EXHIBIT 10.3
EMPLOYMENT AGREEMENT
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This Agreement, dated as of September 18, 1998, is entered into by and
between Four Media Company, a Delaware corporation (the "Company"), and Lawrence
Chernoff ("Executive").
INTRODUCTION
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The Company and its operating subsidiaries ("Affiliates") are engaged in
the business of providing technical and creative services to the entertainment
industry. The Company desires to employ Executive, and Executive desires to
accept such employment, under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
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EMPLOYMENT; TERM; DUTIES
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1.1 Employment. Upon the terms and conditions hereinafter set forth, the
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Company hereby employs Executive, and Executive hereby accepts employment, as
President, Four Media Company Television Group. Provided that Executive is then
actively employed by the Company and is not in breach of this Agreement, at the
next annual meeting of the shareholders of the Company, the Company shall
nominate and, to the extent Robert T. Walston ("Walston") is serving as Chief
Executive Officer of the Company, Walston shall support the nomination and
election of Executive to a full membership on the Board of Directors of the
Company for a regular term. Walston shall cast his shares of stock in the
Company, if any, for such election to the extent he is authorized to vote such
stock. Walston shall also support Executive's request to be accompanied in
meetings of the Board of Directors by an observer selected by Executive, subject
to Walston's approval which shall not be unreasonably withheld. The parties
hereto understand and acknowledge that in the event Executive is not elected to
the Board of Directors, the Company shall not be in breach of this Agreement.
1.2 Term. Subject to Article IV, Executive's employment hereunder shall
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be for a term of three (3) years commencing on the date hereof and expiring at
the close of business on the day prior to the third anniversary of the date
hereof (the "Term").
1.3 Duties. Executive will be the senior executive of the Four Media
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Company Television Group, including both long form and short form television,
responsible for attaining the operational and financial objectives of the
Television Group.
(a) All managing directors, presidents and others responsible for divisions
and facilities of the Company and its Affiliates (excepting those divisions of
the Company under the management of Stefan Sonnenfeld, Mike Pethel, Jerry
Cancellieri, and Steve Michaels (the "Excluded Reports")) which provide
television services shall report to Executive, except to the extent employment
agreements in effect on the date of this Agreement and disclosed on Schedule 1.3
attached to this Agreement ("Prior Employment Agreements") require that
employees providing television services and subject to those prior Employment
Agreements report directly to the Chief Executive Officer of the Company or to
such other person as also identified in the respective Prior Employment
Agreements and also set forth on Schedule 1.3 ("Prior Direct Reports"). Direct
reporting to Executive by any such Prior Direct Reports shall be subject to the
consent of any such individuals. The Company acknowledges that Executive has
relied on the disclosures on Schedule 1.3 as a complete identification of all
Prior Employment Agreements and all Prior Direct Reports (for managing
directors, presidents and others responsible for television divisions of the
Company), with the exception of the Excluded Reports, as a material inducement
of this Agreement.
(b) Walston as Chief Executive Officer of the Company, and any successor in
that position, shall consult with Executive on all matters materially affecting
the Four Media Company Television Group during the Term of Executive's
employment under this Agreement. Executive acknowledges and agrees that action
by the Chief Executive Officer contrary to Executive's preference following such
consultation shall not be a breach of this Agreement for that reason alone.
(c) At Executive's sole option on sixty (60) days' notice to Walston or any
successor Chief Executive Officer of the Company, Executive may redefine the
scope of his duties and responsibilities as President of Four Media Company
Television Group to exclude those business units and facilities directed by
Prior Direct Reports.
(d) In any event, and without limiting the Company's or Executive's rights
or obligations under other provisions of this Agreement, the Company shall
assign Video Symphony, Encore Hollywood, all television sales (excluding those
associated with the Excluded Reports), Digital Magic, Anderson Video (excepting
studio services), Encore Santa Monica, Encore Non Linear and Four Media
Company's Burbank television operations, and their constituent and successor
businesses and senior management to report to Executive during the Term of
Executive's employment by the Company, subject only to obtaining such consents
as may be necessary under Prior Written Agreements (excluding the Excluded
Reports) to permit such assignments. If such consents have not been obtained
within ninety (90) days of the date of this Agreement, then upon written request
of Executive, the Chief Executive Officer of the Company and Executive shall
meet and confer in good faith to attempt to negotiate a mutually satisfactory
redefinition of Executive's duties. If the parties are unable to reach a
mutually acceptable agreement within such ninety (90) day period, then Executive
may resign by
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providing the Company with thirty (30) days written notice, which written notice
must be provided within the initial two hundred twenty (220) days of this
Agreement. Upon the expiration of such thirty (30) day period, this Agreement
shall terminate and Executive shall not be entitled to any further compensation
under this Agreement. Neither an inability to agree on such a redefinition of
Executive's duties nor Executive's resignation from employment in such event
shall be deemed a breach of this Agreement. Executive acknowledges and agrees
that in the event this Agreement is terminated pursuant to this Section 1.3,
Executive's covenant not to compete pursuant to Section 5.3 below shall run for
five (5) years from the Closing Date, as that term is defined in the Stock
Purchase Agreement (as defined in Section 3.7 below).
(e) Executive shall perform his duties principally at the office locations
of the Company located (i) within the Cities of Burbank and Santa Monica,
California, or the area commonly known as West Los Angeles, California,
including the Hollywood area, (ii) at a location within twenty (20) miles of
Executive's current job location as of the date of this Agreement, or (iii) at
such other location as may be mutually agreed upon by Executive and the Chief
Executive Officer of the Company from time to time. Executive shall devote his
entire productive business time, attention and energies to the performance of
his duties hereunder. Executive shall use his best efforts to advance the
interests and business of the Company and its Affiliates. Executive shall abide
by all rules, regulations and policies of the Company, as may be in effect from
time to time. Notwithstanding the foregoing, Executive may act as a member of
other boards of directors, where the time allocated for those activities does
not materially interfere with or create a conflict of interest with the
discharge of his duties for the Company.
1.4 Reporting. Executive shall report directly to the Chief Executive
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Officer of the Company, which position is currently held by Robert T. Walston.
The Company shall not be in breach of this Agreement if, at any time during the
Term, Robert T. Walston is no longer Chief Executive Officer of the Company.
1.5 Exclusive Agreement. Executive represents and warrants to the Company
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that there are no agreements or arrangements, whether written or oral, in effect
which would prevent Executive from rendering his exclusive services to the
Company during the Term.
ARTICLE II
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COMPENSATION
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2.1 Compensation. For all services rendered by Executive hereunder and
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all covenants and conditions undertaken by him pursuant to this Agreement, the
Company shall pay, and Executive shall accept, as full compensation, the amounts
set forth in this Article II.
2.2 Base Salary. The base salary shall be an annual salary of $250,000
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("Base Salary"), payable by the Company in accordance with the Company's normal
payroll practices.
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2.3 Bonus. In addition to the Base Salary, the Company may make
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discretionary bonus payments to Executive, under such terms, conditions and
requirements as may be determined by the Company's Chief Executive Officer in
his sole discretion.
2.4 Deductions. The Company shall deduct from the compensation described
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in Sections 2.2 and 2.3 any federal, state or local withholding taxes, social
security contributions and any other amounts which may be required to be
deducted or withheld by the Company pursuant to any federal, state or local
laws, rules or regulations.
2.5 Disability Adjustment. Any compensation otherwise payable to
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Executive pursuant to Sections 2.2 and 2.3 in respect of any period during which
Executive is disabled (as contemplated in Section 4.3) shall be reduced by any
amounts payable to Executive for loss of earnings or the like under any
insurance plan or policy sponsored by the Company.
ARTICLE III
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BENEFITS; EXPENSES
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3.1 Benefits. During the Term, Executive shall be entitled to participate
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in such group life, health, accident, disability or hospitalization insurance
plans, pension plans and retirement plans as the Company may make available to
its other executive employees as a group, subject to the terms and conditions of
any such plans.
3.2 Expenses. The Company agrees that Executive is authorized to incur
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reasonable expenses in the performance of his duties hereunder and in promoting
the business of the Company. The Company shall from time to time pay or
reimburse Executive for the reasonable and necessary expenses incurred by
Executive in connection with the performance of his duties hereunder if such
expenses have been previously approved by the Company or if reimbursement is
otherwise appropriate in accordance with the Company's established policies and
if the Company receives such verification thereof as the Company may require in
order to qualify such expenses as deductible business expenses. The Company
agrees that Executive's reasonable business expenses, reimbursable to Executive
or payable by the Company to Executive's order, at Executive's sole option in
each case, shall include without limitation (a) first class travel or, if first
class is unavailable, highest available class of travel for international
travel; (b) business class travel or, if business class is unavailable, highest
available class of travel including first class for domestic travel; (c) actual
out of pocket expense for business entertainment at clubs; and (d) cellular
telephones and cellular telephone services selected by Executive, including at
Executive's sole option, Wildfire or equivalent or upgraded telephone
communications management systems or services.
3.3 Vacation. Executive shall accrue, on a daily basis, a total of four
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(4) work weeks of vacation per year following the date of this Agreement. If
Executive's earned but unused vacation time reaches six (6) work weeks,
Executive will not continue to accrue additional vacation time until he uses
enough vacation to fall below this maximum amount. Thereafter,
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Executive will start earning vacation benefits again until the six (6) work week
maximum is again reached. Any accrued but unused vacation time will be paid to
Executive on a pro rata basis at termination of employment.
3.4 Key Man Insurance. The Company may secure in its own name or
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otherwise, and at its own expense, life, health, accident and other insurance
covering Executive alone or with others, and Executive shall not have any right,
title or interest in or to such insurance other than as expressly provided
herein. Executive agrees to assist the Company in procuring such insurance by
submitting to the usual and customary medical and other examinations to be
conducted by such physicians as the Company or such insurance company may
designate and by signing such applications and other written instruments as may
be required by the insurance companies to which application is made for such
insurance. Executive's failure to submit to such usual and customary medical
and other examinations shall be deemed a material breach of this Agreement.
3.5 Liability Insurance. Executive shall be covered under the Company's
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existing Directors' and Officers' insurance policy. A copy of the Company's
current policy has been provided to Executive.
3.6 Indemnification. The Company shall, to the maximum extent permitted
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by applicable law, indemnify and hold Executive harmless from and against all
claims, actions, causes of action, judgements, liabilities, obligations and
expenses, including without limitation, attorneys' fees, court costs, judgments,
fines, settlements, and other amounts actually incurred arising out of, relating
to or in connection with Executive's employment by the Company, his services as
an employee of the Company, or the discharge of his duties hereunder. The
Company shall advance to Executive any expenses incurred in defending any such
proceeding to the maximum extent permitted by law. Notwithstanding the
foregoing, this indemnification does not apply to any acts or omissions of
Executive which constitute criminal conduct, gross negligence or willful
misconduct.
3.7 Stock Options. The Company and Executive acknowledge that the
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Company has granted to Executive unvested options (the "Options") to purchase
89,374 shares of common stock of the Company pursuant to the Company's 1997
Stock Option Plan (the "Plan"), at an exercise price equal to Nine Dollars and
Fifty Cents ($9.50) per share. The Options shall vest one-fifth annually over a
five (5) year period, commencing on the last day of the first year of this
Agreement. In the event the Company fails to offer Executive a commercially
reasonable contract of employment for an additional twenty-four (24) month term
to commence at the end of the three year Term of Executive's employment under
this Agreement as defined in Section 1.2 ("Succeeding Agreement"), then the last
two (2) years of option vesting shall be immediately accelerated. If the
Company does offer Executive such a Succeeding Agreement and Executive rejects
such offer, then such unvested shares shall be forfeited. The terms and
conditions of the Options shall be set forth in a stock option agreement in the
form customarily utilized by the Company for the grant of options to its
employees. Notwithstanding any of the foregoing, Executive acknowledges and
agrees that 29,791 of said options shall be subject to divestiture in accordance
with the provisions of Section 2.3.1 of that certain Stock Purchase Agreement
dated
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as of September 15, 1998, entered into by and between the Company, MSCL, Inc., a
California corporation, and the individuals named therein (the "Stock Purchase
Agreement").
ARTICLE IV
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TERMINATION; DEATH; DISABILITY
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4.1 Termination of Employment With Cause. In addition to any other
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remedies available to the Company at law, in equity or as set forth in this
Agreement, the Company shall have the right, upon written notice to Executive,
to immediately terminate his employment hereunder without any further liability
or obligation to him in respect of his employment (other than its obligation to
pay Base Salary and vacation time accrued but unpaid as of the date of
termination and reimbursement of expenses incurred prior to the date of
termination in accordance with Section 3.2 above) if Executive: (a) breaches
any material provision of this Agreement and, if such breach is curable, in the
sole judgment of the Company, such breach is not cured within ten (10) days
after written notice thereof from the Company; or (b) has committed an act of
gross misconduct in connection with the performance of his duties hereunder, as
determined in good faith by the Board of Directors; or (c) demonstrates habitual
negligence in the performance of his duties, as determined by the Board of
Directors; or (d) is convicted of or pleads nolo contendere to any misdemeanor
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involving moral turpitude or to any felony; or (e) has committed any act of
fraud, misappropriation of funds or embezzlement in connection with his
employment hereunder (a "Termination With Cause"). If Executive's employment is
terminated under this Section 4.1, then all vested Options (as defined in
Section 3.7 above) shall be exercisable as set forth in the Plan (as defined in
Section 3.7 above), and all unvested Options shall be forfeited.
4.2 Termination of Employment Without Cause. During the Term, the Company
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may at any time, in its sole discretion, terminate the employment of Executive
hereunder without cause by written notice to him. In such event, the Company
shall pay Executive an amount equal to the sum of the following:
(a) any Base Salary and vacation time accrued but unpaid as of the
date of termination;
(b) an amount equal to Executive's monthly Base Salary in effect on
the date of termination for the remainder of the Term, payable as and when such
amounts would have been due and payable hereunder had such termination not
occurred (the "Severance Period"); and
(c) any reimbursement for expenses incurred in accordance with Section
3.2.
In addition, the Company shall use its best efforts to arrange for the
continuation, through the Severance Period, of such health and/or medical
benefits or plans as are in effect as of the date of termination, if and only if
permissible under such plans. If not so permissible, the
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Company shall pay to Executive an amount sufficient to enable Executive to
arrange for substantially equivalent health and/or medical coverage during the
Severance Period.
Executive acknowledges that the payments and benefits referred to in
this Section 4.2, together with any rights or benefits under any written plan or
agreement which have vested on or prior to the termination date of Executive's
employment under this Section 4.2, constitute the only payments to which
Executive shall be entitled to receive from the Company hereunder in the event
of any termination of his employment pursuant to this Section 4.2, and that
except for such payments or benefits the Company shall have no further liability
or obligation to him hereunder or otherwise in respect of his employment.
Executive shall have no duty to secure other employment. If Executive
secures other employment or becomes self-employed during the Severance Period,
the Company's obligations under this Section 4.2 shall be reduced by the
earnings from such employment or self-employment received by Executive.
Executive will notify the Company in writing within 10 days if Executive becomes
employed or self-employed during the Severance Period.
If Executive's employment is terminated under this Section 4.2, then
all Options (as defined in Section 3.7 above) shall vest (if they have not
already done so) and shall become immediately exercisable and shall remain
exercisable until the expiration of their terms, except as otherwise expressly
required by the Plan (as defined in Section 3.7 above).
4.3 Death; Disability. In the event that Executive dies or becomes
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Disabled (as defined herein), Executive's employment shall terminate when such
death or Disability occurs and the Company shall pay Executive (or his legal
representative, as the case may be) as follows:
(a) any Base Salary accrued but unpaid as of the date of death or
termination for Disability;
(b) any reimbursement for expenses incurred in accordance with Section
3.2.; and
(c) an amount equal to Executive's monthly Base Salary in effect on
such termination date for the lesser of (i) six (6) months or (ii) the remainder
of the Term, payable as and when such amounts would have been due and payable
hereunder had such termination not occurred. The monthly Base Salary with
respect to any period during which Executive is Disabled shall be reduced by
amounts payable to him under any insurance plan sponsored by the Company,
provided that Executive's aggregate compensation during the period of Disability
shall be equal to 100% of his monthly Base Salary then in effect.
For the purposes of this Agreement, Executive shall be deemed to be
"Disabled" or have a "Disability" if, because of Executive's physical or mental
disability, (a) he has been substantially unable to perform his duties
hereunder for twelve (12) work weeks in any twelve (12)-month period, and (b) he
has utilized any and all benefits available to him under state and federal laws
and is either (i) unable to reasonably and effectively carry out his duties with
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reasonable accommodations by the Company or (ii) unable to reasonably and
effectively carry out his duties because any reasonable accommodation which may
be required would cause the Company undue hardship. In the event of a
disagreement concerning Executive's perceived Disability, Executive shall submit
to such examinations as are deemed appropriate by three practicing physicians
specializing in the area of Executive's Disability, one selected by Executive,
one selected by the Company, and one selected by both such physicians. The
majority decision of such three physicians shall be final and binding on the
parties. Nothing in this paragraph is intended to limit the Company's right to
invoke the provisions of this paragraph with respect to any perceived Disability
of Executive.
Executive acknowledges that the payments referred to in this Section
4.3, together with any rights or benefits under any written plan or agreement
which have vested on or prior to the termination date of Executive's employment
under this Section 4.3, constitute the only payments to which Executive (or his
legal representative, as the case may be) shall be entitled to receive from the
Company hereunder in the event of a termination of his employment for death or
Disability, and that except for such payments the Company shall have no further
liability or obligation to him (or his legal representatives, as the case may
be) hereunder or otherwise in respect of his employment.
4.4 Continued Compliance. The amounts or benefits payable by the Company
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under Sections 4.2(b) and 4.3(c) are subject to Executive's continued compliance
with the provisions of Article V below. If Executive violates the provisions of
Article V, then the Company will have no obligation to make any of the payments
that remain payable by the Company under Sections 4.2(b) and 4.3(c) on or after
the date of such violation.
4.5 Announcements and Statements in Event of Termination. No press or
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public announcement or statement shall be made in the event of Executive's
employment termination during Executive's life except as agreed by the Company
and Executive, except for public disclosure required by applicable federal
securities laws, rules or regulations or policies of NASDAQ.
4.6 Designated Beneficiary. In the event of the death of Executive while
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in the employ of the Company, or at any time thereafter during which amounts
remain payable to Executive under this Article IV, such payments shall
thereafter be made to such person or persons as Executive may specifically
designate (successively or contingently) to receive payments under this
Agreement following Executive's death by filing a written beneficiary
designation with the Company during Executive's lifetime. Such beneficiary
designation shall be in such form as may be reasonably prescribed by the Company
and may be amended from time to time or may be revoked by Executive pursuant to
written instruments filed with the Company during his lifetime. Beneficiaries
designated by Executive may be any natural or legal person or persons, including
a fiduciary, such as a trustee of a trust, or the legal representative of an
estate. Unless otherwise provided by the beneficiary designation filed by
Executive, if all of the persons so designated die before Executive or the
occurrence of a contingency not contemplated in such beneficiary designation, or
if Executive shall have failed to provide such beneficiary designation, then the
amount payable under this Agreement shall be paid to Executive' estate.
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ARTICLE V
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OWNERSHIP OF PROCEEDS OF EMPLOYMENT; NON-DISCLOSURE;
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NON-COMPETITION
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5.1 Ownership of Proceeds of Employment. The Company shall be the sole
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and exclusive owner throughout the universe in perpetuity of all of the results
and proceeds of Executive's services, work and labor during the Term in
connection with Executive's employment by the Company, free and clear of any and
all claims, liens or encumbrances. All results and proceeds of Executive's
services, work and labor during the Term shall be deemed to be works-made-for-
hire for the Company within the meaning of the copyright laws of the United
States and the Company shall be deemed to be the sole author thereof in all
territories and for all purposes.
5.2 Non-Disclosure of Confidential Information. Executive's obligations
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with respect to non-disclosure of confidential information shall be governed by
the terms and conditions of Section 7.1.1 of the Stock Purchase Agreement, which
section is hereby incorporated by reference and made a part hereof. Promptly
upon the expiration or termination of Executive's employment with the Company or
any Affiliate for any reason or whenever the Company so requests, Executive
shall surrender to the Company all documents, drawings, work papers, lists,
memoranda, records and other data (including all copies) constituting or
pertaining in any way to any of the Confidential Information (as that term is
defined in the Stock Purchase Agreement).
5.3 Non-Competition. Executive's obligations with respect to non-
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competition shall be governed by the terms and conditions of Section 7.1.2 of
the Stock Purchase Agreement, which section is hereby incorporated by reference
and made a part hereof.
5.4 Non-Solicitation. Executive shall not, for a period of two (2) years
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from the date of any termination or expiration of his employment hereunder,
directly or indirectly: (a) solicit or hire, or attempt to solicit or hire, any
employee of the Company, or assist any person, firm or corporation in doing so
or attempting to do so; or (b) plan for, acquire any financial interest in or
perform any services for himself or any other entity in connection with a
business in which Executive's interest, duties or activities would inherently
require Executive to reveal any Confidential Information; or (c) solicit or
cause to be solicited the disclosure of or disclose any Confidential Information
for any purpose whatsoever or for any other party. Notwithstanding the
foregoing, this Agreement shall not prohibit an offer of employment by Executive
to Executive's personal assistant.
5.5 Breach of Provisions. In the event that Executive shall breach any of
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the provisions of this Article V, or in the event that any such breach is
threatened by Executive, in addition to and without limiting or waiving any
other remedies available to the Company at law or in equity, the Company shall
be entitled to immediate injunctive relief in any court, domestic or foreign,
having the capacity to grant such relief, without the necessity of posting a
bond, to restrain any such breach or threatened breach and to enforce the
provisions of this Article V. Executive acknowledges and agrees that there is no
adequate remedy at law for any such breach
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or threatened breach and, in the event that any action or proceeding is brought
seeking injunctive relief, Executive shall not use as a defense thereto that
there is an adequate remedy at law.
5.6 Reasonable Restrictions. The parties acknowledge that the foregoing
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restrictions, the duration and the territorial scope thereof as set forth in
this Article V, are under all of the circumstances reasonable and necessary for
the protection of the Company and its business.
5.7 Definition. For purposes of this Article V, the term "Company" shall
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be deemed to include any subsidiary of, affiliate of, predecessor to, or
successor of the Company.
ARTICLE VI
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MISCELLANEOUS
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6.1 Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the parties hereto and their respective legal representatives, heirs,
distributees, successors and assigns; provided that the rights and obligations
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of Executive hereunder shall not be assignable by him.
6.2 Notices. Any notice provided for herein shall be in writing and shall
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be deemed to have been given or made when personally delivered or three (3) days
following deposit for mailing by first class registered or certified mail,
return receipt requested, or if delivered by facsimile transmission, upon
confirmation of receipt of the transmission, to the address of the other party
set forth below or to such other address as may be specified by notice given in
accordance with this Section 6.2:
(a) If to the Company: Four Media Company
2813 W. Alameda Avenue
Burbank, CA 91505
Attention: Robert T. Walston, C.E.O.
Fax No.: (818) 846-5197
With a copy to: Four Media Company
625 Arizona Avenue
Santa Monica, CA 90401
Attention: William E. Niles, General Counsel
Fax No.: (310) 587-1277
(b) If to Executive: Lawrence Chernoff
336 S. Bedford Drive
Beverly Hills, California 90212
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With a copy to: _______________________________
_______________________________
_______________________________
_______________________________
Fax No.:
6.3 Severability. If any provision of this Agreement, or portion thereof,
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shall be held invalid or unenforceable by a court of competent jurisdiction,
such invalidity or unenforceability shall attach only to such provision or
portion thereof, and shall not in any manner affect or render invalid or
unenforceable any other provision of this Agreement or portion thereof, and this
Agreement shall be carried out as if any such invalid or unenforceable provision
or portion thereof were not contained herein. In addition, any such invalid or
unenforceable provision or portion thereof shall be deemed, without further
action on the part of the parties hereto, modified, amended or limited to the
extent necessary to render the same valid and enforceable.
6.4 Arbitration. Any controversy, claim or dispute arising out of or in
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any way relating to this Agreement, the alleged breach thereof, and/or
Executive's employment with the Company or termination therefrom, including
without limitation, any and all claims for employment discrimination or
harassment, shall be determined by final and binding arbitration administered by
JAMS/Endispute in Los Angeles, California in accordance with the JAMS/Endispute
Arbitration Rules and Procedures for Employment Disputes ("Rules") which are in
effect at the time of the arbitration or the demand therefor. The Rules are
hereby incorporated by reference. In the event of such an arbitration
proceeding, the parties shall select a mutually acceptable neutral arbitrator
from among the JAMS/Endispute panel of arbitrators. In the event the parties
cannot agree on an arbitrator, the Administrator of JAMS/Endispute shall appoint
an arbitrator. California Code of Civil Procedure (S)1283.05, which provides
for certain discovery rights, shall apply to any such arbitration, and said code
section is also hereby incorporated by reference. In reaching a decision, the
arbitrator shall have no authority to change, extend, modify or suspend any of
the terms of this Agreement. The arbitration shall be commenced and heard in
Los Angeles County, California. The arbitrator(s) shall apply the substantive
law (and the law of remedies, if applicable) of California or federal law, or
both, as applicable to the claim(s) asserted, and the arbitrator is without
jurisdiction to apply any different substantive law. The arbitrator shall
render an award and a written, reasoned opinion in support thereof, stating all
findings of fact and conclusions of law. Judgment on the award may be entered
in any court of competent jurisdiction, even if a party who received notice
under the Rules fails to appear at the arbitration hearing(s). The parties may
seek, from a court of competent jurisdiction, provisional remedies or injunctive
relief in support of their respective rights and remedies hereunder without
waiving any right to arbitration. However, the merits of any action that
involves such provisional remedies or injunctive relief, including, without
limitation, the terms of any permanent injunction, shall be determined by
arbitration under this paragraph.
6.5 Waiver. No waiver by a party hereto of a breach or default hereunder
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by the other party shall be considered valid unless in writing signed by such
first party, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or any other nature.
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6.6 Controlling Nature of Agreement. To the extent any terms of this
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Agreement are inconsistent with the terms or provisions of the Company's
Employee Manual or any other personnel policy statements or documents, the terms
of this Agreement shall control. To the extent that any terms and conditions of
Executive's employment are not covered in this Agreement, the terms and
conditions set forth in the Employee Manual or any similar document shall
control such terms.
6.7 Entire Agreement. This Agreement sets forth the entire agreement
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between the parties with respect to the subject matter hereof, and supersedes
any and all prior agreements or understanding between the Company and Executive,
whether written or oral, fully or partially performed relating to any or all
matters covered by and contained or otherwise dealt with in this Agreement.
Employee represents and acknowledges that all compensation, whether contingent
or otherwise, arising under any employment agreement has been paid in full and,
except for the obligations evidenced by this Agreement, all employment related
compensation has been paid in full. This Agreement does not constitute a
commitment of the Company with regard to Executive's employment, express or
implied, other than to the extent expressly provided for herein. Executive
hereby confirms that there are no oral or written agreements between the
Executive and the Company relating to Executive's employment with the Company
pursuant to which Executive would be entitled to any bonus or contingent
compensation upon completion of the transactions contemplated in the Stock
Purchase Agreement. Notwithstanding the foregoing, this Section 6.7 shall not
extinguish any accrued vacation or base salary that is due to Executive as of
the date of this Agreement.
6.8 Amendment. No modification, change or amendment of this Agreement or
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any of its provisions shall be valid unless in writing and signed by the party
against whom such claimed modification, change or amendment is sought to be
enforced.
6.9 Authority. The parties each represent and warrant that they have the
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power, authority and right to enter into this Agreement and to carry out and
perform the terms, covenants and conditions hereof.
6.10 Applicable Law. This Agreement, and all of the rights and obligations
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of the parties in connection with the employment relationship established
hereby, shall be governed by and construed in accordance with the substantive
laws of the State of California without giving effect to principles relating to
conflicts of law. This Agreement shall be construed according to its fair
meaning and not for or against any party.
6.11 Successors and Assigns. This Agreement may not be assigned (either
----------------------
voluntarily or involuntarily) by any party hereto without the express written
consent of the other party. Any attempted assignment in violation of this
Section shall be void and ineffective for all purposes. In the event of an
assignment permitted by this Section, this Agreement shall inure to the benefit
of and be binding upon the heirs, successors and assigns of each of the parties
hereto.
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6.12 Survival of Rights and Obligations. The respective rights and
----------------------------------
obligations of the parties hereunder shall survive any termination of
Executive's employment to the extent necessary to the intended preservation of
such rights and obligations.
6.13 Headings. The headings of the sections contained in this Agreement
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are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
6.14 Counterparts. Thus Agreement may be executed in counterparts, each of
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which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"COMPANY"
FOUR MEDIA COMPANY
By: /s/ Robert T. Walston
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Robert T. Walston
Chairman & CEO
"EXECUTIVE"
/s/ Lawrence Chernoff
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Lawrence Chernoff
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