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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into this 29th day of
April, 1996, by and between Dove Four Point, Inc., a Florida corporation (the
"Company"), a wholly-owned subsidiary of Dove Audio, Inc., a California
corporation ("Dove"), and Shukri Ghalayini ("Employee").
Whereas, the Company and Dove desire to assure that the Company retains
the services of Employee, whose experience, knowledge and abilities with respect
to the business and affairs of the Company are extremely valuable to the
Company;
Whereas, the entering into of this Agreement is a condition to the
consummation of the acquisition by Dove of Four Point Entertainment, Inc. ("Four
Point") pursuant to the Agreement and Plan of Merger dated as of April 12, 1996
(the "Merger Agreement");
Whereas, simultaneously herewith, Four Point has merged with
and into the Company;
Now, therefore, the Company and Employee agree as follows:
1. Positions and Duties.
1.1 The Company hereby employs Employee as President (or other
mutually agreed-upon title) of the Company during the term of this Agreement,
with powers and duties consistent with such position. Employee shall report to
the Board of Directors of the Company and to the Chief Executive Officer of the
Company or the President and/or the Chief Operating Officer of Dove, as
determined from time to time by Dove. Employee shall, during the term of this
Agreement, perform such additional or different duties, and accept the election
or appointment to such other offices or positions, as may mutually be agreeable
to Employee and Dove.
1.2 Employee shall devote his full working time to the
promotion of the Company's business and welfare, and use his best efforts to
promote the Company's products and services. During the term of his employment
with the Company, Employee will not
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accept employment or engage in any manner, directly or indirectly, in any other
business. Employee shall perform such duties and responsibilities incidental to
his employment as may from time to time be requested by the Company and shall
faithfully observe the Company's and Dove's policies and procedures.
2. Compensation and Benefits.
2.1 Generally; Base Salary. Beginning on the date of this
Agreement, during the term of employment, for the services to be rendered by
Employee hereunder, Employee shall receive the following compensation and
benefits, payable as earned, in the intervals indicated, and prorated for any
partial year:
(a) An annual salary (the "Base Salary"), at the
rate of two hundred thousand dollars ($200,000) payable from the period
commencing as of the date of commencement of the Term. The Base Salary shall be
payable no less frequently than monthly. The Company may deduct from each
installment of the Base Salary an amount sufficient to cover applicable federal,
state and/or local income tax withholdings, old age and survivors and other
social security payments, state disability insurance premiums and any other
amounts which the Company is required to withhold by applicable law;
(b) an advance against producer fees on new
programming initiated and developed after the date hereof calculated in
accordance with Schedule I hereto (the "Fee Advance") payable monthly at the
annual rate of one hundred thousand dollars ($100,000); and
(c) a stock option grant as of or prior to the
commencement of the Term of 300,000 shares (the "Option Shares") of Dove common
stock, pursuant to the Stock Option Award Agreement dated as of April , 1996
between Dove and Employee substantially in the form of Schedule II hereto (the
"Stock Option Agreement").
2.2 Fringe Benefits. Employee shall receive the
following fringe benefits from the Company during the Term:
(a) four weeks of paid vacation during each
fiscal year of the Company (as used in this Paragraph, a "fiscal year" shall be
the date which is 12 months following the date of commencement of the Term under
this Agreement and each 12-month
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period thereafter). Any such vacation shall be taken at times in accordance with
the vacation policies of Dove, unless approved otherwise by Dove, or if accrued
by Employee and not taken in any fiscal year shall be accrued and carried
forward to the subsequent fiscal year;
(b) payment of the premium payable (in an amount
comparable to the premium historically paid by Four Point) with respect to the
health insurance plan provided by Dove for its executive officers as from time
to time in effect. In addition, Employee shall be permitted during the term
hereof, if and to the extent eligible, to participate in any group life,
hospitalization or disability insurance plan, health program, pension plan,
similar benefit or other fringe benefits of Dove which may be available to
executive officers of Dove;
(c) continuation of the current automobile
leased by Four Point through the term thereof (together with related automobile
insurance and ordinary maintenance costs) and thereafter reimbursement of
automobile expenses in accordance with the policy of Dove as from time to time
in effect for a comparable automobile; and
(d) reimbursement to Employee for all reasonable
costs and expenses he incurs in connection with the performance of his duties
and obligations under this Agreement, and which are consistent with the policies
of Dove for executive officers.
2.3 Guarantee. Dove shall guarantee all compensation
and benefits referred to in this Section 2 as fully as if it were a party
hereto.
3.1 Term. The term of this Agreement (the "Term") shall
commence on the date hereof and shall terminate upon the first to occur of the
following events:
(a) April 30, 1999;
(b) The death or permanent disability of Employee as
defined in Section 5.1(a) herein;
(c) The discharge of Employee for cause or special
cause as defined in Section 5.2(a) or 5.3 herein.
4.1 Covenant Not to Solicit or Hire Employees or
Customers. Until April 30, 1999, Employee shall not, directly or
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indirectly, solicit or induce any of the Company's employees to terminate their
employment with the Company, hire or cause any of the then current employees of
the Company to be hired by any other company, or solicit or assist in soliciting
any business from any of the then current customers or prospective customers of
the Company on behalf of Employee or any other company.
5. Termination.
5.1 Termination Due to Disability, etc. The Company may, by
written notice to Employee, terminate his employment under the Agreement as of
the date of that notice if Employee shall fail or be unable to perform his
duties as the result of any physical or mental disability for 180 consecutive
days or during any 210 days in any 240-day period (a "Permanent Disability");
Employees's employment under this Agreement shall terminate automatically upon
Employee's death or adjudication of incompetency.
5.2 Termination for Cause. By complying with the
provisions of Section 5.2(b) hereof, the Company may terminate Employee's
employment under this Agreement for "Cause."
(a) For purposes of this agreement, "Cause"
shall mean: (i) fraud, embezzlement or conviction of or the pleading of guilty
or no contest to any felony or to any misdemeanor involving dishonesty, (ii)
gross negligence or willful failure of Employee to perform his duties hereunder,
(iii) any breach by Employee of his covenants or obligations under this
Agreement, or (iv) the occurrence of any matter relating to Employee of the type
set forth in Item 401(f) of Regulation S-K promulgated by the Securities and
Exchange Commission.
(b) If any one or more of the events enumerated
under (i) above shall occur, the Company shall provide written notice (the
"Warning Notice") to Employee of its intention to terminate this Agreement for
Cause, the basis of such Cause, and the steps which the Company believes should
be taken by the Employee to correct and cure the same. Unless Employee, within
30 days following receipt of the Warning Notice, substantially corrects and
cures all matters delineated in the Warning Notice to Dove's reasonable
satisfaction or if the matters set forth in the Warning Notice are not
reasonably susceptible of being so cured or corrected within such 30-day period,
the Company may terminate this Agreement so that the Company shall have no
further obligation to Employee except as set forth in Section 5.4
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herein, by delivering a notice of termination to Employee, which notice of
termination shall be effective as of the date of delivery of such notice;
provided however, that Employee shall not be entitled to any notice or
opportunity to cure a termination arising as a result of the "Cause" set forth
in Section 5.2(a)(i) hereof.
5.3 Termination for Special Cause. The Company may
terminate Employee's employment under the Agreement for "Special Cause."
(a) For purposes of this Agreement, "Special
Cause" shall mean a failure by the Company to achieve at least $800,000 of
pre-tax income for the period commencing May 1, 1996 through April 30, 1997.
(b) Upon a determination by the Company that
Special Cause has occurred, Employee may thereafter be terminated for Special
Cause, provided, however, that the Company may continue his employment despite
his failure to achieve the Plan objectives outlined above. Upon termination by
the Company of Employee's employment for "Special Cause," Dove shall agree, so
long as such termination is without "Cause," to shorten the term of such
person's agreement not to compete pursuant to Section 6.4 of the Merger
Agreement to the effective date of such termination.
5.4 Payments Upon Termination.
(a) In the event Employee is terminated for any
reason whatsoever, the Company shall pay to Employee all accrued and unpaid Base
Salary, all accrued and unpaid vacation and other accrued and unpaid benefits
set forth herein to the date of termination, reimbursement of expenses prior to
the date of termination in accordance with the provisions of this Agreement;
continued insurance benefits under such circumstances and for such periods of
time as are mandated by applicable state or federal law; and such other benefits
or entitlements that are deemed to be vested pursuant to the provisions of
Employee Retirement Income Security Act of 1974, as from time to time amended,
and any regulations promulgated pursuant thereto. Such benefits shall be payable
in accordance with the provisions therefor in this Agreement, or with regard to
benefits for which no provision is made, promptly following termination of
employment.
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(b) In the event Employee is terminated by the
Company (other than pursuant to Section 5.3) without Cause, then, in addition to
the payments due to Employee under Section 5.4(a), and as Employee's sole and
exclusive rights and remedies, the Company shall, for the remainder of the Term,
be obligated to continue to provide to the Employee his Base Salary in
accordance with the terms hereof (but no other payments or benefits except the
Options vested in accordance with Section 8(d) of the Stock Option Agreement).
(c) Employee shall have no duty to seek
alternative employment in the event of termination. Notwithstanding the
foregoing, the Company and Employee agree that if Employee enters into
employment after termination by the Company hereunder without Cause or Special
Cause, the total compensation earned by Employee together with any welfare or
other benefits earned or received by Employee during any period that Employee
continues to receive Base Salary shall be deducted from the amount, if any,
which the Company would otherwise be required to pay or provide to Employee
during such period hereunder. Employee agrees that he shall give written notice
to the Company (promptly after accepting any engagement or employment or
furnishing his services after termination of his employment with the Company) of
any amounts earned (or to be earned) by Employee and any benefits provided (or
to be provided) to Employee pursuant to his new engagement or employment
arrangement.
6. Confidential Information. Employee acknowledges that the
information, observations and data obtained by him while employed by the Company
concerning the business or affairs of Dove, the Company or their Affiliates (the
"Confidential Information") are the property of Dove, the Company or such
Affiliate. Therefore, Employee agrees that Employee shall not disclose to any
unauthorized person or use for Employee's own account any Confidential
Information without the prior written consent of the Board, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public other than as a result of Employee's acts or omissions to
act or unless such information is required to be disclosed in connection with an
administrative or judicial proceeding, provided that in such case, Employee
agrees to notify the Company and Dove of the Confidential Information to be
disclosed sufficiently in advance of such disclosure, and agrees, if requested,
to use reasonable efforts to cooperate with Dove, the Company or an Affiliate in
seeking a protective order for
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such information. Employee shall deliver to the Company at the termination of
the Term, or at any other time Dove, the Company or an Affiliate may request,
all "documents" and "writings", as defined in the California Evidence Code, and
copies thereof, relating to the Confidential Information, work product or the
business of Dove, the Company or any Affiliate which Employee may then possess
or have under his control. In the event of the breach or a threatened breach by
Employee of any of the provisions of this Section 6, Dove, the Company or any of
its Affiliates, in addition and supplementary to other rights and remedies
existing in its favor, may apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violations of the provisions hereof (without posting a
bond or other security). Employee acknowledges and agrees that the covenant
under this Section 6 shall apply during the Term and thereafter regardless of
the reason for the termination of Employee's employment.
7. Right to Injunction. Employee acknowledges that any remedy at law
for a breach by him of the provisions of Sections 4.1 or 6 hereof will be
inadequate. Accordingly, in the event of the breach or threatened breach by
Employee of Sections 4.1 or 6 hereof, the Company shall be entitled to
injunctive relief in addition to any other remedy it may have.
8. Entire Agreement. This Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements of the parties with
respect to the subject matter hereof. This Agreement may not changed or amended
except in writing signed by the parties and approved by Dove.
9. Governing Law. This Agreement shall be subject to, and
be governed by, the laws of the State of California.
10. Assignment. Employee may not assign, transfer or convey this
Agreement or any interest therein. This Agreement and all of the Company's
rights and obligations hereunder may be assigned or transferred by it, in whole
but not in part, to and shall be binding upon and inure to the benefit of any
successor of the Company, but any such assignment shall not relieve the Company
of any of its obligations. The term "successor" shall mean only any corporation
or other business entity which by merger, consolidation, purchase of assets or
otherwise succeeds to or otherwise acquires all or substantially all of the
assets of the Company.
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11. Severability. If any provision of this Agreement as applied
to either party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in no way
affect any other provision of this Agreement or the validity or enforceability
of this Agreement.
12. Waiver. Waiver by either party of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
13. Counterparts. This Agreement shall be executed in a number of
identical counterparts, each of which shall be construed as an original for all
purposes, but all of which taken together shall constitute one and the same
Agreement.
14. Notices. Any notice required or permitted to be given under
this Agreement shall be in writing and delivered in person or sent by registered
or certified Unites States mail, postage and fees prepaid, to the addresses of
the parties set forth below, or such other address as shall be furnished by
notice hereunder by any such party:
THE COMPANY Dove Four Point, Inc.
301 North Canon Drive
Suite 207
Beverly Hills, CA 90210
with copy to:
DOVE AUDIO, INC. 301 North Canon, Suite 207
Beverly Hills, California 90210
Attn: President
EMPLOYEE: Shukri Ghalayini
124 North Woodburn
Brentwood, CA 90049
No failure or refusal to accept delivery of any envelope containing such notice
shall affect the validity of such notice or the giving thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
Dove FOUR POINT, INC.
By: /s/ Simon Baker
----------------------------------
Title:
---------------------------
/s/ Shukri Ghalayini
----------------------------------
Employee
Agreed:
DOVE AUDIO, INC.
By: /s/ Simon Baker
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SCHEDULE I
CALCULATION OF PRODUCER'S FEES
Employee shall receive a 30% allocation of generally accepted producer
fees paid to the Surviving Corporation on new programming initiated and
developed by Employee for the Surviving Corporation after the date hereof (but
only after all advances against producer fees have been earned out) subject to
mutually agreed-upon caps.
Schedule I-1
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STOCK OPTION AWARD AGREEMENT
THIS AWARD AGREEMENT (this "Agreement") is entered into as of the 29th
day of April 1996 (the "Grant Date"), by and between Dove Audio, Inc., a
California corporation (the "Corporation"), and Shukri Ghalayini (the
"Participant").
W I T N E S S E T H
WHEREAS, the Participant has agreed to serve as the President of Dove
Four Point, Inc.;
WHEREAS, pursuant to the Agreement and Plan of Merger dated as of April
12, 1996 among the Corporation, the Participant and certain other parties (the
"Merger Agreement"), the Corporation committed to grant to the Participant,
effective as of the Grant Date, but subject to the Closing of the Merger
Agreement, a non-qualified stock option (the "Option") to purchase all or any
part of 300,000 shares of Common Stock, par value $0.01 per share, of the
Corporation (the "Common Stock") upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties hereto
agree as follows:
1. Grant of Option. The Corporation has granted, subject to the Closing
of the Merger Agreement, to the Participant as a matter of separate inducement
and agreement in connection with the Participant's employment with, or other
services provided by the Participant to, the Corporation, but not in lieu of any
salary or other compensation for such employment or services, the right and
option to purchase, on the terms and conditions hereinafter set forth, all or
any part of an aggregate of 300,000 shares (the "Shares") of Common Stock at a
price per share of $11.00 (the "Exercise Price") exercisable from time to time
subject to the provisions of this Agreement prior to the close of business on
April , 2006 (the "Expiration Date"). The Option shall vest according to the
performance criteria set forth in Exhibit A (Performance). This option is
granted outside of the Corporation's 1994 Stock Incentive Plan (the "Plan")
although certain provisions of the Plan are incorporated herein by reference.
Schedule II-1
12
2. Exercisability of Option. Except as otherwise provided in this
Agreement, the Option may be exercised from time to time as set forth on Exhibit
A attached hereto; provided, however, the Option may not be exercised as to less
than 100 shares at any one time unless the number of Shares purchased is the
total number at the time available for purchase under an installment of the
Option. The Option may be exercised only as to whole shares; fractional share
interests shall be disregarded except that they may be accumulated.
3. Method of Exercise and Payment. Each exercise of the Option shall be
by means of written notice of exercise in the form attached hereto as Exhibit B
duly delivered to the Corporation, specifying the number of whole shares with
respect to which the Option is being exercised, together with any written
statements required hereunder and payment of the Price in full in cash or by
check payable to the Corporation.
4. Continuance of Employment. Nothing contained in this Agreement shall
confer upon the Participant any right to continue in the employ of, or to
continue rendering services to, the Corporation or constitute any contract or
agreement of engagement or employment. The Participant acknowledges that the
Corporation has the right to terminate the Participant's employment or services
at will except as may be otherwise provided by separate agreement. Nothing
contained in this Agreement shall interfere in any way with the right of the
Corporation to (i) terminate the employment or services of the Participant at
any time for any reason whatsoever, with or without cause, or (ii) reduce the
compensation received by the Participant from the rate in existence on the Grant
Date.
5. Non-Assignability of Option. Other than by will or the laws of
descent and distribution, or pursuant to a "qualified domestic relations order"
as defined by the Internal Revenue Code, no benefit payable under, or interest
in, any Grant shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, regardless of any community
property or other interest therein of the Participant's spouse or such spouse's
successor in interest, and any such attempted action shall be void and no such
benefit or interest shall be, in any manner, liable for, or subject to, debts,
contracts, liabilities, engagements or torts of any Person. In the event that
the spouse of the Participant shall have acquired a community property interest
in the Option, the Participant, or his or her permitted transferee, may exercise
it
Schedule II-2
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on behalf of the spouse of the Participant or such spouse's successor in
interest. Amounts payable pursuant to a Grant shall be paid only to the
Participant or, in the event of the Participant's death, to the Participant's
Beneficiary or, in the event of the Participant's Total Disability, to the
Participant's Personal Representative or, if there is none, to the Participant.
6. Adjustments Upon Specified Changes. Upon the occurrence of certain
Events (as defined in the Plan) relating to the Corporation's stock, such as
stock splits, combinations, extraordinary cash dividends, or mergers in which
the Corporation is not the Surviving Corporation as further set forth in the
Plan, adjustments will be made in the number and kind of shares that may be
issuable under, or in the consideration payable with respect to, the Option as
if this Option were granted under the Plan.
7. Acceleration. Upon the occurrence of certain Events, as set
forth in the Plan, the Option may become immediately exercisable as if this
Option were granted under the Plan to the full extent theretofore not
exercisable unless prior to an Event the Board of Directors of Dove determines
otherwise.
8. Termination of Employment.
(a) As provided in the Plan, which provisions are incorporated
by reference herein, if the Participant's employment by the Corporation
terminates for any reason other than Retirement, death or Total Disability, the
Participant shall have, subject to earlier expiration thereof, three months from
the date of termination of employment to exercise any Option to the extent that
it shall have vested on that date, and any Option not vested on that date shall
terminate. In the event the Participant is discharged for "Cause" (as defined in
Participant's Employment Agreement), all Options that are not vested shall lapse
immediately upon such termination of employment. For purposes of this Agreement,
if termination occurs for "Special Cause" (as defined in the Employment
Agreement) any Option not vested on that date shall terminate.
(b) If the Participant's employment by the Corporation
terminates as a result of Retirement or Total Disability, the Participant or
Participant's Personal Representative, as the case may be, shall have, subject
to earlier expiration thereof, 12 months from the date of termination of
employment to the exercise
Schedule II-3
14
any Option to the extent it shall have vested by that date, and any Option not
vested on that date shall terminate.
(c) If the Participant's employment by the Corporation
terminates as a result of death while the Participant is employed by the
Corporation or during the 12 month period referred to in subsection (b) above,
the Participant's Option shall be exercisable by the Participant's Beneficiary,
subject to earlier expiration thereof, during the 12-month period following the
Participant's death, as to all or any part of the shares of Common Stock covered
thereby to the extent vested on such date of death.
(d) In the event Participant's employment by the Corporation
is terminated without "cause" or "special cause" and such termination is in
breach of any employment agreement entered into on or prior to the date hereof,
any unvested Options shall accelerate and vest on the date of such termination
and shall be exercisable for the period set forth in (a) above.
9. Application of Securities Laws.
(a) No shares of Common Stock may be purchased pursuant to the
Option unless and until any then applicable requirements of the Commission, and
any other regulatory agencies, including any other state securities agencies
having jurisdiction over the Corporation or such issuance, and any exchanges
upon which the Common Stock may be listed, shall have been fully satisfied. The
Participant represents, agrees and certifies that:
(1) The Participant (A) can bear the economic
risk of losing the Participant's entire investment in the Shares; and (B) has
adequate means of providing for the Participant's current needs and possible
personal contingencies.
(2) The Participant has had an opportunity to ask
questions of and receive answers from the Chief Financial Officer and President
concerning the terms and conditions of this investment. The Participant has
received and reviewed a copy of the Plan.
(3) The Participant understands that the Option
and the Shares issuable upon exercise of the Option have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or any
state securities act, in reliance on
Schedule II-4
15
available exemptions from registration or qualification thereunder, as the case
may be, and that the Corporation is relying upon the Participant's
representations and warranties herein in availing itself of said exemptions.
(4) The Corporation agrees to register the purchase
by the Participant of the Shares underlying the Option on Form S-8 under the
Securities Act as promptly as is reasonably feasible following the vesting of
all or any portion of the Option (provided that the Company shall not be
obligated by the terms of this Section 9(a)(4) to file a registration statement
with respect solely to the Shares).
(5) The Option hereby granted to the Participant is
being acquired solely for the Participant's own account for investment purposes,
and is not being purchased with a view to or for the purposes of the resale,
transfer or other distribution thereof; and the Participant has no present plans
to enter into any contract, undertaking, agreement or arrangement for such
resale, transfer or distribution, and the Participant further agrees that the
Option and Common Stock acquired pursuant to the Option will not be transferred
or distributed without (a) first having presented to the Corporation a written
opinion of legal counsel in form and substance satisfactory to the Corporation's
counsel indicating the proposed transfer will not be in violation of any of the
provisions of the Securities Act and applicable state securities laws and the
rules and regulations promulgated thereunder, or (b) a registration statement
covering the resale of such Common Stock being effective.
(6) The Participant either has a preexisting
personal or business relationship with the Corporation or any of its officers,
directors or controlling persons, or by reason of the Participant's business or
financial experience reasonably can be assumed to have the capacity to protect
his or her own interests in connection with acquisition of the Option and
exercise thereof.
The foregoing representations and warranties are and will be
true and accurate as of both the Grant Date and the date of delivery of Common
Stock acquired pursuant to the Option and shall survive such delivery.
(b) The Board of Directors of Dove may impose such conditions
on the Option or on its exercise or acceleration or on the payment of any
withholding obligation (including, without
Schedule II-5
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limitation, restricting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements, including, without
limitation, Rule 16b-3 (or any successor rule) promulgated by the Commission
pursuant to the Securities Exchange Act of 1934, as amended; however, no
representation is made that the provisions of Rule 16b-3 have been satisfied
with respect to the Option.
10. Notices. Any notice to be given to the Corporation under the terms
of this Agreement shall be in writing and addressed to the Secretary of the
Corporation at its principal office and any notice to be given to the
Participant shall be sent to the Participant at the address given beneath the
Participant's signature hereto, or at such other address as either party may
hereafter designate in writing to the other party. Any such notice shall be
deemed to have been duly given on the date of delivery, if delivered by hand, or
3 days after deposit into U.S. mails of a notice sent by registered or certified
mail (postage and registry or certification fee prepaid).
11. Effect of Agreement. This Agreement shall be assumed by, be
binding upon and inure to the benefit of any successor or successors of the
Corporation to the extent provided in the Plan which provisions are incorporated
by reference herein.
12. Tax Withholding. The provisions of the Plan are hereby incorporated
and shall govern any withholding that the Corporation is required to make with
respect to an exercise of the Option as well as the Corporation's right to
condition a transfer of Common Stock upon compliance with the applicable
withholding requirements of federal, state and local authorities. No Common
Stock acquired pursuant to an exercise of the Option may be transferred until
the Corporation has withheld, or has received payment from the Participant of,
all amounts the Corporation is required to withhold.
13. Terms of the Plan Govern. Except with respect to terms specifically
set forth in this Agreement, the Option and this Agreement are subject to, and
the Corporation and the Participant agree to be bound by, all of the terms and
conditions of the Plan, as if the Option were granted pursuant to the Plan,
which terms and conditions are hereby incorporated as though set forth at
length. In the event of a conflict between this Agreement and the Plan, the
terms of the Plan shall govern. The rights of the Participant are subject to
limitations, adjustments,
Schedule II-6
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modifications, suspension and termination in certain circumstances and upon the
occurrence of certain conditions as set forth in the Plan.
14. Liability of Corporation. The inability of the Corporation, after
using reasonable efforts, to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance and
sale of any Common Stock pursuant to the Option shall relieve the Corporation of
any liability in respect of the non-issuance or sale of the Common Stock as to
which such approval shall not have been obtained.
15. Stockholder Rights. The Participant shall not have any rights of a
stockholder with respect to any Shares covered by this Option unless such Shares
have been issued to the Participant by the Corporation pursuant to the valid
exercise of the Option and the full payment by the Participant of the Exercise
Price in respect thereof.
16. Laws Applicable to Construction. The interpretation, performance
and enforcement of the Participant's Grant and this Agreement shall be governed
by the laws of the State of California.
Schedule II-7
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IN WITNESS WHEREOF, the Corporation has caused this Agreement
to be executed on its behalf by a duly authorized officer and the Participant
has hereunto set his or her hand as of the date and year first above written.
Dove AUDIO, INC.
By: /s/ Simon Baker
--------------------------------
Title:
PARTICIPANT
/s/ Shukri Ghalayini
------------------------------------
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(Print Name)
------------------------------------
(Address)
------------------------------------
(City, State, Zip Code)
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Schedule II-8
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EXHIBIT A (Performance)
Performance Options shall vest on the basis of the achievement of
Pre-Tax Profit targets for Dove Four Point, Inc ("DFP") for each of the periods
set forth below provided Participant remains in the Corporation's employ
continuously during such period. All Performance Options shall vest if
Participant remains in the Corporation's employ continuously until the date 30
days prior to the Expiration Date (i.e. ten years) regardless of meeting the
Pre-Tax Profit targets.
The performance vesting schedule shall be as follows with respect to
that portion of a Performance Option eligible to vest in such year:
I. Period Commencing
May 1, 1996 through Number of
April 30, 1997 Options Vesting
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(1) DFP pre-tax income 0
less than $1.0 million
(2) DFP pre-tax income at 62,500
least $1.0 million but
less than $1.5 million
(3) DFP pre-tax income 79,167
at least $1.5 million
Schedule II-9
20
II. Period Commencing
May 1, 1997 through Number of
April 30, 1998 Options Vesting
------------------- ---------------
(1) DFP pre-tax income 0
less than $2.0 million
(2) DFP pre-tax income at 87,500
least $2.0 million but
less than $3.0 million
(3) DFP pre-tax income 104,166
at least $3.0 million
III. Period Commencing
May 1, 1998 through Number of
April 30, 1999 Options Vesting
------------------- ---------------
(1) DFP pre-tax income 0
less than $2.5 million
(2) DFP pre-tax income at 100,000
least $2.5 million but
less than $3.0 million
(3) DFP pre-tax income 116,667
at least $3.0 million
DFP's pre-tax income shall be based upon the results set forth in the
Corporation's consolidated financial statements for the particular period. In
determining the DFP's pre-tax income, extraordinary gains or losses shall be
disregarded. No charges shall be made for allocations of Dove's corporate
overhead, other than fair and appropriate charges for purchases made or services
rendered by Dove and its accountants and other independent contractors in
connection with DFP's business. In the case of any work performed jointly, or on
a subcontracting basis, by DFP and Dove or any other subsidiary of Dove, the
overall profit or loss for such work shall be apportioned fairly by Dove among
DFP and such other company to reflect as nearly as possible the apportionment
that would result if they were dealing at arm's length.
Schedule II-10
21
EXHIBIT B
Dove AUDIO, INC.
301 North Canon Drive
Suite 207
Beverly Hills, California 90210
Gentlemen:
I am the holder of an option (the "Option") granted by Dove Audio,
Inc., a California corporation (the "Corporation"), on April __, 1996, to
purchase up to an aggregate of 300,000 shares (subject to anti-dilution
adjustments) of the Corporation's Common Stock, pursuant to the terms of a Stock
Option Award Agreement ("Agreement") dated as of April __, 1996. I hereby
exercise my Option with respect to __________ shares of Common Stock subject to
the Option at the price of $____ per share as provided for in the Agreement, and
I present herewith funds payable to the order of the Corporation in the amount
of $__________, which represents the full purchase price for the number of
shares purchased upon this exercise.
I represent and warrant that I have received a copy of the
Company's 1994 Stock Incentive Plan dated November 29, 1994 (portions of which
are incorporated by reference by the Option). I understand that the Corporation
may use the proceeds from the exercise of this Option for general corporate
purposes.
The certificates evidencing the shares purchased upon this
exercise should be registered in my name and delivered to me.
I further hereby understand and confirm that the sale, exchange or
other disposition of the shares acquired hereby shall also be subject to any and
all other requirements and restrictions set forth in said Agreement (including,
without limitation, Paragraph 5 of said Agreement) and the Internal Revenue Code
of 1986, as amended.
Very truly yours,
________________________
Schedule II-11