EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement, dated as of September 26, 2006, by and between Xxxx
Xxxxxxx (the "Executive") and Six Flags, Inc., a Delaware corporation (the
"Company").
WITNESSETH
WHEREAS, the Company has offered Executive, and Executive has
accepted, employment on the terms and conditions set forth in this Agreement;
and
WHEREAS, the Company and Executive wish to set forth such terms and
conditions in a binding written agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth
in this Agreement, it is hereby agreed as follows:
1. Term of Employment. Executive's employment with the Company
pursuant to this Agreement shall commence on September 26, 2006 (the "Effective
Date") and, subject to earlier termination in accordance with Section 4 hereof,
shall end on December 31, 2009; provided that Executive shall have the right to
elect to extend the term for two successive one-year periods upon no more than
120 days and no less than 90 days advance written notice to the Company (the
initial term and any extension thereof under this Section 1 shall hereinafter be
referred to as the "Term").
2. Position, Duties and Location.
(a) Position and Duties. Beginning on the Effective Date,
Executive shall serve as the President and Chief Executive Officer of the
Company, with the duties and responsibilities customarily assigned to such
position and such other customary duties as may reasonably be assigned to
Executive from time to time by the Board of Directors of the Company ("the
Board") consistent with such position. Executive shall at all times report
solely and directly to the Board of Directors. All other employees will report
to Executive either directly or through other employees as determined by
Executive.
(b) Attention and Time. During the Term, Executive shall
devote substantially all his business attention and time to his duties hereunder
and shall use his reasonable best efforts to carry out such duties faithfully
and efficiently. During the Term, it shall not be a violation of this Agreement
for Executive to (i) serve on industry, trade, civic or charitable boards or
committees; (ii) deliver lectures or fulfill speaking engagements; or (iii)
manage personal investments, as long as such activities do not materially
interfere with the performance of Executive's duties and responsibilities as
described herein. Executive shall be permitted to serve on for-profit corporate
boards of directors and advisory committees if approved in advance by the Board,
which approval shall not unreasonably be withheld.
(c) Location. Executive's principal place of employment shall
be located in New York, New York; provided that Executive shall travel and shall
render services at other locations, both as may reasonably be required by his
duties hereunder.
3. Compensation.
(a) Base Salary. During the Term, Executive shall receive a
base salary (the "Base Salary") at an annual rate of $1 million through December
31, 2006. Thereafter, Executive's Base Salary shall be $1.3 million. Base Salary
shall be paid at such times and in such manner as the Company customarily pays
the base salaries of its employees. In the event that Executive's base salary is
increased by the Board in its discretion at any time during the Term, such
increased amount shall thereafter constitute the Base Salary.
(b) Annual Bonus. During the Term, Executive shall be paid an
annual bonus based on the attainment of performance targets in accordance with
Exhibit A hereto. The "Target Bonus" shall be $1,300,000 and the "Maximum Bonus"
shall be $2,600,000. The annual bonus shall be payable at such time as bonuses
are paid to other senior executive officers of the Company but no later than 2
1/2 months following the end of each fiscal year of the Company. For the
avoidance of any doubt, the annual bonus earned by Executive for fiscal year
2006 shall be calculated on results for the full fiscal year and shall not be
prorated on account of the Effective Date.
(c) Equity Awards.
(i) In consideration of his commencement of employment with the
Company and in anticipation of the execution of this Agreement, the Company has
granted Executive an option to purchase 475,000 shares of its common stock (the
"Time-Vesting Option") under the Company's 2001 Stock Option and Incentive Plan
(the "Plan"). The per share exercise price of the Time-Vesting Option is $9.21
(the fair market value (as determined under the Plan) of the Company's common
stock on the date of grant). Except as provided in the last sentence of this
Section 3(c)(i) and in Section 4, subject to Executive's continuing employment
with the Company, which shall include any period of Disability, the Time-Vesting
Option shall vest and become exercisable 20% on the date of grant and the
remainder shall vest and become exercisable in four equal installments on the
first four anniversaries of the date of grant. In the event of a spin off, split
up, stock split, stock dividend, share combination, exchange of shares,
recapitalization, merger, consolidation, reorganization, dissolution,
liquidation or other comparable distributions, changes or transactions of or by
the Company, appropriate adjustments to the exercise price, number and/or type
of shares into which the Time-Vesting Option is exercisable shall be made to
give proper effect to such event so as to avoid dilution of the value of the
Time-Vesting Option. Notwithstanding anything herein to the contrary, in the
event that Executive's employment with the Company ceases following expiration
of the Term, any portion of the Time-Vesting Option that is not fully vested and
exercisable at such time shall immediately become exercisable in full and shall
remain exercisable for its originally scheduled term.
(ii) In consideration of his commencement of employment with the
Company and in anticipation of the execution of this Agreement, the Company has
granted Executive two performance-vesting options, each to purchase 237,500
shares (a total of 475,000 shares) of its common stock (the "Performance-Vesting
Options" and, together with the Time-Vesting Option, the "Option") under the
Plan. The per share exercise price of each Performance-Vesting Option is $9.21
(the fair market value (as determined under the Plan) of the Company's common
stock on the date of grant). Except as provided in Section 4, subject to
Executive's continuing employment with the Company, one of the
Performance-Vesting Options shall vest when the closing price of the Company's
common stock on the New York Stock Exchange or other principal securities
exchange or market on which the Company's common stock is traded is at or above
$12.00 per share on each trading day for a period of 90 calendar days, provided
that such Performance-Vesting Option may not be exercised prior to the second
anniversary of the date of grant, and the other Performance-Vesting Option shall
vest when the closing price of the Company's common stock on the New York Stock
Exchange or other principal securities exchange or market on which the Company's
common stock is traded is at or above $15.00 per share on each trading day for a
period of 90 calendar days, provided that such Performance-Vesting Option may
not be exercised prior to the second anniversary of the date of grant. In the
event of a spin-off, split-up, stock split, stock dividend, share combination,
exchange of shares, recapitalization, merger, consolidation, reorganization,
dissolution, liquidation or other comparable distributions, changes or
transactions of or by the Company affecting the rights or value of the shares
subject to the Option, appropriate adjustments to the performance standard,
exercise prices, number and/or type of shares into which each Option is
exercisable shall be made to give proper effect to such event so as to avoid
dilution of the value of such Option to Executive. Notwithstanding anything
herein to the contrary, in the event that Executive's employment with the
Company ceases following expiration of the Term due to his death or Disability,
the terms of Section 4(a) hereof with respect to the Performance-Vesting Options
shall apply.
(iii) In consideration of his commencement of employment with the
Company and in anticipation of the execution of this Agreement, the Company has
granted Executive an award of 250,000 restricted shares of its common stock (the
"Restricted Shares") under the Plan on January 11, 2006. Except as provided in
the last sentence of this Section 3(c)(iii) and in Section 4, subject to
Executive's continuing employment with the Company, 50% of the Restricted Shares
shall vest and the restrictions thereon shall lapse on the third anniversary of
the date of grant and the remaining 50% of the Restricted Shares shall vest and
the restrictions thereon shall lapse on the fourth anniversary of the date of
grant. Notwithstanding anything herein to the contrary, in the event that
Executive's employment with the Company ceases following expiration of the Term,
any Restricted Shares that have not become fully vested at such time shall
immediately vest and all restrictions thereon shall lapse.
(iv) In the event of a Change of Control (as defined below) of the
Company, any restrictions on the exercise of the outstanding options and on
restricted shares held by Executive at such time shall become immediately null
and void and cease to exist, all outstanding options and restricted shares shall
fully vest immediately and all then outstanding options shall immediately become
exercisable in full.
(v) "Change of Control" shall mean: (A) a change of control of the
direction and administration of the Company's business of a nature that would be
required to be reported in response to item 6(e) of Schedule 14A of Regulation
14A (or any successor rule or regulation) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Company is then subject to such reporting requirement; (B) any "person" (as such
term is used in Sections 13(d) and 14(d)(2) of the Exchange Act but excluding
any employee benefit plan of the Company) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing thirty-five percent (35%) or more of the
combined voting power of the Company's outstanding securities then entitled
ordinarily (and apart from rights accruing under special circumstances) to vote
for the election of directors; (C) during any period of two (2) consecutive
years, the individuals who at the beginning of such period constitute the Board
of Directors or any individuals who would be continuing directors (as defined
below, the "Continuing Directors") cease for any reason to constitute at least a
majority of the Board of Directors; (D) the Board of Directors shall approve a
sale of all or substantially all of the assets of the Company; or (E) the Board
of Directors shall approve any merger, consolidation or like business
combination or reorganization of the Company, the consummation of which would
result in the occurrence of any event described in clause (B) or (C) above.
Continuing Directors mean (i) the directors of the Company in office on the date
hereof, (ii) any successor to any such director and (iii) any additional
director who after the date hereof (A) is nominated or selected by a majority of
the Continuing Directors in office at the time of his nomination or selection
and (B) at the time of his nomination or selection is not an "affiliate" or
"associate" (as defined in Regulation 12B under the Exchange Act) of any person
who is the beneficial owner, directly or indirectly, of securities representing
ten percent (10%) or more of the combined voting power of the Company's
securities then entitled ordinarily to vote for the election of directors.
(d) Other Compensation and Benefits. During his employment
with the Company, the Company shall provide, and Executive shall be entitled to
participate in or receive benefits under any pension plan, profit sharing plan,
stock option plan, stock purchase plan or arrangement, health, disability and
accident plan or any other employee benefit plan or arrangement, including any
non-qualified or deferred compensation or retirement programs made available now
or in the future to senior executives of the Company on a basis no less
favorable than provided any other senior executive of the Company; provided
Executive complies with the conditions attendant with coverage under such plans
or arrangements. In addition to the Company's group insurance policies, the
Company shall provide Executive with term life insurance with a death benefit
equal to his Base Salary and with a disability insurance policy that provides
for full income replacement for the first 36 months of Executive's Disability
after which time the standard disability benefit available to senior executives
shall apply to Executive. Full income shall include Base Salary for the year in
which disability occurs plus the greater of the actual bonus for the year prior
to the occurrence of disability or the Target Bonus for the year in which
disability occurs. Except as expressly provided in this Agreement, nothing
contained herein shall be construed to prevent the Company from modifying or
terminating any plan or arrangement, not including the annual bonus plan
described in Section 3(b), in existence on the date hereof provided that no such
modification or termination adversely affects any award or other entitlement
previously granted to Executive. Without limiting the generality of the
foregoing, Executive shall be entitled to no less than four weeks of paid
vacation per calendar year. The Company shall also reimburse Executive for the
cost (including travel costs) of an annual physical exam provided by an
executive health program selected by Executive.
(e) Perquisites; Expenses. During his employment with the
Company, Executive shall be entitled to perquisites no less favorable than those
provided to any other senior executive of the Company. In addition, the Company
shall promptly pay or, if such expenses are paid directly by Employee, Executive
shall be entitled to receive prompt reimbursement, for all reasonable expenses
that Executive incurs during his employment with the Company in carrying out
Executive's duties under this Agreement, including, without limitation, those
incurred in connection with business related travel or entertainment, upon
presentation of expense statements and customary supporting documentation.
Executive shall be reimbursed for the cost of commutation (by train, car or car
service at Executive's discretion) between his home and the Company's office and
between his home and an airport and at all other times when traveling on Company
business. When traveling on company business, Executive shall be entitled to use
any aircraft owned or leased by the Company ("Company Aircraft") or fly
commercial first-class. Any other use of Company Aircraft shall be governed by
applicable Company policy.
(f) Additional Compensation and Benefits. Nothing contained in
this Agreement shall limit the Board of Directors in awarding, in its
discretion, additional compensation and benefits to Executive.
4. Termination of Employment.
(a) Death; Disability; Termination For Cause. Executive's
employment shall terminate automatically upon his death or Disability (as
defined below). The Company may terminate Executive's employment for Cause (as
defined below). It shall not be deemed to be a breach of this Agreement for the
Executive to voluntarily terminate his employment without Good Reason (as
defined below). Upon a termination of Executive's employment (i) due to
Executive's death or Disability, or (ii) by the Company for Cause or by the
Executive without Good Reason, Executive (or, in the case of Executive's death,
Executive's estate and/or beneficiaries) shall be entitled to: (A) unpaid Base
Salary through the Date of Termination; (B) any earned but unpaid bonus for the
prior fiscal year of the Company; (C) any benefits due to Executive under any
employee benefit plan of the Company and any payments due to Executive under the
terms of any Company program, arrangement or agreement, including insurance
policies but excluding any severance program or policy and (D) any expenses owed
to Executive ((A), (B), (C) and (D) collectively, the "Accrued Amounts"). Except
as provided in the preceding sentence, Executive shall have no further right or
entitlement under this Agreement to payments arising from termination of his
Employment by the Company for Cause or by Executive without Good Reason. In the
event of a termination of Executive's employment due to Executive's death or
Disability, Executive (or in the case of Executive's death, Executive's estate
and/or beneficiaries) shall be entitled to a lump-sum cash amount equal to the
Target Bonus for Executive for the year of termination pro-rated based on the
number of days from the beginning of the year through the date of termination
divided by the total number of days in the year of termination and,
notwithstanding any contrary provisions of the grants of Options and Restricted
Shares, or Section 3(c) above, the Options and Restricted Shares shall fully
vest (without regard to whether the time requirements of Time-Vesting Option or
Restricted Shares have been met and without regard to whether the time and
performance requirements of Performance-Vesting Options have been met) and the
restrictions thereon shall immediately lapse and all Options not previously
exercisable shall become exercisable immediately and all outstanding Options
shall remain exercisable for their originally scheduled respective terms and any
restrictions thereon shall immediately lapse.
(b) Termination Without Cause or for Good Reason. (i) The
Company may terminate Executive's employment without Cause and Executive may
terminate his employment for Good Reason, in each case upon thirty days prior
written notice. In the event that, during the Term, the Company terminates
Executive's employment without Cause or Executive terminates his employment for
Good Reason, Executive shall be entitled to the following in lieu of any
payments or benefits under any severance program or policy of the Company.
(i) the Accrued Amounts plus a lump sum cash amount equal to
the Target Bonus for Executive for the year of termination pro-rated based on
the number of days from the beginning of the year through the date of
termination divided by the total number of days in the year of termination;
(ii) a lump sum cash severance payment equal to the unpaid
balance of the Base Salary and the Target Bonuses Executive would have been
entitled to for the balance of the then-current Term measured from the Date of
Termination to the expiration date of the Term, but in no event shall such lump
sum be less than three times the sum of (X) Executive's Base Salary and (Y)
annual bonus; the severance payable shall be computed based upon (A) Executive's
highest Base Salary in effect at any time during his employment with the Company
and (B) Executive's actual annual bonus as provided for in this Agreement for
the most recent completed fiscal year of the Company prior to the Date of
Termination;
(iii) continued coverage for a period of thirty-six months
commencing on the date of termination or until Executive receives comparable
coverage (determined on a benefit-by-benefit basis) from a subsequent employer
(A) for Executive (and his eligible dependents, if any) under the Company's
health plans (including medical and dental) and other welfare benefit plans on
the same basis as such coverage is made available to executives employed by the
Company (including, without limitation, co-pays, deductibles and other required
payments and limitations) and (B) under any Company-provided life insurance and
disability insurance policies and plan under which Executive was insured
immediately prior to the date of termination; and
(iv) notwithstanding any contrary provisions of the grants of
Options and Restricted Shares or Section 3(c) above, full vesting of all Options
and Restricted Shares previously granted to Executive (without regard to whether
the time requirements of the Time-Vesting Option have been met and without
regard to whether the performance requirements of the Performance-Vesting
Options have been met) and the restrictions thereon shall immediately lapse and
all Options not previously exercisable shall become exercisable immediately and
all outstanding Options shall remain exercisable for their originally scheduled
respective terms.
(c) Definitions. For purposes of this Agreement, the following
definitions shall apply:
(i) "Affiliate" of a person or other entity shall mean: a person or
other entity that directly or indirectly controls, is controlled by, or is under
common control with the person or other entity specified.
(ii) "Cause" shall mean: (A) Executive's willful and continuing
failure (except where due to physical or mental incapacity) to substantially
perform his duties hereunder which is not remedied within 15 days after receipt
of written notice from the Company specifying such failure; (B) Executive's
willful malfeasance or gross neglect in the performance of his duties hereunder
resulting in material harm to the Company; (C) Executive's conviction of, or
plea of guilty or nolo contendere to, a felony or a misdemeanor involving moral
turpitude; (D) the commission by Executive of an act of fraud or embezzlement
against the Company or any Affiliate; or (E) Executive's willful material breach
of any material provision of this Agreement (as determined in good faith by the
Board of Directors) which is not remedied within 15 days after (I) receipt of
written notice from the Company specifying such breach and (II) the opportunity
to appear before the Board. For purposes of the preceding sentence, no act or
failure to act by Executive shall be considered "willful" unless done or omitted
to be done by Executive in bad faith or without reasonable belief that
Executive's action or omission was in the best interests of the Company.
(iii) "Disability" shall have the same meaning as in, and shall be
determined in a manner consistent with any determination under, the long-term
disability plan of the Company in which Executive participates from time to
time, or if Executive is not covered by such a plan, "Disability" shall mean
Executive's permanent physical or mental injury, illness or other condition that
prevents Executive from performing his duties to the Company for a total of six
months during any 12-month period, as reasonably determined by a physician
selected by Executive and acceptable to the Company or the Company's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(iv) "Good Reason" shall mean the occurrence, without Executive's
express written consent, of: (A) an adverse change in Executive's employment's
title or change in Executive's duty to report solely and directly to the Board;
(B) a diminution in Executive's employment duties, responsibilities or
authority, or the assignment to Executive of duties that are materially
inconsistent with his position; (C) any reduction in Base Salary, Maximum Bonus
or Target Bonus as set forth in Section 3(b); (D) a relocation of Executive's
principal place of employment to a location outside of the New York area that
would unreasonably increase Executive's commute; (E) at any time during the Term
failure of Executive to be nominated for election as a director of the Company
throughout the Term or removal of Executive as a director of the Company by the
Board other than for Cause; or (F) any willful breach by the Company of any
material provision of this Agreement (including but not limited to any breach of
its obligations under Section 3 hereof) which is not cured within 15 days after
written notice is received from Executive.
(v) "Date of Termination"/"Notice of Termination." Any termination
of Executive's employment by the Company or by Executive under this Section 4
(other than termination due to death) shall be communicated by a written notice
to the other party hereto indicating the specific termination provision in this
Agreement relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated, and specifying a "Date of
Termination" (a "Notice of Termination") which, if submitted by Executive, shall
be at least 30 days following the date of such notice. A Notice of Termination
submitted by the Company may provide for a "Date of Termination" on the date
Executive receives the Notice of Termination, or any date thereafter elected by
the Company in its sole discretion not to exceed 30 days following the date of
such notice. The failure by Executive or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a showing of Cause
or Good Reason shall not waive any right of Executive or the Company hereunder
or preclude Executive or the Company thereafter from asserting such fact or
circumstance within a period of six months from the date of termination in order
to enforce Executive's or the Company's otherwise applicable rights hereunder.
(vi) "Subsidiary" of the Company shall mean: any corporation of
which the Company owns, directly or indirectly, more than 50% of the voting
stock.
5. Confidentiality of Trade Secrets and Business Information.
Executive agrees that Executive shall not, at any time during Executive's
employment with the Company or thereafter, disclose or use any trade secret,
proprietary or confidential information of the Company or any Subsidiary of the
Company (collectively, "Confidential Information"), obtained by him during the
course of such employment, except for (i) disclosures and uses required in the
course of such employment or with the written permission of the Company, (ii)
disclosures with respect to any litigation, arbitration or mediation involving
this Agreement, including but not limited to, the enforcement of Executive's
rights under this Agreement, or (iii) as may be required by law or by any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with apparent jurisdiction to order such disclosure; provided
that, if, in any circumstance described in clause (iii), Executive receives
notice that any third party shall seek to compel him by process of law to
disclose any Confidential Information, Executive shall promptly notify the
Company and provide reasonable cooperation to the Company (at the Company's sole
expense) in seeking a protective order against such disclosure. Notwithstanding
the foregoing, "Confidential Information" shall not include information that is
or becomes publicly known outside the Company or any of its subsidiaries other
than due to a breach of Executive's obligations under this paragraph.
6. Return of Information. Executive agrees that at the time of any
termination of Executive's employment with the Company or expiration of the
Term, whether at the instance of Executive or the Company, and regardless of the
reasons therefore, Executive shall deliver to the Company (at the Company's
expense), any and all notes, files, memoranda, papers and, in general, any and
all physical (including electronic) matter containing Confidential Information
(other than as he properly is retaining in connection with an action or other
proceeding as noted in clause (ii) or (iii) of Section 5) which are in
Executive's possession, except as otherwise consented in writing by the Company
at the time of such termination. The foregoing shall not prevent Executive from
retaining copies of personal diaries, personal notes, personal address books,
personal calendars, and any other personal information (including, without
limitation, information relating to Executive's compensation), but only to the
extent such copies do not contain any Confidential Information other than that
which relates directly to Executive, including his compensation.
7. Noncompetition and Noninterference.
(a) General. Subject to Section 7(c), in consideration for the
compensation payable to Executive under this Agreement, Executive agrees that
Executive shall not, during Executive's employment with the Company other than
in carrying out his duties hereunder and for a period of one (1) year after any
termination of employment (i) render services to a Competitor, regardless of the
nature thereof, (ii) engage in any activity which is in direct conflict with or
materially adverse to the interests of the Company or any Subsidiary, (iii)
directly or indirectly recruit, solicit or induce, any employee, consultant or
independent contractor of the Company or any Subsidiary, to terminate, alter or
modify such person's employment or other relationship with the Company or any
Subsidiary, nor (iv) directly or indirectly solicit any then current customer or
business partner of the Company or any Subsidiary to terminate, alter or modify
its relationship with the Company or the Subsidiary or to interfere with the
Company's or any Subsidiary's relationships with any of its customers or
business partners on behalf of any enterprise that is a competitor with the
Company or a Subsidiary.
(b) Definition. For purposes of this Agreement, "Competitor"
shall mean any business or enterprise which operates theme parks or engages in
any other business that is competitive with a business conducted by the Company
or a Subsidiary on the Date of Termination. Notwithstanding the foregoing,
Executive's providing services to an Affiliate or a unit of a Competitor that
are not competitive with the business activities of the Company or a Subsidiary,
as described in this paragraph, shall not be a violation of the restrictions of
this Section 7 provided he has no responsibilities, direct or indirect, as to
any activities that cause such enterprise to be a Competitor. Nothing contained
herein shall prevent Executive from acquiring, solely as an investment, any
publicly-traded securities of any person so long as he remains a passive
investor in such person and does not own more than 1% of the outstanding
securities thereof.
(c) Expiration of Term. If Executive's employment with the
Company ceases following expiration of the Term (whether on December 31, 2009,
December 31, 2010 or December 31, 2011, depending on whether extended pursuant
to Section 1), the provisions of Section 7(a) shall remain in effect; provided
that clauses (i) and (ii) of Section 7(a) shall apply for a period of six
months, rather than twelve months, following the expiration of the Term, and
during such six-month period, the Company shall continue to pay Executive's Base
Salary and an additional monthly amount equal to one-twelfth of the annual bonus
paid to Executive in respect of the preceding fiscal year.
8. Enforcement. Executive acknowledges and agrees that: (i) the
purpose of the covenants set forth in Sections 5 through 7 above is to protect
the goodwill, trade secrets and other confidential information of the Company;
(ii) because of the nature of the business in which the Company is engaged and
because of the nature of the Confidential Information to which Executive has
access, it would be impractical and excessively difficult to determine the
actual damages of the Company in the event Executive breached any such
covenants; and (iii) remedies at law (such as monetary damages) for any breach
of Executive's obligations under Sections 5 through 7 would be inadequate.
Executive therefore agrees and consents that if Executive commits any breach of
a covenant under Sections 5 through 7, the Company shall have the right (in
addition to, and not in lieu of, any other right or remedy that may be available
to it) to temporary and permanent injunctive relief from a court of competent
jurisdiction, without posting any bond or other security and without the
necessity of proof of actual damage. If any portion of Sections 5 through 8 is
hereafter determined to be invalid or unenforceable in any respect, such
determination shall not affect the remainder thereof, which shall be given the
maximum effect possible and shall be fully enforced, without regard to the
invalid portions. In particular, without limiting the generality of the
foregoing, if the covenants set forth in Section 7 are found by a court or an
arbitrator to be unreasonable, Executive and the Company agree that the maximum
period, scope or geographical area that is found to be reasonable shall be
substituted for the stated period, scope or area, and that the court or
arbitrator shall revise the restrictions contained herein to cover the maximum
period, scope and area permitted by law. If any of the covenants of Sections 5
through 7 are determined to be wholly or partially unenforceable in any
jurisdiction, such determination shall not be a bar to or in any way diminish
the Company's right to enforce any such covenant in any other jurisdiction.
9. Indemnification.
(a) The Company agrees that if Executive is made a party to,
is threatened to be made a party to, receives any legal process in, or receives
any discovery request or request for information in connection with, any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he was a director, officer, employee,
consultant or agent of the Company, or was serving at the request of, or on
behalf of, the Company as a director, officer, member, employee, consultant or
agent of another corporation, limited liability corporation, partnership, joint
venture, trust or other entity, including service with respect to employee
benefit plans, whether or not the basis of such Proceeding is Executive's
alleged action in an official capacity while serving as a director, officer,
member, employee, consultant or agent of the Company or other entity, Executive
shall be indemnified and held harmless by the Company to the fullest extent
permitted or authorized by the Company's certificate of incorporation or by-laws
or, if greater, by applicable law, against any and all costs, expenses,
liabilities and losses (including, without limitation, attorneys' fees
reasonably incurred, judgments, fines, taxes or penalties and amounts paid or to
be paid in settlement and any reasonable cost and fees incurred in enforcing his
rights to indemnification or contribution) incurred or suffered by Executive in
connection therewith, and such indemnification shall continue as to Executive
even though he has ceased to be a director, officer, member, employee,
consultant or agent of the Company or other entity and shall inure to the
benefit of Executive's heirs, executors and administrators. The Company shall
reimburse Executive for all costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred by him in connection with any Proceeding
within 20 business days after receipt by the Company of a written request for
such reimbursement and appropriate documentation associated with these expenses.
Such request shall include an undertaking by Executive to repay the amount of
such advance if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses; provided that the amount of such
obligation to repay shall be limited to the after-tax amount of any such advance
except to the extent Executive is able to offset such taxes incurred on the
advance by the tax benefit, if any, attributable to a deduction for repayment.
(b) Neither the failure of the Company (including its Board,
independent legal counsel or stockholders) to have made a determination prior to
the commencement of any proceeding concerning payment of amounts claimed by
Executive under Section 9(a) above that indemnification of Executive is proper
because he has met the applicable standard of conduct, nor a determination by
the Company (including its Board, independent legal counsel or stockholders)
that Executive has not met such applicable standard of conduct, shall create a
presumption or inference that Executive has not met the applicable standard of
conduct.
(c) The Company agrees to continue and maintain a directors'
and officers' liability insurance policy covering Executive at a level, and on
terms and conditions, no less favorable to him than the coverage the Company
provides other similarly-situated executives until such time as suits against
Executive are no longer permitted by law.
(d) Nothing in this Section 9 shall be construed as reducing
or waiving any right to indemnification, or advancement of expenses, Executive
would otherwise have under the Company's certificate of incorporation or by-laws
or under applicable law.
(e) In addition, the Company agrees to indemnify Executive
against any and all losses, liabilities, damages, expenses (including attorneys'
fees), judgments, fines and amounts incurred by Executive in connection with any
claim, action, suit or proceeding arising as a result of Executive's alleged or
actual violation of any existing contractual or other restrictions on
Executive's employment or business activities if such violation occurs as a
result of Executive's entering into this Agreement or his rendering, or having
rendered, services to the Company or to any Subsidiary.
10. Arbitration. In the event that any dispute arises between the
Company and Executive regarding or relating to this Agreement and/or any aspect
of Executive's employment relationship with the Company, the parties consent to
resolve such dispute through mandatory arbitration under the Commercial Rules of
the American Arbitration Association ("AAA"), before a single arbitrator in New
York, New York. The parties hereby consent to the entry of judgment upon award
rendered by the arbitrator in any court of competent jurisdiction.
Notwithstanding the foregoing, however, should adequate grounds exist for
seeking immediate injunctive or immediate equitable relief, any party may seek
and obtain such relief. The parties hereby consent to the exclusive jurisdiction
of the state and Federal courts of or in the State of New York for purposes of
seeking such injunctive or equitable relief as set forth above. All
out-of-pocket costs and expenses reasonably incurred by Executive in connection
with such arbitration (including attorneys' fees) shall be paid by the Company
unless the arbitrator determines that Executive shall have brought a claim in
bad faith or without any reasonable basis.
11. Mutual Representations.
(a) Executive acknowledges that before signing this Agreement,
Executive was given the opportunity to read it, evaluate it and discuss it with
Executive's personal advisors. Executive further acknowledges that the Company
has not provided Executive with any legal advice regarding this Agreement.
(b) Executive represents and warrants to the Company that the
execution and delivery of this Agreement and the fulfillment of the terms hereof
(i) shall not constitute a default under, or conflict with, any agreement or
other instrument to which he is a party or by which he is bound and (ii) as to
his execution and delivery of this Agreement do not require the consent of any
other person.
(c) The Company represents and warrants to Executive that (i)
the execution, delivery and performance of this Agreement by the Company has
been fully and validly authorized by all necessary corporate action, (ii) the
person signing this Agreement on behalf of the Company is duly authorized to do
so, (iii) the execution, delivery and performance of this Agreement does not
violate any applicable law, regulation, order, judgment or decree or any
agreement, plan or corporate governance document to which the Company is a party
or by which it is bound and (iv) upon execution and delivery of this Agreement
by the Parties, it shall be a valid and binding obligation of the Company
enforceable against it in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
(d) Each party hereto represents and warrants to the other
that this Agreement constitutes the valid and binding obligations of such party
enforceable against such party in accordance with its terms.
(e) The Company represents that it has sufficient common stock
reserved for issuance under an applicable equity compensation plan to satisfy
the equity awards set forth hereunder.
12. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when delivered
(a) personally, (b) by registered or certified mail, postage prepaid with return
receipt requested, (b) by facsimile with evidence of completed transmission, or
(c) delivered by overnight courier to the Party concerned at the address
indicated below or to such changed address as such Party may subsequently give
such notice of:
If to the Company:
Six Flags, Inc.
0000 Xxxxxxxx; 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
If to Executive:
Xxxx Xxxxxxx
and a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
13. Assignment and Successors. This Agreement is personal in its
nature and neither of the parties hereto shall, without the consent of the
other, assign or transfer this Agreement or any rights or obligations hereunder;
provided, however, that in the event of a merger, consolidation, or transfer or
sale of all or substantially all of the assets of the Company with or to any
other individual(s) or entity, this Agreement shall, subject to the provisions
hereof, be binding upon and inure to the benefit of such successor and such
successor shall discharge and perform all the promises, covenants, duties, and
obligations of the Company hereunder, and such transferee or successor shall be
required to assume such obligations by contract (unless such assumption occurs
by operation of law). Anything herein to the contrary notwithstanding, Executive
shall be entitled to select (and change, to the extent permitted under any
applicable law) a beneficiary or beneficiaries to receive any compensation or
benefit payable hereunder following Executive's death or judicially determined
incompetence by giving the Company written notice thereof. In the event of
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
14. Governing Law; Amendment. This Agreement shall be governed by
and construed in accordance with the laws of New York, without reference to
principles of conflict of laws. This Agreement may not be amended or modified
except by a written agreement executed by Executive and the Company or their
respective successors and legal representatives
15. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement. If any provision of this Agreement shall
be held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall remain
valid and enforceable and continue in full force and effect to the fullest
extent consistent with law.
16. Tax Withholding. Notwithstanding any other provision of this
Agreement, the Company may withhold from amounts payable under this Agreement
all Federal, state, local and foreign taxes that are required to be withheld by
applicable laws or regulations.
17. No Waiver. Executive's or the Company's failure to insist upon
strict compliance with any provision of, or to assert any right under, this
Agreement shall not be deemed to be a waiver of such provision or right or of
any other provision of or right under this Agreement. Any provision of this
Agreement may be waived by either party; provided that any waiver by any person
of any provision of this Agreement shall be effective only if in writing and
signed by the person against whom enforcement of the waiver is sought and such
waiver must specifically refer to this Agreement and to the terms or provisions
being modified or waived.
18. No Mitigation. In no event shall Executive be obligated to seek
other employment or take other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement and such
amounts shall not be subject to offset or otherwise reduced whether or not
Executive obtains other employment. The Company's obligation to make any payment
pursuant to, and otherwise to perform its obligations under, this Agreement
shall not be affected by any offset, counterclaim or other right that the
Company may have against Executive for any reason.
19. Legal Fees. The Company shall pay or reimburse Executive for all
reasonable legal fees, up to a maximum of $175,000 incurred by him in connection
with the negotiation of this Agreement and any other agreements documenting his
employment arrangement with the Company.
20. Section 409A. The parties acknowledge and agree that, to the
extent applicable, this Agreement shall be interpreted in accordance with
Section 409A of the Internal Revenue Code and the Department of Treasury
Regulations and other interpretive guidance issued thereunder, including without
limitation any such regulations or other guidance that may be issued after the
Effective Date ("Code Section 409A"). Notwithstanding any provision of this
Agreement to the contrary, in the event that the Company determines that any
amounts payable hereunder shall be immediately taxable to Executive under Code
Section 409A, the Company may (a) adopt such amendments to this Agreement and
appropriate policies and procedures, including amendments and policies with
retroactive effect, that the Company determines necessary or appropriate to
preserve the intended tax treatment of the benefits provided by this Agreement
and/or (b) take such other actions as the Company determines necessary or
appropriate to comply with the requirements of Code Section 409A; provided that
the Company shall attempt to provide to Executive as nearly as reasonably
possible the economic result intended by the Agreement. If the payment of any
amounts due under this Agreement are delayed as a result of compliance with Code
Section 409A, the Company shall pay Executive such amount in full, no later than
required to avoid tax under Section 409A, with interest, at the interest rate
paid by the Company on its short-term borrowings for the period of delay.
21. Tax Gross-Up.
(a) Definitions. The following terms shall have the following
meanings for purposes of this Section 21.
(i) "Excise Tax" shall mean the excise tax imposed by
Section 4999 of the Internal Revenue Code or any similar tax that may
hereafter be imposed, together with any interest or penalties imposed with
respect to such excise or other similar tax.
(ii) "Parachute Value" of a Payment shall mean the
present value as of the date of the change of control for purposes of
Section 280G of the Code of the portion of such Payment that constitutes a
"parachute payment" under Section 280G(b)(2), as determined by the
Accounting Firm for purposes of determining whether and to what extent the
Excise Tax shall apply to such Payment.
(iii) A "Payment" shall mean any payment, benefit,
entitlement or distribution in the nature of compensation (within the
meaning of Section 280G(b)(2) of the Code) to or for the benefit of
Executive, whether paid or payable pursuant to this Agreement or
otherwise.
(iv) The "Safe Harbor Amount" means 2.99 times
Executive's "base amount," within the meaning of Section 280G(b)(3) of the
Code.
(v) "Value" of a Payment shall mean the economic present
value of a Payment as of the date of the change of control for purposes of
Section 280G of the Code, as determined by the Accounting Firm using the
discount rate required by Section 280G(d)(4) of the Code.
(b) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
Payment would be subject to the Excise Tax, then Executive shall be entitled to
receive an additional payment (the "Gross-Up Payment") in an amount such that,
after payment by Executive of all taxes (and any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the
foregoing provisions of this Section 21(b), if it shall be determined that
Executive is entitled to the Gross-Up Payment, but that the Parachute Value of
all Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up
Payment shall be made to Executive and the amounts payable under this Agreement
shall be reduced so that the Parachute Value of all Payments, in the aggregate,
equals the Safe Harbor Amount. The reduction of the amounts payable hereunder,
if applicable, shall be made by first reducing the payments under Section
4(b)(ii), unless an alternative method of reduction is elected by Executive, and
in any event shall be made in such a manner as to maximize the Value of all
Payments actually made to Executive. For purposes of reducing the Payments to
the Safe Harbor Amount, only amounts payable under this Agreement (and no other
Payments) shall be reduced. If the reduction of the amount payable under this
Agreement would not result in a reduction of the Parachute Value of all Payments
to the Safe Harbor Amount, no amounts payable under the Agreement shall be
reduced pursuant to this Section 21(b). The Company's obligation to make
Gross-Up Payments under this Section 21 shall not be conditioned upon
Executive's termination of employment.
(c) Subject to the provisions of Section 21(d), all
determinations required to be made under this Section 21, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by a
nationally recognized certified public accounting firm designated by Executive
(the "Accounting Firm"). The Accounting Firm shall provide detailed supporting
calculations both to the Company and Executive within 15 business days of the
receipt of notice from Executive that there has been a Payment or such earlier
time as is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 21, shall be paid by
the Company to Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments that
shall not have been made by the Company should have been made (the
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event the Company exhausts its remedies pursuant to Section 21(d) and
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Executive.
(c) Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than 10 business days after Executive is informed
in writing of such claim. Executive shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which Executive gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies Executive in writing prior to the expiration of
such period that the Company desires to contest such claim, Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest, and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or income or other tax (including interest and penalties)
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 21(d), the
Company shall control all proceedings taken in connection with such contest,
and, at its sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either pay
the tax claimed to the appropriate taxing authority on behalf of Executive and
direct Executive to xxx for a refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided that, if the
Company pays such claim and directs Executive to xxx for a refund, the Company
shall indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or income or other tax (including interest or penalties) imposed with
respect to such payment or with respect to any imputed income in connection with
such payment; and provided, further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive with
respect to which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the contest shall
be limited to issues with respect to which the Gross-Up Payment would be payable
hereunder, and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(e) If, after the receipt by Executive of a Gross-Up Payment
or payment by the Company of an amount on Executive's behalf pursuant to Section
21(d), Executive becomes entitled to receive any refund with respect to the
Excise Tax to which such Gross-Up Payment relates or with respect to such claim,
Executive shall (subject to the Company's complying with the requirements of
Section 21(d), if applicable) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after payment by the Company of an amount on
Executive's behalf pursuant to Section 21(d), a determination is made that
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then the amount of such payment shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
(f) Notwithstanding any other provision of this Section 21,
the Company may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit of
Executive, all or any portion of any Gross-Up Payment, and Executive hereby
consents to such withholding.
22. Headings. The Section headings contained in this Agreement are
for convenience only and in no manner shall be construed as part of this
Agreement.
23. Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and shall
supersede all prior agreements, whether written or oral, with respect thereto.
In the event of any inconsistency between the terms of this Agreement and the
terms of any other Company plan, policy, equity grant, arrangement or agreement
with Executive, the provisions most favorable to Executive shall govern.
24. Duration of Terms. The respective rights and obligations of the
parties hereunder shall survive any termination of Executive's employment to the
extent necessary to give effect to such rights and obligations.
25. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, Executive has hereunto set Executive's hand and,
pursuant to the authorization of its Board of Directors, the Company has caused
this Agreement to be executed in its name on its behalf, all as of the day and
year first above written.
SIX FLAGS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Chairman of the Compensation Committee
/s/ Xxxx Xxxxxxx
----------------
Xxxx Xxxxxxx
EXHIBIT A
Annual Bonus Parameters
Definitions:
"Performance Parameters" shall mean the following as determined annually by the
Board:
(a) Budgeted EBITDA: Total budgeted EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization) for the parks.
(b) Budgeted Free Cash Flow: Total Budgeted Free Cash Flow (EBITDA less
Capital Expenditures) for the parks.
(c) Budgeted Attendance: Total budgeted attendance for the parks.
(d) Budgeted In-Park Net Revenue Per Capita: Total budgeted in-park net
revenue per capita for the parks.
(e) Real Estate Sale Progress: Earned if [$ in asset sales] in calendar year
2006, bring an additional package of parks to the market as real estate or
going concern.
(f) Sponsorship Revenues: Achievement of [$ million] in sponsorship revenues
for 2006 and achievement of [$ million] in promotional/advertising value
from co-branding relationships.
Rules for Calculation of Annual Bonus:
Any annual bonus payable under Section 3(b) of the Agreement, shall be
determined annually by the Committee in accordance with the rules below. All
determinations by the Committee shall be final and binding on the Executive. All
EBITDA and other bonus targets shall be determined by reference to the Company's
Budget for each year as approved by the Board of Directors. The Committee shall
work with Executive to determine appropriate bonus targets for any items that
are not specifically contained in the Company's Budget each year.
1. Subject to the other rules, the Performance Parameters shall be weighted
as follows in determining the amount of the annual bonus: Budgeted EBITDA:
50% and 10% for each of the remaining Performance Parameters.
2. No annual bonus whatsoever shall be payable in respect of a given fiscal
year if actual EBITDA for such year is less than 90% of Budgeted EBITDA.
3. If actual results for a given Performance Parameter are less than 90% of
the Performance Parameter, no amount shall be payable in respect of such
Performance Parameter.
4. If actual EBITDA for a given fiscal year equals or exceeds 90% of Budgeted
EBITDA, and the results for any given Performance Parameter (including
Budgeted EBITDA) equals or exceeds 90% of the Performance Parameter, then
the amount payable in respect of such parameter shall be determined by
multiplying the product of the Target Bonus and the weight ascribed to the
Performance Parameter in Rule 1 above by the appropriate multiplier below:
Multiplier Performance Level
---------- -----------------
0.5 Actual Performance equals 90% of the
Performance Parameter (including Budgeted
EBITDA)
0.75 Actual Performance equals 95% of the
Performance Parameter (including Budgeted
EBITDA)
1.0 Actual Performance equals 100% of the
Performance Parameter (including Budgeted
EBITDA)
1.5 Actual Performance equals 105% of the
Performance Parameter (including Budgeted
EBITDA)
2.0 Actual Performance equals or exceeds 110% of
the Performance Parameter (including Budgeted
EBITDA)
Determined Actual Performance exceeds 90% but is below
by 110% of the Performance Parameter (including
interpolation Budgeted EBITDA)
between 0.5
and 2.0
5. If actual EBITDA for a given fiscal year is or exceeds 110% of Budgeted
EBITDA, then Executive shall receive the Maximum Bonus notwithstanding the
results of the other Performance Parameters.
6. Notwithstanding anything to the contrary above, Executive shall not
receive an annual bonus greater than the Maximum Bonus.
EXAMPLES
[Omitted]
