AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of the 15th day of
August, 1996, by and between Alliance Entertainment Corp., a Delaware
corporation having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, residing at ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Executive").
R E C I T A L S:
WHEREAS, the Company considers it essential and in the best interests
of its stockholders to more closely align the interests of the Executive with
those of its shareholders and that the Executive support the mission, values and
strategy of the Company and desires to retain the services of the Executive; and
WHEREAS, the Executive desires to accept such employment by the
Company, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties agree as follows:
1. Employment and Duties. The Company agrees to employ the Executive
as Co-Chairman of the Company and the Executive accepts such employment and
agrees to perform all duties and services consistent with the Executive's
position. As Co-Chairman, the Executive shall be the second highest ranking
officer of the Company. The Executive agrees to devote substantially all of the
Executive's business time, attention and energy to perform the Executive's
duties and services hereunder.
2. Term of Employment. The term of the Executive's employment under
this Agreement shall commence on March 15, 1995 and shall end on the fifth
anniversary of such date, unless sooner terminated as provided in Section 5
hereof (the "Employment Period"); provided, however, that commencing on
March 15, 2000, and each March 15 thereafter, the term of this Agreement shall
automatically be renewed for one (1) additional year unless, not earlier than
210 days nor later than 180 days prior to such date, either party shall have
provided written notice that such party elects not to renew the term of this
Agreement.
3. Compensation and Benefits.
3.1 Base Salary. For the year commencing March 15, 1996, the
Company shall pay the Executive a base salary of Five Hundred Seventy-Eight
Thousand ($578,000) Dollars per annum ("Base Salary"). The Base Salary for each
year after the first year may be increased from time to time in the sole
discretion of the Board and in any event will be increased annually to reflect
corresponding increases in the United States Department of Labor, Bureau of
Labor Statistics, Consumer Price Index, All Urban Consumers, United States City
Average, all items (1982-88 = 100). Base Salary shall be payable at such
intervals as salaries are paid by the Company to its other executive employees.
3.2 Bonus. In addition to Base Salary, with respect to each
fiscal year during the Employment Period, the Executive shall be entitled to
participate in, and be eligible for annual bonuses under, the Company's
Executive Incentive Plan or other annual bonus program which shall be no less
favorable to the Executive than the Executive Incentive Plan. Any such bonus
amount (a "Bonus") shall be payable at such time as executive bonuses
customarily are paid by the Company, but in no event later than 30 days after
the end of the Company's fiscal year. The Executive's target Bonus shall be an
amount equal to sixty percent (60%) of Base Salary and the Executive's maximum
Bonus shall be equal to ninety percent (90%) of Base Salary, subject to
satisfaction of applicable performance goals established by the Compensation
Committee of the Company's board of directors (the "Compensation Committee").
Notwithstanding the foregoing, in any year the Compensation Committee may
recommend for good reason a reduction in bonus for such year.
3.3 Benefit Plans. During the Employment Period, the Company
shall provide Executive with the use of the office in the Company's New York
City headquarters currently occupied by Executive, with appropriate
administrative services, including a secretary, and the Executive shall be
entitled to participate in all plans adopted for the general benefit of the
Company's employees or executive employees, such as pension plans, medical
plans, disability plans, investment plans and group or other insurance plans and
benefits, to the extent that the Executive is and remains eligible to
participate therein and subject to the eligibility provisions of such plans in
effect from time to time; provided, however, that such benefits shall not be
less, in the aggregate, than
those in effect on March 15, 1995. The Executive has received, and shall be
eligible to continue to receive, grants of performance units under the Company's
Long-Term Incentive and Share Award Plan and such other stock option or
incentive plans as may be maintained by the Company, in such amounts and at such
times as shall be determined by the Compensation Committee. The Executive shall
be reimbursed for his reasonable out-of-pocket expenses incurred in the
performance of his duties upon submission of appropriate evidence thereof in
conformity with normal Company policy for executive officers. In addition, the
Executive shall receive a per diem of $1,000 for each day or portion thereof he
is working in Florida.
3.4 Automobile. The Company shall provide [two] luxury
automobiles for the exclusive use and benefit of the Executive. The automobiles
shall be of a type similar to the automobiles currently provided by the Company
for the benefit of the Executive. With respect to any automobile provided to the
Executive pursuant to this Section 3.4 which is subject to a lease, the
Executive shall have the right to purchase the automobile at the termination of
the term of such lease. With respect to any automobile provided to the Executive
pursuant to this Section 3.4 which is owned by the Company, the Executive shall
have the right to purchase such automobile at its depreciated book value.
4. Vacation. For each year during the Employment Agreement, the Executive
shall be entitled to paid vacation in accordance with the Company's standard
policy for executive officers.
5. Termination.
5.1 Death. This Agreement shall automatically terminate upon
the death of the Executive, whereupon the Company shall be obligated to pay to
the Executive's estate any unpaid Base Salary and pro rata Bonus, if any, as
determined by the Compensation Committee, through the date of death. Amounts
payable under this Section 5.1 shall be payable at the times and intervals set
forth in Sections 3.1 and 3.2 hereof.
5.2 Disability. The Company shall have the right to terminate
this Agreement during the continuance of any Disability of the Executive, as
hereinafter defined, upon fifteen (15) days' prior notice to the Executive
during the continuance of the Disability. "Disability" for purposes of
this Section 5.2 shall mean an inability by the Executive to perform a
substantial portion of the Executive's duties hereunder by reason of physical or
mental incapacity of disability for a total of one hundred eighty (180) days or
more in any consecutive period of three hundred and sixty-five (365) days, as
determined by the Board of Directors in its good faith judgment. In the event of
a termination by reason of the Executive's Disability, the Company shall be
obligated to assist the Executive in obtaining payment under the existing
disability insurance maintained for the Executive by the Company. Amounts
payable under this Section 5.2 shall be payable at the times and intervals set
forth in Sections 3.1 and 3.2 hereof.
5.3 Termination for Cause. Upon the early termination of this
Agreement by the Company for Cause, the Company shall only be obligated to pay
the Executive his Base Salary pro-rated to the date of termination and any then
accrued benefits. For purposes of this Agreement, "Cause" shall mean (i) any
willful and continuing material failure by the Executive to perform his material
duties under this Agreement, taken as a whole; (ii) the Executive's conviction
of or plea of nolo contendere to a Felony; (iii) the Executive's conviction of
fraud or embezzlement against the Company; (iv) any willful or intentional
misconduct having the effect of materially injuring the business of the Company,
or (v) any willful and material breach by the Executive of any of the provisions
of the Confidentiality and Non-Competition Agreement attached hereto as Exhibit
A. Termination for Cause shall become effective upon notice to the Executive.
5.4 Termination by Executive for Other than Good Reason. Upon
the early termination of this Agreement by the Executive for other than Good
Reason, the Company shall be obligated to: (i) pay the Executive his Base Salary
pro-rated to the date of termination plus any then accrued benefits; (ii) pay
the Executive, on a monthly basis or more frequently, a consulting fee of 75% of
the Executive's Base Salary at the time of termination through March 15, 2000,
or if this Agreement is renewed pursuant to Section 2, through the date to which
this Agreement has been renewed; (iii) provide that all options granted to the
Executive under the Company's Long-Term Incentive and Share Award Plan and such
other stock option or incentive plans as may be maintained by the Company shall
vest upon such termination; (iv) transfer to the Executive all right and title
to the automobiles provided to the Executive pursuant to Section 3.4 herein; (v)
transfer to the Executive for
consideration of $10,000 all right and title to the Company's facility located
on Lake Tenanah in Roscoe, New York; (vi) pay all premiums with respect to the
split dollar life insurance policy maintained by the Company on the Executive's
life existing as of the date of this Agreement; (vii) provide coverage for the
Executive under the Company's automobile insurance policies, for which the
Company shall be reimbursed by the Executive; and (viii) provide the Executive
coverage under the Company's medical plans and life insurance plans or other
similar medical and life insurance coverage, or the economic equivalent of such
coverage, for so long as the Executive shall live. For purposes of this
Agreement, "Good Reason" shall mean any of the following: (i) a reduction or
adverse change in, or a change which is inconsistent with, the Executive's
responsibilities, duties, authority, power, functions, title, working conditions
or status; or (ii) a reassignment to another geographic location more than fifty
(50) miles from the Executive's place of employment; or (iii) a material breach
by the Company of this Agreement.
5.5 Termination for Other Reason. If the Executive's
employment is terminated during the term of this Agreement by the Executive for
Good Reason or by the Company other than by reason of (i) death, (ii)
Disability, or (iii) for Cause, then the Company shall pay the Executive a cash
lump sum in an amount equal to (i) four (4) times his Base Salary in effect at
the time of his termination of employment, plus (ii) the higher of the Bonus
which the Executive received in the prior fiscal year, or the target Bonus
applicable to the Executive in the fiscal year of such termination. Such amount
shall be payable no later than thirty (30) days following the Executive's
termination pursuant to this Section 5.5. For the three year period after the
Executive's termination of employment pursuant to this Section 5.5, the
Executive shall be (i) entitled to continued participation in all of the
Company's employee benefit plans, including, without limitation, continued
accrual for retirement benefits, and all of the other benefits and perquisites
provided for under this Agreement (other than those benefits set forth in clause
(vi) below) or (ii) provided the economic equivalent of such continued
participation and perquisites. In addition, the Company shall be obligated to:
(i) provide that all options granted to the Executive under the Company's
Long-Term Incentive and Share Award Plan and such other stock option or
incentive plans as may be maintained by the Company shall vest upon such
termination; (ii) transfer to the Executive all right and title to the
automobiles provided to the Executive pursuant to
Section 3.4 herein; (iii) transfer to the Executive for consideration of $10,000
all right and title to the Company's facility located on Lake Tenanah in Roscoe,
New York; (iv) pay all premiums with respect to the split dollar life insurance
policy maintained by the Company on the Executive's life existing as of the date
of this Agreement; (v) provide coverage for the Executive under the Company's
automobile insurance policies, for which the Company shall be reimbursed by the
Executive; and (vi) provide the Executive coverage under the Company's medical
plans and life insurance plans or other similar medical or life insurance
coverage, or the economic equivalent of such coverage, for so long as the
Executive shall live.
5.6 Nature of Payments. Any payments pursuant to the
provisions of this Section 5 shall not be subject to any requirement as to
mitigation or offset.
5.7 Tax Gross-up. Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution made, or benefit provided, by the Company to or for the benefit of
the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise, but determined without regard to
any additional payments required under this Section 5.7) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended and then in effect (the "Code") (or any similar excise tax)
or any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all Federal, state, local or
other taxes (including any interest or penalties imposed with respect to any
such taxes), including, without limitation, any such income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(i) Subject to the provisions of paragraph (ii) of this Section 5.7,
all determinations required to be made under this Section 5.7, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination,
shall be made by Coopers & ▇▇▇▇▇▇▇ (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within 20
calendar days of the receipt of written notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the change in control, the Executive shall
have the right by written notice to the Company to appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company
and shall be paid by the Company upon demand of the Executive as incurred or
billed by the Accounting Firm. Any Gross-Up Payment, as determined pursuant to
this Section 5.7, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with an unqualified written opinion in form and substance satisfactory
to the Executive that failure to report the Excise Tax on the Executive's
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies described in paragraph (ii) of this Section 5.7
and the Executive thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be paid by the Company to or for the
benefit of the Executive within five days of the receipt of the Accounting
Firm's determination. All determinations made by the Accounting Firm in
connection with any Gross-Up Payment or Underpayment shall be final and binding
upon the Company and the Executive.
(ii) The Executive shall notify the Company in writing of any claim
asserted in writing by the Internal Revenue Service to the Executive that, if
successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but not later than 60
days after the Executive is informed in writing
of such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on
which it gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall at the Company's
expense:
a. give the Company any information reasonably requested by the
Company relating to such claim,
b. take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
c. cooperate with the Company in good faith in order effectively
to contest such claim, and
d. permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly as incurred all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or any Federal, state, local
or other income or other tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 5.7,
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and ▇▇▇ for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and ▇▇▇ for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or Federal, state, local or other income or other tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(iii) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to paragraph (ii) of this Section 5.7, the Executive
becomes entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of paragraph
(ii) of this Section 5.7) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto) upon receipt thereof. If, after the receipt by the Executive of an
amount advanced by the Company pursuant to paragraph (ii) of this Section 5.7, a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
6. Confidentiality and Non-Competition Agreement. The Executive
shall be bound by the terms of the Confidentiality and Non-Competition
Agreement, a copy of which is annexed hereto as Exhibit A, during the Employment
Period and for such period following the Employment Period as is set forth in
the Confidentiality and Non-Competition Agreement. The Executive and the Company
shall execute a copy of the Confidentiality and Non-Competition Agreement
simultaneously with the execution of this Agreement.
7. Settlement of Performance Unit Awards. As consideration for
entering into this Amended and Restated Employment Agreement and for waiving any
rights the Executive has to receive amounts payable to the Executive under
grants made prior to the date of this Agreement of Performance Unit Awards under
the Company's Long-Term Incentive and Share Award Plan, the Company hereby
agrees to pay to the Executive $2,100,000 on the date of this Agreement.
8. Miscellaneous Provisions.
8.1 Entire Agreement. This Agreement and the Confidentiality
and Non-Competition Agreement attached hereto as Exhibit A set forth the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersede all prior agreements, arrangements, and
understandings between the parties with respect to the subject matter hereof.
Upon execution of this Agreement and the Confidentiality and Non-Competition
Agreement, the employment agreement between the Executive and the Company dated
March 15, 1995, shall be superseded and shall be of no further force and effect.
8.2 Modification. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof may
be waived, only by a written instrument executed by both of the parties or in
the case of a waiver, by the party waiving compliance.
8.3 Waiver. The failure of either party at any time or times
to require performance of any provision hereof in no manner shall affect the
right at a later time to enforce the same. No waiver by either party of a breach
of any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such breach or a waiver of any other term or
covenant contained in this Agreement.
8.4 Notices. All notices, demands, consents or other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given) upon the earlier of receipt, one business day after being sent
by telecopier or three business days after being sent by registered or certified
mail to the parties at the addresses set forth above or to such other address as
either party shall hereafter specify by notice to the other party. Irrespective
of the foregoing, notice of change of address shall be effective only upon
receipt.
8.5 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York applicable to
contracts made and to be performed wholly within such state.
8.6 Arbitration. Any controversy or claim arising out of or
relating to this Agreement, the making, interpretation or the breach thereof,
other than a claim solely for injunctive relief for any alleged breach of the
provisions of the Confidentiality and Non-Competition Agreement as to which the
parties shall have the right to apply for specific performance to any court
having equity jurisdiction, shall be resolved by arbitration in New York, New
York in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and judgment upon the award tendered by the arbitrators
may be entered in any court having jurisdiction thereof and any party to the
arbitration may, if such party so elects, institute proceedings in any court
having jurisdiction for the specific performance of any such award. The powers
for the arbitrator or arbitrators shall include, but not be limited to, the
awarding of injunctive relief. The arbitrator shall include in any award in the
prevailing party's favor the amount of his or its reasonable attorney's fees and
expenses and all other reasonable costs and expenses of the arbitration. In the
event the arbitrator does not rule in favor of the prevailing party in respect
of all the claims alleged by such party, the arbitrator shall include in any
award in favor of the prevailing party the amount of his or its reasonable costs
and expenses of the arbitration as he deems just and equitable under the
circumstances. Except as provided above, each party shall bear his or its own
attorney's fees and expenses and the parties shall bear equally all other costs
and expenses of the arbitration.
8.7 Assignability. This Agreement, and the Executive's rights
and obligations hereunder, may not be assigned by the Executive. The Company may
assign its rights, together with its obligations hereunder, only to a successor
by merger or by the purchase of all or substantially all of the assets and
business of the Company and such rights and obligations shall inure to, and be
binding upon, any such successor.
8.8 Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective legal
representatives, heirs, permitted successors and permitted assigns.
8.9 Headings and Word Meanings. Headings and titles in this
Agreement are for convenience of reference only and shall not control the
construction or interpretation of any provisions hereof. The words "herein,"
"hereof," "hereunder" and words of similar import, when used anywhere in this
Agreement, refer to this Agreement as a whole and not merely to a subdivision in
which such words appear. unless the context otherwise requires. The singular
shall include the plural unless the context otherwise requires.
8.10 Separability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
THE COMPANY
ALLIANCE ENTERTAINMENT CORP.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
THE EXECUTIVE
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Exhibit A
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS CONFIDENTIALITY AND NON-COMPETITION AGREEMENT (the "Agreement"),
entered into and effective as of the 15th day of August, 1996, is by and between
ALLIANCE ENTERTAINMENT CORP. (the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Employee").
In Consideration of Employee's employment by the Company, and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties agree as follows:
1. Confidential Information. By virtue of Employee's employment at
the Company, Employee may obtain confidential or proprietary information
developed, or to be developed, by the Company. "Confidential Information" means
all information, whether in oral, written, graphic or machine-readable form,
including but not limited to all: software used or developed in whole or in part
by the Company (including source code); algorithms; computer processing systems
and techniques; price lists; customer lists; procedures; improvements, concepts
and ideas; business plans and proposals; technical plans and proposals; research
and development; budgets and projections; technical memoranda, research reports,
designs and specifications; new product and service develpments; comparative
analyses of competitive products, services and operating procedures; and other
information, data and documents now existing or later acquired by the Company,
regardless of whether any of such information, data or documents qualify as a
"trade secret" under applicable Federal or State law. All such information is
collectively referred to as the "Confidential Information".
2. Non-Disclosure. The Employee agrees that, except as directed by
the Company, he will not at any time (during the term of Employee's employment
by the Company or at any time thereafter), except as may be expressly authorized
by the Company in writing, disclose to any person or use any Confidential
Information whatsoever for any purpose whatsoever, or permit any person
whatsoever to examine and/or make copies of any reports or any documents or
software (whether in written form or stored on magnetic, optical or other mass
storage media) prepared by him or that come into his possession or under his
control by reason of his employment by the Company or by reason of any
consulting or software development services he has performed or may in the
future perform for the
Company which contain or are derived from Confidential Information. The Employee
further agrees that while employed at the Company, no Confidential Information
shall be removed from the Company's business premises, without the prior written
consent of the Company.
3. Company Property. As used in this Agreement, the term "Company Property"
means all documents, papers, computer printouts and disks, records, customer or
prospect lists, files, manuals, supplies, computer hardware and software,
equipment, inventory and other materials that have been created, used or
obtained by the Company, or otherwise belonging to the Company, as well as any
other materials containing Confidential Information as defined in Section 1
above. Employee recognizes and agrees that:
3.1 All Company Property shall be and remain the property of the Company;
3.2 Employee will preserve, use and hold Company Property only for the
benefit of the Company and to carry out the Company's business; and
3.3 When Employee's employment is terminated, Employee will
immediately deliver to the Company all Company Property, including all copies or
any other types of reproductions which Employee has in his possession or
control.
4. Non-Solicitation. During the period of his employment and for a
period of one (1) year after termination of his employment at Alliance for any
reason, Employee shall not, on his own behalf or on behalf of any person, firm
or corporation, or in any capacity whatsoever, (i) solicit any persons or
entities with which Alliance had contracts or was negotiating contracts
regarding products or services during the term of Employee's employment, or (ii)
induce, suggest, persuade or recommend to any such persons or entities that they
terminate, alter or refrain from renewing or extending, their relationship with
Alliance or become a client of Employee or any third party, and Employee shall
not himself and shall not induce or permit any other person to approach any such
person or entity for any purpose. Should Employee become aware that any other
Employee or third party has engaged in such conduct, Employee agrees to
immediately advise Alliance of the circumstances of any such conduct.
5. Restrictive Covenant. Employee acknowledges that his employment
with the Company will enable him to obtain knowledge about the computer software
the Company develops or uses, as well as of the entertainment and other fields
in which the Company does business, and will also enable him to form certain
relationships with individuals and entities in the geographic area in which the
Company furnishes its services. Employee further acknowledges that the goodwill
and other proprietary interests of the Company will suffer irreparable and
continuing damage in the event Employee enters into competition with the Company
within one (1) year subsequent to the termination of his employment. Therefore,
Employee agrees that during the term of his employment and for a period of one
(1) year thereafter, regardless of the cause of the termination of Employee's
employment, he will not, without prior written consent of the Company, engage
directly or indirectly in any conduct, activity, or business whatsoever which
would provide revenue to Employee or to any third party, with any person or
entity manufacturing, distributing or supplying a product or service competing
with the Company's products or services. Employee further acknowledges that his
employment with the Company constitutes fair and adequate consideration for his
agreement not to engage in such conduct within one (1) year of the termination
of his employment, regardless of the cause of such termination. Employee further
agrees that should the Company, in its sole discretion, determine that it is
desirable or appropriate to make any payment to Employee upon termination of
employment ("Severance Pay"), such Severance Pay shall be deemed additional
consideration for Employee's binding obligation not to engage in such conduct
during the one (1) year period. However, and notwithstanding any other provision
of this Agreement, it is understood and agreed by the Company and Employee that
any decision made by the Company regarding Severance Pay, regardless of whether
termination occurs with or without cause, shall in no way discharge or release
Employee from the obligation not to engage in such conduct during the one (1)
year period.
6. Work Product. Employee agrees that, during the term of his employment
with the Company:
6.1 He will disclose promptly and fully to the Company all works of
authorship, inventions, discoveries, improvements, designs, processes, software,
or any improvements, enhancements, or documentation of or to the same that he
makes, works on or conceives, individually or jointly with others, in the course
of his employment by the Company or
with the use of the Company's time, materials or facilities, in any way related
or pertaining to or connected with the present or anticipated business,
development, work or research of the Company or which results from or are
suggested by any work he may do for the Company and whether produced during
normal business hours or on personal time (collectively the "Work Product");
6.2 All Work Product of the Employee shall be deemed to be "work
made for hire" within the meaning of { 101 of the Copyright Act and all rights
to copyright shall be vested entirely in the Company. If for any reason the Work
Product is deemed not to be "work made for hire," and its rights to copyright
are thereby in doubt, this Agreement shall constitute an irrevocable assignment
by the Employee to the Company of all right, title and interest in the copyright
of all Work Product created under this Agreement. The parties intend that any
and all copyright and other intellectual property rights in the Work Product,
including, without limitation, any and all rights of whatever kind and nature
now or hereafter to distribute and reproduce such Work Product in any and all
media throughout the world, are the sole property of the Company. The Employee
hereby agrees to assist the Company in any manner as shall be reasonably
requested by the Company to protect the Company's interest in such copyright
and/or other intellectual property rights, and to execute and deliver such legal
instruments or documents as the Company shall request in order for the Company
to register the Company's worldwide copyright in the Work Product with the U.S.
Copyright Office and to register and protect the Company's copyright or other
intellectual property rights in the Work Product throughout the world. Likewise,
the Employee hereby agrees to assist the Company by executing such other
documents and instruments which the Company deems necessary to enable it to
evidence, perfect and protect its right, title and interest in and to the Work
Product.
6.3 Employee shall make and maintain adequate and current written
records and evidence of all Work Product, including drawings, work papers,
graphs, computer records and any other document which shall be and remain the
property of the Company, and which shall be surrendered to the Company upon
request and upon the termination of Employee's employment with the Company,
regardless of cause. The provisions of this section and the term Work Product as
used herein do not apply to any invention for which no equipment, supplies,
facilities or confidential, proprietary or trade secret information of the
Company was used, and which was developed entirely on
Employee's own time, while not on the Company's business premises, and which
does not relate to the Company's business, unless: (i) the invention relates to
the Company's actual or demonstratively anticipated research development or (ii)
the invention results from any work performed by Employee for the Company.
7. Enforcement. The breach or threatened breach by Employee of any
of the provisions of this Agreement shall: (i) constitute cause for the
termination of Employee's employment and (ii) entitle the Company to a permanent
injunction or other injunctive relief in order to prevent or restrain any such
breach or threatened breach by Employee or his partners, agents,
representatives, servants, independent contractors, or any and all persons or
entities directly or indirectly acting for or with Employee. The rights and
remedies of the Company under this Agreement shall be in addition to and not in
limitation of any of the rights, remedies, and monetary or other damages or
redress available to it at law or equity.
8. Acknowledgment. Employee acknowledges that he has carefully read
and considered the provisions of this Agreement, and having done so, agrees that
the restrictions set forth are fair and reasonably required for the protection
of the interests of the Company. In the event that, notwithstanding the
foregoing, any part of the covenants set forth shall be held to be invalid or
unenforceable, the remaining parts thereof shall nevertheless continue to be
valid and enforceable as though the invalid or unenforceable parts had not been
included therein. In the event that any provision of this Agreement shall be
declared by a court of competent jurisdiction to be unreasonable or
unenforceable, the court shall enforce the provision in a way which it deems to
be reasonable and enforceable.
9. Survival. This Agreement shall survive any termination of Employee's
employment, whether or not for cause.
10. The Company Defined. As used in this Agreement, the term "the
Company" includes the Company, any assignee or other successor in interest of
the Company, and any parent, subsidiary, or other corporation or partnership
under common ownership or control with the Company.
11. Notices. All notices in accordance with this Agreement shall be in
writing and given by hand delivery, overnight express delivery, or certified
U.S. mail, return
receipt requested, and properly addressed to the party for whom it is intended
at the following addresses or such other address as is most recently noticed for
such party:
If to the Company: Alliance Entertainment Corp.
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Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman and Chief
Financial Officer
If to Employee: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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12. Miscellaneous. This Agreement is legally binding on both
Employee and the Company and benefits their successors and assigns. It may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. It represents the
parties' entire understanding regarding the subject matter of this Agreement and
supersedes any and all other prior agreements regarding the same subject matter.
The terms and provisions of this Agreement cannot be terminated, modified, or
amended except in a writing signed by the party against whom enforcement is
sought. This Agreement shall be construed in accordance with the laws of the
State of New York, and any suit, action or proceeding arising out of or relating
to this Agreement shall be commenced and maintained in any court of competent
subject-matter jurisdiction in the State of New York, with exclusive venue in
New York County. In any suit, action or proceeding arising out of or in
connection with this Agreement, the prevailing party shall be entitled to an
award of the amount of attorneys' fees and disbursements actually billed to such
party, including fees and disbursements on one or more appeals.
13. No Guarantee of Employment. Nothing in this Agreement shall be
interpreted or construed to be a guarantee of ongoing employment, or to
otherwise limit the Company's right to terminate Employee's employment at any
time.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
EMPLOYEE: ALLIANCE ENTERTAINMENT CORP.
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
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(signature) (signature)
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(name printed) (name printed)
President & Vice Chairman
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(title)
August 27, 1996
Alliance Entertainment Corp.
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Dear Sirs,
Reference is made to that certain Amended and Restated Employment Agreement
dated as of the 15th day of August, 1996 (the "Agreement") by and between
Alliance Entertainment Corp. (the "Company") and the undersigned. As a further
inducement to the Company to enter into the Agreement and for other good and
valuable consideration, receipt of which is hereby acknowledged, this letter
will confirm the following:
1. It is understood and agreed by the undersigned that the cash payment to
be made by the Company pursuant to Section 7 of the Agreement is being made by
the Company for the purpose of retaining for the Company the services of the
undersigned over the term of the Agreement.
2. In the event that the actions or inactions of the undersigned constitute
a willful and continuing material failure by the undersigned to perform his
material duties under the Agreement, taken as a whole (a "Willful Breach"), the
undersigned will be obligated to pay over to the Company a pro rata portion of
the payment originally received pursuant to Section 7 of the Agreement, such pro
rata amount to be calculated by multiplying the total amount of such payment by
a fraction equal to the remaining portion of the term of the Agreement.
Notwithstanding anything in this paragraph 2 to the contrary, the Company
understands and agrees that the exercise by the undersigned of his rights
pursuant to Section 5.4 of the Agreement shall not constitute a Willful Breach
as such term is used in this letter.
3. The undersigned agrees that he will not take, or cause the Company to
take, any action or inaction which in turn would cause the undersigned to commit
a Willful Breach of the Agreement.
4. In the event that the undersigned ceases to perform his services prior
to the expiration of the term of the Agreement, and a bona fide dispute arises
as to whether such cessation constitutes a Willful Breach, the undersigned shall
not be obligated to make the repayment contemplated by paragraph 2 of this
letter, unless and until it is finally judicially determined that such cessation
was a Willful Breach.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance hereof in the space provided below, whereupon this letter and
you acceptance shall constitute a binding agreement between us.
Very truly yours,
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
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Accepted and agreed as of the date first written:
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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August 15, 1996
Alliance Entertainment Corp.
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Gentlemen:
Reference is made to the Amended and Restated Employment Agreements, dated
as of the date hereof, between Alliance Entertainment Corp. and each of the
undersigned. Each of the undersigned agrees he will not exercise his right to
terminate their respective agreements other than for good reason pursuant to
Section 5.4 thereof in a manner that would violate or cause a default under any
existing credit agreement of the Alliance Entertainment Corp. with any bank.
Yours very truly,
/s/▇▇▇▇▇▇ ▇▇▇▇▇▇
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/s/▇▇▇▇ ▇. ▇▇▇▇▇▇
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