AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT
10.2
AMENDMENT
TO AMENDED AND
RESTATED EMPLOYMENT
AGREEMENT
This
AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made
and entered into as of December 23, 2009, by and between HOLLYWOOD MEDIA CORP.,
a Florida corporation (the “Company”) and XXXXXX
X. XXXXXXX (the “Executive”). The
Company and the Executive are sometimes referred to in this Agreement
individually as a “Party” and
collectively as the “Parties.”
Recitals
A. The
Executive currently serves as the Vice Chairperson of the Board of Directors and
President of the Company.
B. The
Company and the Executive are parties to an Amended and Restated Employment
Agreement dated as of December 22, 2008 (the “Current Employment
Agreement”).
C. The
Company has agreed to sell its Broadway Ticketing Division (the “Broadway Sale”)
pursuant to a Stock Purchase Agreement dated December 22, 2009, between the
Company and Key Brand Entertainment Inc. (the “Broadway Purchase
Agreement”), pursuant to which the Company will sell all of the issued
and outstanding capital stock of its wholly owned subsidiary Theatre Direct NY,
Inc., a Delaware corporation.
D. The
Executive possesses intimate knowledge of the business and affairs of the
Company, its policies, methods and personnel, including the Company’s Broadway
Ticketing Division, Ad Sales Division (comprised of the CinemasOnline business
and the Company’s 26.2% interest in XxxxxXxxxxxx.xxx, Inc. (“XxxxxXxxxxxx.xxx”)),
and Intellectual Properties Division (comprised of the Company’s 51% ownership
interest in Tekno Books, certain intellectual properties created by authors and
others, and the Company’s 50% ownership interest in NetCo
Partners). The Ad Sales Division, interest in XxxxxXxxxxxx.xxx, and
Intellectual Properties Division are sometimes referred to collectively herein
as the “Remaining
Businesses”.
E. The
Company desires to assure itself of the Executive’s present and continued
employment in an executive capacity, with respect to oversight of the management
and possible ultimate disposition of the Remaining Businesses, and to compensate
her therefor.
F. The
Company has determined that this Agreement, which amends the Current Employment
Agreement, will reinforce and encourage the Executive’s continued attention and
dedication to the Company following the Broadway Sale.
G. The
Executive is willing to make her services available to the Company on the terms
and conditions of the Current Employment Agreement, as amended by this
Agreement.
H. The
Company and the Executive desire to amend the Current Employment Agreement as
set forth herein.
Agreement
NOW,
THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the Parties hereby agree as follows:
1.
Amendment
of Current Employment Agreement. The Current Employment
Agreement is hereby amended as follows:
(a) Paragraph
1.1 of the Current Employment Agreement is hereby deleted in its entirety and
replaced with the following:
“1.1 Employment and
Term.
(a) Initial
Term. Subject to Paragraph 1.1(b), the Company shall continue
to employ the Executive and the Executive shall continue to serve the Company,
on the terms and conditions set forth herein, for the period (the “Term”) that
commenced as of December 22, 2008 (the “Commencement Date”) and that is
scheduled to expire on December 31, 2010 (the “Termination Date”), unless sooner
terminated as hereinafter set forth; provided, however, that the Term of this
Agreement shall automatically be extended for periods of one year each
commencing on the day after the Termination Date (January 1, 2011) and each
anniversary thereof unless, at least 90 days prior to January 1, 2011, or any
anniversary of such date, the Company shall have delivered to the Executive or
the Executive shall have delivered to the Company written notice that the Term
of the Executive’s employment hereunder will not be extended.
(b) Extension
Term. In the event of the consummation of the sale by the
Company of all of the issued and outstanding capital stock of its wholly owned
subsidiary Theatre Direct NY, Inc., a Delaware corporation (the “Broadway
Sale”), pursuant to a Stock Purchase Agreement dated December 22, 2009 between
the Company and Key Brand Entertainment Inc. (the “Broadway Purchase
Agreement”), while the Executive is in the employ of the Company, the Executive
shall continue to be employed for the same salary and other benefits as in
effect on the Commencement Date for a period ending on the ninetieth day
following the date of the Broadway Sale (such ninetieth day being hereinafter
referred to as the “Initial Term Termination Date”), unless such employment is
sooner terminated as set forth in the Current Employment
Agreement. Thereafter, the Company shall continue to employ the
Executive and the Executive shall continue to serve the Company, on the terms
and conditions set forth herein, for the period (the “Extension Term”)
commencing immediately after the Initial Term Termination Date and ending on the
day that the Executive’s employment with the Company is terminated by either the
Company or the Executive.”
(b) New
Paragraph 2.4 is hereby added to the Current Employment Agreement:
“2.4 Compensation During the
Extension Term. The Executive shall receive the following
compensation during the Extension Term:
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(i) a
base salary at the annual rate of $1, payable in one installment
annually;
(ii) (A)
an amount equal to five percent (5%) of all dividends and other distributions,
whether in cash or property, received by the Company or any affiliate under the
control of the Company in respect of any capital stock of, or equity interest
in, XxxxxXxxxxxx.xxx, Inc. (“XxxxxXxxxxxx.xxx”) or any successor of
XxxxxXxxxxxx.xxx that is held by the Company or by any affiliate under the
control of the Company, in each case within five days after such dividend or
other distribution is made to the Company or to an affiliate under the control
of the Company, (B) an amount equal to five percent (5%) of any other cash or
property received by the Company or by any affiliate under the control of the
Company (1) on account of its ownership interest in XxxxxXxxxxxx.xxx, (2) as a
result of any judgment, settlement, or award against XxxxxXxxxxxx.xxx or any
shareholder of XxxxxXxxxxxx.xxx or any affiliate of such shareholder that arises
from the Company’s relationship with or ownership interests in XxxxxXxxxxx.xxx,
or (3) as a management fee, fee for services, or otherwise paid by
XxxxxXxxxxxx.xxx or any affiliate of XxxxxXxxxxxx.xxx controlled by
XxxxxXxxxxxx.xxx, in each case within five days after such other payment of cash
or property is made to the Company or to an affiliate under the control of the
Company, (C) an amount equal to five percent (5%) of all proceeds, whether in
cash or property, received by the Company or by any affiliate under the control
of the Company upon any sale, transfer, or assignment of any capital stock of
XxxxxXxxxxxx.xxx held by the Company or by any affiliate under the control of
the Company, including but not limited to any proceeds received by the Company
in respect of its XxxxxXxxxxxx.xxx capital stock in connection with a merger,
share exchange, or other reorganization of XxxxxXxxxxxx.xxx, and (D) in the
event that the Company distributes or makes a dividend to its shareholders of
any capital stock of XxxxxXxxxxxx.xxx or of a successor of XxxxxXxxxxxx.xxx,
such number of shares of capital stock of XxxxxXxxxxxx.xxx or a successor as is
equal to five percent (5%) of the aggregate of such shares being distributed to
the Executive and to the shareholders in such distribution or dividend (the
aggregate of subsection (ii) (A), (B), (C), and (D) being referred to as the
“XxxxxXxxxxxx.xxx 5% Interest)”; and
(iii) any
amounts otherwise includible in the XxxxxXxxxxxx.xxx 5% Interest that are
distributed or otherwise paid to the Company or any Affiliate under the control
of the Company after December 23, 2009 but before the commencement of the
Extension Term, payable within five days of the commencement of the Extension
Term.
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In the
event that during the Extension Term the Company enters into any additional
businesses other than the Intellectual Properties Division (comprised of the
Company’s 51% ownership interest in Tekno Books, certain intellectual properties
created by authors and others, and the Company’s 50% ownership interest in NetCo
Partners) and the Ad Sales Division (comprised of the CinemasOnline business and
the Company’s 26.2% interest in XxxxxXxxxxxx.xxx), then the Company will
consider in good faith increasing the Executive’s compensation under this
Paragraph 2.4 during the Extension Term to reflect the additional service to be
provided by the Executive to the Company in connection with such additional
businesses.
In the
event that (x) stock of XxxxxXxxxxxx.xxx becomes publicly traded, or (y)
publicly traded stock or securities are distributed with respect to, or received
in exchange for stock of XxxxxXxxxxxx.xxx (or non-publicly traded stock or
securities that are so distributed or received become publicly traded after such
distribution or receipt), 5% of such publicly traded stock or securities shall
promptly be paid to the Executive in partial or full satisfaction (as
appropriate) of the XxxxxXxxxxxx.xxx 5% Interest, unless such payment is
prohibited by law. If stock of XxxxxXxxxxxx.xxx or any stock or
securities received with respect thereto is not registered with the Securities
and Exchange Commission but is part of a class of stock or securities that is
publicly traded, the portion of such stock or securities distributable to the
Executive shall be distributed subject to applicable resale restrictions if
required by law.
To the
extent any payment received by the Company or its shareholders and described in
the preceding sentences of this Paragraph 2.4 is made in the form of property
other than cash (and other than securities, stock, or other equity interests
that are publicly traded on an established securities market and that are
distributed to the Executive without any restriction imposed by contract, by
securities law, rule or regulation, or otherwise that would preclude an
immediate sale for the current bid price in such market), the corresponding
payment to the Executive shall be made in cash (equal to the fair market value
of such property) to the extent necessary to pay any income tax withholding or
employment taxes required to be withheld with respect to payments under this
Paragraph 2.4. The Parties agree that the rights of the Executive to
payments under this Paragraph 2.4 is an unfunded and unsecured promise to pay of
the Company that does not provide to the Executive any interest in any specific
asset of the Company. The Parties further agree that the rights of
the Executive to payments under this Paragraph 2.4 do not consist of or include
capital stock in the Company, any subsidiary of the Company, or XxxxxXxxxxxx.xxx
and do not provide the Executive with any voting right or other rights of a
shareholder with respect to the Company, and subsidiary of the Company or
XxxxxXxxxxxx.xxx except to the extent of any shares of stock that may be paid to
the Executive during the Extension Term in respect of the XxxxxXxxxxxx.xxx 5%
Interest.”
(c) Paragraphs
3.1 through 3.5 of the Current Employment Agreement are hereby deleted and
replaced with the following:
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“3.1 Expense
Reimbursement. During the Term and Extension Term, the
Company, upon the submission of supporting documentation by the Executive, and
consistent with Company policies as of the Commencement Date, shall reimburse
the Executive for all expenses actually paid or incurred by the Executive in the
course of and relating to the business of the Company, including expenses for
travel and entertainment. Any such reimbursement shall be made within
30 days of the submission of supporting documentation and in all events by the
last day of the calendar year following the calendar year in which the expense
was incurred, and the expenses eligible for reimbursement in any one calendar
year shall not affect the expenses eligible for reimbursement in any other
calendar year. In addition, throughout the Term and Extension Term,
the Company will continue to pay the Executive an automobile allowance in the
amount of $650 per month. Such automobile allowance shall be for no
more than one automobile and shall include all expenses related thereto,
including, without limitation, lease expenses, maintenance and
insurance.
3.2 Other
Benefits. The Company shall obtain or shall continue in force
comprehensive major medical and hospitalization insurance coverages (including,
without limitation, (i) dental coverage and (ii) coverage for nursing care in a
hospital, any other medical facility, and at home), either group or individual,
for the Executive and her dependents, and shall obtain or shall continue in
force disability and life insurance for the Executive (collectively, the
“Policies”), which Policies the Company shall keep in effect at its sole expense
throughout the Term and Extension Term. The Policies to be provided
by the Company shall be on terms as determined by the Board; provided, however,
that such Policies shall in no event provide benefits to the Executive which are
less than the benefits provided to the Executive as of the Commencement
Date.
3.3 Working
Facilities. The Company shall furnish the Executive with (i)
an office in Palm Beach County, Florida, comparable to her current offices as of
the Commencement Date, (ii) a secretary, and (iii) such other facilities and
services (including, without limitation, office internet access, a Blackberry or
similar device, laptop computer, and support services for such devices) as are
suitable to her position and adequate for the performance of her duties
hereunder.
3.4 Vacation. The
Executive shall be entitled to reasonable vacations during each year of the Term
and Extension Term, consistent with past practices.”
(d) The
first sentence of Paragraph 4.1 of the Current Employment Agreement is hereby
deleted and replaced with the following:
“Notwithstanding
anything contained in this Agreement to the contrary, the Executive’s employment
with the Company (whether during the Term or the Extension Term) may be
terminated by the Company for Cause.”
(e) The
first sentence of Paragraph 4.2 of the Current Employment Agreement is hereby
deleted and replaced with the following:
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“Notwithstanding
anything to the contrary contained in this Agreement, if, during the Term or the
Extension Term, the Executive suffers a disability (as defined below), the
Company may, at its election, by a vote of 75% of the members of the Board,
terminate the Executive’s employment with the Company.”
(f) The
last sentence of Paragraph 4.2 of the Current Employment Agreement is hereby
deleted and replaced with the following:
“Except
as provided above and otherwise in this Agreement (including, without
limitation, in Paragraph 4.4(c) and Paragraph 6), the Company shall have no
further liability hereunder (other than for reimbursement for business expenses
incurred prior to the date of termination, subject, however, to the provisions
of Paragraph 3.1 hereof).”
(g) The
first sentence of Paragraph 4.3 of the Current Employment Agreement is hereby
deleted and replaced with the following:
“In the
event of the death of the Executive during the Term or the Extension Term, the
Company shall pay to the Executive’s legal representative any unpaid Base Salary
accrued through the date of the Executive’s death, as well as a lump sum payment
equal to (A) 12 months’ Base Salary at the rate prevailing on the date of the
death of the Executive and (B) the share of Bonus to which he would have been
entitled pro rated based on the percentage of the current fiscal year that had
been completed on the date of her death.”
(h) The
last sentence of Paragraph 4.3 of the Current Employment Agreement is hereby
deleted and replaced with the following:
“Except
as provided above and otherwise in this Agreement (including, without
limitation, Paragraph 4.4(c) and Paragraph 6), the Company shall have no further
liability hereunder (other than for reimbursement for business expenses incurred
prior to the date of the Executive’s death, subject, however, to the provisions
of Paragraph 3.1 hereof).”
(i) Paragraph
4.4 of the Current Employment Agreement is hereby deleted in its entirety and
replaced with the following:
“4.4 Effect of Termination by the
Company Other Than for Cause.
(a) General. If
the employment of the Executive is terminated by the Company during the Term
other than for Cause, death, or disability pursuant to Paragraphs 4.1 through
4.3, the Company will pay to the Executive (i) Base Salary through the date of
termination of employment, (ii) any benefits owed under a plan described in
Paragraph 3 as in effect on the date of termination, (iii) reimbursement for
expenses incurred prior to the date of termination, and (iv) an amount equal to
the Base Salary for the remainder of the Term or 12 months, whichever is
greater. The amounts described in clauses (i) - (iii) of the
preceding sentence shall be paid in accordance with the usual practices and
procedures of the Company and the amount described in clause (iv) shall be paid
in a lump sum within 30 days after termination of employment.
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(b) Additional
Payments. If the employment of the Executive is terminated by
the Company during the Extension Term other than for Cause, death, or disability
pursuant to Paragraphs 4.1 through 4.3, the Company will pay to the Executive
(i) any benefits owed under a plan described in Paragraph 3 as in effect on the
date of termination and (ii) reimbursement for expenses incurred prior to the
date of termination (and the amounts described in clauses (i) and (ii) of this
sentence shall be paid in accordance with past practices of the
Company). In addition, the amount otherwise payable to the Executive
following a Change of Control in installments in accordance with clauses (i) and
(ii) of Paragraph 6(b) shall instead be paid to the Executive in a lump sum
within five business days after such termination of employment (to the extent
not previously paid), without regard to whether all of the payments on account
of the Broadway Note (as defined below) and the Broadway Earn-out (as defined
below) have been received by the Company.
(c) Vesting of XxxxxXxxxxxx.xxx
5% Interest. If the employment of the Executive is terminated
(i) by reason of the death of the Executive, (ii) by the Company during the
Extension Term for any reason other than for Cause pursuant to Paragraph 4.1, or
(iii) by the Executive for “Good Reason” pursuant to subparagraph (d) of this
Paragraph 4.4, the right of the Executive to payments of the XxxxxXxxxxxx.xxx 5%
Interest shall fully vest and the XxxxxXxxxxxx.xxx 5% Interest will continue to
be paid to the Executive and her heirs in perpetuity. For the
avoidance of doubt, if the employment of the Executive is terminated during the
Extension Term (i) by reason of the death of the Executive, (ii) by the Company
for any reason other than for Cause, or (iii) by the Executive for Good Reason,
the Company’s obligation to continue paying to the Executive the
XxxxxXxxxxxx.xxx 5% Interest, notwithstanding the fact that the Extension Term
and the Executive’s employment with the Company has terminated, will not
expire. The rights of the Executive in this Paragraph 4.4(c) shall be
exercisable by her estate following the death of the Executive.
If, upon
the termination of employment of the Executive, the fair market value of the
XxxxxXxxxxxx.xxx 5% Interest (or other amount in excess of the amount actually
paid in such year) is includible in the income of the Executive for the taxable
year of the Executive in which such termination occurs, the Company shall pay to
the appropriate government tax authorities the tax amounts imposed on the
Executive and required to be withheld by the Company with respect to the portion
vested but not paid in such year, and such amount shall be treated as a partial
payment of the amounts ultimately required to be paid by the Company with
respect to the XxxxxXxxxxxx.xxx 5% Interest.
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(d) Termination by Executive for
Good Reason. If the Executive terminates her employment for
“Good Reason” as defined below, such termination shall be treated as a
termination of Executive’s employment by the Company other than for Cause. The
Executive shall be treated as terminating her employment for Good Reason if he
terminates her employment within two years following the initial existence of
one or more of the following events: (i) a material diminution in the
Executive’s base compensation; (ii) a material diminution in the Executive’s
authority, duties, or responsibilities; (iii) a material diminution in the
budget over which the Executive retains authority (other than a diminution by
reason of a sale or other disposition of a substantial portion of the assets of
the Company, such as the Broadway Sale); (iv) a material change in the
geographic location at which the Executive must perform the services described
in this Agreement; and (v) any other action or inaction that constitutes a
material breach by the Company of this Agreement; provided, that the Executive
provide notice to the Company within 90 days after the first occurrence of such
event; provided further, that the Company shall have a period of 30 days in
which to cure any ground for termination for Good Reason. In the
event that, during the Term, the Company shall terminate the employment of
Xxxxxxxx Xxxxxxxxxx without “Cause” as defined in the Employment Agreement of
even date herewith between Xxxxxxxx Xxxxxxxxxx and the Company, or if Xxxxxxxx
Xxxxxxxxxx resigns for “Good Reason” as determined under his Employment
Agreement with the Company, any such termination of employment shall be
considered a material breach by the Company of the terms of this Agreement (of
which the Company shall be deemed to have notice by reason of such resignation
or other termination, and which shall not be subject to cure except insofar as
set forth in the Employment Agreement of Xxxxxxxx Xxxxxxxxxx with the
Company). For the avoidance of doubt, if the Executive terminates her
employment for Good Reason, the Company’s obligation to continue paying to the
Executive the XxxxxXxxxxxx.xxx 5% Interest, notwithstanding the fact that
Executive’s employment with the Company has terminated, will not
expire.”
(j) Paragraph
4.5 of the Current Employment Agreement is hereby deleted in its entirety and
replaced with the following:
“4.5 Termination by Executive
other than for Good Reason. If the Executive terminates her
employment without Good Reason, the Company shall pay to the Executive any
unpaid Base Salary accrued through the effective date of termination specified
in such notice. In addition, the Company shall pay any benefits, if
any, owed to the Executive under any plan provided for the Executive under
Paragraph 3 hereof in accordance with the terms of such plan as in effect on the
date of termination of employment under this Paragraph 4.5. Except as
provided above and as otherwise provided in this Agreement (including, without
limitation, Paragraph 6), the Company shall have no further liability hereunder
(other than for reimbursement for business expenses incurred prior to the date
of termination, subject, however, to the provisions of Paragraph 3.1
hereof).”
(k) Paragraph
4.7 of the Current Employment Agreement is hereby deleted in its entirety and
replaced with the following:
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“4.7 Six-Month Delay for Payments
to Specified Employee. If the Executive is a “specified
employee” (as defined in Treas. Reg. section 1.409A-1(i)) as of the date of her
termination of employment under this Agreement, then, notwithstanding any other
provision of this Agreement, any lump sum payment to the Executive following
such termination of employment that is made under the third sentence of
Paragraph 4.2, under clause (iv) of Paragraph 4.4(a), or under Paragraph 4.4(b)
(in each case, the “Termination Payment”) shall be made on the date that is six
months after the date of termination of employment (the “Termination Payment
Date”). From the date of termination of employment until the
Termination Payment Date (or, if later, the date of actual payment), such
amounts due to the Executive and described in the preceding sentence shall be
set aside in a “rabbi trust” (within the meaning of Internal Revenue Service
Revenue Procedure 92-64) established by the Company for purposes of holding
amounts equal to the amounts referred to in the preceding sentence that are
payable under the third sentence of Paragraph 4.2, clause (iv) of Paragraph
4.4(a), or Paragraph 4.4(b) of this Agreement. Such funds shall be
invested in short-term U.S. Government obligations until the date of payment of
the Termination Payment to the Executive, and an amount equal to the interest
earned on obligations held by the rabbi trust shall be paid to the Executive on
the Termination Payment Date or, if later, the date the Termination Payment is
actually paid to the Executive.”
(l) New
Paragraph 4.8 is hereby added to the Current Employment Agreement.
“4.8 Effect of Notice of
Non-Renewal of Term. If, during the Term, the Company delivers
to the Executive written notice that the Term will not be extended, such notice
shall be treated as a termination of the employment of the Executive by the
Company other than for Cause on the last day of the Term. If, during
the Term, the Executive delivers to the Company written notice that the Term
will not be extended, such notice shall be treated as a termination of
employment by the Executive without Good Reason on the last day of the
Term.”
(m) The
following is hereby added to the end of Paragraph 6(a) of the Current Employment
Agreement:
“The
Parties agree that a consummation of the Broadway Sale pursuant to the Broadway
Purchase Agreement will constitute a Change of Control as defined
above.”
(n) The
following is hereby added to the end of Paragraph 6(b) of the Current Employment
Agreement:
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“Notwithstanding
the foregoing, if the Broadway Sale is completed pursuant to the Broadway
Purchase Agreement, the amount payable within five days of the Change of Control
Date, as otherwise determined pursuant to the first sentence of this Paragraph
6(b) and pursuant to Paragraph 6(c) (which amount is hereby agreed to be
$1,832,189), shall be reduced by $332,189. Thereafter, if the
Executive continues to be employed by the Company on the first anniversary of
the Change of Control Date (or ceases to be employed by the Company on or before
such date other than by reason of a termination by the Company for Cause or
termination by the Executive other than for Good Reason), the following
additional payments shall be made to the Executive in the time and manner set
forth below (without regard to whether the Executive continues to provide
services to the Company after the first anniversary of the Change of Control
Date):
(i) amounts
equal to 1.94% of all payments (interest and principal) received by the Company
on account of the promissory note in the principal amount of $8,500,000 issued
to the Company as partial consideration for the Broadway Sale pursuant to the
Broadway Purchase Agreement (the “Broadway Note”), with each such payment to be
made to the Executive within five business days of receipt of the corresponding
Broadway Note by the Company (but in no event before the first anniversary of
the Closing Date); and
(ii) 2.36%
of the first $7,000,000 of payments received by the Company on account of the
earn-out obligations received by the Company as partial consideration for the
Broadway Sale pursuant to the Broadway Purchase Agreement (the ‘Broadway
Earn-out”), with each such payment being made to the Executive within five
business days of receipt of the corresponding Broadway Earn-out payment by the
Company (but in no event before the first anniversary of the Closing
Date).
For the avoidance of doubt, if the
Company surrenders or otherwise transfers or modifies the Broadway Note or the
Broadway Earn-out for any modified obligation or any other consideration, the
payments to the Executive referenced in clauses (i) and (ii) immediately above
shall be required to be made with respect to such modified obligation or the
fair market value of such other consideration.
If the
Company does not pay any amount that becomes due to the Executive under clauses
(i) or (ii) immediately above by the latest date on which such amount is
permitted under such clauses to be paid, then the Executive shall provide
written notice to the Company of such failure to pay, and if such payment is not
made by the 30th day
following the date that such written notice is provided to the Company, then the
obligations of the Company to pay to the Executive 1.94% of all payments
received by the Company on account of Broadway Note and 2.36% of all payments
received by Company on account of the Broadway Earn-out shall accelerate and
become immediately due and payable in full as if the Company had received total
principal payments of $8,500,000 on account of the Broadway Note and the first
$7,000,000 of payments on account of the Broadway Earn-out.
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The right
of the Executive to payments under this Paragraph 6(b) shall be treated as a
right to a series of separate payments for purposes of Internal Revenue Code
section 409A and the Treasury Regulations thereunder. The portion of
any amount that is received by the Company in respect of the Broadway Note or
Broadway Earn-out before the first anniversary of the Closing Date that is
payable to the Executive shall be set aside in a “rabbi trust” in the same
manner as is described in Paragraph 4.8 until the first anniversary of the
Closing Date, at which time such amount (plus an amount equal to the interest
earned on obligations held by the rabbi trust in respect of such amount) shall
be paid to the Executive.”
(o) Paragraph
6(d) of the Current Employment Agreement is hereby deleted in its entirety and
replaced by the following:
“If (x)
the payment described in clause (b) of this Paragraph 6 or any amount payable to
the Executive under any other compensation arrangement maintained by the Company
(or a subsidiary) which became payable after payment of the first payment
provided for in (b), upon or as a result of the Change of Control and/or the
exercise by the Executive of rights which are contingent on a Change of Control,
or (y) any payment described in Paragraph 2.4 (each a “Payment” and collectively
the “Payments”), or any portion thereof or right thereto would be considered (i)
a “parachute payment” under Internal Revenue Code (“Code”) section 280G and
Treasury Regulations thereunder subject to the excise tax imposed by Code
section 4999, or a successor provision or (ii) a right to a deferral of
compensation that does not comply with Code section 409A (or with Treasury
Regulations or other Internal Revenue Service guidance under Code section 409A)
and that is therefore subject to the interest or additional tax imposed by Code
section 409A(a)(1)(B) (collectively, the “Section 409A Taxes”), or a successor
provision, or any interest or penalties are incurred by the Executive with
respect to such excise tax or Section 409A Taxes (such excise tax or Section
409A Taxes, together with any such interest and penalties, collectively, the
“Excise Tax”), then the Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that, after payment by the
Executive of all taxes imposed thereon and amounts relating thereto, including,
without limitation, (x) any interest or penalties imposed with respect to such
taxes and (y) any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
(p) The
first sentence of Paragraph 7.1 of the Current Employment Agreement is hereby
deleted and replaced with the following:
“During
the Term and the Extension Term and following termination of the Executive’s
employment with the Company, the Executive shall not divulge, communicate, use
to the detriment of the Company or for the benefit of any other person or
persons, or misuse in any way, any Confidential Information (as hereinafter
defined) pertaining to the business of the Company.”
(q) Paragraph
7.2 of the Current Employment Agreement is hereby deleted in its entirety and
replaced with the following:
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“7.2 Books and Records.
All books, records, accounts and similar repositories of Confidential
Information of the Company, whether prepared by the Executive or otherwise
coming into the Executive’s possession, shall be the exclusive property of the
Company and shall be returned immediately to the Company on termination of
Executive’s employment or on the Board’s request at any time.”
(r) Paragraph
7.3 is hereby added to the Current Employment Agreement:
“7.3 Sharing of
Information. Upon the request of the Executive, the Company
shall: furnish promptly to her copies of the monthly financial
reports received by the Company with respect to XxxxxXxxxxxx.xxx or any
successor; keep her informed on a current basis as to all material events with
respect to XxxxxXxxxxxx.xxx or any successor; and provide an annual computation,
within 30 days after the end of each fiscal year of the Company, certified as
accurate and complete by the Chief Financial Officer of the Company or by an
independent member of the Board of the Company, as to (i) the amounts relating
to XxxxxXxxxxxx.xxx that are required to be taken into account in determining
payments with respect to the XxxxxXxxxxxx.xxx 5% Interest, and (ii) collections
with respect to the Broadway Note and the Broadway Earn-out (including
computations of the Broadway Earn-out amounts to which the Company is entitled
with respect to the Broadway Sale).
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(s)
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New
Paragraph 21 is hereby added to the Current Employment
Agreement:
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“21
Past Due
Amounts. If the Company fails to pay any amount that becomes
due to the Executive under the Agreement by the latest date on which such the
amount is permitted under the Agreement to be paid (such date being hereafter as
the “Required Payment Date”), interest shall be charged with respect to the past
due amount at the rate of 1.5% per month (18% per annum, compounded monthly)
from the Required Payment Date, and such interest shall be paid by the Company
to the Executive at or before the time that the amount past due is
paid.”
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2.
Effect of
Termination of Broadway Sale. Except as provided in the
following sentences of this Section 2, this Agreement shall be of no force or
effect, and the Current Employment Agreement will continue in place and remain
in full force and effect, in the event that (i) the Broadway Sale is not
consummated, within 12 months after the date this Agreement is entered into,
pursuant to the terms and conditions of the Broadway Purchase Agreement, (ii)
the Broadway Purchase Agreement is terminated at any time for any reason before
the consummation of the Broadway Sale, (iii) the employment of the Executive is
terminated by the Company other than for Cause, or by the Executive for Good
Reason, before the consummation of the Broadway Sale and before the Broadway
Purchase Agreement has been terminated, or (iv) at the election of the
Executive, if any amendment is made to the Broadway Purchase Agreement affecting
the purchase price or other principal terms of the Broadway
Sale. Notwithstanding the previous sentence, however, (x) the
amendments made to the Current Employment Agreement by subsections (j), (l), and
(m) of Section 1 of this Agreement, and Section 6 of this Agreement shall be
given effect from and after the date of this Agreement, and (y) a termination of
employment by Xxxxxxxx Xxxxxxxxxx for Good Reason, as defined in the Employment
Agreement between Xxxxxxxx Xxxxxxxxxx and the Company of even date with the
Current Employment Agreement between the Company and the Executive, shall be
considered as a material breach by the Company of the terms of the Current
Employment Agreement, whether or not any of the events described in clauses (i)
through (iv) of this Section 2 occur. In addition, if, following a
termination of this Agreement under circumstances described in clause (iii) of
the second preceding sentence, the Broadway Sale is consummated pursuant to the
terms of the Broadway Purchase Agreement, the entire amount of the Change of
Control payment described in Section 6(b) of the Current Employment Agreement,
as specified in the parenthetical clause in the first sentence of the language
added by Section 1(n) of this Agreement to Paragraph 6(b) of the Current
Employment Agreement, shall be paid in a lump sum within five days of the Change
of Control Date. In addition, and for the avoidance of doubt, if the
Broadway Ticketing Division is sold or otherwise transferred (x) to the
purchaser under the Broadway Purchase Agreement or an affiliated person under
terms different in any material respect from those set forth in the Broadway
Purchase Agreement, or (y) to a purchaser other than the purchaser specified in
the Broadway Purchase Agreement or an affiliated person, in a transaction that
is similar to that described in the Broadway Purchase Agreement or that
otherwise constitutes a Change of Control, the entire amount of the Change of
Control payment as referred to in the preceding sentence shall be paid in a lump
sum to the Executive within five days of the Change of Control
Date.
3. Current Employment Agreement
Effective; No Expansion of Duties of Executive.
(a) Except
as otherwise specifically set forth in this Agreement, all provisions of the
Current Employment Agreement that are not amended by this Agreement shall remain
in full force and effect.
(b) For
the avoidance of doubt, nothing in this Agreement is intended to add to or
otherwise expand upon the duties or obligations of the Executive as set forth in
the Current Employment Agreement.
4. Entire Agreement;
Modification. This Agreement, the Current Employment
Agreement, and the Indemnification Agreement dated as of November 12, 1993,
between the Executive and the Company, constitute collectively the entire
agreement among the Parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof. This Agreement
may be amended or modified only by an instrument in writing duly executed by the
Parties.
5.
Binding
Effect. This Agreement is binding upon, inures to the benefit
of and is enforceable by the Parties and their respective successors and
assigns.
6. Legal
Matters. The provisions of Paragraphs 10 and 14 of the Current
Employment Agreement, concerning arbitration of disputes and governing law,
shall also apply with respect to this Agreement and any controversy or claim
arising under this Agreement. The Company will reimburse the
Executive for all reasonable legal fees and related disbursements incurred by
the Executive in connection with the negotiation of this Agreement.
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7.
Unfunded and Unsecured
Promise. Any right of the Executive to compensation under this
Agreement shall be an unfunded and unsecured promise to pay, not secured by any
specific property of the Company, and shall not be subject to assignment,
pledge, or other transfer to any other person, except by will or by the laws of
descent and distribution.
8.
Counterparts. This
Agreement may be executed in any number of counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument.
[Signature
page follows]
14
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
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Company:
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By:
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/s/ Xxxxx
Xxxxx
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Name:
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Xxxxx
Xxxxx
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Title:
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Chief Accounting
Officer
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| Executive: |
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/s/ Xxxxxx X. Xxxxxxx
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XXXXXX
X.
XXXXXXX
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