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EXHIBIT 10.1
As of January 1, 1997
Xxxxx Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxxxx:
Spelling Entertainment Group, Inc. ("Spelling"), having an address at
0000 Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, agrees to employ you and
you agree to accept such employment upon the following terms and conditions:
1. Term. The term of your employment hereunder shall commence on January
1, 1997 and, unless terminated by Spelling or you pursuant to paragraph 8
hereof, shall continue through and until January 1, 2000. The period from
January 1, 1997 through January 1, 2000 shall hereinafter be referred to as the
"Employment Term" notwithstanding any earlier termination pursuant to paragraph
8.
2. Duties. During the Employment Term, you agree to devote substantially
all of your business time, attention and energies to the business of Spelling.
You will be President of Spelling and you agree to perform such duties, and such
other duties reasonable and consistent with such office as may be assigned to
you from time to time by the Board of Directors of Spelling (the "Board"). Your
principal place of business shall be at Spelling's headquarters in the
metropolitan Los Angles area.
3. Compensation.
(a) Salary: For all the services rendered by you in any capacity
hereunder, Spelling agrees to pay you the sum of Six Hundred Seventy-Five
Thousand Dollars ($675,000) per annum ("Salary"), payable in accordance with
Spelling's then effective payroll practices. Your Salary will be increased on
January 1, 1998 to Seven Hundred Twenty-Five Thousand Dollars ($725,000) per
annum and on January 1, 1999 to Seven Hundred Ninety-Five Thousand Hundred
Dollars ($795,000) per annum.
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(b) Bonus Compensation: In addition to your Salary, you shall be
entitled to receive bonus compensation ("Bonus") for each of the calendar years
during the Employment Term, determined and payable as follows:
(i) Your Bonus for each of the calendar years during
the Employment Term will be based upon a
measurement of performance against established
objectives in accordance with the Spelling
Short-Term Incentive Plan, as the same may be
amended from time to time.
(ii) The target for your Bonus ("Target Bonus") for each
of the calendar years during the Employment Term
shall be 50% of your then current Salary.
(iii) Your Bonus for any calendar year shall be payable
by February 28 of the following calendar year.
(c) Long-Term Incentive Compensation.
(i) In addition to your Salary and Bonus, you shall
receive an annual grant (the "Annual Grant") under
Spelling's 1994 Stock Option Plan or any successor
plans for each of the calendar years during the
Employment Term of stock options to purchase no
less than 125,000 shares of Spelling's Common
Stock; provided, that the amount of the Annual
Grant shall be adjusted in the event of a stock
split or stock dividend. Each Annual Grant shall be
made as of the date as of which the Board or any
Committee thereof shall award the major stock
option grant to Spelling's senior executives for
such calendar year.
(ii) If a "Triggering Event" (as defined in clause (iii)
below) occurs during the Employment Term, the
vesting of all stock options granted to you whether
under Spelling's 1987 Stock Option Plan, Spelling's
1994 Stock Option Plan or any successor Spelling
plans or otherwise (collectively, the "Spelling
Stock Option Plans") that are not exercisable as of
the date of Triggering Event will be accelerated
and such
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stock options will become fully exercisable and
vested as of the date of the Triggering Event
specified in clause (iii)(x) and (y) below and as
of the day immediately preceding the Triggering
Event specified in clause (iii)(z) below.
(iii) A "Triggering Event" means the happening of any of
the following:
(x) When any person or group other than Viacom
Inc. or any affiliate of Viacom Inc. or any
successor of Viacom Inc. or such affiliate
becomes the beneficial owner of securities of
Spelling representing 50% or more of the
combined voting power of Spelling's then
outstanding securities;
(y) The liquidation of Spelling or the sale or
other disposition of all or substantially all
of the assets of Spelling; or
(z) Spelling goes private in a transaction subject
to Rule 13e-3 under the Securities Exchange
Act of 0000 (xxx "Xxxxxxxx Xxx").
For purposes of this clause (iii), "affiliate"
shall have the meaning provided in Rule 144
under the Securities Act of 1933; "beneficial
owner" shall have the meaning provided in Rule
13d-3 under the Exchange Act; "group" shall
have the meaning provided in Section 13(d) of
the Exchange Act; and "person" shall have the
meaning provided in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and
14(d) thereof.
(iv) In the event that Spelling or Viacom Inc.
establishes for its executives a non-stock based
long-term incentive compensation plan, you will be
eligible to participate in such plan on the same
basis as other senior executives which may entail
adjusting your participation in the Spelling Stock
Option Plans as set forth in clause (i) above.
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4. Benefits. You shall be entitled to participate in such medical,
dental and life insurance, 401(k), pension and other plans as Spelling from time
to time may have or establish and in which you would be entitled to participate
pursuant to the terms thereof. The foregoing, however, shall not be construed to
require Spelling to establish any such plans or to prevent the modification or
termination of such plans once established, and no such action or failure
thereof shall affect this Agreement. It is further understood and agreed that
all benefits you may be entitled to as an employee of Spelling shall be based
upon your Salary, as set forth in paragraph 3(a) hereof, and not upon any bonus
compensation due, payable or paid to you hereunder, except where the benefit
plan expressly provides otherwise. You shall be entitled to four (4) weeks of
vacation.
5. Business Expenses; Indemnification.
(a) Business Expenses. During the Employment Term, you shall be
reimbursed for such reasonable travel and other expenses incurred in the
performance of your duties hereunder as are customarily reimbursed to senior
executives of Spelling. You shall be entitled to a car allowance in the amount
of One Thousand Dollars ($1,000) per month.
(b) Indemnification. Spelling shall indemnify, defend and hold
you harmless for any claims, losses or damages (including reasonable attorney's
fees) resulting from your carrying out the duties provided herein, except that
Spelling shall not be required to indemnify, defend, or hold you harmless for
claims, losses and damages resulting from your gross negligence or malfeasance.
6. Exclusive Employment, Confidential Information, Etc.
(a) Non-Competition. You agree that your employment hereunder is
on an exclusive basis, and that during the period ending on the last day of the
Employment Term or, if earlier, the date of the termination of your employment
pursuant to paragraph 8(b) or 8(c) hereof or eighteen (18) months after the
termination of your employment pursuant to paragraph 8(a) hereof (the
"Non-Compete Period"), you will not engage in any other business activity which
is in conflict with your duties and obligations hereunder. You agree that,
during the Non-Compete Period, you shall not directly or indirectly engage in or
participate as an officer, employee, director, agent
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of or consultant for any business directly competitive with that of Spelling,
nor shall you make any investments in any company or business competing with
Spelling; provided, however, that nothing herein shall prevent you from
investing as less than a one (1%) percent shareholder in the securities of any
company listed on a national securities exchange or quoted on an automated
quotation system.
(b) Confidential Information. You agree that you shall not,
during the Employment Term or at any time thereafter, use for your own purposes,
or disclose to or for the benefit of any third party, any trade secret or other
confidential information of Spelling or Viacom Inc. ("Viacom") (except as may be
required by law or in the performance of your duties hereunder consistent with
Spelling's policies) and that you will comply with any confidentiality
obligations of Spelling or, to the extent known to you, Viacom to a third party,
whether under agreement or otherwise. Notwithstanding the foregoing,
confidential information shall be deemed not to include information which (i) is
or becomes generally available to the public other than as a result of a
disclosure by you or any other person who directly or indirectly receives such
information from you or at your direction or (ii) is or becomes available to you
on a non-confidential basis from a source which is entitled to disclose it to
you.
(c) No Employee Solicitation. You agree that, during the
Employment Term and for one (1) year thereafter, you shall not, directly or
indirectly, engage, employ, or solicit the employment of any person who is then
or has been within six (6) months prior thereto, an employee of Spelling, Viacom
or any of Viacom's affiliates.
(d) Spelling Ownership. The results and proceeds of your services
hereunder, including, without limitation, any works of authorship resulting from
your services during your employment with Spelling, Viacom and/or any of
Viacom's affiliates and any works in progress, shall be works-made-for-hire and
Spelling shall be deemed the sole owner throughout the universe of any and all
rights of whatsoever nature therein, whether or not such rights are now or
hereafter known, existing, contemplated, recognized or developed, with the right
to use the same in perpetuity in any manner Spelling determines in its sole
discretion without any further payment to you whatsoever. If, for any reason,
any of such results and proceeds shall not legally be a work-for-hire and/or
there are any rights which do not accrue to Spelling under the preceding
sentence, then you hereby irrevocably assign and agree to assign any and all of
your right, title and interest thereto, including, without limitation, any and
all copyrights, patents, trade secrets, trademarks and/or other rights of
whatsoever nature therein, whether or not such rights are now or hereafter
known, existing, contemplated, recognized or developed to Spelling, and Spelling
shall have the right to use the same
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in perpetuity throughout the universe in any manner Spelling determines without
any further payment to you whatsoever. You shall, from time to time, as may be
requested by Spelling, at Spelling's sole cost and expense, do any and all
reasonable things which Spelling may deem useful or desirable to establish or
document Spelling's exclusive ownership of any and all rights in any such
results and proceeds, including, without limitation, the execution of
appropriate copyright and/or patent applications or assignments. To the extent
you have any rights in the results and proceeds of your services that cannot be
assigned in the manner described above, you unconditionally and irrevocably
waive the enforcement of such rights. This paragraph 6(d) is subject to, and
shall not be deemed to limit, restrict, or constitute any waiver by Spelling of
any rights of ownership to which Spelling may be entitled by operation of law by
virtue of Spelling being your employer.
(e) Litigation. You agree that, during the Employment Term, for
one (1) year thereafter and, if longer, during the pendency of any litigation or
other proceeding, (i) you shall not communicate with anyone (other than your own
attorneys and tax advisors and, except to the extent necessary in the
performance of your duties hereunder) with respect to the facts or subject
matter of any pending or potential litigation, or regulatory or administrative
proceeding involving Spelling, Viacom or any of Viacom's affiliates, other than
any litigation or other proceeding in which you are a party-in-opposition,
without giving prior notice to Spelling or Spelling's counsel, and (ii) in the
event that any other party attempts to obtain information or documents from you
with respect to matters possibly related to such litigation or other proceeding,
you shall promptly so notify Spelling's counsel.
(f) No Right to Write Books, Articles, Etc. During the Employment
Term, except as authorized by Spelling or Viacom, you shall not prepare or
assist any person or entity in the preparation of any books, articles,
television or motion picture productions or other creations concerning Spelling,
Viacom or any of Viacom's affiliates or any of their officers, directors,
agents, employees, suppliers or customers.
(g) Return of Property. All documents, data, recordings, or other
property, whether tangible or intangible, including all information stored in
electronic form, obtained or prepared by or for you and utilized by you in the
course of your employment with Spelling shall remain the exclusive property of
Spelling. In the event of the termination of your employment for any reason,
Spelling reserves the right, to the extent permitted by law and in addition to
any other remedy Spelling may have, to deduct from any monies otherwise payable
to you the following: (i) the full amount of any specifically determined debt
you owe to Spelling, Viacom or any of Viacom's
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affiliates at the time of or subsequent to the termination of your employment
with Spelling, and (ii) the value of the Spelling property which you retain in
your possession after the termination of your employment with Spelling. In the
event that the law of any state or other jurisdiction requires the consent of an
employee for such deductions, this Agreement shall serve as such consent.
(h) Non-Disparagement. You agree that you shall not, during the
Employment Term and for one (1) year thereafter, in any communications with any
customer or client of Spelling, Viacom or any of Viacom's affiliates, criticize,
ridicule or make any statement which disparages or is derogatory of Spelling,
Viacom or any of Viacom's affiliates or any of their officers, directors, agents
or employees.
(i) Injunctive Relief. Spelling has entered into this Agreement
in order to obtain the benefit of your unique skills, talent, and experience.
You acknowledge and agree that any violation of paragraphs 6(a) through (h)
hereof will result in irreparable damage to Spelling and/or Viacom, and,
accordingly, Spelling and/or Viacom may obtain injunctive and other equitable
relief for any breach or threatened breach of such paragraphs, in addition to
any other remedies available to Spelling and/or Viacom.
(j) Survival; Modification of Terms. Your obligations under
paragraphs 6(a) through (i) hereof shall remain in full force and effect for the
entire period provided therein notwithstanding the termination of the Employment
Term pursuant to paragraph 8 hereof or otherwise; provided, however, that your
obligations under paragraph 6(a) hereof shall cease in the event that your
employment terminates pursuant to paragraph 8(b) or 8(c) hereof. You and
Spelling agree that the restrictions and remedies contained in paragraphs 6(a)
through (i) hereof are reasonable and that it is your intention and the
intention of Spelling that such restrictions and remedies shall be enforceable
to the fullest extent permissible by law. If it shall be found by a court of
competent jurisdiction that any such restriction or remedy is unenforceable but
would be enforceable if some part thereof were deleted or the period or area of
application reduced, then such restriction or remedy shall apply with such
modification as shall be necessary to make it enforceable.
7. Incapacity. In the event you become totally medically disabled and
cannot substantially perform your duties at any time during the Employment Term,
the Board, at any time after such disability has continued for 30 consecutive
days, may determine that Spelling requires such duties and responsibilities be
performed by another executive. In the event you become disabled, you will first
receive benefits under
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Spelling's short-term disability program for the first 26 weeks of consecutive
absence. Thereafter, you will be eligible to receive benefits under the Spelling
Long-Term Disability ("LTD") program in accordance with its terms. Upon receipt
of benefits under the LTD program, you will also be entitled to receive a
pro-rated Target Bonus for the calendar year in which such benefits commence.
8. Termination.
(a) Termination for Cause. Spelling may, at its option, terminate
this Agreement forthwith for "cause", and Spelling shall thereafter have no
further obligations under this Agreement, including, without limitation, any
obligation to pay Salary or Bonus or to provide benefits under this Agreement.
For purposes of this Agreement, termination of this Agreement for "cause" shall
mean termination for embezzlement, fraud or other conduct which would constitute
a felony, conviction of a felony, or willful unauthorized disclosure of
confidential information, or if you at any time materially breach this Agreement
(including, without limitation, your failure, neglect of or refusal to
substantially perform your obligations hereunder as set forth in paragraphs 2
and 11 hereof), except in the event of your disability as set forth in paragraph
7. Anything herein to the contrary notwithstanding, Spelling will give you
written notice prior to terminating this Agreement for your material breach
setting forth the exact nature of any alleged breach and the conduct required to
cure such breach. You shall have ten (10) business days from the giving of such
notice within which to begin to cure.
(b) Good Reason Termination. You may terminate your employment
hereunder for "Good Reason" at any time during the Employment Term by written
notice to Spelling not more than thirty (30) days after you learn or reasonably
should have learned of the occurrence of the event constituting "Good Reason".
Such notice shall state an effective date no later than ten (10) business days
after the date it is given. Good Reason shall mean, without your prior written
consent, other than in connection with the termination of your employment for
"cause" (as defined above) or in connection with your permanent disability, the
assignment to you by Spelling of duties substantially inconsistent with your
positions, duties, responsibilities, titles or offices hereunder, the withdrawal
of a material part of your responsibilities as set forth in paragraph 2, the
material breach by Spelling of its material obligations hereunder, a reduction
in your Salary or a reduction in benefits (other than in connection with a
reduction in benefits applicable to all executives of a comparable level) or
your relocation to offices more than 75 miles from your present location.
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(c) Termination Without Cause. Spelling may terminate your
employment hereunder without "cause" (as defined above) at any time during the
Employment Term by written notice to you.
(d) Termination Payments, Etc. In the event that your employment
terminates pursuant to paragraph 8(b) or 8(c) hereof, you shall be entitled to
receive, subject to applicable withholding taxes:
(i) your Salary as provided in paragraph 3(a) until the
end of the Employment Term, payable in accordance
with Spelling's then effective payroll practices;
(ii) bonus compensation for each calendar year during
the Employment Term equal to the Target Bonus, as
set forth in paragraph 3(b);
(iii) your car allowance as provided in paragraph 5 until
the end of the Employment Term, payable in
accordance with Spelling's then effective payroll
practices;
(iv) medical and dental insurance coverage under COBRA
until the end of the Employment Term or, if
earlier, the date on which you become eligible for
medical and dental coverage from a third party
employer; during this period, Spelling will pay an
amount equal to the applicable COBRA premiums (or
such other amounts as may be required by applicable
law) (which amount will be included in your income
for tax purposes to the extent required by
applicable law); at the end of such period, you may
elect to continue your medical and dental insurance
coverage at your own expense for the balance, if
any, of the period required by law;
(v) life insurance coverage until the end of the
Employment Term (the amount of Salary covered by
such insurance to be reduced by the amount of any
salary payable to you by a third party); and
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(vi) stock options granted to you under any of
Spelling's Stock Option Plans which are exercisable
on or prior to the date of the termination of your
employment under paragraph 8(b) or 8(c) or that
would have vested and become exercisable on or
before the last day of the Employment Term will be
exercisable until six (6) months after the date of
such termination or, if earlier, the expiration
date of the stock options;
provided, however, you shall be required to mitigate the amount of any payment
provided for in (i), (ii) and (iii) of this paragraph 8(d) by seeking other
comparable employment or otherwise (to the extent required by law), and the
amount of any such payment provided for in (i), (ii) and (iii) shall be reduced
by any compensation earned by you from a third person except that mitigation
shall not be required, and no reduction for any other compensation shall be
made, for eighteen (18) months after the termination of your employment or for
the period commencing with the termination of your employment and ending on the
last day of the Employment Term, whichever is shorter. The payments provided for
in (i) above are in lieu of any severance or income continuation or protection
under any Spelling plan that may now or hereafter exist. The payments and
benefits to be provided pursuant to this paragraph 8(d) shall constitute
liquidated damages, and shall be deemed to satisfy and be in full and final
settlement of all obligations of Spelling to you under this Agreement.
(e) Termination of Benefits. Notwithstanding anything in this
Agreement to the contrary (except as otherwise provided in paragraph 8(d) with
respect to medical, dental and life insurance), coverage under all Spelling
benefit plans and programs (including, without limitation, vacation, 401(k) and
pension plans, LTD and car insurance) will terminate upon the termination of
your employment except to the extent otherwise expressly provided in such plans
or programs.
(f) Non-Renewal Notice, Etc. Spelling shall notify you in writing
in the event that Spelling elects not to extend or renew this Agreement. If
Spelling gives you such notice less than twelve (12) months before the end of
the Employment Term, or your employment terminates pursuant to paragraph 8(b) or
8(c) hereof during the final twelve (12) months of the Employment Term, you
shall be entitled to receive Salary as provided in paragraph 3(a), payable in
accordance with Spelling's then effective payroll practices, subject to
applicable withholding requirements, for the period commencing after the end of
the Employment Term which, when added to the portion of the Employment Term, if
any, remaining when the notice is given or the termination occurs,
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equals twelve (12) months; provided, however, you shall be required to mitigate
the amount of any payment pursuant to this paragraph 8(f) by seeking other
comparable employment or otherwise (to the extent required by law), and the
amount of any such payment shall be reduced by any compensation earned by you
from a third person except that mitigation shall not be required, and no
reduction for any other compensation shall be made, for six (6) months after the
expiration of the Employment Term. The payments provided for in this paragraph
8(f) are in lieu of any severance or income continuation or protection under any
Spelling plan that may now or hereafter exist.
9. Death. If you die prior to the end of the Employment Term, your
beneficiary or estate shall be entitled to receive your Salary up to the date on
which the death occurs and pro-rated Target Bonus and to exercise all Spelling
stock options consistent with the terms and conditions of the Spelling Stock
Option Plans.
10. Section 317 and 507 of the Federal Communications Act. You represent
that you have not accepted or given nor will you accept or give, directly or
indirectly, any money, services or other valuable consideration from or to
anyone other than Spelling for the inclusion of any matter as part of any film,
television program or other production produced, distributed and/or developed by
Spelling, Viacom and/or Viacom's affiliates.
11. Equal Opportunity Employer. You acknowledge that Spelling is an
equal opportunity employer. You agree that you will comply with Spelling
policies regarding employment practices and with applicable federal, state and
local laws prohibiting discrimination on the basis of race, color, creed,
national origin, age, sex or disability.
12. Notices. All notices required to be given hereunder shall be given
in writing, by personal delivery or by mail at the respective addresses of the
parties hereto set forth above, or at such other address as may be designated in
writing by either party, in the case of Spelling, to the attention of the
General Counsel of Spelling and, in your case, with a copy to the attention of
Xxxxxx X. Xxxxx, Esq., Manatt, Xxxxxx & Xxxxxxxx, 00000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000. Any notice given by mail shall be deemed to have
been given three days following such mailing.
13. Assignment. This is an Agreement for the performance of personal
services by you and may not be assigned by you or Spelling, except that Spelling
may assign this Agreement to Viacom or any affiliate of Viacom or any successor
in interest
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to Spelling, Viacom or any affiliate of Viacom. Notwithstanding the foregoing,
no such assignment shall affect the duties and responsibilities provided for you
herein.
14. California Law. This Agreement and all matters or issues collateral
thereto shall be governed by the laws of the State of California applicable to
contracts entered into and performed entirely therein.
15. No Implied Contract. Nothing contained in this Agreement shall be
construed to impose any obligation on Spelling to renew this Agreement or any
portion thereof. The parties intend to be bound only upon execution of a written
agreement and no negotiation, exchange of draft or partial performance shall be
deemed to imply an agreement. Neither the continuation of employment nor any
other conduct shall be deemed to imply a continuing agreement upon the
expiration of this Agreement.
16. Entire Understanding. This Agreement contains the entire
understanding of the parties hereto relating to the subject matter herein
contained, and can be changed only by a writing signed by both parties hereto.
17. Void Provisions. If any provision of this Agreement, as applied to
either party or to any circumstances, shall be adjudged by a court to be void or
unenforceable, the same shall be deemed stricken from this Agreement and shall
in no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement.
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18. Supersedes Previous Agreement. Except to the extent of any accrued
but unpaid obligations under any prior agreement, this Agreement supersedes and
cancels all prior agreements relating to your employment by Spelling.
If the foregoing correctly sets forth our understanding, please sign one
copy of this letter and return it to the undersigned, whereupon this letter
shall constitute a binding agreement between us.
Very truly yours,
SPELLING ENTERTAINMENT GROUP INC.
By: /s/ XXXXXXXX X. XXXXXX
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Name: Xxxxxxxx X. Xxxxxx
Title: Director
ACCEPTED AND AGREED:
/s/ XXXXX XXXXXXXX
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Xxxxx Xxxxxxxx
