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EXECUTIVE EMPLOYMENT
AGREEMENT
BETWEEN
MOVIE GALLERY US,
LLC
AND
THOMAS D. JOHNSON,
JR.
DATED
SEPTEMBER 22,
2007
TABLE OF
CONTENTS
EXECUTIVE EMPLOYMENT
AGREEMENT
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PAGE NO. |
| 1. |
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Background |
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3 |
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| 2. |
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Definitions |
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3 |
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| 3. |
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Employment |
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6 |
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| 4. |
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Responsibilities |
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6 |
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| 5. |
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Stock
Compensation and Benefits; Reimbursements |
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6 |
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| 6. |
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Term;
Termination |
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8 |
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| 7. |
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Proprietary Information |
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9 |
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| 8. |
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Covenant Not To Compete |
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10 |
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| 9. |
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Non-Disparagement |
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10 |
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| 10. |
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Injunctive Relief |
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10 |
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| 11. |
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Severability |
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10 |
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| 12. |
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Arbitration |
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11 |
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| 13. |
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Attorneys’ Fees |
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| 14. |
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Headings |
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| 15. |
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Notices |
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| 16. |
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General Provisions |
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| 17. |
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Entire
Agreement |
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2
EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE EMPLOYMENT
AGREEMENT (the “Agreement”) is entered into this
22nd day of September, 2007 by and between MOVIE GALLERY US,
LLC, a Delaware limited liability company, with its principal
offices at 900 West Main Street, Dothan, Alabama 36301 (the
“Company”), and THOMAS D. JOHNSON, JR.
(“Employee”), whose address is XXXXXXXXXXXXXXXX, and
shall be effective on the Effective Date, as defined
below.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants and
agreements of the parties hereto, the parties do hereby covenant
and agree as follows:
1.
Background.
A. The Company is
engaged in the Home Entertainment Business (as hereinafter
defined).
B. The Company desires
to secure and retain the services of Employee in the office of
Executive Vice President and Chief Financial Officer and such
services are considered by the Company to be valuable with regard
to the Home Entertainment Business.
C. Employee is
currently employed with the Company and desires to continue his
employment with the Company, subject to and in accordance with the
terms and conditions set forth herein.
2.
Definitions.
As used in this Agreement,
the following terms shall have the meaning as set forth below, and
the parties hereto agree to be bound by the provisions
hereof:
A. Area means the
geographic area of the United States, Canada and Mexico, and such
other geographic areas in which operations are performed,
supervised, or assisted in by Employee on behalf of the Company or
in which the Company operates, both as of the date hereof and as
are anticipated to be conducted throughout the Term.
B. Board of Directors
means the Board of Directors of the Company.
C. Change of Control
means the occurrence of any of the following events:
(i) Merger or consolidation
where the Company is not the consolidated, continuing or surviving
company;
(ii) Transfer of all or
substantially all of the assets or stock of the Company;
or
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(iii) Change in control of
the Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934 as in effect
on the date thereof, and any person or persons acting in concert
(as such term is used in Section 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the beneficial holder directly or
indirectly of securities of the Company representing fifty percent
(50%) or more of the combined voting power of Company’s
then outstanding securities.
D. Chief Executive
Officer means the Chief Executive Officer of the Company from
time to time.
E. Company means Movie
Gallery US, LLC, its parent corporation, Movie Gallery, Inc., and
their respective subsidiaries and successors.
F. Constructive
Termination means a separation from service with the Company
during the Term due to Employee’s resignation within a period
of two years after the occurrence of one of the following without
Employee’s consent: (i) a material diminution in
Employee’s base salary or target annual bonus, (ii) a
material diminution in Employee’s authority, duties or
responsibilities from those in which Employee was engaged as
Executive Vice President and Chief Financial Officer of the Company
on the Effective Date, (iii) a material change in the primary
geographic location at which Employee provides services to the
Company, or (iv) any material breach by the Company of this
Agreement; provided, however that any such event shall constitute
Constructive Termination only if (i) Employee provides initial
notice of the Constructive Termination event to the Company within
90 days after the date of the event giving rise to
Constructive Termination and (ii) the Company fails to cure
the event giving rise to Constructive Termination within
30 days after its receipt of Employee’s initial notice
of such event.
G. Effective Date
means the date set forth above.
H. Home Entertainment
Business means the business of renting and/or selling movies,
games and other entertainment content, whether delivered, provided
and/or displayed via a physical retail store, kiosk or vending
machine, data transmission, the Internet, direct mail, or through
any other form of display or delivery system (whether now know or
developed hereafter, whether such system involves the delivery of a
physical or tangible object and including any other technological
evolutions thereof).
I. Initial Term means
the basic term of this Agreement, which shall be twelve
(12) months, beginning on the Effective Date and ending on the
date which is twelve (12) months following the Effective
Date.
J. Permanent
Disability means a physical or mental condition which renders
Employee incapable of performing his regular duties hereunder for a
period of one hundred twenty (120) consecutive days. In the
event of any disagreement between Employee and the Company as to
whether Employee is suffering from Permanent Disability, the
determination of Employee’s Permanent Disability shall be
made by one or more board certified licensed physicians practicing
the specialty of medicine applicable to Employee’s disorder
in accordance with the provisions of this Subsection J. If either
the Company or Employee desires to initiate the procedure provided
in this Section, such party (the “Initiating Party”)
shall deliver written notice to the other party (the
“Responding Party”) in accordance with the provisions
of this Agreement specifying that the Initiating Party desires to
proceed with a
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medical examination and the procedures
specified in this Section. Such notice shall include the name,
address and telephone number of the physician selected by the
Initiating party (the “Disability Examination Notice”).
If the Responding Party fails within thirty (30) days after
the receipt of the Disability Examination Notice to designate a
physician meeting the standards specified herein, the physician
designated by the Initiating Party in the Disability Examination
Notice shall make the determination of Permanent Disability as
provided in this Section. If the Responding Party by written notice
notifies the Initiating Party within thirty (30) days of the
receipt by the Responding Party of the Disability Examination
Notice by notice specifying the physician selected by the
Responding Party for purposes of this Section, then each of the two
physicians as so designated by the respective parties shall each
examine Employee. Examinations shall be made by each such physician
within thirty (30) days of such physician’s respective
designation. Each physician shall render a written report as to
whether Employee is, in such physician’s opinion, suffering
Permanent Disability. If the two physicians agree on the status of
Employee for purposes of this Section, such determination shall be
conclusive and dispositive for all purposes of this Section. If the
two physicians cannot agree, the two physicians shall jointly
select a third physician meeting the standards specified in this
Section within thirty (30) days after the later report of the
two physicians is submitted. The third physician shall render a
written report on the status of Employee within thirty
(30) days of selection and such report shall be dispositive
for purposes of this Section. For purposes of this Subsection J,
Employee agrees that he shall promptly submit to such examinations
and tests as such physicians shall reasonably request for purposes
of making a determination of Permanent Disability as provided
herein. Failure or refusal of the Company to designate a licensed
physician to make a determination of Permanent Disability as
required in accordance with this Section or of Employee to submit
to the examination as required by this Section shall constitute a
conclusive admission by the Company or Employee, as appropriate,
that Employee is suffering from a Permanent Disability as provided
herein.
K. Renewal Term means
the period, if any, following the Initial Term during which the
Agreement is extended as set forth in Section 6B.
L. Severance Amount
shall have the meaning as set forth in Section 5C.
M. Term means the
Initial Term and any Renewal Term.
N. Termination Date
means the following: (a) with respect to Termination With
Cause, the date the Company notifies Employee of the actions giving
rise to such termination and the termination of this Agreement
based thereon; (b) with respect to the death of Employee, the
date of his death; (c) with respect to Termination Without
Cause, the date on which the Company gives Employee notice of
Termination Without Cause; (d) with respect to Voluntary
Termination, the date on which Employee unilaterally terminates his
employment relationship with the Company; (e) with respect to
the Permanent Disability of Employee, the date Employee is
determined to be suffering from Permanent Disability, as provided
in Subsection 2J; and (f) with respect to Constructive
Termination, the date on which Constructive Termination occurs as
provided in Subsection 2F.
O. Termination With
Cause means the termination of this Agreement and
Employee’s separation from service with the Company during
the Term, only for the following:
(i) Theft or embezzlement
with regard to material property of the Company;
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(ii) Criminal conviction
punishable by imprisonment;
(iii) Material breach by
Employee of any of his duties or obligations under this Agreement;
or
(iv) Gross
insubordination.
P. Termination Without
Cause means a termination by the Company of this Agreement and
Employee’s separation from service with the Company during
the Term which is not a result of Termination With Cause, a
Voluntary Termination or a Constructive Termination, including the
expiration of the Term as a result of the Company electing not to
renew this Agreement at the end of the Initial Term or any Renewal
Term.
Q. Triggering Event
means Employee’s separation from service with the Company
during the Term due to (i) a Termination Without Cause or
(ii) a Constructive Termination.
R. Voluntary
Termination means unilateral termination by Employee of his
employment with the Company prior to the end of the Term and in the
absence of a Triggering Event, or as a result of Employee electing
not to renew this Agreement at the end of the Initial Term or any
Renewal Term. Notice by Employee to the Company of a breach by the
Company of its obligations under this Agreement pursuant to
Section 2F shall not constitute a Voluntary Termination for
purposes of this Agreement.
3. Employment. The
Company agrees to employ Employee in the office of Executive Vice
President and Chief Financial Officer
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