EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.2
This Executive Employment Agreement (the “Agreement”), is made and entered into as of this
23rd day of March, 2009 (the “Effective Date”), by and between Marvel Entertainment,
Inc., a Delaware corporation (“MEI”) and Marvel Characters B.V., a company incorporated under the
laws of The Netherlands (“MCBV”), on one hand (MEI and MCBV together, “Employer”), and Xxxxx
Xxxxxxxxxx (“Executive”) on the other.
WHEREAS, Employer and Executive intend for Executive to continue to be employed as Chief
Executive Officer and Vice-Chairman of the Board of Directors of MEI and as a senior executive of
MCBV, and Executive desires to continue such employment, subject to and on the terms and conditions
set forth in this Agreement;
WHEREAS, from and after the Effective Date, this Agreement shall replace the existing
employment agreement dated November 30, 2001, as amended;
WHEREAS, Employer considers the maintenance of a sound management team, including Executive,
essential to protecting and enhancing its best interests and those of its stockholders;
WHEREAS, Employer recognizes that the possibility of a change in control of Employer may
result in the departure or distraction of management to the detriment of Employer and its
stockholders;
WHEREAS, Executive is a key employee of Employer and an integral member of its management
team;
WHEREAS, Employer has determined that appropriate steps should be taken to encourage the
attention and dedication of Executive to his assigned duties without the distraction arising from
the possibility of a change in control of Employer; and
WHEREAS, both Employer and Executive have read and understood the terms and provisions set
forth in this Agreement and have been afforded a reasonable opportunity to review this Agreement
with their respective legal counsel.
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and
agreements set forth in this Agreement and for other good, valuable and binding consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally
bound, agree as follows:
1. Employment. Employer hereby agrees to employ Executive, and Executive hereby
accepts such employment on the terms and conditions set forth herein.
(a) Duties. The Employer hereby employs the Executive for the Term (as defined in
Section 2), to render services to MEI as its Chief Executive Officer and Vice-Chairman of the Board
of Directors and to render senior executive services to MCBV. The Executive shall report solely to
the Board of Directors and Chairman of MEI and the Management Board of MCBV. The Executive shall
have all of the powers and duties customarily associated with those positions
and consistent with prior practice. The Executive shall be the most senior executive of the
Employer and all of Employer’s other employees shall report directly or indirectly to him. The
Executive’s duties shall be performed at the direction and under the supervision of the Board of
Directors and Chairman of MEI and the Management Board of MCBV and may include additional or
different duties assigned to the Executive thereby consistent with the foregoing and his positions
described above.
(b) Acceptance. The Executive hereby accepts such employment and agrees to render the
services described above. During the Term, the Executive agrees to serve the Employer faithfully
and to the best of the Executive’s ability, to devote the Executive’s entire business time, energy
and skill to such employment (other than passive investments and service on corporate, civic or
charitable boards or committees which do not interfere with the Executive’s duties and
responsibilities as an employee of the Employer in accordance with this Agreement; provided,
however, that any service on corporate boards or committees is approved by the Chairman) and to use
the Executive’s professional efforts, skill and ability to promote the Employer’s interests.
Notwithstanding the foregoing, the Executive may devote an insignificant amount of time to other
business activities outside the scope of such employment if such business activities and devotion
of such time are approved by the Chairman. The Executive shall be subject to the Employer’s
policies, procedures and approval practices, as generally in effect from time to time for senior
executives of Employer and which are not inconsistent with the terms of this Agreement. The
Executive shall be based at MEI’s offices in New York City and MCBV’s offices in West Palm Beach,
FL, or such other location as agreed upon by the Employer and the Executive, except for required
travel on the Employer’s business. Any business travel shall be arranged in accordance with the
travel policies and procedures established by the Employer.
2. Term. The Executive’s employment under this Agreement shall begin on the Effective
Date and shall continue through the date (the “Expiration Date”) that is four years after the
Effective Date, unless earlier terminated pursuant to Section 4 or Section 9 hereof (the “Term”).
3. Compensation and Benefits. In consideration for the services of Executive
hereunder, Employer shall compensate Executive as follows:
(a) Base Salary. As compensation for all services to be rendered pursuant to this
Agreement, the Employer agrees to pay the Executive during the Term a base salary, payable
bi-weekly in arrears, at the annual rate of $750,000, less such deductions or amounts to be
withheld as required by applicable law and regulations and deductions authorized by the Executive
in writing. The Executive’s base salary shall be reviewed no less frequently than annually by the
Board of Directors in accordance with the policies and procedures that apply to other senior
executives of the Employer in order to determine whether any change to the Executive’s base salary
is warranted; provided, however, that under no circumstances will the Executive’s base salary be
less than the amount stated in the preceding sentence. The Executive’s base salary as in effect
from time to time is referred to in this Agreement as the “Base Salary.”
Page 2 of 18
(b) Stock Options. The Executive shall also be entitled to participate in the stock
option plan established by the Employer, pursuant to which the Executive shall receive options,
granted on the date of this Agreement at the market price of the Employer’s common stock at
the close of business on the date immediately preceding the date of this Agreement, to purchase an
aggregate of 750,000 shares of the common stock, par value $.01 per share, of the Employer (the
“Common Stock”), vesting with respect to one-third of the underlying shares on each of the first,
second and third anniversaries of the grant date and expiring no later than the fourth anniversary
of the grant date. The stock option agreement evidencing the grant of such options shall specify
that all such options shall be accelerated and vest immediately upon a Third Party Change in
Control (as defined below), upon the Executive’s death or Disability (as defined below), upon
termination of employment by the Employer for other than Cause (as defined below), or upon
termination by the Executive for Good Reason (as defined below). The stock option agreement shall
also specify that upon cessation of the Executive’s employment as described in the preceding
sentence, the Executive shall have not less than ninety (90) days to exercise or forfeit such fully
vested stock options; provided, however, that the Executive shall have not less than one (1) year
in the event such cessation is as a result of the Executive’s death or Disability (as defined
below); but in no event shall the options remain exercisable beyond their expiration date. The
Executive shall also be eligible for additional annual equity grants at the sole discretion of the
Compensation Committee of MEI’s Board of Directors (the “Compensation Committee”).
(c) Bonus. Executive shall be eligible, at the sole discretion of the Compensation
Committee, to participate in Employer’s annual bonus, special bonus or long term incentive plan(s),
as adopted or modified from time to time, on such terms and in such amounts as may be determined by
the Compensation Committee and approved by the Board of Directors. Any such bonus shall be paid
between January 1st and March 15th of the calendar year following the year to
which the bonus relates.
(d) Vacation. Executive shall be entitled to three (3) weeks of paid vacation per
year, accrued in accordance with the Employer’s standard practices, to be taken at the reasonable
and mutual convenience of Employer and Executive in accordance with Employer’s vacation policy.
(e) Standard Benefits. During his employment, Executive shall be entitled to
participate in Employer’s employee benefit plans and programs (including any group health plans,
qualified pension plans or 401(k) plans) on the same terms applicable to similarly situated
executive employees, in accordance with the terms of those plans and programs. The Employer shall
have the right to terminate or change any such plan or program at any time.
(f) Expenses. The Executive shall be entitled to receive prompt reimbursement for all
reasonable and customary travel and business expenses incurred in connection with his employment,
but he must incur and account for those expenses in accordance with the policies and procedures
established by the Employer.
4. Termination. Executive’s employment hereunder shall terminate as follows:
(a) Death or Disability. Upon the death of Executive during the term of his
employment hereunder or, at the option of Employer, in the event of Executive’s Disability, upon
thirty (30) days’ notice to Executive. Under this Agreement, termination for “Disability” means
Executive is unable to perform Executive’s principal services hereunder by reason of any
medically determinable physical or mental impairment (i) for a continuous period of not less
than six (6) consecutive months, or (ii) for shorter periods aggregating six (6) months during any
twelve (12) month period.
Page 3 of 18
(b) For Cause. For Cause, immediately upon written notice by Employer to Executive.
A termination by Employer shall be for “Cause” if:
(i) The Executive willfully and intentionally fails or refuses to perform or observe
any of his material duties, responsibilities or obligations set forth in this Agreement;
provided, however, that the Employer shall not be deemed to have Cause pursuant to this
clause (i) unless the Employer gives the Executive written notice that the specified conduct
has occurred and making specific reference to this paragraph (b), the Executive is given an
opportunity to appear before the Board of Directors to discuss the conduct alleged to
constitute Cause and the Executive fails to cure the conduct within thirty (30) days after
receipt of such notice; (ii) the Executive willfully and materially breaches any of his
obligations under Section 7 hereof; (iii) the Executive willfully and intentionally commits
an act involving fraud, theft, misappropriation of funds, embezzlement or material
dishonesty affecting the Employer or the Executive engages in willful misconduct which has,
or could reasonably be expected to have, a material adverse effect on the Employer; or
(iv) the Executive is convicted of, or enters a plea of guilty or nolo contendre to, an
offense which is a felony in the jurisdiction involved.
(c) Without Cause. Without Cause upon written notice by Employer to Executive. A
termination by Employer shall be “without Cause” if for any reason other than as specified in
paragraph (b) above.
(d) By Executive for Good Reason. “Good Reason” means the occurrence of any of the
following events, without the prior written consent of Executive, provided Executive gives Employer
written notice that the Good Reason event has occurred within ninety (90) days of its initial
existence, Employer fails to cure such event within thirty (30) days of receipt of such notice, and
Executive terminates employment within six (6) months of the initial existence of such event:
(i) assignment of the Executive to duties materially inconsistent with the Executive’s
positions as described in Section 1 hereof, or any significant diminution in the Executive’s
duties or responsibilities (including, by way of example, if the Executive were not the most
senior executive of Employer (which, for purposes of this clause (i), means the ultimate
parent company of any consolidated group that includes MEI or MCBV), if all of Employer’s
other employees did not report directly or indirectly to him and if Executive did not report
directly to Employer’s Board of Directors), other than in connection with the termination of
the Executive’s employment for Cause or Disability or by the Executive other than for Good
Reason; or
(ii) breach by the Employer of its obligations under Section 3 hereof or any other
material breach of this Agreement by the Employer which is continuing.
Page 4 of 18
5. Severance Pay. Any post-termination benefits provided to the Executive under this
Section 5 and/or Section 9 of this Agreement are conditioned on (1) the Executive (or his estate)
providing the Employer, within 45 days of the termination, with an effective release of claims and
an agreement concerning continuing obligations of confidentiality, non-disparagement etc. in the
Employer’s then-standard form and (2) the Executive’s continued compliance with the provisions of
that agreement. In the event that the Employer and the Executive are unable to agree in good faith
on the form of the release and agreement, a form shall be used that is no less favorable to
Executive than any of the three most recent such agreements entered into by the Employer with
senior executives of the Employer (subject to any provisions added in good faith to address any
intervening changes in laws or regulations).
(a) Termination Upon Death or Disability. Executive shall not be entitled to any
severance pay or other compensation upon termination of his employment hereunder due to death or
Disability, except for the following, which shall be paid within ten (10) days of the date of
termination, unless otherwise specified below:
(i) his Base Salary accrued but unpaid as of the date of termination;
(ii) unpaid expense reimbursements for expenses incurred in accordance with the terms
hereof prior to termination;
(iii) all of Executive’s restricted stock and any options or other rights granted by
Employer, including, without limitation, under MEI’s 2005 Stock Incentive Plan, shall vest
and become exercisable in accordance with the terms thereof, and subject to the achievement
of any applicable performance goals, upon such date of termination;
(iv) reimbursement (less the amount that the Executive would have paid for the same
coverage had he remained employed) for continuation coverage, under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended or modified (“COBRA”) of all medical benefits
(under Employer’s group health plan) for Executive and his dependents until the earlier of
Executive becoming eligible for benefits under a new plan or expiration of the maximum
period of time Executive or his dependents would be eligible for continuation coverage under
COBRA, or similar provision of state law, following Executive’s death or Disability;
(v) compensation for accrued, unused vacation as of the date of termination;
(vi) any annual bonus awarded to Executive for the prior bonus period that is unpaid as
of the date of termination; and
(vii) the annual bonus that Executive would have been entitled to receive for the bonus
period in which the date of termination occurs, prorated for the number of days Executive
was employed prior to the date of termination and payable on the date such annual bonus
would otherwise be paid in accordance with this Agreement, but in no event later than March
15 of the next fiscal year.
Page 5 of 18
(b) Termination Without Cause or for Good Reason. In the event Executive’s employment
hereunder is terminated pursuant to Sections 4(c) or 4(d), Employer shall pay
Executive the amounts described immediately below as Executive’s sole remedy in connection
with such termination, unless otherwise specified below and subject to Section 10(b) hereof.
(i) within ten (10) days of the termination, Executive’s Base Salary accrued but unpaid
as of the date of termination;
(ii) within ten (10) days of the termination, unpaid expense reimbursements for
expenses incurred in accordance with the terms hereof prior to termination;
(iii) within ten (10) days of the termination, any annual bonus awarded to and earned
by Executive for the prior bonus period that is unpaid as of the date of termination;
(iv) within ten (10) days of the termination, compensation for accrued, unused vacation
as of the date of termination;
(v) reimbursement (less the amount that the Executive would have paid for the same
coverage had he remained employed) for continuation coverage, under COBRA, of all medical
benefits (under Employer’s group health plan) for Executive and his dependants until the
earlier of Executive becoming eligible for benefits under a new plan or expiration of the
maximum period of time Executive and his dependents would be eligible for continuation
coverage under COBRA, or similar provision of state law, following Executive’s date of
termination;
(vi) payment, in bi-weekly installments for periods through the third anniversary of
the Executive’s date of termination, at an annual rate equal to the sum of (A) Executive’s
Base Salary as in effect immediately preceding the date of termination and (B) an amount
equal to the average value of the two (2) most recent annual incentive bonuses awarded to
the Executive prior to the date of termination, using the actual amount issued or paid (as
opposed to any target amount of the award) and using Black-Scholes pricing as of the date of
issuance, in the case of stock options; and
(vii) the annual bonus that Executive would have been entitled, based on actual
performance but without any exercise by the Compensation Committee of downward discretion,
to receive for the bonus period in which the date of termination occurs, prorated for the
number of days Executive was employed prior to the date of termination and payable on the
date such annual bonus would otherwise be paid in accordance with this Agreement, but in no
event later than March 15 of the next fiscal year.
In addition, all of Executive’s restricted stock, options and other rights granted by Employer,
including, without limitation, pursuant to MEI’s 2005 Stock Incentive Plan, shall vest and become
exercisable in accordance with the terms thereof, subject to the achievement of any applicable
performance goals, as of the date of such termination. Further, if Executive resigns for Good
Reason and the Good Reason event is a material reduction in Executive’s annual Base Salary, all
references to Base Salary in this subsection (b) shall refer to Executive’s annual Base Salary
immediately prior to such reduction. Any compensation that Executive may receive from a third
party during the period in which the payments described in this subsection (b) are to be made shall
not have the effect of reducing payments due Executive hereunder.
Page 6 of 18
(c) Termination For Cause or Resignation in Breach of this Agreement. In the event
Executive’s employment hereunder is terminated pursuant to Section 4(b) or by Executive in breach
of this Agreement, Executive shall not be entitled to any severance pay or other compensation upon
termination of his employment hereunder, except for the following:
(i) his Base Salary accrued but unpaid as of the date of termination;
(ii) unpaid expense reimbursements for expenses incurred in accordance with the terms
hereof prior to termination; and
(iii) compensation for accrued, unused vacation as of the date of termination.
In the event Executive’s employment is terminated for Cause or he resigns in breach of this
Agreement, all of Executive’s unvested restricted stock, unexercised stock options and other equity
rights granted by Employer will terminate on the date of such termination. This Section 5(c) shall
not limit the rights and remedies available to Employer under law or in equity in connection with a
termination for Cause or a resignation in breach of this Agreement.
6. Inventions; Assignment.
(a) (i) Inventions. As used herein, “Inventions” shall mean all rights to
discoveries, inventions, improvements, designs and innovations (including all data and records
pertaining thereto) that constitute an integral part of the business of Employer at the time of the
Invention, whether or not patentable, copyrightable or reduced to writing, that Executive may
discover, invent or originate during the term of his employment hereunder, and for a period of one
year thereafter, either alone or with others and whether or not during working hours or by the use
of the facilities of Employer; all of which shall be the exclusive property of Employer.
Inventions within the meaning of this paragraph shall not include discoveries, inventions,
improvements, designs and innovations by the Executive that (i) do not constitute an integral part
of the business of Employer at the time of development thereof and (ii) are developed without use
of Employer’s facilities, employees or assets. Such items shall be the exclusive property of
Executive. Executive shall promptly disclose all Inventions to Employer, shall execute at the
request of Employer any assignments or other documents Employer may deem necessary to protect or
perfect its rights therein, and shall assist Employer, at Employer’s expense, in obtaining,
defending and enforcing Employer’s rights therein. Executive hereby appoints Employer as his
attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by
Employer to protect or perfect its rights to any Inventions.
Page 7 of 18
(ii) Work Made for Hire. The Executive understands that within the scope of his
employment, he may create or contribute to literary, artistic, or other kinds of material
(collectively, the “Works”) that may qualify as “works made for hire” under U.S. copyright law, and
if so, that the Employer is the author and sole owner of the Works in the U.S. and worldwide, and
the Executive waive any rights he may have to the Works, including moral rights. If at any time,
any of the Works are deemed not to be works made for hire, the Executive assigns, grants, transfers
and conveys to the Employer all his right, title and interest to the Works for the entire length of
time they are protected by any applicable law. The Executive agrees (whether during or after his
employment with the Employer) to sign any document the Employer
may reasonably request in order to secure or enforce the Employer’s rights in the Works. The
Executive irrevocably appoints the Employer and any of its officers as his attorney-in-fact to
secure and enforce the rights in his name. To the extent that the Executive retains any right,
title or interest to the Works, he agrees to: (i) unconditionally and irrevocably waive the
enforcement of such rights, and all claims and causes of action of any kind against the Employer
with respect to such rights; (ii) consent to and join in any action to enforce such rights at the
Employer’s request; and (iii) grant to the Employer an irrevocable, fully paid-up, transferable,
sublicensable, worldwide right and license to use, reproduce, distribute, display and perform,
prepare derivative works of and otherwise modify without limitation, make, sell, offer to sell,
import and otherwise use and exploit all or any portion of the Works, in any form or media (now
known or later developed).
(b) Other Products and Proceeds of Services. The Employer shall be the sole owner of
all the products and proceeds of the Executive’s services hereunder, including, but not limited to,
all materials, ideas, concepts, formats, suggestions, developments, arrangements, packages,
programs and other intellectual properties that he may acquire, obtain, develop or create in
connection with and during his employment, free and clear of any claims by him (or anyone acting or
claiming on his behalf) of any kind or character whatsoever (other than the right to receive
payments hereunder). The Executive shall, at the request of the Employer, execute such
assignments, certificates or other instruments as the Employer may from time to time deem necessary
or desirable to evidence, establish, maintain, perfect, protect, enforce or defend its right, title
or interest in or to any such properties.
(c) Covenant to Assign and Cooperate. Without limiting the generality of the
foregoing, Executive shall assign and transfer to Employer the world-wide right, title and interest
of Executive in the Inventions. Executive agrees that Employer may apply for and receive patent
rights (including Letters Patent in the United States) for the Inventions in Employer’s name in
such countries as may be determined solely by Employer. Executive shall communicate to Employer
all facts known to Executive relating to the Inventions and shall cooperate with Employer’s
reasonable requests in connection with vesting title to the Inventions and related patents
exclusively in Employer and in connection with obtaining, maintaining and protecting Employer’s
exclusive patent rights in the Inventions.
(d) Successors and Assigns. Executive’s obligations under this Section 6 shall inure
to the benefit of Employer and its successors and assigns and shall survive the expiration of the
term of this Agreement for such time as may be necessary to protect the proprietary rights of
Employer in the Inventions and the Works.
Page 8 of 18
7. Confidential Information.
(a) Acknowledgments. The Executive recognizes and agrees that the Employer and its
subsidiaries and affiliates under the control of MEI (collectively or separately as the context may
require, the “Group”) currently conduct their business world-wide. The Executive further
recognizes and agrees that, in his position with the Employer, he will be responsible for: (i)
actively conducting the Group’s business, (ii) overseeing Employer activities, (iii) developing and
implementing strategies on behalf of the Employer everywhere the Group currently conducts its
business, and (iv) affecting customers, suppliers, and distributors everywhere the Group
currently conducts its business. In addition, the Executive recognizes and agrees that, to
enable him to satisfy his duties and responsibilities under this Agreement, the Employer will
invest substantial resources in him by making available to him Confidential Information (as defined
below) and other valuable resources and assets for which he would not have had access, but for his
employment with the Employer. To protect the Group’s business interests, including its
Confidential Information (as defined below) and business relationships, the Executive makes the
following promises in this Section 7.
(b) Non-Disclosure of Confidential Information. The Executive promises and agrees
that he will never, directly or indirectly, use, disclose or retain (other than, during his
employment, in furtherance of the Employer’s business) any trade secret, proprietary and/or
confidential information relating to the Group that he receives or becomes aware of during his
employment with or service to the Employer (or that he has already received or become aware of)
concerning, among other things, the Group’s business, operations, customers, suppliers, investors,
and business partners (“Confidential Information”). “Confidential Information” may include, among
other things, information relating to the Group’s business or operational methods; corporate plans
and strategies; management systems; finances; new business opportunities; scripts and storylines of
entertainment projects; plans or activities involving the financing, development, casting,
marketing, release and/or distribution of entertainment projects; story and character ideas;
profits; costs of media trades/investments; pricing and sales arrangements; terms of business;
marketing or sales of any products or services; technical processes; research projects; inventions;
designs; applications; know-how; lists or details of actual, past or potential clients, customers
or suppliers or the arrangements made with any of them; and any information in respect of which the
Group owes an obligation of confidentiality to any third party (where such obligation is known, or
reasonably should be known, to the Executive), conveyed orally or reduced to a tangible form in any
medium. “Confidential Information” does not include information that (i) is generally known within
the relevant industry or (ii) that the Executive can demonstrate has subsequently become known to
him other than through his work for the Group and not as a result of a breach of any duty owed to
the Group by him or any third party. Notwithstanding this paragraph, the Executive may disclose
Confidential Information as required by court order, subpoena, or otherwise as required by law,
provided that upon receiving such order, subpoena, or request and prior to disclosure, he shall
provide written notice to the Employer of such order, subpoena, or request and of the content of
any testimony or information to be disclosed and shall cooperate fully with the Employer to
lawfully resist disclosure of such information. Nothing in this Agreement shall prevent the
Executive from testifying or meeting with any representatives of any federal, state or local law
enforcement agency who are investigating any matters involving the Employer’s business practices.
(c) Return of Information. The Executive promises and agrees that, prior to his last
day of employment with the Employer or at the Employer’s earlier request, he will return all
Employer property and/or Confidential Information in any form or media and all copies thereof in
his possession, custody, or control, including memoranda, notes, records, reports, manuals,
drawings, blueprints, and other documents, and he shall delete all Confidential Information from
any computers, e-mail accounts, or other electronic memory devices he owns or uses outside the
Employer’s workplace (including, but not limited to, PDAs, cell phones, and USB storage devices).
Page 9 of 18
8. Noncompetition.
(a) For a period of twenty-four (24) months after the date of termination of Executive’s
employment hereunder, including without limitation termination in connection with a Third Party
Change in Control as contemplated by Section 9 hereof, Executive shall not, directly or indirectly,
on his own behalf or on behalf of any other person or entity, whether as an owner, director,
officer, partner, employee, agent or consultant, for pay or otherwise, (A) render services of an
executive, creative, advertising, marketing, sales, supervisory, technical, financial, research,
purchasing, entertainment-developing, entertainment-producing or consulting nature to any person or
entity (or on his own behalf, if he is self-employed) that is engaged in a business that competes
with or intends to compete with any business conducted by the Group, including but not limited to
development, production and distribution of entertainment, character-based licensing or publication
(in any medium) of comic books or other graphic fiction or (B) acquire an interest in any such
business, directly or indirectly, as an individual, partner, shareholder, director, officer,
principal, agent, employee, trustee, consultant, or in any other relationship or capacity.
(b) For the twenty-four (24) month period commencing on the date of the termination of
Executive’s employment hereunder, or for such shorter period as the written consent from Employer
shall specify, Executive shall not directly or indirectly solicit or encourage any director,
officer, employee of, or consultant to, Employer to end his relationship with Employer and commence
any such relationship with any entity engaged in a business that competes with or intends to
compete with any business conducted by the Group, including but not limited to development,
production and distribution of entertainment, character-based licensing or publication (in any
medium) of comic books or other graphic fiction.
(c) Executive’s noncompetition obligations hereunder shall not preclude Executive from owning
less than 5% of the common stock of any publicly traded corporation.
(d) If at any time the provisions of this section are determined by a court of competent
jurisdiction to be invalid or unenforceable, this section shall be considered divisible and shall
be immediately amended to only such area, duration and scope of activity as shall be determined to
be reasonable and enforceable by the court or other body having jurisdiction over the matter, and
Executive agrees that this section as so amended shall be valid and binding as though any invalid
or unenforceable provision had not been included herein.
9. Termination of Employment in Connection With a Change In Control.
(a) Applicability. The provisions of this section shall apply in lieu of the
provisions of Section 5 hereof and of any conflicting provisions in this Agreement in the event
Executive’s employment hereunder is terminated in a Triggering Termination. A “Triggering
Termination” shall occur if Executive’s employment hereunder is terminated by (i) Employer during
the 90-day period immediately preceding a Third Party Change in Control (as defined below) or
within twelve months after a Third Party Change in Control for, in either case, any reason other
than for Cause, Disability or death or (ii) Executive within 90 days after a Third Party Change in
Control for Good Reason.
Page 10 of 18
(b) Termination Payment.
(i) Amount. Upon the occurrence of a Triggering Termination, Employer shall
pay Executive a lump sum payment in cash equal to three (3) times the sum of the following
items (less amounts already paid to Executive pursuant to Section 5(b), if any):
(1) Executive’s annual Base Salary in effect immediately preceding the date of
the Triggering Termination; and
(2) the average value of the two (2) most recent annual incentive bonuses
awarded to Executive prior to the date of the Triggering Termination, using the
actual amount issued or paid (as opposed to any target amount of the award) and
using Black-Scholes pricing as of the date of issuance, in the case of stock
options.
In addition, the Executive shall be paid the following amounts as part of his Termination
Payment (less amounts already paid to Executive pursuant to Section 5(b), if any), with
appropriate adjustment in the case of any event contemplated by Section 10(c)
(“Adjustments”) of Employer’s 2005 Stock Incentive Plan:
(3) Executive’s Base Salary accrued but unpaid as of the date of the Triggering
Termination;
(4) reimbursement for unpaid expenses incurred in the performance of his duties
hereunder prior to the date of the Triggering Termination;
(5) any other benefit accrued but unpaid as of the date of the Triggering
Termination;
(6) any incentive bonus awarded to and earned by Executive for the prior bonus
period that is unpaid as of the date of the Triggering Termination;
(7) the annual bonus that Executive would have been entitled, based on actual
performance but without any exercise by the Compensation Committee of downward
discretion, to receive for the bonus period in which the date of termination occurs,
prorated for the number of days Executive was employed prior to the date of
termination and payable on the date such annual bonus would otherwise be paid in
accordance with this Agreement, but in no event later than March 15 of the next
fiscal year; and
(8) in a lump sum, an amount equal to the cost to Executive of obtaining
medical benefits under Employer’s group or executive health plan for Executive and
his dependants for the maximum period of time Executive and his dependents would be
eligible for continuation coverage under COBRA, or similar provision of state law,
following the date of the Triggering Termination, less the amount that the Executive
would have paid for the same coverage had he remained employed;
Page 11 of 18
(ii) Upon the occurrence of a Triggering Termination, all of Executive’s restricted
stock, options and other rights shall vest and become exercisable on such date.
(iii) If the Triggering Termination is Executive’s resignation for Good Reason, and the
Good Reason event is a material reduction in Executive’s annual Base Salary, all references
to Base Salary in the calculation of the Termination Payment shall refer to Executive’s
annual Base Salary immediately prior to such reduction.
(iv) Timing of Payment. Subject to Section 10(b) hereof, the Termination
Payment (other than pursuant to Section 9(b)(i)(7)) shall be paid to Executive within ten
(10) days of the date of the Triggering Termination or within ten (10) days of the Third
Party Change in Control (as defined below) if the Termination Payment becomes payable
because Executive was terminated by Employer during the 90-day period immediately preceding
a Third Party Change in Control.
(v) Payment Authority. Any officer of Employer (other than Executive) is
authorized to issue and execute a check, initiate a wire transfer or otherwise effect
payment on behalf of Employer to satisfy Employer’s obligations to pay all amounts due to
Executive under this Section 9; provided, however, any such payment shall comply with
applicable Employer policies on funds disbursement.
(c) Third Party Change in Control. For purposes of this Agreement, a Third Party
Change in Control shall be deemed to have occurred if (i) any “person” or “group” (as those terms
are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), other than an Excluded Person or Excluded Group (as defined below) (hereinafter,
a “Third Party”), is or becomes the “beneficial owner” (as defined below), directly or indirectly,
of securities of MEI representing fifty percent (50%) or more of the combined voting power of MEI’s
then outstanding securities entitled to vote in the election of directors of MEI, (ii) MEI is a
party to any merger, consolidation or similar transaction as a result of which the shareholders of
MEI immediately prior to the transaction beneficially own securities of the surviving entity
representing less than fifty percent (50%) of the combined voting power of the surviving entity’s
outstanding securities entitled to vote in the election of directors of the surviving entity, (iii)
all or substantially all of the assets of MEI are acquired by a Third Party or (iv) all or
substantially all of the assets of MCBV, or 50% or more of the voting securities of MCBV, are
acquired by a Third Party that is unaffiliated with MEI. “Excluded Group” means a “group” (as that
term is used in Sections 13(d) and 14(d) of the Exchange Act) that includes one or more Excluded
Persons; provided that the voting power of the voting stock of the Employer beneficially owned by
those Excluded Persons represents a majority of the voting power of the voting stock beneficially
owned by the group. “Excluded Person” means the Executive, any spouse or descendant of the
Executive, any trust established solely for the benefit of, and any charitable trust or foundation
established by, the Executive or his spouse or descendants and each of their respective affiliates
and estates. “Beneficial owner”, “beneficially own” and “beneficially owned” have the same
meanings as in Rule 13d-3 under the Exchange Act.
Page 12 of 18
(d) Gross Up Payment.
(i) Excess Parachute Payment. If Executive incurs the tax (the “Excise Tax”)
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) on
“excess parachute payments” within the meaning of Section 280G(b)(1) of the Code as a result
of the receipt of any payments under this Agreement, Employer shall pay to Executive an
amount (the “Gross Up Payment”) such that the net amount retained by Executive, after
deduction of (1) any Excise Tax upon any payments under this Agreement (other than payments
provided by this paragraph (d)(i)) and (2) any federal, state and local income and
employment taxes (together with penalties and interest) and Excise Tax upon the payments
provided by this paragraph (d)(i), shall be equal to the amount of the payments that
Executive is entitled to receive under this Agreement (other than payments provided by this
paragraph (d)(i)).
(ii) Applicable Rates. For purposes of determining the Gross Up Payment
amount, Executive shall be deemed:
(1) to pay federal income taxes at the highest marginal rate of federal income
taxation applicable to individual taxpayers in the calendar year in which the Gross
Up Payment is made (which rate shall be adjusted as necessary to take into account
the effect of any reduction in deductions, exemptions or credits otherwise available
to Executive had the Gross Up Payment not been received);
(2) to pay additional employment taxes as a result of the receipt of the Gross
Up Payment in an amount equal to the highest marginal rate of employment taxes
applicable to wages; provided that if any employment tax is applied only up to a
specified maximum amount of wages, such limit shall be taken into account for
purposes of such calculation; and
(3) to pay state and local income taxes at the highest marginal rates of
taxation in the state and locality of Executive’s residence on the date of the
Triggering Termination, net of the maximum reduction in federal income taxes that
could be obtained from deduction of such state and local taxes.
(iii) Time For Payment. Employer shall pay the Gross Up Payment to Executive
concurrent with payment of the Termination Payment.
(iv) Determination. The determination of the Gross Up Payment shall be made by
a nationally recognized public accounting firm selected by mutual agreement of Employer and
Executive. The cost of such determination shall be borne by Employer. Executive and
Employer agree to reasonably cooperate in the determination of the actual Gross Up Payment
amount.
(e) No Right To Continued Employment. This section shall not give Executive any right
of continued employment or any right to compensation or benefits from Employer except the rights
specifically stated herein.
Page 13 of 18
10. General.
(a) Notices. All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, sent by overnight courier (notices sent by overnight courier shall be deemed
to have been given on the scheduled delivery date) or mailed first class, postage prepaid, by
registered or certified mail (notices mailed shall be deemed to have been given on the third
business day after mailing), as follows (or to such other address as either party shall designate
by notice in writing to the other in accordance herewith):
If to Employer, to:
|
and: | |
| Marvel Characters B.V. | ||
000 Xxxxx Xxxxxx
|
Beechavenue 54 – 00 | |
Xxx Xxxx, Xxx Xxxx 00000
|
1119 PW Schiphol-Rijk, The Netherlands | |
Attention: General Counsel
|
Attn: Executive Vice President |
If to the Executive, to him at his address as then on file with the Employer’s Human Resources
Department, with a copy to:
Gardere Xxxxx Xxxxxx LLP
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: W. Xxxxxx Xxxx, Jr.
Facsimile: (000) 000-0000
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: W. Xxxxxx Xxxx, Jr.
Facsimile: (000) 000-0000
(b) Code Section 409A. In no event will any of the payments or benefits provided
under this Agreement be delayed from the time they become payable except on terms and to the extent
permitted under Section 409A of the Internal Revenue Code (the “Code”). Payments and benefits
hereunder will be payable at the times specified herein, subject in all cases to applicable Section
409A Compliance Rules (including any applicable six-month delay rule) adopted by the Employer and
in effect to provide for compliance with Code Section 409A, which Compliance Rules are hereby
incorporated into this Agreement by reference. In the event that Executive nevertheless, through
no fault of his own, incurs any Section 409A Penalties (as defined below) in connection with
amounts received pursuant to this Agreement, Employer shall reimburse Executive in the amount of
such Section 409A Penalties within 60 days of the date Executive remits payment of such Section
409A Penalties to the applicable tax authority. “Section 409A Penalties” means any interest and
additional tax set forth within Section 409A(a)(1)(B) of the Code.
(c) Withholding; No Offset or Mitigation. All payments required to be made to
Executive by Employer shall be subject to the withholding of such amounts, if any, relating to
federal, state and local taxes as may be required by law. No payments under this Agreement shall
be subject to offset or reduction attributable to any amount Executive may owe to Employer or any
other person or to any compensation that he may receive from further employment or to any duty to
mitigate damages.
Page 14 of 18
(d) Legal and Accounting Costs. Employer shall pay all attorneys’ and accountants’
fees and costs incurred by Executive as a result of any breach by Employer of its obligations under
this Agreement, including without limitation all such costs incurred in contesting or disputing any
determination made by Employer or in connection with any tax audit or proceeding to the extent
attributable to the application of the Code to any payment under this Agreement. Reimbursements of
such costs shall be made by Employer within fifteen (15) days after Executive’s presentation to
Employer of any statements of such costs and thereafter shall bear interest at the maximum rate
allowed by law until paid by Employer, and all accrued and unpaid interest shall bear interest at
the same rate, all of which interest shall be compounded daily. Additionally, Employer shall
reimburse Executive for all legal fees and expenses associated with preparing and negotiating this
Agreement within fifteen (15) days after Executive’s presentation to Employer of any statements of
such expenses.
(e) Remedies. Each of the parties hereto acknowledges and agrees that upon any breach
by Executive of his obligations under this Agreement, Employer shall have no adequate remedy at law
and accordingly shall be entitled to specific performance and other appropriate injunctive and
equitable relief. All other controversies under this Agreement shall be settled exclusively by
arbitration in New York, New York, in accordance with the Commercial Arbitration Rules of JAMS then
in effect. Judgment upon the award rendered by the arbitrator may be entered in, and enforced by,
any court having jurisdiction thereof.
(f) Severability. If any provision of this Agreement is held to be illegal, invalid
or unenforceable, such provision shall be fully severable, and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof,
and the remaining provisions hereof shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as
part of this Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
(g) Waivers. No delay or omission by either party in exercising any right, power or
privilege hereunder shall impair such right, power or privilege, nor shall any single or partial
exercise of any such right, power or privilege preclude any further exercise thereof or the
exercise of any other right, power or privilege.
(h) Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which together shall constitute one and the same
instrument.
(i) Captions. The captions in this Agreement are for convenience of reference only
and shall not limit or otherwise affect any of the terms or provisions hereof.
(j) Reference to Agreement. Use of the words “herein,” “hereof,” “hereto,”
“hereunder” and the like in this Agreement refer to this Agreement only as a whole and not to any
particular section or subsection of this Agreement, unless otherwise noted.
Page 15 of 18
(k) Binding Agreement. This Agreement shall be binding upon and inure to the benefit
of the parties and shall be enforceable by the personal representatives and heirs of Executive and
the successors and assigns of Employer. In the event of any such assignment by the Employer, the
Employer shall remain liable for all of its obligations hereunder and shall be liable for all
obligations of all such assignees hereunder. If Executive dies while any amounts would still be
payable to him hereunder, such amounts shall be paid to Executive’s estate. This Agreement is not
otherwise assignable by Executive.
(l) Entire Agreement; Effect on Prior Agreement. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and may not be amended except by a written instrument hereafter signed by
each of the parties hereto. Executive and the Employer hereby agree that, if any other employment
agreement between Executive and the Employer is in existence on the Effective Date, then this
Agreement shall supersede such other employment agreement in its entirety, and such other
employment agreement shall no longer be of any force and effect after the date hereof.
(m) Indemnification. To the fullest extent permitted by applicable law, the Executive
shall be indemnified and held harmless for any action or failure to act in his capacity as an
officer or employee of the Employer or any of its affiliates or subsidiaries. In furtherance of
the foregoing and not by way of limitation, if the Executive is a party or is threatened to be made
a party to any suit because he is an officer or employee of the Employer or such affiliate or
subsidiary, he shall be indemnified against expenses, including reasonable attorneys’ fees,
judgments, fines and amounts paid in settlement if he acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interest of the Employer, and with respect
to any criminal action or proceeding, he had no reasonable cause to believe his conduct was
unlawful. The Executive shall give the Employer prompt notice of any such suit; provided, that his
failure to do so shall not relieve the Employer from any obligation that it would otherwise have
pursuant to this Section 10 except to the extent that the Employer has been prejudiced by that
failure. The Employer shall have the option to control the defense and settlement of any such
suit. No settlement affecting the Executive’s rights shall be entered into by the Employer without
his consent, such consent not to be unreasonably withheld. Indemnification under this Section 10
shall be in addition to any other indemnification by the Employer of its officers and directors.
Expenses incurred by the Executive in defending an action, suit or proceeding for which he claims
the right to be indemnified pursuant to this Section 10 shall be paid by the Employer in advance of
the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the Executive to repay such amount in the event that it shall ultimately be determined
that he is not entitled to indemnification by the Employer. Such undertaking shall be accepted
without reference to the financial ability of the Executive to make repayment. The provisions of
this Section 10 shall apply as well to the Executive’s actions and omissions as a trustee of any
employee benefit plan of the Employer, its affiliates or subsidiaries.
(n) Availability for Litigation. Following the Term, Executive agrees that he shall
at all times make himself reasonably available to assist in connection with litigation involving
the Employer and the Employer shall reimburse Executive for all out-of-pocket expenses he may incur
in connection with rendering such assistance.
Page 16 of 18
(o) Surrender of Profits. This Agreement is subject to the “Clawback Policy” adopted
by the Compensation Committee in February 2007, as such policy may be amended or modified.
(p) Jurisdiction. The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in this Agreement upon the courts of any state within the
geographical scope of such covenants. In the event that the courts of any one or more of such
states shall hold such covenants wholly unenforceable by reason of the breadth of such covenants or
otherwise, it is the intention of the parties hereto that such determination not bar or in any way
affect the Employer’s right to the relief provided above in the breaches of such covenants in such
other respective jurisdictions, the above covenants as they relate to each state being for this
purpose severable into diverse and independent covenants.
(q) Governing Law. This Agreement and the performance hereof shall be construed and
governed in accordance with the laws of the State of New York, without regard to its choice of law
principles.
(r) Gender and Number. The masculine gender shall be deemed to denote the feminine or
neuter genders, the singular to denote the plural, and the plural to denote the singular, where the
context so permits.
[remainder of page intentionally left blank]
Page 17 of 18
EXECUTED, as of the date and year first above written.
|
EMPLOYER MARVEL ENTERTAINMENT, INC., a Delaware corporation |
||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Xxxxx X. Xxxxxx | ||||
| Chairman of the Compensation Committee | ||||
MARVEL CHARACTERS B.V., a company incorporated under the laws of the Netherlands |
||||
| By: | /s/ Robbert Xxxxxxxx Xxxxxxx | |||
| Name: | Robbert Xxxxxxxx Xxxxxxx, | |||
Title: |
Xxxxxx Xxx xxx Xxxxx Director, Class A |
|||
| By: | /s/ Xxxx Xxxx Fine | |||
| Name: | Xxxx Xxxx Fine | |||
| Title: | Director, Class B | |||
EXECUTIVE |
||||
| /s/ Xxxxx Xxxxxxxxxx | ||||
| Xxxxx Xxxxxxxxxx | ||||
Page 18 of 18
