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On-Call Employee Agreement - Playboy Enterprises Inc. and James English

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                           ON-CALL EMPLOYEE AGREEMENT

This On-Call Employee Agreement ("Agreement") is executed as of June 4, 2004 by
and between Playboy Enterprises, Inc. (the "Company") and James English
("English"), with reference to the following facts and circumstances:

A.    WHEREAS, the Company is desirous of transitioning English's status as a
      regular full-time employee to that of an on-call employee on the terms and
      conditions hereinafter set forth; and

B.    WHEREAS, English desires to perform services as an on-call employee upon
      such terms and conditions.

NOW, THEREFORE, in consideration of the premises and of the mutual promises,
representations and covenants herein contained, the parties hereto agree as

1.    Services

      A.    English will provide those services reasonably requested by the
            Company in connection with the production and marketing of adult
            television programming for domestic and international television
            networks worldwide and worldwide DVD/home video products and the
            associated production, programming and distribution activities
            related thereto (collectively the "Services"). English will not be
            required to supervise any Company staff.

      B.    English shall perform such additional duties consistent with the
            Services as the Company may reasonably assign during the term of
            this Agreement, including Services for any subsidiary or affiliated

      C.    English will be entitled to perform consulting services for third
            parties during the Term hereof (as defined in paragraph 2.) without
            violating the terms and conditions of this Agreement on the
            condition that such third parties are not pay or free cable or
            satellite broadcast adult networks as provided in paragraph 6.

      D.    English's principal place of business in the performance of the
            Services shall be at Company's Andrita


            Studios in California, but will engage in such travel and spend such
            time in other places as may be necessary or appropriate in
            furtherance of his duties under this Agreement at Company's expense
            and in accordance with Company's travel and entertainment policies.
            Company will provide English with an office at Andrita Studios in
            addition to access to and use of a laptop computer and Playboy's
            telephone and e-mail system for purposes of performing the Services.

2.    Term

      A.    The initial term ("Term") of this Agreement will be one year,
            commencing June 4, 2004, unless sooner terminated as hereinafter

      B.    The Term may be extended for two additional periods of six months
            each with the mutual consent of the parties.

3.    Compensation

      A.    The Company will pay English the sum of $650,000 within 10 days of
            English's execution of this Agreement which specifically constitutes
            payment relating to the termination of English's prior employment
            agreement. English acknowledges and agrees that no other payments
            are due or will be due him under such prior employment agreement
            except for any travel and entertainment reimbursement to which he is
            entitled under Company policy.

      B.    For all Services rendered and required to be rendered by, covenants
            of and restrictions in respect to English under this Agreement,
            Company will pay English for the Term at the rate of $650,000 per
            annum, payable on a biweekly basis in accordance with Company's
            standard payroll practices.

      C.    Company will reimburse English for all reasonable out-of-pocket
            expenses approved in advance by the Company and in furtherance of
            his duties under this Agreement in accordance with the Company's


      D.    Company will pay English's costs of COBRA coverage for the Term.

      E.    All payments due to English hereunder shall be subject only to such
            income tax withholding, payroll taxes and any other withholdings
            required by law.

      F.    English will be entitled to continue to participate in Company's
            401(k) plan consistent with ERISA rules and Company policies
            relating to on-call employees.

4.    Termination

      A.    Company shall have the right to terminate this Agreement at any time
            only "for cause" immediately upon written notice to English. "For
            cause" is defined as conviction of a crime involving dishonesty,
            fraud or breach of trust, or intentionally engaging without
            permission or direction from Company in conduct materially injurious
            to Company.

      B.    English shall have the right to terminate this Agreement at any time
            on not less than 60 days' prior written notice only to take a
            full-time position with any company or concern that is not in the
            pay or free cable or satellite broadcast adult network as provided
            under paragraph 6. hereof.

5.    Effect of Termination

      If Company terminates this Agreement "for cause," English shall not be
      entitled to any compensation that could have been earned after the
      effective date of termination.

6.    Non-Competition

      For the Term, or for so long as English is receiving compensation under
      paragraph 3. hereof, English shall not work for or provide services to any
      other pay or free cable or satellite broadcast adult network (including,
      but not limited to, New Frontier, Hustler or Private, or their successors,
      but not including HBO or Showtime).

7.    Indemnity

      Although it is not intended and hopefully will never occur, Company
      recognizes that the performance of the Services


      within the scope of English's employment creates the potential in some
      jurisdictions of civil or even criminal actions being brought against
      English. To the fullest extent permitted by law, Company shall indemnify,
      defend, protect and hold English harmless from and against all claims,
      demands, causes of action, actions, suits, costs, damages, penalties,
      fines, liabilities, losses and expenses, whether civil or criminal,
      including, without limitation, reasonable attorneys' and consultant's fees
      and expenses arising out of or resulting from the performance of English's
      duties within the scope of English's employment.

8.    Confidentiality

      A.    All memoranda, notes, records and other materials made or compiled
            by English, or made available to English, in connection with and
            during the Term will remain the sole and exclusive property of
            Company. English acknowledges and agrees that all nonpublic
            information acquired about Company, and all material reflecting such
            nonpublic information, is highly confidential and that disclosure of
            such information or material could cause serious and irreparable
            injury to Company, and that English will not hereafter disclose any
            such information or make any such material available to anyone
            without the written consent of Company, other than as required
            pursuant to an order of a court, governmental agency or other
            authorized tribunal. For purposes of this paragraph 8., the term
            "Company" includes any of Company's subsidiaries and affiliated and
            predecessor companies, and its and their officers, directors,
            employees and agents.

      B.    English will not directly or indirectly disclose, discuss,
            disseminate, be the source of or otherwise publish or communicate in
            any manner to any person or entity any confidential information
            concerning the personal, social or business activities of Company,
            its affiliates or the executives and principals and the officers,
            directors, agents and employees of all of the foregoing during or at
            any time after the Term other than as required pursuant to an order
            of a court, governmental agency or other authorized tribunal. In
            addition, English agrees that without Company's express written
            approval in each case, English will not:


            (i)   write, be the source of or contribute to any articles,
                  stories, books, screenplays or any other communication or
                  publicity of any kind (written or otherwise) or deliver
                  lectures in any way regarding or concerning confidential
                  information of Company, or

            (ii)  grant any interviews regarding or concerning confidential
                  information of Company during or at any time after the Term.

      C.    Upon termination of this Agreement, or at any other time the Company
            demands, English shall deliver promptly to the Company all material
            and documentation relating to the Company, its parent, subsidiaries,
            affiliates, predecessor companies, and its and their executives,
            principals, officers, directors, agents, employees, clients, and
            customers, including without limitation, all memoranda, notes,
            records, reports, manuals, drawings, customer lists, referral source
            lists, vendor service lists, software programs, and any other
            documents, whether or not of a confidential nature, belonging to the
            Company, including all copies of such materials which English may
            then possess or have under English's control. English further agrees
            that upon termination of the engagement, English shall not retain
            any document containing or pertaining to any confidential

9.    Unfair Competitive Practices

      A.    English will not at any time during the Term solicit or take away,
            directly or indirectly, any person, entity or business that is a
            customer or prospective customer of the Company, its parent, or any
            of its affiliates or subsidiaries.

      B.    During the Term, English agrees that he will not, directly or
            indirectly, solicit, induce or influence any person employed or
            engaged by the Company to terminate such employment or engagement.

      C.    During the Term, English will not do anything that could affect to
            the Company's detriment any relationship of the Company with any
            current, future or prospective customer, supplier or Company


            ployee, or which could cause any current, future or prospective
            client or customer to refrain from entrusting business or additional
            business to the Company.

      D.    English and Company agree that during the Term and after termination
            of this Agreement, neither Company nor English will make any public
            statement, or engage in any conduct, that is disparaging to the
            other party or, in the case of Company, any of its employees,
            officers, directors or shareholders known to you, but not limited
            to, any statement that disparages the products, services, finances,
            financial condition, capabilities or other aspect of the business of
            Company and English's capabilities. Notwithstanding any term to the
            contrary herein, neither English nor Company shall be in breach of
            this paragraph for the making of any truthful statements under oath.

      E.    English agrees that, where applicable, the provisions of this
            paragraph 9. shall survive the termination of this Agreement.

      F.    English hereby acknowledges and agrees that, in the event he shall
            violate any provisions of this paragraph 9., the Company will be
            without an adequate remedy at law and, accordingly, will be entitled
            to enforce such restrictions by temporary or permanent injunctive or
            other mandatory relief obtained in any action or proceeding, without
            the necessity of proving damages or posting bond, and without
            prejudice to any other remedies which it may have at law or in

      G.    During the Term and after termination of this Agreement, English
            will make no use of Company's intellectual property without the
            prior written consent of Company.

10.   Releases

      A.    For and in consideration of English's promises made hereunder,
            Company hereby agrees not to sue or make any claim of any kind
            against English or his assigns (the "English Releasees"), before any
            agency, court of other forum, and Company releases and dis-


            charges the English Releasees, and each of them, from all manner of
            action and actions, cause or causes of action in law or inequity,
            administrative proceedings, suits, claims, debts, liens, sums of
            money, accounts, reckonings, bonds, bills, covenants, contracts,
            controversies, agreements, promises, variances, trespasses, damages,
            judgments, executions, claims and demands whatsoever, whether known
            or unknown, arising from acts or omissions of the English Releasees
            in connection with English's employment through the effective date
            of this Agreement (including the Employment Agreement dated October
            8, 2003, as amended). In addition, for and in consideration of the
            payments and other benefits provided to English hereunder, English
            agrees not to sue or make any claim of any kind against Company, its
            subsidiaries and affiliated and predecessor companies, its and their
            successors and assigns and all its and their past and present
            directors, officers, employees and agents and attorneys, either
            personally or in their capacity as directors, officers, employees
            and agents (for purposes of this paragraph 10.A., the "Releasees"),
            before any agency, court or other forum, and English releases and
            discharges the Releasees, and each of them, from all manner of
            action and actions, cause or causes of action in law or inequity,
            administrative proceedings, suits, claims, debts, liens, sums of
            money, accounts, reckonings, bonds, bills, covenants, contracts,
            controversies, agreements, promises, variances, trespasses, damages,
            judgments, executions, claims and demands whatsoever, whether now
            known or unknown, arising from acts or omissions of the Releasees in
            connection with English's employment through the effective date of
            this Agreement (including the Employment Agreement dated October 8,
            2003, as amended). English agrees that this release of claims
            includes, but is not limited to, claims for breach of any implied or
            express contract or covenant; claims for promissory estoppel; claims
            of entitlement to any pay (other than the pay promised in paragraph
            3.); claims of wrongful denial of insurance and employee benefits;
            claims for wrongful termination, public policy violations,
            defamation, invasion of privacy, fraud, misrepresentation, emotional
            distress or other common law or tort matters; claims of harassment,
            retaliation or


            discrimination based on lifestyle, age, race, color, religion, sex,
            national origin, ancestry, physical or mental disability, medical
            condition, marital status, sexual orientation, union activity or
            veteran status; claims under California Labor and Government Codes;
            claims based upon the California or Federal Constitutions; any
            claims based on legal restrictions on the Company's right to
            terminate, not to hire or promote employees, or to change an
            employee's compensation; and claims based on any federal, state or
            other governmental statute, regulation or ordinance, including,
            without limitation: Title VII of the Civil Rights Act of 1964, as
            amended; the California Fair Employment and Housing Act; the Equal
            Pay Act, 29 U.S.C. Section 206(d)(1); the Age Discrimination in
            Employment Act; the Older Worker Benefit Protection Act; the
            Americans with Disabilities Act; the Labor Management Relations Act;
            the Family Medical Leave Act; and the Employee Retirement Income
            Security Act. It is expressly understood by English that among the
            various rights and claims being waived by English in this release
            are those arising under the Age Discrimination in Employment Act of
            1967 (29 U.S.C. Section 621, et seq.), as amended.


11.   For the purpose of implementing a full and complete release, the parties
      hereto expressly acknowledge that the releases given in this Agreement are
      intended to include in their effect, without limitation, claims that they
      did not know or suspect at the time of execution hereof, regardless of
      whether the knowledge of such claims, or the facts upon which they might
      be based, would materially have affected the settlement of this matter,
      and that the consideration given under this Agreement is also for the
      release of those claims and contemplates the extinguish-


      ment of any such unknown claims. In furtherance of this settlement, the
      parties waive any rights they may have under California Civil Code,
      Section 1542, or other similar statutes. Section 1542 states:


12.   Miscellaneous

      A.    Upon the effective date of this Agreement, English will no longer be
            entitled to life insurance or long-term disability insurance under
            the Company's insurance plans. English may apply for the conversion
            of such insurance, which must be completed within 31 days from the
            effective date of this Agreement.

      B.    Any stock options issued to English by Company will cease vesting as
            of the effective date of this Agreement. English will have ten days
            after the end of the Term within which to exercise any stock options
            that were exercisable as of the effective date of this Agreement.
            Any options unexercised after such 10 day period will expire.

      C.    English will not receive or be entitled to receive any compensation
            under Company's Executive Incentive Compensation Plan for 2004 or
            subsequent years.

      D.    As of the effective date of this Agreement, any restricted stock
            units granted to English will be null and void.

      E.    The Employment Agreement dated October 1, 2003, as amended, is
            terminated effective as of the date of this Agreement.

      F.    Company shall directly pay to the firm of Reuben & Novicoff,
            English's attorneys, upon submission of a detailed invoice, up to
            $10,000 to cover English's legal fees (at English's attorneys'
            standard hourly rates) incurred in the negotiation of this

13.   Entire Agreement


      This Agreement sets forth the entire understanding of the parties with
      respect to the subject matter hereof, and no statement, representation,
      warranty or covenant has been made by either party except as expressly set
      forth herein. This Agreement supersedes and cancels all prior agreements
      between the parties, whether written or oral, relating to the Services of

14.   Amendment or Alteration

      No amendment or alteration of the terms of this Agreement shall be valid
      unless made in writing and signed by the parties hereto.

15.   Assignment

      This Agreement may not be transferred or assigned by either party without
      the prior written consent of the other party.

16.   Notices

      All notices hereunder shall be in writing and sent postage prepaid,
      registered mail, return receipt requested, or by overnight express
      courier, or by facsimile, provided answer-back confirmation is requested
      and received, to the parties at the addresses indicated below (or to such
      changed address, addressee and/or facsimile as a party may subsequently
      give such notice of) and shall be deemed effective when actually received
      or refused by the addressee or upon notification of non-deliverability by
      the postal authorities, the express courier or upon receipt of an
      answer-back confirmation in the case of facsimile, as the case may be.

      If to the Company:        Playboy Enterprises, Inc.
                                680 North Lake Shore Drive
                                Chicago, IL 60611
                                Attention:  General Counsel
                                Facsimile 312 266 2042

      If to the Executive:      James English
                                777 South Oak Knoll Avenue
                                Pasadena, CA 91106
                                Facsimile 626 796 6123


      With a copy to:           Timothy D. Reuben, Esquire
                                Reuben & Novicoff
                                1100 Glendon Avenue
                                10th Floor
                                Los Angeles, CA 90024
                                Facsimile 310 777 1989

17.   Governing Law; Forum

      This Agreement will be governed by, and construed in accordance with, the
      laws of the State of California applicable to agreements made and to be
      performed entirely in such state.

18.   Successors and Assigns

      All of the terms and provisions of the Agreement shall be binding upon and
      inure to the benefit of and be enforceable by the respective heirs,
      personal representatives, successors and assigns of English and the
      successors and assigns of the Company.

19.   Severability

      A.    If, at any time subsequent to the date hereof, any provision of this
            Agreement shall be held by any court of competent jurisdiction to be
            illegal, void or unenforceable, such provision shall be of no force
            and effect, but the illegality or enforceability of such provision
            shall have no effect upon and shall not impair the enforceability of
            any other provision of this Agreement.

      B.    To the extent that any portion of this Agreement is deemed
            unenforceable by virtue of its scope in terms of area, business
            activity prohibited and/or length of time, but could be enforceable
            by reducing the scope of area, business activity prohibited and/or
            length of time, English and the Company agree that same shall be
            enforced to the fullest extent permissible under the laws and public
            policies applied in the jurisdiction in which enforcement is sought,
            and that the Company shall have the right, in its sole discretion,
            to modify such invalid or unenforceable provision to the extent
            required to be valid and enforceable. English agrees to be bound by
            any promise or cove-


            nant imposing the maximum duty permitted by law which is subsumed
            within the terms of any provision hereof, as though it were
            separately articulated in and made a part of this Agreement, that
            may result from striking or modifying any of the provisions hereof.

20.   Agreement Is Knowing And Voluntary

      English understands and agrees that English:

      A.    has had a reasonable time within which to consider this Agreement
            before executing it;

      B.    has carefully read and fully understands all of the provisions of
            this Agreement;

      C.    knowingly and voluntarily agrees to all of the terms set forth in
            this Agreement;

      D.    knowingly and voluntarily intends to be legally bound by the same;

      E.    was advised, and hereby is advised in writing, to consider the terms
            of this Agreement and consult with an attorney of English's choice
            prior to executing this Agreement;

      F.    has had sufficient time to consider this Agreement prior to signing
            it, and has seven days after signing this Agreement to revoke his
            signature. Revocation can be made by delivering a written notice of
            revocation to the Company's General Counsel. For this revocation to
            be effective, written notice must be received by the General Counsel
            not later than the close of business on the seventh calendar day
            after English signs this Agreement. If English revokes this
            Agreement, it shall not be effective or enforceable and English will
            not receive the benefits provided herein.


IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date and year first written above.


               By  /s/ Howard Shapiro

               Its Exec. V.P.

                       /s/ James L. English
                           JAMES ENGLISH

               Date of Signature June 4, 2004