EXHIBIT 10.7
[SABAN LETTERHEAD]
May 20, 1998
Xx. Xxx Xxxxx
Saban Entertainment, Inc.
00000 Xxxxxxxx Xxxx.
Los Angeles, California 90024
Re: Amendment No. 2 to Employment Agreement
Dear Xxx:
Reference is made to the Employment Agreement entered into as of June 1,
1994 between Saban Entertainment, Inc. ("Saban") and you, as amended by
Amendment No. 1 to Employment Agreement dated as of September 26, 1996 (the
Employment Agreement, as so amended, is referred to herein as the "Agreement").
Capitalized terms used herein without definition shall have the meanings
ascribed to them in or pursuant to the Agreement.
As additional compensation for your services performed to date, Xxxxx
hereby agrees to advance to you the aggregate principal amount of Two Million
Dollars ($2,000,000) (the "Advance"). The Advance shall bear no interest.
Except if otherwise repaid by you at your election, as set forth herein, the
Advance will be payable solely by recourse against the amount otherwise payable
as the Termination Purchase Price that Saban purchases from you pursuant to
Paragraph 5(f)(ix) of the Agreement.
Any exercise by you of the option to purchase Option Shares pursuant to the
terms and conditions of paragraph 5(f) of the Agreement shall be conditioned
upon your concurrent repayment in full of the Advance. You may, at your
election, make all or any portion of such repayment by increasing the purchase
price in connection with such exercise (subject to the satisfaction of all
applicable requirements in connection with such increase set forth in that
certain Second Amended and Restated Credit Agreement dated as of October 28,
1997 among FCN Holding, Inc., International Family Entertainment, Inc., Saban
Entertainment, Inc., Fox Kids Holdings, LLC, the initial lenders named therein,
Citicorp USA, Inc., Citicorp Securities, Inc., Chase Securities, Inc. and
BankBoston, N.A.) by an aggregate amount equal to all or such portion of the
Advance.
You and Xxxxx agree to report the Advance on all applicable federal and
state tax returns (including, without limitation, all income tax, employment tax
and information tax returns) (hereafter "Returns") as compensation for services
rendered and to treat the Advance accordingly for all tax purposes. You and
Xxxxx agree that Saban shall withhold from the payment of the Advance all
amounts required to be withheld therefrom in accordance with the preceding
sentence. If you exercise the option to purchase Option Shares pursuant to
paragraph 5(f) of the
Xx. Xxx Xxxxx
May 20, 1998
Page 2
Agreement, you and Saban agree to treat the repayment of the Advance for all tax
purposes as an increase in the purchase price of the Option Shares and to
report, when required, such repayment accordingly on all Returns. If you do not
exercise the option to purchase Option Shares pursuant to paragraph 5(f) of the
Agreement, you and Saban agree to treat the repayment of the Advance for all tax
purposes as a reduction in the Termination Purchase Price and to report, when
required, such repayment accordingly on all Returns.
The Advance shall be due and payable, if and to the extent not earlier
repaid, upon the termination of your employment with Saban for any reason (the
"Termination"), by offset against the amount otherwise payable as the
Termination Purchase Price.
Except as expressly modified herein, all terms of the Agreement remain in
full force and effect. This letter shall be governed by the laws of the State
of California, excluding any rule of law that would cause application of the
laws of any jurisdiction other than the State of California.
Please execute and return the enclosed copy of this letter, whereupon this
letter shall constitute Amendment No. 2 to the Agreement.
Very Truly Yours,
SABAN ENTERTAINMENT, INC.
By: /s/ Xxxx Xxxxx
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Xxxx Xxxxx
Chief Executive Officer
Agreed and accepted this
20th day of May, 1998
/s/ Xxx Xxxxx
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Xxx Xxxxx
