NON-COMPETITION AGREEMENT
This Non-Competition Agreement is entered into as of October 31, 1996
among Xxxxxx X. Xxxxxx ("Little") and Overseas FilmGroup, Inc., a Delaware
corporation ("OFG"). OFG is hereinafter sometimes referred to as the
"Company."
Company and Little are parties to the Agreement of Merger, dated as of
July 2, 1996, as amended as of September 20, 1996 (as amended, the "Merger
Agreement"), pursuant to which OFG will be merged with Entertainment/Media
Acquisition Corporation, a
Delaware corporation ("EMAC").
Little has developed substantial expertise and experience in the
business conducted by OFG and has had access to proprietary and confidential
business information relating to the business of OFG.
To induce EMAC to enter into the Merger Agreement and protect the value
to EMAC of OFG, which EMAC will own upon consummation of the acquisition
contemplated by the Merger Agreement and the goodwill associated therewith,
Little desires to enter into this Agreement and provide certain covenants to
Company.
The execution of this Agreement is a condition to the consummation of
the transactions contemplated by the Merger Agreement.
In consideration of the mutual promises contained herein, and for other
good and valuable consideration the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
Definitions. For purposes of this Agreement and used herein, "Business" shall
mean the material business and operations of OFG as engaged in by OFG
immediately prior to the Closing Date, including, without limitation the
development, production, and sale or distribution of feature length motion
pictures for initial presentation in theatrical exhibition, as well as all
forms of programming for initial presentation on in-home television, no matter
how delivered or paid for (the "Business").
The Business is conducted throughout each of the counties in the State of
California and the other States of the United States of America, and such
other countries where the Company may be engaged in the Business (the
"Territory"). Capitalized terms used in this Agreement and not defined herein
shall have the meanings given to them in the Merger Agreement. Effectiveness
of this Agreement is conditioned upon consummation of the Merger in accordance
with the Merger Agreement, and this Agreement shall be deemed to be of no
force or effect if the Merger is not consummated. For purposes of this
Agreement, "Employment Agreement" shall mean that certain Employment Agreement
between Little and the Company of even date herewith, and "Confidential
Materials," "Cause," "Good Reason" and "Services" shall have the same meanings
given to such terms in the Employment Agreement.
Non-competition.
For a period of five (5) years (unless earlier terminated as provided
in subsection (c) below) (the "Term") commencing on the Closing Date, Little
agrees that, except in the course of rendering the Services, he shall not at
any time, directly or indirectly, within the Territory so long as Company
continues to engage in a like business in the Territory:
own, manage, operate, control or be connected in any material
manner with the ownership, management, operation or control of any person or
entity, other than the Company, that engages in a business competitive with
the Business (in either case, "Competitive Business"), which includes but is
not limited to, acting as a director, officer, agent, employee, consultant,
investor, independent contractor, partner or stockholder of a Competitive
Business, except such activities as may be specifically permitted by Section
1.4 of the Employment Agreement;
i)engage in any activity which is in competition with the Business
except such activities as may be specifically permitted by Section 1.4 of the
Employment Agreement;
ii)interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between Company and any customer or prospective
customer (as evidenced by meaningful contacts with the Company), supplier,
lessee or employee of
2.
Company, or other party with whom Company has an advantageous business
relationship, including without limitation the customers and suppliers of the
Business prior to the Closing Date;
iii)solicit employment for or of employees of Company
or induce any employee to leave the employ of Company;
iv)lend or allow his name or reputation to be used by or in
connection with any Competitive Business, except such activities as may be
specifically permitted by Section 1.4 of the Employment Agreement;
v)render material advice to or otherwise allow his skill,
knowledge or experience to be used in a material manner in or by any
Competitive Business, except such activities as may be specifically permitted
by Section 1.4 of the Employment Agreement.
Notwithstanding anything in this Section 2 to the contrary, nothing in
this Agreement shall limit the right of Little to engage in the production of
motion pictures; provided that any such activities are not in violation of
Section 3(b) hereof.
a)If (i) Little's employment shall be terminated without "Cause," or
for "Good Reason," or (ii) the Company shall have breached an obligation to
pay money (and failed to cure any such monetary breach as provided in the
applicable agreement) under that certain Note of even date herewith, in the
case of (ii) at a time when Little (together with Little's spouse, trusts
established by or for the benefit of Little or Little's spouse or other
relatives, or other entities controlled by Little or Little's spouse) does not
control a majority of the Board of Directors of the Company, then Little
shall, upon such termination or breach, be released from the restrictions of
this Agreement.
Trade Secrets; Confidential Information; Non-Solicitation in
Connection with Pending Projects.
Except as permitted by Section 1.6 of the Employment Agreement or to
the extent necessary to defend against any claim or assert any right under
this Agreement, and provided that Little's employment shall not have been
terminated without "Cause," or for "Good Reason," during the Term Little shall
not
3.
misuse, use for the benefit of any other person or entity, or disclose any
Confidential Materials to anyone outside the Company and its Affiliates.
Except as may be permitted under Section 1.4 of the Employment
Agreement, during the Term (i) Little will not, or will not cause any other
person or entity to wrongfully and without the permission of the Company,
directly or indirectly, undertake to bid for, acquire or make properties or
projects in which the Company or any of its subsidiaries has an ownership or
other proprietary interest (i.e., an option, an exclusive negotiating right or
similar position) (the "Projects"), and (ii) Little will not solicit or accept
any business from, offer to render any services to, or agree to provide
financing, or any other financial support, or otherwise engage or employ in
any respect whatsoever any talent, creative personnel, producers, directors,
writers, cinematographers or other similar parties in connection with their
activities on such Projects.
Severable Covenants. The parties hereto intend that the covenants set forth in
Sections 2 and 3 hereof shall be construed as separate covenants. It is the
desire and intent of the parties hereto that the provisions of this Agreement
shall be enforced to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought. If any
particular provision or portion of this Agreement shall be adjudicated to be
invalid or unenforceable, such adjudication shall apply only with respect to
the operation of this Agreement in the particular jurisdiction in which such
adjudication is made.
Injunctive Relief. Little hereby acknowledges and agrees that any breach of or
default under this Agreement will cause irreparable damage to Company in an
amount difficult to ascertain. Accordingly, in addition to any other relief to
which Company may be entitled, Company shall be entitled, without proof of
actual damages, to such injunctive relief as may be ordered by any court of
competent jurisdiction including, but not limited to, an injunction
restraining any violation of Section 2 or 3 hereof.
Independent Agreements and Remedies. This Agreement is in
4.
addition to the Merger Agreement and Company's rights and remedies under this
Agreement and under the Merger Agreement shall be independent, separate and
distinct.
Cumulative Remedies; Waiver. To the extent permitted by law, all rights and
remedies existing under this Agreement are cumulative to and not exclusive of,
any rights or remedies otherwise available under applicable law. No failure on
the part of any party to exercise or delay in exercising any right hereunder
shall be deemed a waiver thereof, nor shall any single or partial exercise
preclude any further or other exercise of such or any other right.
Attorneys' Fees and Costs. In the event of any action for the breach of this
Agreement or misrepresentation by any party in this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and expenses
incurred in connection with such action.
No Assignment. Neither this Agreement nor any rights or obligations under it
are assignable, except that Company may assign its rights hereunder to any
successor (by way of purchase of assets, stock, merger or similar acquisitive
transaction) to substantially all of the operating assets of the Business and
to its associated goodwill. This Agreement shall be binding upon and inure to
the benefit of each party and its successors and such permitted assigns.
Governing Law. This Agreement and the legal relations between the parties
shall be governed by and construed in accordance with the laws of the State of
California applicable to contracts made and performed in such State without
regard to conflicts of law doctrines, except to the extent that certain
matters are preempted by federal law or governed by the law of the
jurisdiction of organization of the respective parties.
Entire Agreement. This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith.
Amendments; Waivers. This Agreement may be amended only by an agreement in
writing of all parties. No waiver of any provision nor consent to any exception
to the terms of this Agreement shall
5.
be effective unless in writing and signed by the party to be bound and then
only to the specific purpose, extent and instance so provided.
Counterparts. This Agreement may be executed in one or more counterparts and
by different parties in separate counterparts. All of such counterparts shall
constitute one and the same agreement and shall become effective when one or
more counterparts of this Agreement have been signed by each party and
delivered to the other parties.
Headings. The descriptive headings of the Sections of this Agreement are for
convenience only and do not constitute part of this Agreement.
Notices. Any notice or other communication hereunder must be given in writing
and either (a) delivered in person, (b) transmitted by facsimile or electronic
mail or (c) mailed by certified or registered mail, postage prepaid, receipt
requested, as follows:
IF TO LITTLE, ADDRESSED TO:
00000 Xxxxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
(000) 000-0000 (Facsimile)
WITH A COPY TO:
Xxxx XxXxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
(000) 000-0000 (Facsimile)
IF TO EMAC OR OFG:
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
(000) 000-0000 (Facsimile)
6.
WITH A COPY TO:
000 X. Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
(000 000-0000
AND TO:
Xxxxxxxxx, Xxxxx & Xxxxxx, LLP
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx, 00000
Attention: Xxx Xxxxxx, Esq.
(000) 000-0000 (Facsimile)
or such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number or address so specified in (or pursuant
to) this Section 15 and an appropriate answerback or confirmation is received,
(ii) if given by mail, three days after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid or (iii) if
given by any other means, when actually received at such address.
7.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Non-Competition Agreement to be executed as of the day and year first above
written.
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
OVERSEAS FILMGROUP, INC.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
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Title: Vice President
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8.
