Exhibit 10.8.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated as of September 15, 2006, between
XXXXXX XXXXXX, residing at 000 Xxxx Xxx Xxxxxx, #0X, Xxx Xxxx, Xxx Xxxx, 00000
("Executive") and PLAYBOY ENTERPRISES, INC., a Delaware corporation ("Employer"
or the "Company"), with an office at 000 Xxxxx Xxxx Xxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx, 00000.
RECITAL
Employer is primarily engaged in the business of multimedia entertainment.
Employer desires to hire Executive, and Executive desires to be employed by
Employer on the terms and subject to the conditions set forth below.
In consideration of the premises and the mutual covenants hereinafter set forth,
the parties hereto hereby agree as follows:
1. Employment of the Executive
Employer hereby agrees to employ Executive and Executive hereby agrees to
be and remain in the employ of Employer, as an Executive Vice President of
Employer, upon the terms and conditions hereinafter set forth.
2. Employment Period
The term of Executive's employment under this Agreement (the "Employment
Period") shall commence September 18, 2006 (the "Commencement Date") and,
subject to earlier termination as provided herein, shall continue for a
period of three years (the "Initial Period") after the Commencement Date.
Unless earlier terminated, at the end of the Initial Period, the parties
will determine whether or not to renew this Agreement and, if so, on what
terms and conditions.
3. Duties and Responsibilities
(a) During the Employment Period, Executive (i) shall have the
title of Executive Vice President and President, Media Group,
(ii) shall devote his full business time and attention and
expend his best efforts, energies and skills on a full-time
basis to the business of the Company, and shall not engage in
any other activity that would interfere with the performance
of his duties under this Agreement (provided that Executive is
permitted to serve on the board of directors of Double Click
-- to the extent that doing so does not create any conflict of
interest with Executive's obligations or duties under this
Agreement -- other organizations, subject to approval of the
Company's CEO, or engage in endeavors related to the
community, his faith and other charitable functions which do
not materially interfere with the performance of his duties
hereunder) and (iii) shall perform such duties, and comply
with all reasonable directions and instructions of the
Company's CEO.
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(b) During the Employment Period, Executive's responsibilities
will include all pay and free cable and satellite broadcast
television, home video and theatrical entertainment
development activities of the Company, and the associated
production, programming and distribution activities, the
Company's online, radio and wireless activities and the
Company's publishing activities (other than international
publishing); provided, however, that the foregoing will not be
construed so as to prevent or limit the Company's good faith
determination for bona fide business reasons to operate one or
more of any such activities through a joint venture, third
party license or other arrangement with a third party, subject
to Paragraph 5.7(ii) hereof.
(c) During the Employment Period, Executive will report to the
Company's CEO and will be the Company's most senior executive
in regard to those responsibilities set forth in Paragraph
3.(b) above.
4. Compensation
(a) For all services rendered and required to be rendered by,
covenants of and restrictions in respect to Executive, under
this Agreement, Employer shall pay to Executive during and
with respect to the Employment Period, and Executive agrees to
accept a base salary computed at a rate of $700,000 per annum
("Base Salary"), payable on a biweekly basis in accordance
with the Employer's standard payroll practices. In addition,
on the Commencement Date, Executive will be eligible to
participate in a Board of Directors' approved incentive
compensation plan, with Executive's being eligible to earn up
to a maximum potential of 100% of his Base Salary. The
incentive compensation will be based in part (50%) on the
Company's fiscal year net income performance as determined by
the CEO and the Company's Board of Directors and in part (50%)
on Media Group financial performance established by the CEO in
consultation with Executive that are reasonably attainable.
Subject to Paragraph 5. hereof, incentive compensation for
fiscal years 2006 and 2009 will be prorated based on
Executive's Commencement Date.
(b)(i) The Company will also pay to Executive a one-time bonus (the
"Signing Bonus") in the sum of $50,000, payable to Executive
on the Commencement Date. In the event that Executive resigns
prior to the first anniversary of the Commencement Date, other
than for Good Reason (as hereinafter defined), or is
terminated for Cause (as hereinafter defined), then Executive
shall promptly repay to the Company 100% of the Signing Bonus
within 30 days of such resignation or termination.
(b)(ii) The Company will reimburse Executive that amount which
represents the prorata refund Executive makes to Westwood One
of the signing bonus Executive received from Westwood One up
to, but not to exceed, $50,000 within 30 days of the
Commencement Date.
(c) In each calendar year of the Initial Period, Executive will
also be granted nonqualified options to purchase 50,000 shares
(the "Options") of the Class B common stock of the Company.
The Option agreements will be subject to the
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Company's stock option plan and contain the terms and
conditions determined by the Company's Compensation Committee,
which will be consistent with the terms and conditions of
stock option grants made to other executive officers of the
Company. The vesting period for such options will be three
years in equal installments from the date of grant. The strike
price of the options will be the closing price of the
Company's Class B common stock at the close of business on the
date on which such grants are made to the other executive
officers by the Compensation Committee of the Company's Board
of Directors.
(d) In each calendar year of the Initial Period, Executive will be
granted 20,000 deferred stock awards subject to the terms and
conditions determined by the Company's Compensation Committee
of the Company's Board of Directors consistent with the terms
and conditions of deferred stock awards to other executive
officers of the Company (which will include performance goals
based on the Company's operating income as such term is used
and determined by the Company for purposes of the Company's
rolling three year plan).
(e) Upon commencement of Executive's employment by the Company
Executive will receive:
(i) a one-time grant of nonqualified options to purchase
75,000 shares of the Class B common stock of the
Company. This option will be subject to the Company's
stock option plan and contain the terms and conditions
determined by the Company's Compensation Committee,
which will be consistent with the terms and conditions
of those stock option grants made to Executive pursuant
to Paragraph 4.(c) above. The vesting period of such
options will be three years in equal installments from
the date of grant. The strike price of such options will
be the closing price of the Company's Class B common
stock at the close of business on the Commencement Date;
and
(ii) a one-time grant of 30,000 shares of the Company's Class
B stock; and
(iii) a one-time grant of 25,000 deferred stock awards subject
to the terms and conditions determined by the Company's
Compensation Committee consistent with the terms and
conditions of deferred stock awards to other executive
officers for fiscal 2006 (which will include performance
goals based on the Company's operating income as such
term is used and determined by the Company for purposes
of the Company's rolling three year plan).
(f) Effective on the Commencement Date, Executive will be entitled
to participate in the Company's health benefit plans, together
with the Company's Executive vacation policy, matching 401-K
plan, deferred compensation plan and similar plans in effect
from time to time. Executive's participation in the foregoing
plans, perquisites and travel and entertainment policy will be
on terms no less favorable than afforded to other executives
of the Company commensurate with Executive's level.
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5. Termination of Employment Period; Change of Control
5.1 Employer may, at any time during the Employment Period by notice to
Executive (the "Termination Notice"), terminate the Employment
Period for "Cause" effective immediately. The Termination Notice
shall specify the Cause for termination. In such an event, Executive
shall not be entitled to any compensation or other amount from the
Company from the effective date of termination. For purposes hereof,
for "Cause" means a:
(a) willful failure or refusal by Executive to implement or follow
lawful policies or directions of the CEO or Board of Directors
after notice from Company;
(b) commission by Executive of an act of moral turpitude or act
bringing disgrace or disrepute to the Company , or commission
of/conviction for any felony or any misdemeanor involving
theft, fraud or other dishonest action or event that results
in harm to the Company;
(c) material violation of this Employment Agreement; and
(d) material misrepresentation or material and willful
non-disclosure by Executive to the Company in connection with
performance of Executive duties.
Provided that in the event any such wrongful conduct is capable of
being cured, Executive will have 15 days from his receipt of the
Termination Notice to cure such conduct to the reasonable
satisfaction of Company.
5.2 The company may terminate this Agreement at any time, by delivering
a notice to Executive, without Cause, effective 30 days after
Executive receives such notice in accordance with the terms hereof.
In such an event, Executive's sole remedy shall be:
(a) to collect all unpaid Base Salary and all unreimbursed
expenses payable for all periods through the effective date of
termination; plus
(b) a severance payment in the sum of 12 months of Executive's
then Base Salary; plus
(c) a prorata payout under the incentive compensation plan for
Executive in the year of such termination in an amount equal
to the fraction, the numerator of calendar days from the
beginning of the year of such termination through the
effective date of termination and the denominator of which is
365;
(the sum of paragraphs 5.2 (a), (b) and (c) being collectively
referred to as the "Severance Payment").
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The Severance Payment will be due and payable on the effective date
of the termination of this Agreement.
5.3 (a) In the event Executive becomes totally disabled or disabled
such that he is rendered unable to perform substantially all
of his usual duties for Company, and if such disability shall
persist for a continuous period in excess of three months, or
an aggregate period in excess of three months in any one
fiscal year, Company shall have the right at any time after
the end of such period during continuance of Executive's
disability by the delivery of not less than 30 days' prior
written notice to Executive to terminate Executive's
employment under this Agreement whereupon the applicable
provisions of Paragraph 5.4 below shall apply.
5.3 (b) For purposes of this Agreement, if Executive and Company shall
disagree as to whether Executive is totally disabled, or
disabled such that he is rendered unable to perform
substantially all of his usual duties for Company as set forth
above, or as to the date at which time such total disability
began, the decision of a licensed medical practitioner,
mutually agreed upon by the parties, shall be binding as to
both questions. If the parties cannot agree as to the identity
of the licensed medical practitioner, Executive shall select a
licensed medical practitioner of his choice and the Company
shall select a licensed medical practitioner of its choice.
The two licensed medical practitioners so selected shall
select a third licensed medical practitioner, which third
individual shall resolve either or both of the questions
referred to above and which resolution shall be binding upon
the parties.
5.4 If Executive's employment with the Company is terminated on account
of Executive's disability as provided for in Paragraph 5.3 above or
on account of Executive's death, then Executive (or Executive's
estate or personal representative, as applicable) shall only be
entitled to receive, and Company shall pay to Executive (or
Executive's estate or personal representative, as applicable) the
following amounts:
(a) all unpaid Base Salary and all unreimbursed expenses payable
for all periods through the effective date of termination;
plus
(b) the sum of six months of Executive's then Base Salary; plus
(c) a pro rata payout under the incentive compensation plan for
Executive in the year of such termination in an amount equal
to the fraction, the numerator of which is the number of
calendar days from the beginning of the year of such
termination through the effective date of termination and the
denominator of which is 365.
5.5 The Company is party to a certain severance agreement with certain
executives of the Company ("the Severance Agreement") a copy of
which is attached hereto as Exhibit A. The Company will enter into a
Severance Agreement on substantially the same terms upon the
execution hereof by Executive.
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5.6 If Executive's employment with Company is terminated for any reason,
Company will have no right of offset, nor will Executive be under
any duty or obligation to seek alternative or substitute employment
at any time after the effective date of such termination or
otherwise mitigate any amounts payable by Company to Executive.
5.7 Executive shall have the right to terminate his employment under
this Agreement and receive the Severance Payment by the delivery of
written notice to Company within 30 days after any of the events
hereinbelow defined as Good Reason. For purposes hereof, "Good
Reason" means that:
(i) the Company has materially breached this Agreement and the
Company has failed to cure such breach after 30 days written
notice from Executive,
(ii) there has occurred any material diminution or reduction in
duties of Executive, whether in scope or nature,
(iii) Executive fails to report directly to the CEO of the Company
(or reports to a CEO other than Xxxxxxxx Xxxxxx),
(iv) there has occurred a Change in Control (as defined in the
Severance Agreement referenced in Paragraph 5.5),
(v) the Company sells or otherwise transfers all or substantially
all of its media assets in a single transaction or series of
transactions, except if, and only for so long as, the Company,
directly or indirectly, continues to own a controlling
interest in the buyer or transferee, or
(vi) the Company permanently closes its New York office.
6. Location of Executive's Activities
Executive's place of business in the performance of his duties and
obligations under this Agreement shall be split principally between the
Employer's place of business in Glendale, California and New York, New
York. Notwithstanding the preceding sentence, Executive will engage in
such travel and spend such time in other places, including Chicago, as may
be necessary or appropriate in furtherance of his duties hereunder at the
Employer's expense.
7. Miscellaneous
7.1 Notices. All notices, requests, demands, consents, and other
communications required or permitted to be given or made hereunder
shall be in writing and shall be deemed to have been duly given and
received, (i) if delivered by hand, the day it is so delivered, (ii)
if mailed via the United States mail, certified first class mail,
postage prepaid, return receipt requested, five business days after
it is mailed, or (iii) if sent by a nationally recognized overnight
courier for next business day delivery, the business day after it is
sent, to the party to whom the same is so
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given or made, at the address of such party as set forth at the head
of this Agreement, which address may be changed by notice to the
other party hereto duly given as set forth herein, with copies
delivered as follows:
(a) if to Executive:
000 Xxxx Xxx Xxxxxx, #0X
Xxx Xxxx, XX 00000
with a copy to:
Xxx Xxxxxxxxx
Xxxxxxxxx Entertainment
0000 Xxxxx Xxxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
(b) if to the Company:
General Counsel
Playboy Enterprises, Inc.
000 Xxxxx Xxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
7.2 Governing Law; Jurisdiction. This agreement shall be governed by,
and construed and enforced in accordance with, the substantive and
procedural laws of the State of Illinois. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the state and
federal courts located in Xxxx County, Illinois, and waives any
claim based upon forum non-conveniens.
7.3 Headings. All descriptive headings in this agreement are inserted
for convenience only and shall be disregarded in construing or
applying any provision of this Agreement.
7.4 Counterparts. This Agreement maybe executed in counterparts, each of
which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
7.5 Severability. If any provision of this Agreement, or part thereof,
is held to be unenforceable, the remainder of such provision and
this Agreement, as the case may be, shall nevertheless remain in
full force and effect.
7.6 Entire Agreement and Representation. This Agreement contains the
entire agreement and understanding between Employee and Executive
with respect to the subject matter hereof. This Agreement supersedes
any prior agreement between the parties relating to the subject
matter hereof. Except as otherwise provided herein, this Agreement
cannot be changed or terminated except by an instrument in writing
signed by the parties hereto.
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7.7 Binding Effect. This Agreement shall be binding upon, and insure to
the benefit of, each parties' successors, transferees, heirs and
assigns.
7.8 Confidentiality; Disclosure of Information
(a) Executive recognized and acknowledges that he will have access
to Confidential Information (as defined below) relating to the
business or interests of Company or of persons with whom
Company may have business relationships. Except as permitted
herein or as may be approved by Company from time to time,
Executive will not during the Employment Period or at any time
thereafter, use or disclose to any other person or entity, any
Confidential Information of Company (except as required by
applicable law or in connection with performance of
Executive's duties and responsibilities hereunder). If
Executive is requested or becomes legally compelled to
disclose any of the Confidential Information, he will give
prompt notice of such request or legal compulsion to Company.
Company may waive compliance with this Paragraph 7.8(a) or
will provide Executive with legal counsel at no cost to
Executive to seek an appropriate remedy; provided however
Executive may disclose any Confidential Information in the
event notwithstanding all such efforts of the Company and such
legal counsel Executive if compelled by court order to do so.
The term "Confidential Information" means information relating
to Company's business affairs, proprietary technology, trade
secrets, patented processes, research and development data,
know-how, market studies and forecasts, competitive analyses,
pricing policies, executive lists, employment agreements
(other than this Employment Agreement), personnel policies,
the substance of agreements with customers, suppliers and
others, marketing arrangements, customer lists, commercial
arrangements, or any other information relating to Company's
business which is treated as confidential or proprietary by
Company in accordance with its policies. Notwithstanding the
immediately preceding sentence, the provisions of this
Paragraph 7.8(a) shall not apply to any information that (1)
is in the public domain; (2) is or becomes available to the
public other than as a result of a disclosure by Executive in
violation of this Paragraph 7.8(a); (3) was available to
Executive on a non-confidential basis prior to the date of
this Employment Agreement; (4) was already lawfully in
Executive's possession prior to the date of this Employment
Agreement; or (5) becomes available to Executive on a
non-confidential basis from a source other than Company. This
obligation shall continue until such Confidential Information
becomes publicly available, other than pursuant to a breach of
this Paragraph 7.8(a) by the Executive, regardless of whether
the Executive continues to be employed by the Company.
(b) It is further agreed and understood by and between the parties
to this Agreement that all "Company Materials," which include,
but are not limited to, computers, computer software, computer
disks, tapes, printouts, source, HTML and other codes,
flowcharts, schematics, designs, graphics, drawings,
photographs, charts, graphs, notebooks, customer lists, sound
recordings, other tangible or intangible manifestation of
content, and all
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other documents whether printed, typewritten, handwritten,
electronic, or stored on computer disks, tapes, hard drives,
or any other tangible medium, as well as samples, prototypes,
models, products and the like shall be the exclusive property
of Company and, upon termination of Executive's employment
with Company, and/or upon the written request of Company, all
Company Materials, including copies thereof, as well as all
other Company property then in Executive's possession or
control, shall be returned to and left with Company.
7.9 Copyright
Executive acknowledges that all original works of authorship by
Executive, whether created alone or jointly with others, relating to
the Executive's employment with the Company, and which are
protectable by copyright, are "works made for hire" within the
meaning of the United States Copyright Act, 17 U.S.C. ss. 101, as
amended, and the copyright of which shall be owned solely,
completely and exclusively by Company. If any such work is
considered to be a work not included in the categories of work
covered by the United States Copyright Act, 17 U.S.C. ss. 101, as
amended, such work is hereby conveyed and transferred completely and
exclusively to Company. Executive hereby irrevocably designates
counsel to Company as Executive's agent and attorney-in-fact to do
all lawful acts necessary to apply for and obtain patents and
copyrights and to enforce Company's rights under this section,
provided that such counsel shall take any such actions only after
Executive has been requested in writing to do such acts by Company
and failed to promptly do so. This Paragraph 7.9 shall survive the
termination of this Agreement. Any conveyance of copyright hereunder
includes all rights of paternity, integrity, disclosure and
withdrawal and any other rights that may be known as or referred to
as "moral rights."
7.10 Indemnification
Company recognizes that the activities within the scope of
Executive's employment create the potential in some jurisdictions of
civil or even criminal actions being brought against Executive. To
the fullest extent permitted by law, Company shall indemnify,
defend, protect and hold Executive harmless from and against all
claims, demands, causes of action, actions, suits, costs, damages,
penalties, fines, liabilities, losses and expenses, whether civil or
criminal, including, without limitation, reasonable attorneys' and
consultant's fees and expenses arising out of or resulting from the
performance of Executive's duties within the scope of Executive's
employment. Company will include Executive as a named insured on
Company's directors and officers liability policy.
7.11 Non-Competition and Non-Solicitation
Executive acknowledges that Company has invested substantial time,
money and resources in the development and retention of its
Confidential Information (including trade secrets), customers,
accounts and business partners, and further acknowledges that during
the course of Executive's employment with Company, Executive will
have access to Company's Confidential Information (including
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trade secrets), and will be introduced to existing and prospective
customers, vendors, cable operators, accounts and business partners
of Company. Executive acknowledges and agrees that any and all
"goodwill" associated with any existing or prospective customer,
vendor, cable operator, account or business partner belongs
exclusively to Company, including, but not limited to, any goodwill
created as a result or direct or indirect contacts or relationships
between Executive and any existing or prospective customers,
vendors, cable operators, accounts or business partners.
Additionally, the parties acknowledge and agree that Executive
possesses skills that are special, unique or extraordinary and that
the value of Company depends upon his use of such skills on its
behalf.
In recognition of this, Executive covenants and agrees that:
(a) During Executive's employment with Company, Executive may not,
without prior written consent of Company (whether as an
executive, agent, servant, owner, partner, consultant,
independent contractor, representative, stockholder, or in any
other capacity whatsoever) perform any work directly
competitive in any way to the business of Company or a
substantially planned business that Executive is aware of
during Executive's employment with Company on behalf of any
entity or person other than Company (including Executive).
(b) During Executive's employment with Company and for one year
thereafter, Executive may not notice, solicit or encourage any
Company employee to leave the employ of the Company or any
independent contractor to sever its engagement with Company,
absent prior written consent from Company.
(c) During Executive's employment with Company and for one year
thereafter, Executive may not, directly or indirectly, entice,
solicit or encourage any customer or prospective customer of
Company to cease doing business with Company, reduce its
relationship with Company or refrain from establishing or
expanding a relationship with Company.
7.12 Non-Disparagement; Non-Disclosure
(a) Executive and Company hereby agree that during the Employment
Period and all times thereafter, neither Executive or Company
will make any public statement, or engage in any conduct, that
is disparaging to the other party or, in the case of Company,
any of its Executives, officers, directors, or shareholders
known to Executive, including, but not limited to, any
statement that disparages the products, services, finances,
financial condition, capabilities or other aspect of the
business of Company and the capabilities of Executive.
Notwithstanding any term to the contrary herein, neither
Executive nor Company shall be in breach of this Paragraph
7.12 for the making of any truthful statements under oath.
(b) Executive will not directly or indirectly be the source of
disclosing, by publishing or by granting interviews, of any
Confidential Information
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(which is known to Executive to be confidential) concerning
the personal, social or business activities of Company, its
affiliates or the executives and principals and the officers,
directors, agents and Executives of all the foregoing during
or at any time after the termination of Executive's
employment, subject to the exceptions specified in Section
7.8(a) (1) - (5). In addition, Executive agrees that without
Company's express written approval in each case, Executive
will not:
i. write, be the source of or contribute to any articles,
stories, books, screenplays or any other communication
or publicity of any kind (written or otherwise) or
deliver lectures in any way regarding or concerning the
Confidential Information, or
ii. grant any interviews regarding or concerning the
Confidential Information during or at any time after the
termination of his employment.
7.13 Representations and Warranties. The execution, delivery and
performance of this Agreement by the Company has been duly
authorized by all necessary corporate action of the Company and this
Agreement constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first above written.
Playboy Enterprises, Inc.
By: /s/ Xxxxxxxx Xxxxxx
----------------------------
Xxxxxxxx Xxxxxx
Chairman of the Board
and
Chief Executive Officer
/s/ Xxxxxx Xxxxxx
----------------------------
Xxxxxx Xxxxxx
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