EXHIBIT 10.1**EXECUTIVE EMPLOYMENT AGREEMENT****BETWEEN****MOVIE GALLERY US, LLC****AND****KEITH A. COUSINS****DATED****AUGUST 23, 2006**
 

 
**TABLE OF CONTENTS****EXECUTIVE EMPLOYMENT AGREEMENT**   **PARAGRAPH** **PAGE NO.****1.   Background** **3**   **2.   Definitions** **3**   **3.   Employment** **6**   **4.   Responsibilities** **6**   **5.   Stock Compensation and Benefits; Reimbursements** **7**   **6.   Term; Termination** **8**   **7.   Proprietary Information** **9**   **8.   Covenant Not To Compete** **10**   **9.   Non-Disparagement** **10**   **10.   Injunctive Relief** **11**   **11.   Severability** **11**   **12.   Arbitration** **11**   **13.   Attorneys’ Fees** **11**   **14.    Headings** **11**   **15.   Notices** **11**   **16.   General Provisions** **12**   **17.   Entire Agreement** **12**
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**EXECUTIVE EMPLOYMENT AGREEMENT**     This **EXECUTIVE EMPLOYMENT AGREEMENT**(the “Agreement”) is entered into this 23rd day ofAugust, 2006 by and between **MOVIE GALLERY US, LLC,**a Delaware limited liability company, with itsprincipal offices at 900 West Main Street, Dothan, Alabama 36301 (the “Company”), and **KEITH A.COUSINS**(“Employee”), whose address is 9112 Sturbridge Place, Montgomery, Alabama 36116, and shallbe effective on the Effective Date, as defined below.     NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements ofthe 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 ofExecutive Vice President and Chief Development Officer and such services are considered by theCompany to be valuable with regard to the Home Entertainment Business.          **C.**Employee is currently employed with the Company and desires to continue his employment withthe 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, andthe 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 othergeographic areas in which operations are performed, supervised, or assisted in by Employee onbehalf of the Company or in which the Company operates, both as of the date hereof and as areanticipated 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 survivingcompany, and the surviving or resulting company does not expressly agree to be bound by and havethe benefits of the provisions of this Agreement, Employee’s corporate position is eliminated, orthe scope of Employee’s position or responsibilities is materially changed;               (ii) Transfer of all or substantially all of the assets or stock of the
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Company, and thetransferee of the Company’s assets or stock does not expressly agree to be bound by and have thebenefits of the provisions of this Agreement, Employee’s corporate position is eliminated, or thescope of Employee’s position or responsibilities is materially changed; or               (iii) Change in control of Company of a nature that would be required to be reported inresponse to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities ExchangeAct of 1934 as in effect on the date thereof, and any person or persons acting in concert (as suchterm is used in Section 13(d) and 14(d)(2) of the Exchange Act) is or becomes the beneficial holderdirectly or indirectly of securities of the Company representing fifty percent (50%) or more of thecombined voting power of Company’s then outstanding securities, and the Employee’s corporateposition is eliminated, or the scope of Employee’s position or responsibilities is materiallychanged.          **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 theirrespective subsidiaries and successors.          **F. Constructive Termination**means a termination of this Agreement resulting from any materialbreach by the Company of its obligations under this Agreement which breach is not cured withinthirty (30) days after receipt of notice by the Company from Employee specifying the nature of thebreach, which breach shall include, but shall not be limited to, (a) removal of Employee during theTerm, other than removal as a result of a Termination With Cause or a Voluntary Termination, asExecutive Vice President and Chief Development Officer of the Company or any material change by theCompany in the functions, duties or responsibilities of Employee during the Term from those inwhich Employee was engaged as Executive Vice President and Chief Development Officer of the Companyon the Effective Date, without the consent of Employee, (b) a material, non-voluntary reduction inEmployee’s Base Salary and eligibility for bonus amounts, or (c) the occurrence of a Change ofControl. Notwithstanding the foregoing, a Constructive Termination shall occur only (A) after theCompany’s failure to cure a breach of its obligations under this Agreement, as specified above,within thirty (30) days after its receipt of notice of such breach from Employee, and furtherreceipt by the Company of notice from Employee specifying that the Company has failed to cure suchbreach and that an event of Constructive Termination has occurred, and (B) if Employee provides theinitial notice of breach to the Company within sixty (60) days after the date of the event givingrise to such breach.          **G. Effective Date**means August 23, 2006.          **H. Home Entertainment Business**means the business of renting and/or selling movies, games andother entertainment content, whether delivered, provided and/or displayed via a physical retailstore, kiosk or vending machine, data transmission, the Internet, direct mail, or through any otherform of display or delivery system (whether now know or developed hereafter, whether such systeminvolves the delivery of a physical or tangible object and including any other technologicalevolutions thereof).          **I. Initial Term**means the basic term of this Agreement, which shall be
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twelve (12) months,beginning on the Effective Date and ending on the date which is twelve (12) months following theEffective Date.          **J. Permanent Disability**means a physical or mental condition which renders Employee incapableof performing his regular duties hereunder for a period of one hundred twenty (120) consecutivedays. In the event of any disagreement between Employee and the Company as to whether Employee issuffering from Permanent Disability, the determination of Employee’s Permanent Disability shall bemade by one or more board certified licensed physicians practicing the specialty of medicineapplicable to Employee’s disorder in accordance with the provisions of this Subsection J. Ifeither the Company or Employee desires to initiate the procedure provided in this Section, suchparty (the “Initiating Party”) shall deliver written notice to the other party (the “RespondingParty”) in accordance with the provisions of this Agreement specifying that the Initiating Partydesires to proceed with a medical examination and the procedures specified in this Section. Suchnotice shall include the name, address and telephone number of the physician selected by theInitiating party (the “Disability Examination Notice”). If the Responding Party fails withinthirty (30) days after the receipt of the Disability Examination Notice to designate a physicianmeeting the standards specified herein, the physician designated by the Initiating Party in theDisability Examination Notice shall make the determination of Permanent Disability as provided inthis Section. If the Responding Party by written notice notifies the Initiating Party withinthirty (30) days of the receipt by the Responding Party of the Disability Examination Notice bynotice specifying the physician selected by the Responding Party for purposes of this Section, theneach 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’srespective designation. Each physician shall render a written report as to whether Employee is, insuch physician’s opinion, suffering Permanent Disability. If the two physicians agree on thestatus of Employee for purposes of this Section, such determination shall be conclusive anddispositive for all purposes of this Section. If the two physicians cannot agree, the twophysicians shall jointly select a third physician meeting the standards specified in this Sectionwithin thirty (30) days after the later report of the two physicians is submitted. The thirdphysician shall render a written report on the status of Employee within thirty (30) days ofselection and such report shall be dispositive for purposes of this Section. For purposes of thisSubsection J, Employee agrees that he shall promptly submit to such examinations and tests as suchphysicians shall reasonably request for purposes of making a determination of Permanent Disabilityas provided herein. Failure or refusal of the Company to designate a licensed physician to make adetermination of Permanent Disability as required in accordance with this Section or of Employee tosubmit to the examination as required by this Section shall constitute a conclusive admission bythe Company or Employee, as appropriate, that Employee is suffering from a Permanent Disability asprovided herein.          **K. Renewal Term**means the period, if any, following the Initial Term during which theAgreement 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 TerminationWith Cause, the date the Company notifies Employee of the actions giving rise to suchtermination and the termination of this Agreement based thereon; (b) with respect to the death ofEmployee, the date of his death; (c) with respect to Termination Without Cause, the date on whichthe Company gives Employee notice of Termination Without Cause; (d) with respect to VoluntaryTermination, the date on
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which Employee unilaterally terminates his employment relationship withthe Company; (e) with respect to the Permanent Disability of Employee, the date Employee isdetermined to be suffering from Permanent Disability, as provided in Subsection 2J; and (f) withrespect to Constructive Termination, the date on which Constructive Termination occurs as providedin Subsection 2F.          **O. Termination With Cause**means the termination of this Agreement and the employmentrelationship of Employee with the Company, only for the following:               (i) Theft or embezzlement with regard to material property of the Company;               (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 theemployment relationship of Employee with the Company during the Term which is not a TerminationWith Cause, a Voluntary Termination or a Constructive Termination, including the expiration of theTerm as a result of the Company electing not to renew this Agreement at the end of the Initial Termor any Renewal Term.          **Q. Triggering Event**means (i) a termination of Employee’s employment by the Company during theTerm due to a Termination Without Cause or (ii) a Constructive Termination of Employee’s employmentwith the Company.          **R. Voluntary Termination**means unilateral termination by Employee of his employment with theCompany prior to the end of the Term and in the absence of a Triggering Event, or as a result ofEmployee 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 thisAgreement pursuant to Section 2F shall not constitute a Voluntary Termination for purposes of thisAgreement.     **3. Employment.**The Company agrees to employ Employee in the office of Executive VicePresident and Chief Development Officer of the Company for the Term, and Employee agrees to acceptsuch employment and office upon the terms and conditions set forth herein.     **4. Responsibilities.**Pursuant to this Agreement, Employee shall have the responsibilities,perform the duties, and exercise the powers as Executive Vice President and Chief DevelopmentOfficer of the Company or as designated, assigned or set forth by the Chief Executive Officer orBoard of Directors and consistent with the responsibilities, duties and powers exercised byEmployee as Executive Vice President and Chief Development Officer of the Company as of the Effective Dateand such other duties as may be assigned from time to time by the Chief Executive Officer or Boardof Directors. The Employee agrees to devote his full time and efforts to the performance of hisduties as Executive Vice President and Chief Development Officer of the Company. The Employeeagrees that he will not engage in any other gainful occupation during the term of this Agreement,without the prior written consent of the Company. Nothing contained herein shall be construed,however, to
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prevent the Employee from personal business, charitable and professional activities,from trading, for his own account and benefit, in stocks, bonds, securities, real estate,commodities, or other forms of investments. Employee agrees to comply with the Company’s policies,rules and regulations as determined by the Company and shall uphold his fiduciary obligations tothe Company at all times.     **5. Compensation and Benefits; Reimbursements.**The Company shall pay, and Employee agrees toaccept, as partial compensation for services to be rendered hereunder during the Term, theremuneration described below:          **A. Annual Salary.**The Company shall pay Employee a base annual salary as of the EffectiveDate of Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00) per year (“Base Salary”),subject to such increases as the Board of Directors in its sole discretion deems appropriate inaccordance with the Company’s customary procedures regarding the salaries of its executiveofficers. The Base Salary shall be payable according to the customary payroll practices of theCompany, but in no event less frequently than monthly.          **B. Bonuses.**During the Term, Employee shall be entitled to participate in the Company’sexecutive officer bonus program, as amended from time to time by the Board of Directors. Duringthe Term, Employee shall be entitled to participate in other incentive and/or bonus, cash andequity compensation plans of the Company which provide benefits to senior officers, as determinedby the Board of Directors of the Company.          **C. Severance Payments.**               (i) Upon the occurrence of a Triggering Event, Employee shall be deemed to have earned theSeverance Amount, as defined below, on the effective date of the Triggering Event. The obligationof the Company under this Subsection 5C(i) shall take the place of any other obligations of theCompany under this Section 5 to pay to Employee for the balance of the Term Employee’s then BaseSalary pursuant to Subsection 5A.               (ii) For purposes of this Agreement, the term Severance Amount shall mean thefollowing: (a) if a Triggering Event occurs as a result of a Constructive Termination inconnection with a Change of Control, the Severance Amount shall be an amount equal to one and onehalf (11/2) times Employee’s Base Salary; (b) if a Triggering Event (other than a ConstructiveTermination in connection with a Change of Control) occurs within one hundred eighty (180) daysprior or subsequent to the date of a Change of Control, or is in any way related to, results from,arises out of, or is in connection with a Change of Control, the Severance Amount shall be anamount equal to one andone-half (11/2) times Employee’s Base Salary; or (c) if a Triggering Event otherwise occurs, theSeverance Amount shall be an amount equal to one (1) times Employee’s Base Salary.               (iii) If the Severance Amount payable pursuant to this Section is anamount equal to one and one-half (11/2) times Employee’s Base Salary, then the Severance Amountshall be paid within thirty (30) days of the date of the Triggering Event. Otherwise, the SeveranceAmount payable pursuant to this Section shall be paid over the twelve (12) month period followingthe Triggering Event according to the Company’s payroll practices and procedures in effect at thetime of the Triggering Event.               (iv) Upon the occurrence of a Triggering Event, any and all stock options to purchase sharesof the Company’s Common Stock which are held by Employee shall become
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one hundred percent (100%)vested and immediately exercisable as of the date of such Triggering Event, and shall beexercisable by the Employee over the balance of the remaining stated term of such stock options(which term shall be the term applicable to the Employee in the absence of termination ofemployment), notwithstanding any provision contained in the stock option agreement to the contrary.          **D. Insurance and Benefits; Reimbursements.**               (i) Employee shall be entitled to participate in or receive benefits under all employee andexecutive benefit plans or arrangements and perquisites of employment, including, withoutlimitation, plans or arrangements providing for health and disability insurance coverage, lifeinsurance for the benefit of Employee’s beneficiaries, deferred compensation and pension benefits,and personal financial, investment, legal or tax advice, all at the highest level that is availablethrough the Company to other senior officers of the Company subject to the same terms andconditions as apply to such other senior officers.               (ii) Employee shall be entitled to all holidays recognized by the Company and vacation timefor not less than three (3) weeks per year plus such additional time as is available under thevacation policy of the Company in effect for senior officers with continuing payment of allcompensation as set forth herein.               (iii) Employee shall be reimbursed by the Company for all reasonable expenses incurred byEmployee in connection with the performance of his duties and responsibilities, subject to, or inaccordance with, the then current reimbursement policies of the Company.               (iv) Nothing paid to Employee under any plan, arrangement or perquisite presently in effect ormade available in the future shall be deemed to be in lieu of the salary and other compensation orpayments paid or payable to Employee under this Agreement.               (v) In the event of a termination of Employee’s employment with the Company as a result of orin connection with a Triggering Event, and Employee elects under COBRA to continue his group healthcoverage, then for a twelve (12) month period following the Termination Date, the Company shall payEmployee (on a monthly basis) an amount equal to the actual premium cost to Employee for theportion of such continuation coverage (if any) that was being paid by the Company at the time ofsuch termination.     **6. Term; Termination.**          **A.**This Agreement will commence on the Effective Date and shall continue during the InitialTerm.          **B.**In addition to the Initial Term, this Agreement shall be renewed for additional one (1)year periods (the “Renewal”), ad infinitum, unless either party gives notice of non-renewal atleast thirty (30) days prior to the expiration of the Initial Term or the then current RenewalTerm.          **C.**During the Term, the Company or Employee may terminate this Agreement, subject to theterms, conditions and obligations hereof, by any of the following events:
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               (i) Mutual written agreement expressed in a single document signed by both the Company andEmployee;               (ii) Voluntary Termination by Employee;               (iii) Death of Employee;               (iv) Termination Without Cause;               (v) Termination With Cause;               (vi) Constructive Termination; or               (vii) Permanent Disability.          **D.**The obligations of Employee under Sections 7, 8 and 9 shall survive termination orexpiration of this Agreement. The obligations of the Company under Section 5 that by their termsare to be paid or to continue after termination of this Agreement shall also survive suchtermination.     **7. Proprietary Information.**          **A.**Employee acknowledges and agrees that during his employment with the Company, prior to andsubsequent to the date of this Agreement, Employee has had and will continue to have access tocertain confidential and proprietary information of the Company, including:               (i) information which derives economic value, actual or potential, from not being generallyknown to, and not being readily ascertainable by proper means by, other persons who can obtaineconomic value from its disclosure or use, and is the subject of efforts that are reasonable underthe circumstances to maintain its secrecy (hereinafter “Trade Secrets” or “Trade Secret”); or               (ii) information which does not rise to the level of a Trade Secret, but is valuable to theCompany and provided in confidence to Employee (hereinafter “Confidential Information”).          **B.**Employee acknowledges and agrees with respect to Trade Secrets and Confidential Informationprovided to or obtained by Employee, prior to or subsequent to the date of this Agreement(hereinafter collectively the “Proprietary Information”):               (i) that the Proprietary Information is and shall remain the exclusive property of theCompany;               (ii) to use the Proprietary Information exclusively for the purpose of fulfilling theobligations under this Agreement;               (iii) to return the Proprietary Information, and any copies thereof, in his possession orunder his control, to the Company upon request of the Company, or expiration or termination of thisAgreement for any reason; and
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               (iv) to hold the Proprietary Information in confidence and not to copy, publish, or discloseto others or allow any other party to copy, publish, or disclose to in any form, any ProprietaryInformation without the prior written approval of an authorized representative of the Company.          **C.**The obligations and restrictions set forth in this Section 7 shall survive expiration ortermination of this Agreement, for any reason, and shall remain in full force and effect asfollows:               (i) as to Trade Secrets, for so long as such information remains subject to protection underapplicable law;               (ii) as to Confidential Information, for a period of five (5) years after expiration ortermination of this Agreement for any reason.     **8. Covenant Not To Compete.**Employee hereby agrees that during the term hereof, and for aperiod of one (1) year from the date of expiration or termination of this Agreement for any reason,and within the Area, Employee will not:          **A.**compete with the Company in the Home Entertainment Business, or engage in or carry on theHome Entertainment Business, directly or indirectly, through any person or entity, or in anycapacity, including, without limitation, agent, lender, trustee, consultant, shareholder, director,officer, employee, or partner;          **B.**be employed by, or perform any services as employee, consultant, or otherwise for, anyperson, firm, partnership, joint venture, corporation or other entity that competes with theCompany in the Home Entertainment Business, or that is engaged in the Home Entertainment Businesswithin the Area;          **C.**employ, solicit for employment, or advise or recommend to any other person or entity thatsuch person or entity employ, or solicit for employment, any employee of the Company; or          **D.**deal with, invest in (other than as a stockholder of less than one percent (1%) of theissued and outstanding stock of a publicly traded corporation having assets in excess of$100,000,000.00), lend money to, guarantee loans of, make gifts to, advise, or by any other meansassist any other person or entity that competes with the Company, or that is engaged in the HomeEntertainment Business within the Area.     **9. Non-Disparagement.**During the Term and for a period of one (1) year from the date ofexpiration or termination of this Agreement for any reason, Employee shall maintain a professionalmanner, and shall avoid and refrain from: (i) making any disparaging or derogatory remarks orcomments about the Company, or any of its employees, officers, directors, stockholders, members,representatives or agents; or (ii) engaging in any other conduct which is likely to disparage theCompany, or any of its employees, officers, directors, stockholders, members, representatives oragents, or otherwise damage, jeopardize or be prejudicial to any business, professional or personalrelationship, interests or reputation of the Company, or any of its employees, officers, directors,stockholders, members, representatives or agents.
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     **10. Injunctive Relief.**Employee acknowledges and agrees that any breach by Employee of hisobligations under Section 7, Section 8 or Section 9 of this Agreement will cause irreparable harmto the Company and agrees to the entry of a temporary restraining order and permanent injunction byany court of competent jurisdiction to prevent breach or further breach thereof, in addition to anyother remedy available to the Company at law or in equity.     **11. Severability**. If any provision of this Agreement is held to be invalid or unenforceableby any court of competent jurisdiction, such holdings shall not affect the enforceability of anyother provision of this Agreement, and all other provisions shall continue in full force andeffect.     **12. Arbitration.**Except as set forth in section 10 above, all disputes between the partieshereto arising out of, or relating to, this Agreement shall be settled and determined to finalresolution by arbitration. Any such arbitration shall be held in Dothan, Alabama, and shall beconducted in accordance with the Commercial Arbitration Rules of the American ArbitrationAssociation. There shall be one arbitrator, as shall be agreed upon by the parties. In theabsence of such agreement, each party in the dispute shall select one arbitrator and thearbitrators so selected shall select a third arbitrator. In the event the arbitrators cannot agreeupon the selection of a third arbitrator, such third arbitrator shall be appointed by the AmericanArbitration Association at the request of the parties in dispute. All of the arbitrators shall beindividuals skilled in the legal and business aspects of the subject matter of this Agreement andof the dispute. The arbitrator(s) shall be instructed to manage the arbitration to a promptresolution. Judgment upon any award obtained in such proceedings may be entered in any courthaving jurisdiction over the subject matter of the proceedings. All arbitration costs shall bepaid by the non-prevailing party. The parties agree to be bound by the decision and award of thearbitrator or arbitrators.     **13. Attorneys’ Fees.**If any arbitration, legal action or other proceeding is commenced toenforce or interpret any provision of, or otherwise relating to, this Agreement, the prevailingparty as determined through arbitration or final judgment of a court of competent jurisdiction(which arbitration or judgment is not subject to further appeal due to the passage of time orotherwise) shall be entitled to reimbursement from the other party for reasonable attorneys’ feesand expenses incurred by the prevailing party in connection with the resolution of the dispute.     **14. Headings.**The headings of the several paragraphs in this Agreement are inserted forconvenience of reference only and are not intended to affect the meaning or interpretation of thisAgreement.     **15. Notices.**All notices, consents, requests, demands and other communications hereundershall be in writing and shall be deemed to have been duly given or delivered if (i) deliveredpersonally; (ii) mailed by certified mail, return receipt requested, with proper postageprepaid; or (iii) delivered by recognized courier contracting for same day or next day deliverywith signed receipt acknowledgment to the Company at its principal offices, or to Employee at theaddress last shown on the records of the Company, or at such other address as the parties heretomay have last designated by notice to the other party. Any item delivered personally or byrecognized courier contracting for same day or next day delivery shall be deemed delivered on thedate of delivery. Any item mailed shall be deemed to have been delivered on the date evidenced onthe return receipt.     **16. General Provisions.**This Agreement shall be governed by and construed under the laws ofthe State of Alabama, without giving effect to its conflict of law principles. The terms of thisAgreement shall be binding upon and inure to the benefit of the Company and its successors andassigns.
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Neither party may assign his or its rights and obligations under this Agreement to anyother party.     **17. Entire Agreement**. This Agreement contains the entire agreement between the partieshereto, and except as otherwise provided in this Agreement, supersedes and cancels all previous andcontemporaneous written and oral agreements, including all prior employment agreements between theCompany and Employee and amendments thereto. No amendment or modification of this Agreement shallbe valid or binding unless in writing and signed by the party to be bound.[SIGNATURE PAGE FOLLOWS]
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     **IN WITNESS WHEREOF**, the parties hereto have executed this Agreement effective as of the datefirst above written.       ** **   **COMPANY:**       **ATTEST:**   **MOVIE GALLERY US, LLC**       /s/ Jeffrey B. Gordon   By: /s/ S. Page Todd       Assistant Secretary     S. Page Todd      Its: Executive Vice President    Date: 8/23/2006           **EMPLOYEE**:       /s/ James H. Cooper   /s/ Keith A. Cousins     Witness   Keith A. Cousins    Date: 8/25/2006
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