EMPLOYMENT AGREEMENT
This Employment Agreement (this "AGREEMENT") is made and entered as of
the 13th day of April, 1998, by and between Equity Marketing, Inc., a
Delaware corporation (the "COMPANY"), and Edward T. Boyd III ("EMPLOYEE").
1. ENGAGEMENT AND DUTIES.
a) Upon the terms and subject to the conditions set forth in this
Agreement, the Company hereby engages and employs Employee as an officer of
the Company, with the title and designation "Senior Vice President, Worldwide
Operations." Employee hereby accepts such engagement and employment.
b) Employee's duties and responsibilities shall be to manage and
supervise the Company's worldwide operations business. In addition,
Employee's duties shall include those duties and services for the Company and
its affiliates as the Board or a Responsible Officer (as defined below)
shall, in his or their sole and absolute discretion, from time to time
reasonably direct which are not inconsistent with Employee's position as
Senior Vice President, Worldwide Operations.
c) Employee agrees to devote all of his business time, energy and
efforts to the business of the Company and will use his best efforts and
abilities faithfully and diligently to promote the Company's business
interests. For so long as Employee is employed by the Company, or for so
long as Employee is receiving severance under Section 5(c) of this Agreement,
Employee shall not, directly or indirectly, either as an employee, employer,
consultant, agent, investor, principal, partner, stockholder (except as the
holder of less than 1% of the issued and outstanding stock of a publicly held
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corporation), corporate officer or director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of the Company Group,
as such businesses are now or hereafter conducted. Subject to the foregoing
prohibition and provided such services or investments do not violate any
applicable law, regulation or order, or interfere in any way with the
faithful and diligent performance by Employee of the services to the Company
otherwise required or contemplated by this Agreement or duly requested by a
Responsible Officer or the Board, the Company expressly acknowledges that
Employee may:
(1) make and manage personal business investments of Employee's
choice without consulting the Board; and
(2) serve in any capacity with any civic, educational, charitable
or trade organization with the prior approval of a Responsible Officer, which
approval will not be unreasonably withheld.
2. DEFINITIONS. For the purposes of this Agreement, the following terms
shall have the meanings set forth below:
"BOARD" shall mean the Board of Directors of the Company.
"COMPANY GROUP" shall mean the Company and each Person which the Company
directly or indirectly Controls.
"CONTROL" shall mean, with respect to any Person, (i) the beneficial
ownership of more than 50% of the outstanding voting securities of such
Person, or (ii) the power, directly or indirectly, by proxy, voting trust or
otherwise, to elect a majority of the outstanding directors, trustees or
other managing persons of such Person.
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"EMPLOYMENT COMMENCEMENT DATE" shall mean April 13, 1998.
"EMPLOYMENT TERM" shall mean April 13, 1998 through April 12, 2000.
"FOR CAUSE" shall mean, in the context of a basis for termination of
Employee's employment with the Company, that:
a) Employee breaches any obligation, duty or agreement under this
Agreement, which breach is not cured or corrected within 15 days of written
notice thereof from the Company (except for breaches of Sections 1(c), 8 or 9
of this Agreement, which cannot be cured and for which the Employee shall
have no opportunity to cure); or
b) In the reasonable judgment of a Responsible Officer or the
Board, Employee is grossly negligent in the course of providing services to
the Company, or commits any act of personal dishonesty, fraud or breach of
fiduciary duty or trust; or
c) Employee is convicted of, or pleads guilty or nolo contendere
with respect to, theft, fraud, crime involving moral turpitude, or felony
under federal or applicable state law;
d) Employee commits any act or acts of personal conduct that, in
the reasonable opinion of a Responsible Officer or the Board, gives rise to a
material risk of liability under federal or applicable state law for
discrimination or sexual or other forms of harassment or other similar
liabilities to subordinate employees; or
e) Employee commits continued and repeated substantive violations
of specific directions of a Responsible Officer or the Board, which
directions are consistent with this Agreement and Employee's position as an
executive officer, or continued and repeated substantive failure to perform
duties assigned by or pursuant to
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this Agreement; provided that no discharge shall be deemed For Cause under
this subsection (e) unless Employee first receives written notice from the
Company advising him of the specific acts or omissions alleged to constitute
violations of written directions or a material failure to perform his duties,
and such violations or material failure continue after he shall have had a
reasonable opportunity to correct the acts or omissions so complained of; or
f) Employee himself made any material misrepresentation or
omission regarding his employment history, education or experience in
connection with his negotiations to become an employee of the Company.
"PERSON" shall mean an individual or a partnership, corporation, trust,
association, limited liability company, governmental authority or other
entity.
"RESPONSIBLE OFFICER" shall mean one or more officers of the Company
designated by the Board with titles senior to the title held by Employee, or
if no such officer shall have been so designated, the Board.
3. COMPENSATION; EMPLOYEE BENEFIT PLANS.
a) SIGNING BONUS. Within five business days following the date
Employee commences his employment pursuant to this Agreement, the Company
shall pay to Employee a signing bonus of $50,000 (the "SIGNING BONUS").
b) BASE SALARY. The Company shall pay to Employee a base salary (the
"BASE SALARY") at an annual rate of $200,000 during the Employment Term. The
Base Salary shall be payable in installments throughout the Employment Term
in the same manner and at the same times the Company pays base salaries to
other executive officers of the Company.
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c) BONUS. Employee shall be entitled to bonus compensation as follows:
(i) During each calendar year of his employment (including
the first partial calendar year) Employee shall be entitled to a bonus if he
and/or the Company attains certain goals, described as Individual Performance
Goals (relating to goals specifically for the Employee), and the Company
Performance Goal (relating to the Company's overall performance) (such goals
shall be collectively referred to as the "GOALS"). Employee's target
aggregate bonus for each year shall be 30% of Base Salary. Of Employee's
target aggregate bonus for each year other than 1998, 50% shall be allocated
to meeting Individual Performance Goals and 50% shall be allocated to meeting
the Company Performance Goal.
(ii) The Individual Performance Goals and the Company
Performance Goal for the first partial calendar year of the Employment Term
of Employee's employment (the calendar year ended December 31, 1998), and the
amount and calculations of the bonus for such period, are set forth in
Exhibit A to this Agreement. The target aggregate bonus for meeting all
Goals in calendar year 1998 shall be $50,000. Prior to the beginning of 1999
and 2000, Employee and a Responsible Officer shall meet to discuss the
potential Individual Performance Goals and the Company Performance Goal for
such years. A Responsible Officer shall thereafter establish the Goals for
Employee for such years, generally consistent with the overall policies and
objectives of the Company and the manner of establishing goals for other
executive officers of the Company (excluding the Chief Executive Officers).
If Employee believes that one or all of the proposed Goals or bonus
allocation is not appropriate, Employee may request that the Board review his
proposed Goals and/or bonus allocation for such
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year. The Board will review such proposed Goals and either confirm or modify
such Goals, as it, in its sole and absolute discretion, deems appropriate.
To the extent that one or more Goals are materially exceeded during any
calendar year, Employee shall be eligible for consideration for an additional
bonus, at the sole discretion of the Responsible Officer or the Board, up to
a maximum aggregate bonus of 60% of Base Salary.
(iii) The bonus for any calendar year shall be paid no later
than 90 days following the end of such calendar year.
d) REIMBURSEMENT. Employee shall be entitled to reimbursement from
the Company for the reasonable costs and expenses which he incurs in
connection with the performance of his duties and obligations under this
Agreement in a manner consistent with the Company's practices and policies
for reimbursements for officers.
e) AUTOMOBILE ALLOWANCE. Employee shall be entitled to an automobile
allowance of $1,000 per month. The automobile allowance shall be paid in a
manner consistent with the Company's practices and policies therefor.
f) GROUP BENEFIT PLANS. Employee shall be eligible to participate in
the Company's group health, dental, life, disability, retirement (including
401(k)) and pension benefit plans, subject to the terms, conditions and
limitations contained in the applicable plan documents and insurance policies.
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g) VACATION. Employee shall be entitled to three weeks paid vacation
each year during the Employment Term. Employee shall have the right to
carryover unused vacation to the extent permitted by the Company's policies
from time to time in effect.
h) DISABILITY BENEFITS. In the event of any disability or illness of
Employee, if Employee shall receive payments as a result of such disability
or illness under any disability plan maintained by the Company, the Company
shall be entitled to deduct the amount of such payments received from Base
Salary payable to Employee during the period of such illness and/or
disability.
i) WITHHOLDING. The Company may deduct from any compensation payable
to Employee the minimum amounts sufficient to cover applicable federal, state
and/or local income tax withholding, old-age and survivors' and other social
security payments, state disability and other insurance premiums and payments.
4. TERM OF EMPLOYMENT. Employee's employment pursuant to this Agreement
shall commence on the Employment Commencement Date and shall terminate on the
earliest to occur of the following:
a) upon 30 days' written notice from Employee to the Company at any
time after the end of the Employment Term;
b) upon the death of Employee;
c) upon delivery to Employee of written notice of termination by the
Company if Employee shall suffer a physical or mental disability which
renders Employee, in the reasonable judgment of a Responsible Officer, unable
to perform his duties and obligations under this Agreement for 90 days in any
12-month period;
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d) upon delivery to Employee of written notice of termination by the
Company For Cause; or
e) upon delivery to Employee of written notice of termination by the
Company without cause.
5. SEVERANCE COMPENSATION.
a) If Employee's employment is terminated pursuant to Section 4(b)
(death) or Section 4(c) (disability), Employee's Base Salary and other
benefits shall cease as of the date of termination, and Employee shall be
eligible for bonus compensation for the year in which his employment is
terminated as follows: With respect to the Company Performance Goal, the
bonus shall be determined as if Employee's employment had not terminated
during such calendar year, except that Employee's bonus shall equal the
amount which the bonus would have been with respect to such Goal multiplied
by a fraction, the numerator of which is the number of days in such calendar
year during which Employee was employed by the Company and the denominator of
which is the number of days in such calendar year. With respect to his
Individual Performance Goals, Employee acknowledges that those are unique
goals personal to Employee and that the determination of whether such Goals
shall have been met shall be made as of the date of termination of
employment. Such determination shall be made by a Responsible Officer within
60 days following termination of Employee's employment. If it is determined
that his Individual Performance Goals were achieved, in whole or in part, to
the extent necessary to achieve all or a portion of the bonus for Individual
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Performance Goals for such year, such payment shall be made promptly
following such determination.
b) If Employee's employment is terminated pursuant to Section 4(a) (by
Employee following end of Employment Term) or Section 4(d) (by the Company
For Cause), Employee's Base Salary and other benefits shall cease as of the
date of termination, and Employee shall not be entitled to any bonus for the
calendar year during which his employment shall be terminated or at any time
thereafter.
c) If Employee's employment is terminated pursuant to Section 4(e) (by
the Company other than For Cause) prior to the end of the Employment Term,
Employee shall be: (A) entitled to continue to receive Base Salary in accordance
with Section 3 of this Agreement through the end of the Employment Term, payable
when and in the manner as if Employee's employment had not terminated;
(B) unless otherwise prohibited by the Group Benefit Plans, entitled to receive
benefits (other than vacation) under Section 3 of this Agreement until the
earlier of the date Employee accepts other employment or the end of the
Employment Term; provided, however, that if insurance benefits do not commence
for some grace period following commencement of Employee's new employment, the
benefits under this Agreement shall continue until the earlier of the end of
such grace period or 90 days from commencement of employment (and Employee
agrees to promptly notify the Company of his acceptance of other employment);
and (C) eligible for bonus compensation through the end of the calendar year in
which his employment terminates. With respect to the Company Performance Goal,
the bonus shall be determined as if Employee's employment had not terminated
(without proration). With respect to Individual Performance Goals, Employee
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acknowledges that those are unique goals personal to Employee and Employee
shall be eligible for a bonus with respect such Goals only for the year in
which his employment shall be terminated and then based upon whether those
Goals shall have been met as of the date of termination of employment. Such
determination shall be made by a Responsible Officer within 60 days following
termination of Employee's employment. If it is determined that such Goals
are achieved, in whole or in part, to the extent necessary to achieve all or
a portion of the bonus for the Individual Performance Goals for such year,
such payment shall be promptly made following such determination.
d) If Employee terminates his employment in breach of this Agreement
prior to the end of the Employment Term, Employee shall as of the date of
termination cease to be entitled to Base Salary, benefits or bonuses. In
addition, the Company shall be entitled to seek any other available remedies
pursuant to this Agreement or otherwise for such breach, and to offset
against any amounts due Employee any damages suffered as a result of such
breach.
e) In the event of termination of Employee's employment pursuant to
Section 4(d) (by the Company For Cause), and subject to applicable law and
regulations, the Company shall be entitled to offset against any payments due
Employee the loss and damage, if any, which shall have been suffered by the
Company as a result of the acts or omissions of Employee giving rise to
termination under Section 4(d). The foregoing shall not be construed to limit
any cause of action, claim or other rights which the Company may have against
Employee in connection with such acts or omissions.
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f) Employee acknowledges that the Company has the right to terminate
Employee's employment other than For Cause and that such termination shall
not be a breach of this Agreement or any other express or implied agreement
between the Company and Employee. Accordingly, in the event of such
termination, Employee shall be entitled only to those benefits specifically
provided for in this Agreement in the event of such termination, and shall
not have any other rights to any compensation or damages from the Company for
breach of contract.
g) If Employee's employment is terminated by the Company pursuant to
Section 4(d) (by the Company For Cause) or by Employee in breach in this
Agreement on or prior to April 13, 1999, Employee shall reimburse the Company
for the Signing Bonus paid by the Company. Such reimbursement shall be made
within 10 days following the termination of Employee's employment. The
Company shall have the right to offset against any payments due from the
Company to Employee all or any portion of such Signing Bonus required to be
reimbursed by Employee.
h) Employee acknowledges that in the event of termination of his
employment for any reason, he shall not be entitled to any severance or other
compensation from the Company except as specifically provided in this Section
5. Without limitation on the generality of the foregoing, this Section
supersedes any plan or policy of the Company which provides for severance to
its officers or employees, and Employee shall not be entitled to any benefits
under any such plan or policy.
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6. STOCK OPTIONS.
a) On the Employment Commencement Date, Employee shall be granted an
option to purchase 75,000 shares of the Common Stock of the Company at the
market price at the time of the grant. Such grant shall be made under the
Company's Employee Stock Option Plan (the "OPTION PLAN").
b) It shall be within the sole discretion of the Board whether
additional stock option(s) shall be granted during the Employment Term and,
if granted, the number of shares subject to such option(s) and the terms and
conditions of such option(s).
7. EMPLOYMENT FOLLOWING EMPLOYMENT TERM. If Employee's employment
continues following the Employment Term:
a) such employment shall continue to be "at will," and may be
terminated either by the Employee upon 30 days written notice to the Company
or by the Company at any time; and
b) except as otherwise agreed in writing, all of the provisions of
this Agreement shall be applicable to such continued employment, other than:
(i) Employee's compensation, which shall be the Base Salary at the rate in
effect at the end of the Employment Term, (ii) bonus compensation, if any, as
may be granted by the Board in its sole discretion; and (iii) the provisions
of Section 4 shall be superseded to the extent discussed in this paragraph.
8. COVENANT NOT TO SOLICIT. During the period from the date Employee's
employment with the Company terminates through the second anniversary of such
date, Employee will not directly or indirectly, either alone or by action in
concert with others: (a) induce or attempt to influence any employee of any
member of the Company
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Group to engage in any activity in which Employee is prohibited from engaging
by Section 1(c) of this Agreement or to terminate his or her employment with
any member of the Company Group; or (b) employ or offer employment to any
person who was employed by any member of the Company Group during the time of
Employee's employment with the Company; or (c) induce or attempt to induce
any customer, supplier, licensee or other business relationship of any member
of the Company Group to cease or reduce its business with any member of the
Company Group, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relationship and any member of the
Company Group; or (d) solicit business from any of the Company's customers.
9. CONFIDENTIALITY. Employee will not at any time (whether during or after
his employment with the Company) disclose or use for his own benefit or
purposes or the benefit or purposes of any other Person, other than any
member of the Company Group, any trade secrets, information, data, or other
confidential information relating to customers, development programs, costs,
marketing, trading, investment, sales activities, promotion, credit and
financial data, financial methods, plans, or the business and affairs of the
Company Group generally, PROVIDED that the foregoing shall not apply to
information which is generally known to the industry or the public other than
as a result of Employee's breach of this covenant. Employee agrees that upon
termination of his employment with the Company for any reason, he will return
to the Company immediately all memoranda, books, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in any way
relating to the business of the Company Group except that he may retain
personal notes, notebooks, diaries, rolodexes and
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addresses and phone numbers. Employee further agrees that he will not retain
or use for his account at any time any trade names, trademark or other
proprietary business designation used or owned in connection with the
business of any member of the Company Group.
10. SPECIFIC PERFORMANCE. Employee acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 1(c), 8 or 9 would be inadequate and, in recognition of
this fact, Employee agrees that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction
or any other equitable remedy which may then be available.
11. RESOLUTION OF DISPUTES.
a) Except as provided in subsection (c) below, any controversy or
claim between or among the parties, relating to Employee's employment with
the Company, including but not limited to those arising out of or relating to
this Agreement or any agreements or instruments relating hereto or delivered
in connection herewith and any claim based on or arising from an alleged
tort, shall at the request of any party be determined by arbitration. The
arbitration shall be conducted in Los Angeles, California, in accordance with
the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement, and under the Commercial Rules of
the American Arbitration Association ("AAA"). The parties shall have the
right to review and approve a panel of prospective arbitrators supplied by
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AAA, but the arbitration shall be conducted by a single arbitrator selected
from the approved panel by AAA or by stipulation of the parties. The
arbitrator(s) shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator(s). The arbitrator(s) shall be entitled to
order specific performance of the obligations imposed by this Agreement.
Judgment upon the arbitration award may be entered in any court having
jurisdiction.
b) All decisions of the arbitrator shall be final, conclusive and
binding on all parties and shall not be subject to judicial review. All
costs of the arbitration shall be borne by the party which is not the
Prevailing Party (as defined in Section 12(h) of this Agreement). If
required, each party shall advance 50% of any costs of the arbitration
required to be advanced, subject to the right of the non-Prevailing Party to
reimbursement.
c) Subsection (a) above does not prohibit a party from seeking and
obtaining injunctive relief pending the outcome of arbitration. A party
bringing an action for injunctive relief shall not be deemed to have waived
its right to demand arbitration of all disputes.
12. MISCELLANEOUS.
a) NOTICES. All notices, requests, demands and other communications
(collectively, "NOTICES") given pursuant to this Agreement shall be in
writing, and shall be delivered by personal service, courier, facsimile
transmission or by United States first class, registered or certified mail,
addressed to the following addresses:
(i) If to the Company, to:
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Equity Marketing, Inc.
131 S. Rodeo Drive, Suite 300
Beverly Hills, California 90212-2428
Attn: Senior Vice President, Business Affairs
(ii) If to Employee, to:
Edward T. Boyd III
5605 Little Fawn Court
Westlake Village, CA 91362
Any Notice, other than a Notice sent by registered or certified mail, shall
be effective when received; a Notice sent by registered or certified mail,
postage prepaid return receipt requested, shall be effective on the earlier
of when received or the third day following deposit in the United States
mails (or on the seventh day if sent to or from an address outside the United
States). Any party may from time to time change its address for further
Notices hereunder by giving notice to the other party in the manner
prescribed in this Section.
b) ENTIRE AGREEMENT. This Agreement contains the sole and entire
agreement and understanding of the parties with respect to the entire subject
matter of this Agreement, and any and all prior discussions, negotiations,
commitments and understandings, whether oral or otherwise related to the
subject matter of this Agreement are hereby merged herein. No
representations, oral or otherwise, express or implied, other than those
contained in this Agreement have been relied upon by any party to this
Agreement. Notwithstanding the foregoing, Employee acknowledges that the
Company has relied on his resume and other documents which may have been
provided by Employee, and oral statements regarding Employee's employment
history, education and experience, in determining to enter into the
Agreement, and material misrepresentations (or omissions) in connection with
such documents may constitute the basis of termination For Cause, as
contemplated by the definition of For Cause.
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c) SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason,
in whole or in part, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.
d) GOVERNING LAW. This Agreement has been made and entered into in
the State of California and shall be construed in accordance with the laws of
the State of California.
e) CAPTIONS. The various captions of this Agreement are for reference
only and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
g) BUSINESS DAY. If the last day permissible for delivery of any
notice under any provision of this Agreement, or for the performance of any
obligation under this Agreement, shall be other than a business day, such
last day for such notice or performance shall be extended to the next
following business day (provided, however, under no circumstances shall this
provision be construed to extend the date of termination of this Agreement).
h) ATTORNEYS' FEES. If any action, proceeding or arbitration is
brought to enforce or interpret any provision of this Agreement, the
Prevailing Party shall be entitled to recover as an element of its costs, and
not its damages, its reasonable attorneys' fees, costs and expenses. The
"PREVAILING PARTY" is the party who would have been entitled to recover its
costs under the California Code of Civil Procedure had the action been
maintained in the Superior Court of California regardless of whether there is
final judgment. A party not entitled to recover its costs may not recover
attorneys' fees. No sum for attorneys' fees shall be counted in calculating
the amount of a
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judgment for purposes of determining whether a party is entitled to recover
its costs or attorneys' fees.
i) ADVICE FROM INDEPENDENT COUNSEL. The parties hereto understand
that this Agreement is legally binding and may affect such party's rights.
Each party represents to the other that it has received legal advice from
counsel of its choice regarding the meaning and legal significance of this
Agreement to which it is a party and that it is satisfied with its legal
counsel and the advice received from it.
j) INTERPRETATION. Should any provision of this Agreement require
interpretation, it is agreed that any court or arbitrator interpreting or
construing the same shall not apply a presumption that the terms hereof shall
be more strictly construed against any Person by reason of the rule of
construction that a document is to be construed more strictly against the
Person who itself or through its agent prepared the same, it being agreed
that all Parties have participated in the preparation of this Agreement.
k) WAIVER OF JURY TRIAL. IF NOTWITHSTANDING THE AGREEMENT THAT ALL
DISPUTES BE SUBMITTED TO BINDING ARBITRATION, A DISPUTE IS SUBMITTED TO A
COURT, EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE
IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR
ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, AND AGREE TO TAKE
ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS WRITTEN CONSENT TO A
TRIAL BY THE COURT.
Company:
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EQUITY MARKETING, INC.
By: /s/Mark Lewis
---------------------------
Its: Senior Vice President, Business Affairs
EMPLOYEE:
/s/ Edward T. Boyd III
--------------------------------
Edward T. Boyd III
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EXHIBIT A
INDIVIDUAL PERFORMANCE GOALS AND
COMPANY PERFORMANCE GOAL
FOR 1998
I. Individual Performance Goals
A. Target Amount: $25,000
B. Description: To be determined
II. Company Performance Goal
A. Target Amount: $25,000
B. Description: The Company's pre-tax,
pre-bonus target as
approved by the Board
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