required or may desire to serve upon the
Company hereunder shall be in writing and may be served by delivering it
personally or by sending it certified mail, return receipt requested or
overnight delivery, or facsimile (with receipt confirmed by person or machine)
to the address set forth below, or such other substitute address as the Company
may from time to time designate by notice to Employee. Such notices by Employee
shall be effective at the same times as specified in this Section 7.4 for
notices by the Company.
The Company: Overseas Filmgroup, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
Employee: Xxxxxxx X. Xxxxxxx
000 0xx Xxxxxx
Xxxxx Xxxxxx, XX 00000
7.5 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
Delaware applicable to agreements fully executed and performed entirely in
Delaware.
7.6 Captions. The paragraph headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
7.7 No Joint Venture. Nothing herein contained shall constitute a
partnership between or joint venture by the parties hereto.
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7.8 Assignability. This Agreement, and the rights and obligations of
Employee hereunder, may not be assigned by Employee, except that Employee may
assign his rights to receive compensation hereunder to any person or entity
affiliated with Employee, to trusts for the benefit of the family of Employee,
or any charitable trusts, charities or non-profit organizations. The Company may
assign its rights, together with its obligations hereunder, in connection with
any sale, transfer or other disposition of all or substantially all of its
business and assets; provided, however, that any such assignee agrees to be
bound by the provisions of this Agreement. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties'
successors-in-interest, heirs, legal representatives and permitted assigns.
7.9 Modification/Entire Agreement. This Agreement may not be altered,
modified or amended except by an instrument in writing signed by all of the
parties hereto. No person, whether or not an officer, agent, employee or
representative of any 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.
7.10 Severability. If any term, provision or covenant in this Agreement is
held to be invalid, void or unenforceable, (i) the remainder of the terms,
provisions and covenants in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and (ii) to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, all portions of any section of this Agreement containing any such
provision held to be invalid, void or unenforceable that are not themselves
invalid, void or unenforceable) shall be construed so as to give effect to the
intent manifested by the provision held invalid, void or unenforceable.
7.11 Arbitration. Except as otherwise set forth in Section 2.7 hereof, if
any dispute arises between Employee and the Company concerning the application,
validity, construction, or interpretation of this Agreement that Employee and
the Company are unable to resolve themselves, the parties agree that arbitration
by a single arbitrator experienced in employment law in accordance with the
then-applicable rules of the American Arbitration Association shall provide the
exclusive remedy for resolving any such dispute, regardless of its nature. Any
arbitration shall take place in Los Angeles, California (New York City, if
Employee has relocated to New York) in such location as is agreed to by the
Company and Employee. If the parties cannot agree upon a location for the
arbitration, the arbitrator shall determine the location within Los Angeles,
California (New York City, if Employee has relocated to New York). The Company
may enforce Employee's obligations under Sections 2.4 and 2.6 hereof by an
action for injunctive relief and damages in a court of competent jurisdiction at
any time prior or subsequent to the commencement of an arbitration proceeding as
herein provided. In such event, each of the parties hereto irrevocably consents
to the exclusive jurisdiction and venue of the federal and state courts located
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within Los Angeles County, California (New York County, if Employee has
relocated to New York) and courts with appellate jurisdiction therefrom, in
connection with any such matter.
7.12 Contractual Nomenclature. All references herein to "Dollars" or "$"
shall mean Dollars of the United States of America, its legal tender for all
debts public and private. Wherever used herein and to the extent appropriate,
the masculine, feminine or neuter gender shall include the other two genders,
the singular shall include the plural, and the plural shall include the
singular.
7.13 Publicity. Except as agreed pursuant to the Securities Purchase
Agreement, neither party shall issue any press release or announcement of or
relating to the execution of, or any terms, provisions, or conditions contained
in, this Agreement without the other party's prior approval of the content and
timing of any such announcement or announcements.
7.14 Representation and Warranty. Employee hereby warrants and represents
to the Company that he is free to enter into the Agreement and to perform all of
his duties and obligations hereunder and otherwise to the Company without
violating any existing contractual or other obligations or the rights of any
third parties.
7.15 Definitions. As used in this Agreement, the following terms shall have
the following meanings:
(A) "Affiliate" shall mean, as to any person, any other person
controlled by or under common control with (or, where applicable, controlling),
directly or indirectly, such person.
(B) "person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof, or any other entity.
(C) "Profits Target" means either (i) during any two of the three
years of the Initial Term, the Company's Pre-Tax Profits for each such year
exceed $500,000 or (ii) the Company's average Pre-Tax Profits for the three
years of the Initial Term exceed $500,000.
(D) "Employment Year" shall mean each twelve month period during the
Term commencing on June 20,2000, and ending on June 19, 2001, of the
following year.
(E) "Pre-Tax Profits" shall mean the profit (loss) of the Company for
the applicable period prior to payment of or provision for federal, state or
local income taxes for such period determined in accordance with generally
accepted accounting principles in the United States, consistently applied, as
reflected in the audited financial statements of the Company for the applicable
period.
7.16 Life Insurance. The Company shall have the right to obtain, at its
sole cost and expense, one or more insurance policies insuring the life of
Employee for the benefit of the Company. Employee agrees to cooperate fully with
13
the Company and to take such actions as the Company may reasonable require in
order to obtain such insurance, including without limitation, signing necessary
documentation and submitting to required medical exams.
7.17 Third Party Rights. The parties acknowledge and agree that Xxxxxxxx
LLC (and its successors and assigns) is a third party beneficiary of the
provisions of section 2.4 hereof and shall have the right to take any and all
actions as may be necessary to protect its rights in the event of any breach (or
threatened breach) of Section 2.4 hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
OVERSEAS FILMGROUP, INC.
/s/ Xxxxxxxxxxx Xxxxxx
By:___________________________
Name: Xxxxxxxxxxx Xxxxxx
Title: Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx
00
