EXHIBIT 10.9
EMPLOYMENT AGREEMENT
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This Employment Agreement is entered into as of the 1st day of June, 1994
by and between Saban Entertainment, Inc., a Delaware corporation ("Company") and
Xxx Xxxxx ("Employee"):
1. ENGAGEMENT. Company hereby engages Employee to render services as
President and Chief Operating Officer of Company pursuant to the terms and
conditions hereof, and Employee hereby accepts such engagement. Employee shall
report solely to Xxxx Xxxxx, the Chairman and Chief Executive Officer of
Company, subject to the overall direction and supervision of Company's Board of
Directors; provided that from and after a "Change of Control," as defined in
Section 12, below, Employee agrees that he may be required to report to some
other person. If Employee is elected to the Board of Directors of Company,
Employee agrees to accept such appointment.
2. NATURE AND PLACE OF SERVICES. Employee shall render all services
usually and customarily rendered by and required of executives similarly
employed in the entertainment industry and such other services as may be
reasonably required by Company. The location of Employee's office shall be at
Company's principal Southern California executive offices, which will be located
at such place or places in Los Angeles County as the Board of Directors of
Company shall from time to time designate; and the duties of Employee shall be
performed at such offices, except for such travel as may from time to time be
required.
3. EXCLUSIVITY. Employee shall work full-time for Company and its
affiliates during the Term hereof. Without limiting the foregoing, Employee's
services shall be rendered exclusively to Company and its affiliates hereunder
during the Term of this Agreement, and Employee shall not render services of any
nature to or for any other person, firm or corporation during the Term of this
Agreement without the prior written consent of Company. For so long as Employee
is employed pursuant to the terms hereof, Employee shall not become financially
interested in or associated with, directly or indirectly, any other person or
entity engaged in the production, distribution or exhibition of motion pictures,
television programs, phonograph recordings, or any visual or audio recordings of
any kind, or in the broadcasting or music publishing businesses, anywhere in the
world; provided, that Employee may invest in the capital stock or other
securities of any corporation whose stock or other securities are publicly owned
or are regularly traded on any securities exchange or in the over-the-counter
market, so long as Employee's ownership of such securities does not
exceed 5% of the issued and outstanding securities of such entity and Employee's
holdings in any one such entity does not in the aggregate cost Employee more
than $100,000.
4. TERM. The term of this Agreement ("Term") shall commence on June 1,
1994 and, subject to termination as hereinafter provided, expire with the close
of business on May 31, 1999. Each consecutive year of the Term beginning on June
1 and ending on the following May 31 shall be referred to as a "Term Year."
5. COMPENSATION.
(a) Fixed Salary. As consideration for the services to be rendered by
Employee pursuant hereto, and upon condition that Employee is substantially
performing all of the services required hereunder, that Employee is not in
material default, and that grounds do not then exist under this Agreement for
the termination of Employee hereunder, Company will pay or will cause to be paid
to Employee, subject to all applicable laws and requirements respecting
withholding of federal, state, and/or local taxes, a fixed annual salary,
payable in equal installments, no less frequently than semi-monthly, in the
following amounts:
FOR THE FIRST TERM YEAR: Four Hundred Twenty-Six Thousand Dollars
($426,000).
FOR THE SECOND TERM YEAR: Four Hundred Twenty-Six Thousand Dollars
($426,000).
FOR THE THIRD TERM YEAR: Four Hundred Fifty Thousand Dollars ($450,000).
FOR THE FOURTH TERM YEAR: Four Hundred Seventy-Five Thousand Dollars
($475,000).
FOR THE FIFTH TERM YEAR: Five Hundred Thousand Dollars ($500,000).
(b) Contingent Bonus. Provided Employee is not in material default
hereof, and that grounds do not then exist under this Agreement for the
termination of Employee hereunder, Company will pay or will cause to be paid to
Employee, subject to all applicable laws and requirements respecting withholding
of federal, state, and/or local taxes, the "Contingent Bonus," as hereinafter
defined, for each Term Year. The Contingent Bonus for any Term Year shall be an
amount equal to the lesser of one percent (1%) of the "Consolidated Pre-Tax
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Income" of Company, as defined in Paragraph 5(c), below, for such Term Year, or
the "Maximum Bonus Amount," as defined in Paragraph 5(d), below, for such Term
Year.
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(c) Consolidated Pre-Tax Income. "Consolidated Pre-Tax Income" for
any Term Year shall be the "Consolidated Pre-Tax Income" of Company, as such
term is defined in Section 4 of that certain Employment Agreement dated as of
July 1, 1994 by and between Company and Xxxx Xxxxx; and, as is provided therein,
no portion of any Annual Bonus Amount payable or paid to Xxxx Xxxxx shall be
treated as an expense in computing "Consolidated Pre-Tax Income" for any period.
(d) Maximum Bonus Amount. The "Maximum Bonus Amount" for any Term
Year shall be as follows:
FOR THE FIRST TERM YEAR: Five Hundred Seventy-Four Thousand Dollars
($574,000).
FOR THE SECOND TERM YEAR: Six Hundred Twenty-Four Thousand Dollars
($624,000).
FOR THE THIRD TERM YEAR: Six Hundred Fifty Thousand Dollars ($650,000).
FOR THE FOURTH TERM YEAR: Six Hundred Seventy-Five Thousand Dollars
($675,000).
FOR THE FIFTH TERM YEAR: Seven Hundred Thousand Dollars ($700,000).
(e) Payment of Contingent Bonus. The Contingent Bonus, if any, for
any Term Year shall be payable to Employee within thirty (30) days after the
issuance by Company's auditors of Company's audited consolidated financial
statements for Company's fiscal year which is concurrent with such Term Year;
provided that, if such statements are not issued within nine (9) months after
the close of such fiscal year, Company will pay or will cause to be paid to
Employee, subject to all applicable laws and requirements respecting withholding
of federal, state, and/or local taxes, an amount equal to eighty-five percent
(85%) of the amount that would constitute the Contingent Bonus for such Term
Year if the Contingent Bonus were computed based on the lesser of the Maximum
Bonus Amount or Company's then most recently prepared unaudited consolidated
income statements for such fiscal year. Such amount shall constitute an advance
against the Contingent Bonus for such Term Year and in the event such amount is
in excess of the Contingent Bonus for such Term Year, Employee shall, within
three (3) business days after issuance of the audited consolidated financial
statements for such fiscal year, pay to Company an amount equal to such excess.
(f) Stock Options.
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(i) Subject to the terms and conditions hereof, including the
vesting requirements under Paragraph 5(f)(ii), below, Company hereby grants to
Employee the option to purchase sixteen and three hundred twenty-seven one
thousandths (16.327) shares ("Option Shares") of Company common stock at a
purchase price of One Hundred Twenty-Two Thousand Four Hundred Ninety-Six
Dollars and Forty-Eight Cents ($122,496.48) per share.
(ii) The option shall vest and be exercisable by Employee with
respect to one-fifth (1/5) of the Option Shares after the completion of the
first Term Year provided Employee is then and has continuously been employed by
Company. The option shall vest and be exercisable by Employee with respect to an
additional one-fifth (1/5) of the Option Shares after the completion of each
Term Year of the Term, provided Employee is and has continuously been employed
by Company at the end of each such Term Year. Notwithstanding the foregoing:
(A) if (I) Employee dies during the Term or Employee's
employment is terminated by reason of disability as set forth in Paragraph
10(a) hereof, (II) Employee was until then continuously employed by
Company, and (III) the option has then vested and become exercisable with
respect to less than one-half (1/2) of the Option Shares, then the option
shall immediately vest and be exercisable by Employee with respect to an
additional number of Option Shares equal to one-half the Option Shares less
the number of Option Shares which have theretofore vested and become
exercisable;
(B) if (I) Employee's employment is terminated during
any Term Year pursuant to Paragraph 10(d) hereof (a termination other than
for cause), (II) Employee was until then continuously employed by Company,
and (III) the option has then vested and become exercisable with respect to
less than one-half (1/2) of the Option Shares, then the option shall
immediately vest and be exercisable by Employee with respect to an
additional number of Option Shares equal to one-half the Option Shares less
the number of Option Shares which have theretofore vested and become
exercisable; and
(C) if (I) Employee's employment is terminated during
any Term Year pursuant to Paragraph 10(d) hereof, (II) Employee was until
then continuously employed by Company, and (III) the option has then vested
and become exercisable with respect to at least one-half (1/2) of the
Option Shares, then the option shall,effective immediately prior to such
termination, vest and be exercisable by Employee with respect to that
portion of the Option Shares which would have vested upon completion of the
Term Year in which
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Employee's termination occurs, had such termination not occurred.
(iii) Upon termination of Employee's employment with Company
for any reason, Employee shall be entitled to exercise only the portion of the
option that has vested pursuant to Paragraph 5(f)(ii), above, as of the
termination date. Nothing in this Paragraph 5(f)(iii) shall, however, be
construed to limit any of Employee's rights or remedies in the event of
Company's breach of this Agreement.
(iv) During Employee's lifetime, the option may be exercised
only by him and may not be transferred, assigned, pledged or hypothecated
(whether by operation of law or otherwise) other than by will or the applicable
laws of descent or distribution. If Employee dies at a time when the option, or
a portion thereof, is exercisable by him, the portion of the option that is then
exercisable by him shall be exercisable by Employee's executors, personal
representatives, legatees or distributees, as applicable.
(v) The option granted hereunder shall be exercised by
Employee by giving written notice to Company stating the number of Option Shares
with respect to which the option is being exercised and tendering payment
therefor in cash or by certified check. As a condition to the issuance of the
Option Shares, Employee shall (A) execute such further documents and instruments
and take whatever acts are necessary in order for the issuance to be in
compliance with all applicable federal and state securities laws, (B) enter into
a shareholders agreement restricting the transferability of the Option Shares
and providing for such other matters as the parties may agree, the terms of
which shareholders agreement shall be negotiated in good faith, and (C) enter
into a voting trust agreement or such other arrangement as is reasonably
satisfactory to Company whereunder Xxxx Xxxxx (or, in the event of Xxxx Xxxxx'x
death, his successor) is granted the power to vote the Option Shares. As soon as
reasonably practicable thereafter, a certificate representing the Option Shares
with respect to which the option is exercised shall be delivered to Employee.
Such certificate may contain a legend thereon reflecting the restrictions set
forth in subparagraphs (A), (B) and (C), above, and Paragraphs 5(f)(ix) and
5(f)(x), below.
(vi) Employee shall have none of the rights or privileges of a
shareholder of Company in respect of any of the Option Shares, unless and until
the purchase price for such Option Shares shall have been paid in full.
(vii) The number of Option Shares shall be appropriately
adjusted for any increase or decrease in the number of shares of issued and
outstanding common stock of Company
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resulting from a subdivision or consolidation of shares, whether through
reorganization, recapitalization, stock split-up, stock distribution or
combination of shares, or payment of a share dividend or other increase or
decrease in the number of such shares outstanding effected without receipt of
consideration by Company. In the event of any such adjustment, the purchase
price per share for the Option Shares as so adjusted shall be adjusted by
dividing Two Million Dollars ($2,000,000) by the number of Option Shares as so
adjusted. Upon a merger or consolidation of Company in which Company is not the
surviving corporation or an exchange of all of the outstanding shares of common
stock of Company or all or a substantial portion of the assets of Company for
shares of another corporation or equity interests in a partnership, limited
partnership, limited liability company or other entity (any such corporation and
any such entity is referred to in this subparagraph (vii) as a "corporation"),
the successor or exchanging corporation shall assume all obligations under this
Agreement and such option shall be converted into an option for a number of
shares or other equity interests of the successor or exchanging corporation (or
cash, property or such other consideration) that Employee would have received if
Employee had owned the Option Shares on the effective date of such transaction,
and the purchase price per share of the stock or other equity interests of the
successor or exchanging corporation under such converted option shall be equal
to Two Million Dollars ($2,000,000) divided by the number of shares of the stock
or other equity interests of such successor or exchanging corporation to which
the converted option applies (if, following such merger, consolidation or
exchange, Employee would receive non-share (or other equity interest)
consideration upon exercise of the option, the purchase price to be paid upon
exercise of the option shall be equal to Two Million Dollars ($2,000,000)
multiplied by a fraction equal to that portion of the option then being
exercised). Upon the dissolution or liquidation of Company other than following
an asset transfer subject to this subparagraph (vii), the option granted
hereunder shall expire as of the effective date of such transaction, provided,
however, that Company shall give at least sixty (60) days prior written notice
of such event to Employee during which time he shall have a right to exercise
his unexercised vested option.
(viii) Upon the exercise of the option hereunder, Company shall
have the right to require Employee to remit to Company, prior to the issuance of
any Option Shares, an amount sufficient to satisfy all federal, state and local
withholding tax requirements. As soon as reasonably practicable following the
"initial public offering" (as that term is defined in Paragraph 5(f)(xii)
hereof), Company shall prepare, or cause to be prepared, and file with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-8 under the Securities Act of 1933, as amended (the "Act"), (or such
successor
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form of registration statement as shall then have been adopted by the
Commission) covering the offer and sale by Company of the Option Shares
underlying the then unexercised portion of the option granted to Employee
hereunder, and, to the extent permitted under such form, any Option Shares
issued upon exercise of such option prior to the initial public offering; and
Company shall use its best efforts during the term of the option to maintain
such registration statement in effect, and to comply with the rules and
regulations of the Commission applicable to securities covered by such
registration statement, so that the issuance of any Option Shares upon exercise
of the option shall be registered under the Act.
(ix) After Employee's employment with Company is terminated for
any reason, Company shall purchase from Employee and Employee shall sell to
Company any and all Option Shares owned by Employee and the option granted to
Employee hereunder for an amount (the "Termination Purchase Price") equal to (A)
the fair market value of the Option Shares owned by Employee plus the fair
market value of the Option Shares with respect to which Employee's option has
vested but has not been exercised, less (B) Employee's purchase price,
determined under Paragraph 5(f)(i), above, for the Option Shares with respect to
which Employee's option has vested but has not been exercised. The fair market
value of the Option Shares for purposes of the Termination Purchase Price shall
be determined by mutual agreement of the parties as of the date of Employee's
termination of his employment ("Termination Date"). In the event the parties are
unable to reach agreement within thirty (30) days of the Termination Date, the
fair market value of the Option Shares shall be determined by the following
appraisal procedure: Each party shall appoint an appraiser by giving notice of
such appointment to the other party within forty-five (45) days from the
Termination Date. Such appraiser shall be a certified public accountant
practicing in the entertainment, licensing and television industries or such
other person with experience in valuing companies in the entertainment,
licensing and television businesses. If either party fails to appoint an
appraiser within said time period, the other party's appointed appraiser shall
be the sole appraiser. If both parties have so appointed appraisers, then within
thirty (30) days from the appointment of both parties' appraisers, the
appraisers so appointed shall appoint a third appraiser, with the same
qualifications. The third appraiser (or the sole appraiser if either party fails
to appoint an appraiser within the required time period) shall then determine
the fair market value of the Option Shares within sixty (60) days after the
appointment of the third appraiser (or within sixty (60) days after the failure
by either party to appoint an appraiser within the required time period). The
third appraiser, or such sole appraiser, as applicable, is referred to
hereinbelow as the
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"Selected Appraiser." The determination of the Selected Appraiser shall be
binding on the parties hereto. The costs and fees of the Selected Appraiser
shall be borne equally by the parties hereto. Company shall give the Selected
Appraiser reasonable access to its books and records to enable him or her to
undertake his or her appraisal. Within ten (10) days after the parties'
agreement on the fair market value of the Option Shares, or, failing such
agreement, the notification by the Selected Appraiser of his or her appraisal,
Company shall pay to Employee ten percent (10%) of the Termination Purchase
Price (the "Down Payment") and shall deliver to Employee a promissory note (the
"Note") for payment of the remainder of the Termination Purchase Price in nine
(9) equal annual installments. The Note shall provide for the annual payment of
interest on the outstanding balance of the remainder of the Termination Purchase
Price at the rate per annum equal to the "prime" or "reference" rate charged by
Company's principal bank (currently Imperial Bank), as determined from time to
time. Concurrently with the payment of the Down Payment and delivery of the
Note, Employee shall execute and deliver to Company an assignment of the option
in form reasonably satisfactory to Company and an assignment separate from
certificate for the Option Shares, in each case free and clear of any and all
liens, claims, encumbrances and restrictions of any type, kind or nature.
(x) Except as provided below, in the event Xxxx Xxxxx, any
member of his immediate family or any of his affiliated entities (collectively
with Xxxx Xxxxx and such family members, "Saban Entities") sells to a third
party in a bona fide sale any of his or its shares of the common stock of
Company ("Saban Shares"), the parties agree as follows:
(A) Company shall purchase from Employee and Employee shall
sell to Company the "Applicable Percentage," as defined below, of the Option
Shares owned by Employee for a per-share consideration equal to the per-share
consideration paid by the third party for the Saban Shares. If the consideration
paid by the third party for the Saban Shares includes non-cash consideration
and/or deferred consideration, the consideration paid by Company to Employee for
the Option Shares sold by Employee to Company under this subparagraph (A) shall
consist of similar non-cash and/or deferred consideration in the same ratio as
the non-cash and/or deferred consideration paid by the third party for the Saban
Shares bears to the total consideration paid by the third party for the Saban
Shares. The "Applicable Percentage" shall equal the percentage that the Saban
Shares sold to the third party represents of the total shares of Company owned
by the Saban Entities immediately prior to the sale. The purchase and sale of
the Option Shares under this subparagraph (A) shall close no later than ten (10)
days after the closing of the sale of the Saban Shares to the third party.
Concurrently with the purchase and sale
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of the Option Shares under this subparagraph (A), Employee shall execute and
deliver to Company an assignment separate from certificate for the Option
Shares, free and clear of any and all liens, claims, encumbrances and
restrictions of any type, kind or nature.
(B) Company shall pay to Employee an amount equal to the
Applicable Percentage (as defined in subparagraph (A) above) of (x) the per-
share consideration paid by the third party for the Saban Shares multiplied by
the number of Option Shares with respect to which Employee's option has vested
but has not been exercised, less (y) Employee's purchase price, determined under
Paragraph 5(f)(i), above, for such Option Shares. If the consideration paid by
the third party for the Saban Shares includes non-cash consideration and/or
deferred consideration, the payment by Company to Employee under this
subparagraph (B) shall consist of similar non-cash and/or deferred consideration
in the same ratio as the non-cash and/or deferred consideration paid by the
third party for the Saban Shares bears to the total consideration paid by the
third party for the Saban Shares. The payment under this subparagraph (B) shall
be made no later than ten (10) days after the closing of the sale of the Saban
Shares to the third party .
(C) The number of Option Shares Employee shall have the
option to purchase pursuant to this Paragraph 5(f) shall immediately be reduced
by a number of shares of Company equal to the Applicable Percentage (as defined
in subparagraph (A), above) of the Option Shares with respect to which
Employee's option has vested but has not been exercised. Such reduction shall
reduce only the Option Shares with respect to which Employee's option has vested
but has not been exercised and shall not reduce any Option Shares with respect
to which Employee's option has not then vested.
(D) If in connection with any sale of Saban Shares subject
to this Paragraph 5(f)(x), Xxxx Xxxxx is required to enter into an agreement
which includes provisions restricting his ability to compete, directly or
indirectly (including, without limitation, through an ownership or licensing
arrangement with a competitor or potential competitor of Company), with Company
("noncompetition provisions"), and if the purchaser of the Saban Shares so
requires, Employee shall, in connection with the sale of the Option Shares and
payment for vested options under this Paragraph 5(f)(x), execute and deliver to
Company and such purchaser an agreement, in form and substance reasonably
acceptable to the purchaser, which agreement shall contain noncompetition
provisions, the scope, duration, terms and provisions of which are substantially
identical to the noncompetition provisions contained in Xxxx Xxxxx'x agreement;
provided, that no separate payment will be required to be made to Employee on
account of such agreement.
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This subparagraph (x) shall not apply to (A) any sale by a Saban Entity pursuant
to an "initial public offering" (as defined in Paragraph 5(f)(xii)) of the
common stock of the Company or (B) any transaction subject to Paragraph
5(f)(vii), above.
(xi) The obligations of Company to make any payment or payments
to Employee with respect to the purchase of Option Shares by Company (including
any payments under the Note) are subject to the satisfaction by Company of any
applicable statutory provisions restricting Company's ability to make such
payments, including, without limitation, Section 160 of the Delaware General
Corporation Law and Chapter 5 of the California General Corporation Law, and if
and to the extent that under those provisions, any such payment would expose the
directors of Company to any liability, or would be unlawful, Company shall
deliver to Employee, in lieu of such payment, a promissory note with terms
identical to the Note, which note shall be due and payable at the earliest
practicable date thereafter when such payment would not be violative of such
statutory provisions.
(xii) Notwithstanding any provision of this Paragraph 5(f) to
the contrary, following the earlier to occur of (I) the first closing of an
offer and sale of shares of the common stock of Company (whether such shares are
sold by Company, existing stockholders or both) for cash pursuant to a firmly
underwritten public offering effected pursuant to a registration statement filed
by Company with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (or such successor legislation as shall then be in effect)
or (II) the date upon which the shares of common stock of Company are first
authorized for quotation on the Nasdaq National Market, or listed on the New
York Stock Exchange or American Stock Exchange (either event, an "initial public
offering"):
(A) the provisions of Paragraphs 5(f)(ix) and 5(f)(x) shall
terminate and be of no further force or effect;
(B) the provisions of any voting trust agreement entered into
pursuant to Paragraph 5(f)(v)(C) shall not prevent or restrict Employee's right
to sell and transfer any of the Option Shares free and clear of the obligations
therein set forth;
(C) the option shall terminate and expire, to the extent not
theretofore exercised, (x) if Employee's employment with Company is terminated
for any reason other than for "cause" pursuant to Paragraph 10(c) hereof, on the
first anniversary of the date of such termination, and (y) if Employee's
employment with Company is terminated for "cause" pursuant to Paragraph 10(c)
hereof, on the thirtieth (30th) day following the date of such termination; and
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(D) after Employee's employment with Company is terminated for
any reason, Company shall have the right and option, exercisable at any time
prior to the date of expiration of the option by delivery of written notice of
such exercise to Employee, to purchase from Employee, and if such option is
exercised, Employee shall sell to Company, any and all Option Shares owned by
Employee on the date of receipt of the notice of exercise (or acquired
thereafter upon exercise of the option and prior to the closing of such
purchase) and the option granted to Employee hereunder for an amount equal to
the "Termination Purchase Price," as defined in and determined pursuant to the
procedures provided in Paragraph 5(f)(ix), above; and within ten (10) days after
the parties' agreement on the fair market value of the Option Shares, or,
failing such agreement, the notification by the Selected Appraiser of his or her
appraisal, Company shall pay the Termination Purchase Price to Employee, against
delivery by Employee to Company of an assignment of the option in form
reasonably satisfactory to Company and an assignment separate from certificate
for the Option Shares, in each case free and clear of any and all liens, claims,
encumbrances and restrictions of any type, kind or nature.
(g) Employee Benefits.
(i) Reimbursements. Company shall reimburse Employee for
all ordinary and necessary business, entertainment and other expenses reasonably
incurred by Employee in the performance of Employee's duties and obligations
under this Agreement, including reimbursement for air travel and accommodations
for business travel. Company agrees to repay or reimburse Employee for such
business expenses upon the presentation of itemized statements of such business
expenses in accordance with Company's policy.
(ii) Annual Vacations. Employee shall be entitled to take
four (4) weeks annual vacation for each Term Year.
(iii) Health Insurance and Other Employee Benefits.
Company shall provide Employee with health insurance for him and his dependents
no less favorable in benefits than any other employee of Company. To the extent
that Company establishes any other employee benefit plan which provides benefits
to executives of Company generally, Employee shall be entitled to participate in
such plan pursuant to the terms thereof, except that Company may exclude
Employee's participation in any plan which is a stock option plan or plan
similar to a stock option plan.
(h) Signing Bonus. On or prior to execution hereof, Company will pay
or will cause to be paid to Employee, subject to
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all applicable laws and requirements respecting withholding of federal, state,
and/or local taxes, a signing bonus of One Hundred Thousand Dollars ($100,000).
Employee hereby acknowledges receipt in full of such signing bonus.
6. [INTENTIONALLY DELETED]
7. REPRESENTATIONS AND WARRANTIES.
(a) Representations of Employee. Employee represents and warrants
that Employee has all right, power, authority and capacity, and is free, to
enter into this Agreement; that by doing so Employee will not violate or
interfere with the rights of any other person or entity; and that Employee is
not subject to any contract, understanding or obligation which will or might
prevent, interfere with or impair the performance of this Agreement by Employee.
Employee will indemnify and hold Company harmless with respect to any losses,
liabilities, demands, claims, fees, expenses, damages and costs (including
attorneys fees and court costs) resulting from or arising out of any claim or
action based upon Employee's entering into this Agreement.
(b) Representations of Company. Company represents and warrants that
Company has all right, power and authority, without the consent of any other
person, to execute and deliver, and perform its obligations under, this
Agreement. All corporate and other actions required to be taken by Company to
authorize the execution, delivery and performance of this Agreement and the
consummation of all transactions contemplated hereby have been duly and properly
taken. This Agreement is the lawful, valid and legally binding obligation of
Company, enforceable in accordance with its terms.
(c) Materiality of Representations. The representations, warranties
and covenants set forth in this Agreement shall be deemed to be material and to
have been relied upon by the parties hereto.
8. RELATIONSHIP AND COVENANTS OF EMPLOYEE.
(a) Covenant Not To Disclose. Employee shall not at any time during
or after the termination of the Term, knowingly reveal, divulge or make known to
any person (other than the Company or its affiliates) or use for Employee's own
account any non-public information concerning or used by Company of which
Employee was apprised or otherwise had become aware during the term of
Employee's employment by Company (excluding any such information
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which becomes public for reasons other than Employee's breach of this Agreement
or which Employee is required to disclose by law).
(b) Covenant to Deliver Records. All memoranda, notes, records and
other documents made or compiled by Employee, or made available to Employee
during the term of this Agreement concerning the business of Company shall be
Company's property and shall be delivered to Company on the termination of this
Agreement or at any other time on request. Employee shall keep in confidence and
shall not use for Employee or others, or divulge to others, any secret or
confidential information, knowledge or data of Company obtained by Employee as a
result of Company's employment, unless authorized by Company or required by law.
Employee shall be entitled to retain for his own records copies of any and all
memoranda, notes, records and other documents made or compiled by Employee
during the Term of this Agreement.
(c) Covenant Not To Divert. Employee shall not so long as Employee
is employed hereunder, or if such employment shall terminate during or at the
expiration of the Term, for a period of two years following such termination,
directly or indirectly, either on Employee's own behalf, or as a member of a
partnership, joint venture or corporation, or as an employee or agent on behalf
of any person, firm, partnership, joint venture or corporation, either (i)
solicit, induce (or attempt to induce), or endeavor to entice away any clients
of Company (unless Company consents in writing), (ii) solicit, divert, or seek
to develop or exploit any existing entertainment projects on which Company is
working at the time of termination (unless Company thereafter advises Employee
in writing that it has abandoned such project), or (iii) solicit, interfere
with, induce (or attempt to induce) or endeavor to entice away any employee
(other than Employee's assistant) associated with Company to become affiliated
with him or any other person, firm, partnership, joint venture, corporation or
business organization.
(d) Limitations Upon Covenants. The provisions under this Paragraph
8 shall survive the termination of this Agreement. The parties hereto agree
that, in the event any of the provisions set forth in this Paragraph 8 are held
by any court or other duly constituted legal authority to be effective in any
particular area or jurisdiction only if modified to limit their duration or
scope or to be void or otherwise unenforceable in any particular area or
jurisdiction, then such provisions shall be deemed amended and modified with
respect to that particular area or jurisdiction so as to comply with the order
of any such court or other duly constituted legal authority and, as to all other
areas and jurisdictions, and as to all other provisions of this Paragraph 8,
13
such provisions shall remain in full force and effect as set forth in this
Agreement.
(e) Remedies. Employee acknowledges that Company will have no
adequate remedy at law if Employee violates the terms of the provisions of this
Paragraph 8 or any other provisions of this Agreement (including, without
limitation, the exclusivity provisions of Paragraph 3, above). In such event,
Company shall have the right, in addition to any other rights it may have, to
obtain in any court of competent jurisdiction injunctive relief to restrain any
breach or threatened breach or specific performance of this Agreement.
9. CERTAIN RIGHTS OF COMPANY.
(a) Announcement. Company shall have the sole right to make a public
announcement of the terms, provisions, or execution of this Agreement.
(b) Use of Name, Likeness, and Biography. Company shall have the
right (but not the obligation) to use, publish and broadcast, and to authorize
others to do so, the name, approved likeness and approved biographical material
of Employee to advertise, publicize and promote the business of Company and of
affiliates, but not for the purposes of direct endorsement without Employee's
consent. An "approved likeness" and "approved biographical material" shall be,
respectively, any photograph or other depiction of Employee, or any biographical
information or life story concerning the professional career of Employee, which
has been submitted to and approved by Employee prior to its first use,
publication or broadcast, such approval not to be unreasonably withheld.
(c) Corporate Offices. In addition to his positions as President and
Chief Operating Officer of the Company, Company or its affiliates may from time
to time appoint Employee to one or more corporate offices of Company or its
affiliates. Employee agrees to accept such offices if consistent with Employee's
stature and experience.
(d) Right to Insure. Company shall have the right to secure in its
own name, or otherwise, and at its own expense, life, health, accident or other
insurance covering Employee, and Employee shall have no right, title or interest
in and to such insurance. Employee shall assist Company in procuring such
insurance by submitting to examinations and by signing such applications and
other instruments as may be required by the insurance carriers to which
application is made for any such insurance.
14
10. TERMINATION.
(a) Disability. If Employee shall be rendered incapable by illness
(physical or mental disability) of complying with the terms, provisions and
conditions hereof on his part to be performed for a period in excess of 90
consecutive days or 250 days in the aggregate during the Term, then Company may,
at its option, prior to the date Employee resumes the rendering of services,
terminate this Agreement by written notice to that effect sent by registered or
certified mail. Such termination shall terminate any and all obligations to
Employee under this Agreement effective as of the date of such written notice
except (i) Employee's right to receive the Fixed Salary in Paragraph 5(a) for
the Term Year in which the date of such written notice falls, pro-rated to the
date of such written notice, (ii) Employee's right to receive the Contingent
Bonus in Paragraph 5(b) for the Term Year in which the date of such written
notice falls, prorated to the date of such written notice (payable at the time
set forth in Paragraph 5(e)), and (iii) Employee's vested rights with respect to
the option set forth in Paragraph 5(f).
(b) Death. In the event Employee dies during the Term of this
Agreement, such death shall terminate any and all obligations to Employee under
this Agreement effective as of the date of death except (i) Employee's right to
receive the Fixed Salary in Paragraph 5(a) for the Term Year in which the date
of death falls, pro-rated to the date of death, (ii) Employee's right to receive
the Contingent Bonus in Paragraph 5(b) for the Term Year in which the date of
death falls, pro-rated to the date of death (payable at the time set forth in
Paragraph 5(e)), and (iii) Employee's vested rights with respect to the option
set forth in Paragraph 5(f).
(c) Cause. Company may terminate Employee's employment hereunder for
cause, which shall mean (i) indictment of Employee for a felony or a crime
involving a high degree of moral turpitude, (ii) the commission by Employee of
an act or acts of dishonesty constituting a crime, which act or acts are
intended to result, directly or indirectly, in gain or personal enrichment at
the expense of Company or any of its subsidiaries or affiliates by Employee,
(iii) certification by a medical doctor that Employee is a habitual alcoholic or
is a narcotic addict, (iv) Employee's material breach of this Agreement. Such
termination shall terminate any and all obligations to Employee under this
Agreement effective as of the date of such written notice except (i) Employee's
right to receive the Fixed Salary in Paragraph 5(a) for the Term Year in which
the date of such written notice falls, pro-rated to the date of such written
notice, and (ii) Employee's
15
vested rights with respect to the option set forth in Paragraph 5(f).
(d) At Convenience of Company. Company shall have the absolute and
unconditional right to terminate Employee's employment hereunder at any time,
other than pursuant to Paragraphs 10(a), 10(b) or 10(c), by written notice to
that effect delivered in person or sent by registered or certified mail. Such
termination shall terminate any and all obligations to Employee under this
Agreement effective as of the date of such written notice except (i) Employee's
right to receive the Fixed Salary in Paragraph 5(a) for the Term Year in which
the date of such written notice falls, pro-rated to the date of such written
notice, (ii) Employee's right to receive the Severance Pay provided in, and
subject to the terms and conditions of, Paragraph 11 hereof, (iii) Employee's
right to receive the Contingent Bonus in Paragraph 5(b) for the Term Year in
which the date of such written notice falls, prorated to the date of such
written notice (payable at the time set forth in Paragraph 5(e)), and (iv)
Employee's vested rights with respect to the option set forth in Paragraph 5(f).
(e) At Employee's Election. Employee may terminate his employment
hereunder upon Company's material breach of this Agreement by written notice to
that effect delivered in person or sent by registered or certified mail. Such
termination shall terminate any and all obligations of Company to Employee under
this Agreement, including liabilities with respect to such breach, effective as
of the date of such written notice except (i) Employee's right to receive the
Fixed Salary in Paragraph 5(a) for the Term Year in which the date of such
written notice falls, pro-rated to the date of such written notice, (ii)
Employee's right to receive the Severance Pay provided in, and subject to the
terms and conditions of, Paragraph 11 hereof, (iii) Employee's right to receive
the Contingent Bonus in Paragraph 5(b) for the Term Year in which the date of
such written notice falls, prorated to the date of such written notice (payable
at the time set forth in Paragraph 5(e)), and (iv) Employee's vested rights with
respect to the option set forth in Paragraph 5(f).
11. SEVERANCE PAY. In the event Employee's services are terminated by
Company pursuant to Paragraph 10(d) or by Employee pursuant to Paragraph 10(e)
above prior to the completion of the Term, Employee shall receive Employee's
fixed salary set forth in Paragraph 5(a) hereof for the balance of the Term,
payable in equal installments no less frequently than semi-monthly. The
termination benefits contemplated by this Paragraph shall be reduced by the
aggregate amount of any wages, salaries, fees or other compensation ("Earnings")
earned by Employee during the period in which payments
16
pursuant to the first sentence of this Paragraph are otherwise to be made, as
compensation for full-time or part-time services rendered as an employee,
consultant, manager, independent contractor or in any other employment capacity.
For the purposes of determining the amount of such Earnings, if any, Employee
shall apprise Company from time to time, upon its request, of such amounts
earned, providing to Company such evidence thereof (on a confidential basis),
including, without limitation, Employee's federal and state income tax returns,
as Company may reasonably request.
12. CHANGE OF CONTROL.
(a) For the purposes of this Section 12, the following definitions
shall apply:
The following events shall each constitute a "Change of Control"
of Company: (i) the acquisition of one or more shares of the voting securities
of Company by any Acquiring Person, or any group of two or more Acquiring
Persons acting in concert, as a result of which such Person or group
beneficially owns fifty percent (50%) or more of the issued and outstanding
voting securities of Company; (ii) the consolidation with, or merger with or
into, any other entity, by Company and, in connection with such merger or
consolidation, Company is not the continuing or surviving entity; (iii) the sale
or transfer by other means by Company in one transaction or a series of related
transactions, of assets or earning power aggregating fifty percent (50%) or more
of the assets or earning power of Company and its subsidiaries (taken as a whole
and calculated on the basis of Company's most recent regularly prepared
financial statements) to any other person or persons (but excluding sales of
inventory in the ordinary course of business). The determination as to which
party to a merger or consolidation is the "continuing" or "surviving"
corporation shall be made on the basis of the relative equity interests of the
shareholders in the corporation existing after the merger or consolidation, as
follows: if following any merger or reorganization, the holders of outstanding
voting securities of Company immediately prior to the merger or consolidation
beneficially own fifty percent (50%) or more of the voting power of the entity
existing following the merger or consolidation, then for purposes of this
Agreement, Company shall be the survivor or continuing corporation. In making
the determination of beneficial ownership by the shareholders of a corporation
immediately after the merger or consolidation, of equity securities which the
shareholders owned immediately before the merger or consolidation, shares which
they beneficially owned as shareholders of another party to the transaction
shall be disregarded.
17
"Acquiring Person" shall mean any individual, corporation,
partnership, limited liability company or other entity or group other than Xxxx
Xxxxx or any other of the Saban Entities, Employee or Company or any of its
wholly-owned subsidiaries.
"Beneficial Ownership" shall be determined pursuant to Rule 13d-3 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as in effect on the date of this Agreement.
(b) If, in the event of a Change of Control of Company, any Acquiring
Person or other person or group proposing to acquire control of Company and/or
the business of Company (the "Proposed Acquiror") objects to any of the terms of
this Agreement, Employee agrees to negotiate in good faith with Company to amend
this Agreement in such manner as to make it acceptable to the Proposed Acquiror.
Xxxx Xxxxx and Company shall in any event use their best efforts to cause the
Proposed Acquiror to accept the terms of this Agreement.
13. ARBITRATION.
(a) The terms of this Paragraph 13 contain the sole and exclusive method,
means and procedure to resolve any and all claims, disputes or disagreements
arising under this Agreement, except those arising under the provisions of
Paragraph 8, above. The parties irrevocably waive any and all rights to the
contrary and shall at all times conduct themselves in accordance with the terms
of this Paragraph 13; any attempt to circumvent the terms of this Paragraph 13
shall be null and void and of no force or effect.
(b) Within ten (10) days after delivery of written notice (the "Notice of
Dispute") of the existence and nature of any dispute given by any party to the
other party, and unless otherwise provided herein in any specific instance, the
parties shall each (i) appoint one (1) lawyer actively engaged in the licensed
and full time practice of law in the County of Los Angeles for a continuous
period immediately preceding the date of delivery (the "Dispute Date") of the
Notice of Dispute of not less than ten (10) years, but who has at no time ever
represented or acted on behalf of any of the parties, and (ii) deliver written
notice of the identity of such lawyer and a copy of his or her written
acceptance of such appointment and acknowledgment of and agreement to be bound
by the time constraints and other terms of this Paragraph 13 (the "Acceptance")
to the other party hereto. In the event that any party fails to so act, that
party's arbitrator shall be appointed pursuant to the same procedure that is
followed when agreement cannot be reached as to the third arbitrator. Within ten
(10) days
18
after such appointment and notice, such lawyers shall appoint a third lawyer
(who, together with the first two (2) lawyers, shall hereinafter be referred to
collectively as the "Arbitration Panel") of the same qualification and
background as the first two (2) lawyers (including the qualification that he or
she has at no time ever represented or acted on behalf of any of the parties)
and shall deliver written notice of the identity of such lawyers and a copy of
his or her written Acceptance of such appointment to each of the parties. If
agreement cannot be reached on the appointment of a third lawyer within such
period, such appointment and notification shall be made as rapidly as possible
by any court of competent jurisdiction, by any licensing authority, agency or
organization having jurisdiction over such lawyers, by any professional
association of lawyers in existence for not less than ten (10) years at the time
of such dispute or disagreement and the geographical membership boundaries of
which extend to the County of Los Angeles, or by any arbitration association or
organization in existence for not less than ten (10) years at the time of such
dispute or disagreement and the geographic boundaries of which extend to the
County of Los Angeles, as determined by the party giving such Notice of Dispute
and simultaneously confirmed in writing delivered by such party to the other
party. Any such court, authority, agency, association or organization shall be
entitled either to directly select such third lawyer or to designate in writing
delivered to each of the parties an individual who shall do so. In the event of
any subsequent vacancies or inabilities to perform among the Arbitration Panel,
the lawyer or lawyers involved shall be replaced in accordance with the terms of
this Paragraph 13 as if such replacement was an initial appointment to be made
under this Paragraph 13 within the time constraints set forth in this Paragraph
13, measured from the date of notice of such vacancy or inability to the person
or persons required to make such appointment, with all attendant consequences of
failure to act timely if such appointment is not so made. Unless the parties
shall otherwise agree, all arbitration proceedings shall be conducted at such
location within Los Angeles County as the members of the Arbitration Panel shall
by majority vote from time to time designate.
(c) Consistent with the terms of this Paragraph 13, the members of the
Arbitration Panel shall utilize their utmost skill and shall apply themselves
diligently so as to hear and decide, by majority vote, the outcome and
resolution of any dispute or disagreement submitted to the Arbitration Panel as
promptly as possible, but in any event on or before the expiration of sixty (60)
days after the appointment of the members of the Arbitration Panel. None of the
members of the Arbitration Panel shall have any
19
liability whatsoever for any acts or omissions performed or omitted in good
faith pursuant to the provisions of this Article.
(d) The Arbitration Panel shall (i) enforce and interpret the rights and
obligations set forth in this Agreement to the extent not prohibited by law,
(ii) fix and establish any and all rules as it shall consider appropriate in its
sole and absolute discretion to govern the proceedings before it, including any
and all rules of discovery, procedure and/or evidence, provided however, that
such rules shall be consistent with such rules established by the American
Arbitration Association and (iii) make and issue any and all orders, final or
otherwise, and any all awards, as a court of competent jurisdiction sitting at
law or in equity could make and issue and as it shall consider appropriate in
its sole and absolute discretion, including the awarding of monetary damages
(but specifically excluding the awarding of consequential, punitive or exemplary
damages or the awarding of attorneys' fees and costs to either party) to the
prevailing party as determined by the Arbitration Panel in its sole and absolute
discretion, and the issuance of injunctive relief.
(e) The decision of the Arbitration Panel shall be final and binding, and
may be confirmed and entered by any court of competent jurisdiction at the
request of any party and may not be appealed to any court of competent
jurisdiction or otherwise, except upon a claim of fraud on the part of any
member of the Arbitration Panel (except as to the arbitrator chosen by the party
claiming the fraud), or on the basis of a manifest error as to the applicable
law. The Arbitration Panel shall retain jurisdiction over any dispute until its
award has been implemented, and judgment on any such award may be entered in any
court having appropriate jurisdiction and may be enforced against either party
and its assets pursuant to applicable laws and procedures.
(f) Each member of the Arbitration Panel (i) shall be compensated for any
and all services rendered under this Paragraph 13 at a rate of compensation
equal to the sum of Two Hundred Fifty Dollars ($250.00) per hour, which sum
shall be increased each year in accordance with annual increases in the Consumer
Price Index for Urban Wage Earners and Clerical Workers, Los Angeles-Anaheim-
Xxxxxxxxx, Xxxxxxxxxx 0000-00 = 100 ("CPI"), and (ii) shall be reimbursed for
any and all expenses incurred in connection with the rendering of such services,
payable in full promptly upon conclusion of the proceedings before the
Arbitration Panel. Such compensation and reimbursement shall be borne by the
non-prevailing party as determined by the Arbitration Panel in its sole and
absolute discretion, unless the Arbitration Panel does not make a determination
that one of the parties is the prevailing party, in
20
which case the parties shall bear the cost as fixed by the Arbitration Panel.
14. INDEMNIFICATION. Concurrent with the execution and delivery of this
Agreement, Company and Employee have entered into an Indemnification Agreement,
pursuant to which, inter alia, Company has agreed, on the terms and conditions
----- ----
therein set forth, to indemnify Employee against certain claims arising by
reason of the fact that he is or was an officer or director of Company.
15. GENERAL.
(a) Assignment; Successors; Affiliates. Company may assign this
Agreement (or the interest of Company therein) to any affiliate of Company or to
any entity which is a party to a merger, reorganization, or consolidation with
Company or to a subsidiary of Company or to an entity or entities acquiring
substantially all of the assets of Company or of any division with respect to
which Employee is providing services (providing any such assignee assumes
Company's obligations under this Agreement). Employee shall, if requested by
Company, perform Employee's services and duties, as specified in this Agreement,
to or for the benefit of any subsidiary or other affiliate of Company. Upon such
assignment, acquisition, merger, consolidation, or reorganization, the term
"Company" as used herein shall be deemed to refer to such assignee or such
successor entity. Employee shall not have the right to assign Employee's
interest in this Agreement, any rights under this Agreement or any duties
imposed under this Agreement nor shall Employee (or Employee's spouse, heirs,
beneficiaries, administrator's or executors) have the right to pledge,
hypothecate or otherwise encumber Employee's right to receive compensation
hereunder without the consent of Company.
(b) Headings. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of its
provisions.
(c) Severability. It is agreed that if any term, covenant,
provision, paragraph or condition of this Agreement shall be illegal, such
illegality shall not invalidate the whole Agreement but it shall be construed as
if not containing the illegal part, and the rights and obligations of the
parties shall be construed and enforced accordingly.
(d) Entire Agreement. The parties hereto agree that this Agreement
supersedes all existing agreements between Company and Employee, whether oral,
written, expressed or implied, and contains
21
the entire understanding and agreement between the parties. This Agreement shall
not be amended, modified, or supplemented in any respect except by a subsequent
written agreement entered into by both parties hereto.
(e) Choice of Law. This Agreement and the performance hereunder
shall be construed in accordance with and under and pursuant to the internal
substantive laws of the State of California applicable to agreements fully
executed and to be performed entirely in such state.
(f) Notices. All communications and notices hereunder shall be in
writing and shall be deemed to have been duly given and delivered personally if
sent by united States registered or certified mail, postage prepaid:
If to Company: Saban Entertainment, Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxx
With a copy to:
Xxxxxxx X. Xxxxx, Esq.
Attorney
0000 Xxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
If to Employee:
Xxx Xxxxx
or to such other addresses as my be designated in writing by either of the
parties.
(g) No Joint Venture. Nothing herein contained shall constitute a
partnership between or joint venture by the parties hereto or appoint any party
the agent of any other party. No party shall hold itself out contrary to the
terms of this paragraph and, except as otherwise specifically provided herein,
no party shall become liable for the representation, act or omission of any
other party. This Agreement is not for the benefit of any third party who is not
referred to herein and shall not be deemed to give any right or remedy to any
such third party.
22
(h) Contractual Nomenclature. All reference herein to "Dollars" or
"$" shall mean Dollars of the United States of America, its legal tender for all
debts public and private. Where used herein and to the extent appropriate, the
masculine, feminine or neuter gender shall include the other two genders, the
singular shall include the plural, and the plural shall include the singular.
(i) Time of Essence. Time is of the essence of each provision in
this Agreement in which time is an element.
(j) No Adverse Construction. The rule that a contract is to be
construed against the party drafting the contract is hereby waived, and shall
have no applicability in construing this Agreement or the terms of this
Agreement.
* * *
IN WITNESS WHEREOF, Company and Employee have executed this Agreement as of
the 1st day of June 1994.
SABAN ENTERTAINMENT, INC.
By \s\ Xxxx Xxxxx
-------------------------------------------------
\s\ Xxx Xxxxx
--------------------------------------------------
XXX XXXXX
23
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement (the "Amendment") is made and
entered into as of September 26, 1996, by and between Saban Entertainment,
Inc., a Delaware corporation ("SEI") and Xxx Xxxxx ("Xxxxx").
R E C I T A L S
----------------
X. Xxxxx and SEI are parties to that certain Employment Agreement,
dated as of June 1, 1994 (the "Agreement"). All terms defined in the Agreement
which are not defined in this Amendment shall have the same meanings when used
in this Amendment.
B. The parties hereto desire to amend the Agreement from and after
the effective date of the initial public offering (the "Initial Public
Offering") of Fox Kids Worldwide, Inc., a Delaware corporation ("Fox Kids
Worldwide").
A G R E E M E N T
-----------------
NOW, THEREFORE, in consideration of the foregoing facts, the parties hereto
agree that from and after the effective date of the Initial Public Offering, the
following sections are amended as follows:
1. Expiration of Stock Option. From and after the effective date of the
--------------------------
Initial Public Offering, Paragraph 5(f)(i) of the Agreement is amended by adding
the following sentence at the end of such Paragraph.
"As long as the option is not earlier exercised or terminated in
accordance with the terms of this Agreement, the option shall expire on June 1,
2004."
2. Termination of Option. From and after the effective date of the
---------------------
Initial Public Offering, Paragraph 5(f)(xii)(D) of the Agreement shall terminate
and be of no further force or effect.
3. Effect of Amendment. Except as expressly modified herein, all terms
-------------------
of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
SABAN ENTERTAINMENT, INC.
By: /s/ Xxxx Xxxxx
________________________________________
Its: Chairman and Chief Executive Officer
________________________________________
XXX XXXXX
/s/ Xxx Xxxxx
________________________________________
