EXHIBIT 10.48
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of March 1, 1998 (this "Agreement")
between Marvel Entertainment Group, Inc., a Delaware corporation (the
"Company") , and Xxxxxx Xxxxxxxx (the "Executive").
Whereas, the Company wishes to employ the Executive, and the Executive
wishes to accept such employment, on the terms and conditions set forth in this
Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment, Duties. The Company hereby employs the Executive to
render full-time services to the Company as President and Chief Executive
Officer of the Company, with duties and responsibilities as are typical for the
most senior executive officer in similarly situated companies in the industry.
1.2 Acceptance. The Executive hereby accepts such employment and
agrees to render the services described above. The Executive agrees to serve
the Company faithfully and to the best of the Executive's ability, to devote
the Executive's time, energy and skill to such employment, and to use the
Executive's best efforts to promote the Company's interests. The Executive
further agrees to accept election, and to serve during all or any part of the
Term, as a director of the Company and of any subsidiary or affiliate of the
Company, without any compensation therefor other than that specified in this
Agreement. Notwithstanding the foregoing, the Executive shall be entitled to
render services to charitable and community organizations, to manage his
personal investments and interests and to sit on outside boards of directors so
long as such activities are disclosed to the Company and do not materially
interfere with the performance of the Executive's duties hereunder.
1.3 Location. The duties to be performed by the Executive shall be
performed primarily (i.e., at least 30 hours per week) at the offices of the
Company in New York City, subject to reasonable travel requirements.
2. Term of Employment; Certain Post-Term Benefits.
2.1 The Term. The term of Executive's employment (the "Term") shall
commence on March 1, 1998, and shall end on June 30, 1999, or such later date
to which the Term is extended pursuant to Section 2.2.
2.2 End-of-Term Provisions. On or before six months prior to the end
of the Term, each of the Company and the Executive shall have the right to give
the other party written notice of non-renewal of the Term. Absent such notice,
the Term shall be automatically extended for successive 1 year periods.
3. Compensation: Benefits.
3.1 Salary. The Company shall pay the Executive a base salary, payable
bi-weekly in arrears, at the annual rate of $400,000 until June 30, 1998, and,
thereafter, at the annual rate of $450,000, less such amounts as are required
to be withheld by applicable law and regulations and deductions authorized by
the Executive in writing (the "Base Salary") . In the event that the Company
determines to increase the Base Salary, such increased amount shall, from and
after the effective date of the increase, constitute "Base Salary" for purposes
of this Agreement.
3.2 Discretionary Bonus. In addition to the amounts to be paid to the
Executive pursuant to Section 3.1, the Executive shall be entitled to receive a
discretionary performance based bonus with respect to each year of the Term
based on improvements achieved in the Company's performance in relation to the
prior year.
3.3 Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the
Executive during the Term in the performance of the Executive's services under
this Agreement, upon presentation of expense statements or vouchers or such
other supporting information as the Company customarily may require of its
officers. The Executive shall be entitled to reimbursement for travel expenses
on a first class basis.
3.4 Vacation. During the Term, the Executive shall be entitled to a
vacation period or periods of 4 weeks taken in accordance with the vacation
policy of the Company during each year of the Term. Vacation time not used by
the end of a year shall be forfeited, unless Executive was unable to utilize
such time due to work commitments which interfered with reasonable efforts to
schedule such vacation.
3.5 Fringe Benefits. The Executive shall be entitled to all benefits
generally available to employees of the Company under any 401(k) plan, pension
plan, group insurance or other so-called "fringe" benefit plan or program. The
Executive shall also be entitled to participate in any compensation or equity
plan which the Company provides, together with medical, dental and vision
benefits for the Executive, the Executive's spouse and the Executive's
children, all as such may be in effect from time to time for any senior
officers of the Company. He shall also be entitled to the business and personal
use of a Company car (luxury model) and to reimbursement for, or direct payment
of, all expenses and insurance premiums incurred in connection therewith.
3.6 Special Payment. In consideration of efforts to be made by the
Executive to assist in marketing the Company and/or its businesses and assets
to outside investors, in the event that the Company, any of its subsidiaries or
a material aspect of its businesses or assets, are sold, licensed or otherwise
transferred to a third party or parties (an "Acquiror") in a transaction or in
a series of related transactions, including, but not limited to, a merger or
reorganization in which the Company is the surviving entity, but is owned or
controlled by new equity or debt interests (an "Acquisition Transaction") , the
Executive shall be entitled to receive a special payment equal to 1/5 of l% of
the total consideration paid or provided by the Acquiror whether in the form of
cash, equity, debt (including assumption of existing debt) or other
consideration. Such payment will be made at the closing of the Acquisition
Transaction in a lump sum based on the then present value of the consideration
paid with future payments discounted at LIBOR.
3.7 Equity Opportunity. It is understood that the Executive expects to
receive, a l% equity participation in the Company or any company (defined as
the entity which emerges from the reorganization and/or owns, controls, or has
the right to exploit, a substantial portion of the assets of what is now Marvel
Entertainment Group, Inc.) whether such equity is pre-existing or newly created
through the conversion of debt, new investment, recapitalization or other
restructuring (including restructuring through sale of assets, merger,
acquisition or reorganization) (a "Triggering Event") . Such equity to vest 1/3
upon issuance, 1/3 within a year thereof and the final 1/3 at the end of the
second year. The Executive also expects to receive the right to acquire up to
an additional 2%. (1%. per year) of the Company through the issuance of fair
market value warrants and/or options. In the event that the Company should fail
to provide the Executive with the equity opportunity set forth in this Section
3.7 (or a similar opportunity reasonably acceptable to the Executive) within 90
days following a Triggering Event, the Executive shall be entitled to terminate
his employment pursuant to Section 4.4 hereof and receive the payments and
benefits set forth in that Section.
4. Termination.
4.1 Death. If the Executive should die during the Term, his employment
shall terminate and no further amounts or benefits shall be payable hereunder,
except that the Executive's legal representatives shall be entitled to receive
continued payments in an amount equal to 60'. of the Base Salary, in the
manner specified in Section 3.1 and any amounts payable or which become payable
under Section 3.6, until the end of the Term or for a period of one year,
whichever is longer. In addition, any and all unvested securities, rights or
compensation granted to, or purchased by, the Executive, pursuant to Section
3.7 or otherwise, shall automatically vest and become the property of the
Executive's estate.
4.2 Disability. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) for shorter periods aggregating six
months during any twelve month period, the Company may at any time after the
last day of the six consecutive months of disability or the day on which the
shorter periods of disability shall have equalled an aggregate of six months,
by written notice to the Executive (but before the Executive has recovered from
such disability), terminate his employment and no further amounts or benefits
shall be payable hereunder, except that the Executive shall be entitled to
receive (i) continued payments in an amount equal to 60% of the Base Salary, in
the manner specified in Section 3.1 and any amounts payable or which become
payable under Section 3.6, until the end of the Term or one year, whichever is
longer, (ii) the medical, dental and vision benefits provided for in Section
3.5 for so long as the Disability should last, and (iii) any unvested
securities, rights or compensation granted to, or purchased by, the Executive,
pursuant to Section 3.7 or otherwise, shall automatically vest and become the
property of the Executive. If the Executive should die before receiving all
payments to be made by the Company in accordance with the foregoing, such
payments shall be made to a beneficiary designated by the Executive on a form
prescribed for such purpose by the Company or, in the absence of such
designation, to the Executive's legal representative.
4.3 Cause. In the event of conviction of the Executive of any felony,
conviction of the Executive of a misdemeanor involving the property of the
Company or any of its subsidiaries or affiliates, or willful misconduct or
fraud by the Executive in connection with the performance of any material
portion of the Executive's duties hereunder the Company may terminate
Executive's employment, and, upon such termination, this Agreement shall
terminate and the Executive shall be entitled to receive no further amounts or
benefits hereunder, except as shall have been earned, accrued or vested as of
the date of such termination. Notwithstanding the foregoing, no Cause
termination shall occur unless the Company first gives the Executive 30 days
written notice of its intent to terminate for Cause and the specific underlying
acts which allegedly constitute Cause and the Executive thereafter fails to
cure the alleged Cause or undertake diligent efforts to cure, which efforts can
be completed in a reasonable time.
4.4 Involuntary Termination. In the event that the Executive's
employment is terminated by the Company without Cause (including a termination
through non-renewal of the Term, pursuant to Section 2.2 or resulting from
rejection of this Agreement by the U.S. Bankruptcy Court, or a failure of any
successor to all or substantially all of the assts or business of the Company
to assume in writing the Company's obligation to perform this Agreement within
ten (10) days after plan confirmation of any merger, consolidation, sale of
assets, tender offer or similar transaction), or is terminated by the Executive
for Good Reason, the Executive shall be paid (i) in a lump sum an amount equal
to the Executive's Base Salary as set forth in Section 3.1; (ii) an amount
equal to the Executive's annual Bonus as set forth in Section 3.2 (determined
in good faith); (iii) benefits as specified in Section 3.5; and (iv) any
amounts payable or which become payable under Section 3.6; all until the end of
the Term or, for a period of one year, whichever is longer. In addition, any
and all unvested securities, rights or compensation granted to, or purchased
by, the Executive, pursuant to Section 3.7 or otherwise, shall automatically
vest and become the property of Executive. Without limiting the foregoing, Good
Reason shall be any (i) failure of Company to honor the obligations of this
agreement; (ii) any significant adverse change in Executive's position or
responsibilities; (iii) any substantial diminution in the businesses under the
Executive's auspices; (iv) a change in the locus of Executive's employment
outside of the Greater New York metropolitan area; or (v) the failure to
provide the Executive with the equity opportunity set forth in Section 3.7
within 90 days following a Triggering Event.
4.5 No Mitigation. The Executive shall have no obligation to mitigate
damages to receive any payments required to be made hereunder and, to the
extent that the Executive shall earn compensation after a termination of
employment, it shall not offset any such payments.
4.6 Litigation Expenses. Except as provided for in Section 5.6, in the
event the Company and the Executive become involved in any action, suit or
proceeding relating to the alleged breach of this Agreement by the Company or
the Executive, and if a judgment in such action, suit or proceeding is rendered
in favor of the Executive, the Company shall reimburse the Executive for all
expenses (including reasonable attorneys, fees) incurred by the Executive in
connection with such action, suit or proceeding. Such costs shall be paid to
the Executive promptly upon presentation of expense statements or other
supporting information evidencing the incurrence of such expenses.
5. Protection of Confidential Information; Non-Competition:
Solicitation.
5.1 Confidentiality. In view of the fact that the Executive's work for
the Company will bring the Executive into close contact with many confidential
affairs of the Company and its subsidiaries and affiliates not readily
available to the public and plans for future developments, the Executive
agrees:
5.1.1 To keep and retain in the strictest confidence all confidential
matters of the Company and its subsidiaries and affiliates, including, without
limitation, "know how", trade secrets, customer lists, pricing policies,
operational methods, technical processes, formulae, inventions and research
projects and other business affairs of the Company and its subsidiaries and
affiliates, and any information concerning any director, officer, employee or
agent of the Company or any of its affiliates or subsidiaries or any of their
respective family members, learned by the Executive during his employment
hereunder, and not to disclose them to anyone outside of the Company, either
during or after the Executive's employment with the Company, except in the
course of performing the Executive's duties hereunder or with the Company's
express written consent.
5.1.2 To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Company's business
and all property associated therewith, which the Executive may then possess or
have under the Executive's control.
5.1.3 Solicitation of Personnel or Employees. Executive agrees that
during the Term and for a period of 180 days after the expiration or
termination date of this Agreement, it will not without the consent of the
Company, solicit, hire, contract with, nor engage the services of, any employee
of the Company.
5.2 Remedies. In the event the Executive commits a breach of any of
the provisions of Sections 5.1, 5.2, 6 or 7 the Company shall have the
following rights and remedies ONLY:
5.2. 1 The right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach will cause irreparable injury to
the Company and that money damages will not provide an adequate remedy to the
Company.
5.3 Severabilitv.
5.3.1 In the event any of the covenants contained in this Agreement,
or any part thereof, hereafter are construed to be invalid or unenforceable,
the same shall not affect the remainder of the covenant or covenants, which
shall be given full effect, without regard to the invalid portions.
5.3.2 In the event any covenant contained in Sections 5.1, 5.2, 6 or 7
or any part thereof, are held to be unenforceable because of the duration of
such provision or the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and, in its reduced form, said provision shall then be
enforceable.
5.4 Jurisdiction. The parties hereto intend to and hereby confer
jurisdiction to enforce the covenants contained in Section 5.2 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 Company's right to the relief provided above in the courts of
any other states within the geographical scope of such covenants as to 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.
5.5 Expenses. In the event that any action, suit or other proceeding
in law or in equity is brought to enforce the covenants contained in Sections
5.1, 5.2, 6 or 7 or to obtain money damages for the breach thereof, and such
action results in the award of a judgment for money damages or in the granting
of any injunction in favor of the Company, all expenses (including reasonable
attorneys, fees) of the Company in such action, suit or other proceeding shall,
on demand of the Company, be paid by the Executive. In the event the Company
fails to obtain a judgment for money damages or an injunction in favor of the
Company, all expenses (including reasonable attorneys, fees) of the Executive
in such action, suit or other proceeding shall, on demand of the Executive, be
paid by the Company.
6. Inventions and Patents.
6.1 The Executive agrees that all processes, technologies and
inventions, including new contributions, improvements, ideas and discoveries,
whether patentable or not (collectively, "Inventions"), conceived, developed,
invented or made by the Executive during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive's work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company's time or with the use of
the Company's facilities or materials. The Executive shall further: (a)
promptly disclose such Inventions to the Company; (b) assign to the Company,
without additional compensation, all patent and other rights to such Inventions
for the United States and foreign countries; (c) sign all papers necessary to
carry out the foregoing; and (d) give testimony in support of the Executive's
inventorship.
6.2 In the event any Invention is described in a patent application or
disclosed to third parties, directly or indirectly, by the Executive within two
years after the termination of the Executive's employment by the Company, it is
to be presumed that the Invention was conceived or made during the Term
6.3 The Executive agrees that the Executive will not assert any rights
to any Invention as having been made or acquired by the Executive prior to the
date of this Agreement, except for Inventions, if any, disclosed to the Company
in writing prior to the date hereof.
7. Intellectual Property.
The Company shall be the sole owner of all the products and proceeds
of the Executive's services hereunder, including, but not limited to, all
materials, formats, discoveries, developments, characters, product lines,
ideas, concepts, packages, performances, trade secrets, programs and other
intellectual properties that the Executive may acquire, obtain, develop or
create in connection with the Executive's work with the Company or any of its
subsidiaries or affiliates during the Term, free and clear of any claims by the
Executive (or anyone claiming under the Executive) of any kind or character
whatsoever (other than the Executive's right to receive payments hereunder) .
The Executive shall, at the request of the Company, execute such assignments,
certificates or other instruments as the Company 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.
8. Indemnification.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement incurred or sustained by the
Executive in connection with any action, suit or proceeding to which the
Executive may be made a party by reason of the Executive being an officer,
director or employee of the Company or of any subsidiary or affiliate of the
Company.
9. 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 or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the third date after the date mailed) ,
as follows (or to such other address as either party shall designate by notice
in writing to the other in accordance herewith):
If to the Company, to:
Marvel Entertainment Group, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
If to the Executive to:
Xxxxxx Xxxxxxxx
000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
10. General.
10.1 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York.
10.2 Headings. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
10.3 Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
10.4 Termination of Prior Agreements. This Agreement expressly
supersedes all agreements and understandings between the parties regarding the
subject matter hereof and any such agreement is terminated as of the date first
above written.
10.5 Assignment. This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive. The Company may
assign its rights, together with its obligations, hereunder (i) to any
affiliate or (ii) to third parties in connection with any sale, transfer or
other disposition of all or substantially all of its business or assets and, in
any event, the obligations of the Company hereunder shall be binding on its
successors or assigns, whether by merger, consolidation or acquisition of all
or substantially all of its business or assets.
10.6 Amendment; Waiver. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms or covenants hereof
may be waived, only by a written instrument executed by both of the parties
hereto, or in the case of a waiver, by the party waiving compliance. The
failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant contained in this Agreement.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, all of which together shall be considered one and the same
instrument.
10.8 Subsidiaries. As used herein, the term "subsidiary" shall mean
any corporation or other business entity controlled directly or indirectly by
the corporation or other business entity in question, and the term "affiliate"
shall mean and include any corporation or other business entity directly or
indirectly controlling, controlled by or under common control with the
corporation or other business entity in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MARVEL ENTERTAINMENT GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Xxxx X. Xxxxxxx
Trustee
/s/ Xxxxxx Xxxxxxxx
-----------------------------------[L.S.]
Xxxxxx Xxxxxxxx
[Letterhead of Marvel Entertainment Group, Inc.]
February 27, 1998
Xx. Xxx Xxxxxx
Toy Biz
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
RE: XXXXXX XXXXXXXX
EMPLOYMENT AGREEMENT
DATED AS OF MARCH 1, 1998
[HEREINAFTER THE EMPLOYMENT AGREEMENT]
Dear Xx. Xxxxxx:
This letter shall confirm our understanding that in the event Toy Biz
consummates a plan to reorganize Marvel and is in control of the combined
companies [Marvel and Toy Biz], Toy Biz may
(a) elect not to pay the Special Payment as provided in Paragraph 3.6
of the Employment Agreement; and in addition
(b) Paragraph 4.4 (iv) of the Employment Agreement shall be modified to
read as follows: "(iv) any amounts payable or which become payable
under Section 3.6; all until the end of the Term or, for a period
of six months, whichever is longer."
This letter will further confirm that in view of the forgoing, we will enter
into good faith negotiations with respect to a "Stay Bonus" and an "Equity
Participation".
Therefore, I have signed the Employment Agreement and sent it on to the Trustee
for his signature. This letter relates to Toy Biz only.
Sincerely,
/s/ Xxxxxx Xxxxxxxx
-------------------
Xxxxxx Xxxxxxxx
JC:ra
Agreed to and Accepted:
MARVEL ENTERTAINMENT GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
------------------------
Xxxx X. Xxxxxxx, Trustee
cc: Judge Xxxx Xxxxxxx
Xxx Xxxxxx
