Re: Amended and Restated Employment Agreement
Exhibit 10.61
December 15, 2008
Mr. Xxxxx Xxxxx
| Re: | Amended and Restated Employment Agreement
|
Dear Xxxxx:
On behalf of Lions Gate Films Inc. (the “Company”), this letter is to confirm the terms of
your employment by the Company. We refer to you herein as “Employee.” The employment agreement
entered into as of April 1, 2006, between Employee and the Company (the “Prior Employment
Agreement”), is hereby amended and restated in its entirety. The terms of Employee’s employment
from the Effective Date (as defined below) are as follows:
1. The term of this agreement (this “Agreement”) will begin April 1, 2006 (the “Effective
Date”) and end March 31, 2009, subject to early termination as provided in this Agreement (the
“Term”). During the Term of this Agreement, Employee will serve as General Counsel and Executive
Vice President, Corporate Operations. Employee shall report to the CEO in his capacity as General
Counsel and to the COO, or person performing substantially such role in his capacity as Executive
Vice President, Corporate Operations. For the purpose hereof, Employee agrees that Xxxxx Xxxxx
performs such function. Employee shall render such services as are customarily rendered by persons
in Employee’s capacity in the motion picture industry and as may be reasonably requested by the
Company.
The Company may, at its sole discretion, extend the Term of this Agreement for an additional
year, commencing April 1, 2009 and ending March 31, 2010 (the “Option Year”) by giving notice to
Employee of its election to extend this Agreement at least one hundred eighty (180) days before
that date.
So long as this Agreement shall continue in effect, Employee shall devote Employee’s full
business time, energy and ability exclusively to the business, affairs and interests of the Company
and matters related thereto, shall use Employee’s best efforts and abilities to promote the
Company’s interests and shall perform the services contemplated by this Agreement in accordance
with policies established by the Company.
2. The following compensation will be paid to Employee during the Term of this Agreement:
(a) Base Salary. During the Term of this Agreement, the Company agrees to pay Employee
an annual Base Salary as follows:
For first year of the Term, the rate of $400,000 per year, payable in accordance with the
Company’s normal payroll practices in effect.
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For the remainder of the Term, the rate of $500,000 per year, payable in accordance with the
Company’s normal payroll practices in effect.
During the Option Year, the rate of $600,000 per year, payable in accordance with the
Company’s normal payroll practices in effect.
Nothing in this Agreement shall limit the Company’s right to modify its payroll practices, as
it deems necessary.
(b) Bonuses:
(i) An annual bonus at the full discretion of the CEO;
(ii) An annual bonus of 25% of Base Salary based upon Established Goals. The
Established Goals shall be set forth in writing at the beginning of each fiscal, and
shall be discussed in good faith between the Company and Employee; and
(iii) An annual bonus of 25% of Base Salary based upon the EBITDA of the
Company on a most favored nation (“MFN”) basis with any person receiving an EBITDA
based bonus. For the sake of clarity, the MFN basis applies to the definition of
EBITDA, the EBITDA target, and the percentages of Base Salary payable at various
levels of the EBITDA target.
(iv) Employee must be employed with the Company through the last day of the
bonus year to be eligible to receive an annual bonus pursuant to the foregoing
provisions of this Section 2(b) for that year, and any such bonus will be paid
within the “short-term deferral” period provided under Treasury Regulation Section
1.409A-1(a)(4) (generally within two and one-half months after the end of the fiscal
year for which the bonus is paid).
(v) Change of Control Bonus: For the purposes of this Agreement, “Change of
Control” shall have the same meaning as set forth in the employment agreement of
Xxxxxxx Xxxxx, dated as of September 1, 2003. The Company shall pay Employee a Bonus
of $1,000,000 upon a Change of Control (the “Change of Control Bonus”).
Notwithstanding anything to the contrary, the Change of Control Bonus shall vest
100% if discussions relating and leading to a Change of Control commence during the
Term hereof, whether or not the Change of Control is actually consummated after the
Term or the termination hereof. However, the Change of Control Bonus shall become
unvested and not be payable if the principal agreement giving rise to the Change of
Control is not signed within one (1) year following Employee’s termination of
employment. Subject to the foregoing provisions, the Change of Control Bonus shall
be paid in cash in a lump sum within ten (10) days following the closing of the
Change of Control that triggers such bonus payment.
(vi) Two Past Services Bonuses: The first in the amount of $100,000,
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which shall be paid April 3, 2006; and the Second in the amount of $125,000
which shall be paid April 3, 2007. These Bonuses shall not be applicable against any
other bonus payable pursuant to this Agreement and shall not be counted as any
portion of Employee’s bonus for the fiscal year 2006.
3. As an employee of the Company, Employee will continue to be eligible to participate in all
benefit plans, including Senior Management Plans, to the same extent as other employees, subject to
the terms of such plans.
4. Employee shall be entitled to take paid time off without a reduction in salary, subject to
(i) the approval of Employee’s supervisor, and (ii) the demands and requirements of Employee’s
duties and responsibilities under this Agreement. There are no paid vacation days. Finally,
Employee will be eligible to be reimbursed for any business expenses in accordance with the
Company’s current Travel and Entertainment policy. The forgoing notwithstanding, Employee’s travel
and entertainment shall be on a MFN basis with all other Presidents of Divisions.
5. The Company shall request that the Compensation Committee of Lions Gate (“CCLG”) authorize
and grant Employee 100,000 common share units (“Grants”) of Lions Gate Entertainment Corp. in
accordance with the terms and conditions of the existing and/or future Employee Stock Plan
(“Plan”). Employee acknowledges that this Grant of stock is subject to the approval of the CCLG.
The award date (“Award Date”) shall be the date of the board meeting when the Grant is approved.
The Grant shall vest as follows:
50% on March 31, 2008 and 50% on March 31, 2009
When the Company obtains an additional allotment of shares under the Plan, the Company shall
grant Employee 25,000 common share units (the “Further Grants”) of Lions Gate Entertainment Corp.
in accordance with the terms and conditions of the Plan. The Further Grants shall vest as follows:
50% on March 31, 2008 and 50% on March 31, 2009
If the Company does not obtain an additional allotment of shares, then it shall pay Employee
in cash the value of such Further Grants on the date such Further Grants were to have vested.
If any employee’s stock options or shares that are issued under the Plan accelerate in vesting
schedule as a result of a Change of Control, Employee’s previously granted stock options, Further
Grants, and shares issued hereunder shall likewise accelerate in vesting schedule.
For the sake of clarity, all options granted under Employee’s prior employment agreement
(other than the Prior Agreement, as defined herein) shall continue to vest in accordance with the
terms of such prior agreement.
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Employee represents and warrants that, during the Term hereof, Employee shall hold at least
5000 shares of common shares of the Company.
6. Employee agrees that the Company Employee Handbook outlines other policies, which will
apply to Employee’s employment, and Employee acknowledges receipt of such handbook. Please note,
however, that the Company retains the right to revise, modify or delete any policy or benefit plan
it deems appropriate.
7. This Agreement shall terminate upon the happening of any one or more of the following
events:
(a) The mutual written agreement between the Company and Employee; or
(b) The death of Employee. However, in the event of the death of Employee, all granted shares
and stock options shall immediately vest; or
(c) Employee’s having become so physically or mentally disabled as to be incapable, even with
a reasonable accommodation, of satisfactorily performing his duties hereunder for a period of
ninety (90) days or more, provided that Employee has not cured such disability within ten (10) days
of written notice; or
(d) The determination on the part of the Company that “Cause” exists for termination of this
Agreement, with “Cause” being defined as any of the following: 1) Employee’s conviction of a felony
or plea of nolo contendere to a felony, except in connection with a traffic violation; 2)
Employee’s commission, by act or omission, of any material act of dishonesty in the performance of
Employee’s duties hereunder; 3) material breach of this Agreement by Employee causing material harm
to the Company; or 4) any act of misconduct by Employee having a substantial adverse effect on the
business or reputation of the Company.
(e) Employee is terminated Without Cause. Termination “Without Cause” shall be defined as
Employee being terminated by the Company for any reason other than as set forth in Sections
7(a)-(d) above. In the event of a termination Without Cause, Employee shall be entitled to receive
(i) 50% of the amount of the Base Salary which Employee would have been entitled to receive for the
period commencing on the date of such termination and ending on the last day of the Term (or, if
such termination occurs during the Option Year, the last day of the Option Year) had Employee
continued to be employed with the Company through such date, such payment to be made, subject to
Section 13, in cash in a lump sum as soon as practicable after (and in all events not more than two
and one-half (2 1/2) months after) the date of Employee’s Separation from Service with the Company,
and (ii) all bonuses pursuant to Section 2 (other than the Change of Control Bonus, which shall
vest and be payable as set forth in Section 2(b)(v)), shall be paid on a prorated basis for the
year of termination of employment in proportion to the amount of such year worked by Employee (such
bonus(es) to be paid at the times provided in Section 2(b)(iv)) and shall not become payable in
years subsequent to the year of termination of employment. The Company’s payment of the amounts
described above in this Section 7(e) shall relieve the Company of any and all obligations to
Employee. As used herein, a “Separation from Service” occurs when Employee dies, retires, or
otherwise has a termination of employment with
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the Company that constitutes a “separation from service” within the meaning of Treasury
Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available
thereunder.
(f) The forgoing notwithstanding, if Employee’s employment with the Company is not terminated
contemporaneous with a Change of Control, but is terminated subsequent thereto Without Cause or by
Employee for “Good Reason” (as defined below), then Employee shall be entitled to receive (in
addition to any rights to accelerated vesting of equity awards under Section 5 hereof) (i) 100% of
the amount of the Base Salary which Employee would have been entitled to receive for the period
commencing on the date of such termination and ending on the last day of the Term (or, if such
termination occurs during the Option Year, the last day of the Option Year) had Employee continued
to be employed with the Company through such date, such payment to be made, subject to Section 13,
in cash in a lump sum as soon as practicable after (and in all events not more than two and
one-half (2 1/2) months after) the date of Employee’s Separation from Service with the Company, and
(ii) all bonuses pursuant to Section 2 shall be paid at the times provided in Section 2(b). The
Company’s payment of the amounts described above in this Section 7(f) shall relieve the Company of
any and all obligations to Employee. For purposes hereof, “Good Reason” shall mean any material
diminution by the Company in Employee’s responsibilities as measured against Employee’s
responsibilities prior to the Change of Control; provided, however, that any such condition shall
not constitute “Good Reason” unless both (x) Employee provides written notice to the Company of the
condition claimed to constitute Good Reason within ninety (90) days of the initial existence of
such condition, and (y) the Company fails to remedy such condition within thirty (30) days of
receiving such written notice thereof; and provided, further, that in all events the termination of
Employee’s employment with the Company shall not be treated as a termination for “Good Reason”
unless such termination occurs not more than one (1) year following the initial existence of the
condition claimed to constitute “Good Reason.” For these purposes, if the Company is purchased by a
larger entity, it shall not be considered a material diminution in responsibility if Employee is
made either (i) General Counsel or (ii) EVP, Operations of that larger entity. However, it shall be
considered a material diminution in responsibility if Employee is required to report to another
person performing a legal role in such larger entity, General Counsel or otherwise, unless Employee
consents.
(g) In the event that this Agreement is terminated pursuant to any of Sections 7(a)-(d)
above, neither the Company nor Employee shall have any remaining duties or obligations hereunder,
except that the Company shall pay to Employee only such compensation as is earned under Section 2
as of the date of Employee’s termination of employment with the Company.
8. Employee’s services shall be exclusive to the Company during the Term. Employee shall
render such services as are customarily rendered by persons in Employee’s capacity in the motion
picture industry and as may be reasonably requested by the Company. Employee hereby agrees to
comply with all reasonable requirements, directions and requests, and with all reasonable rules and
regulations made by the Company in connection with the regular conduct of its business; to render
services during Employee’s employment hereunder whenever and wherever and as often as the Company
may reasonably require in a competent, conscientious and professional manner, and as instructed by
the Company in all matters, including those
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involving artistic taste and judgment, but there shall be no obligation on the Company to
cause or allow Employee to render any services, or to include all or any of Employee’s work or
services in any motion picture or other property or production.
9. Employee agrees that the Company shall own all rights of every kind and character
throughout the universe, in perpetuity to any material and/or idea suggested or submitted by
Employee or suggested or submitted to Employee by a third party that occurs during the Term or any
other period of employment with the Company, its parent, affiliates, or subsidiaries that are
within the scope of Employee’s employment and responsibilities hereunder. Employee agrees that
during the Term and any other period of employment with the Company, its parent, affiliates, or
subsidiaries, the Company shall own all other results and proceeds of Employee’s services that are
related to Employee’s employment and responsibilities. Employee shall promptly and fully disclose
all intellectual property generated by the Employee during the Term and any other period of
employment with the Company, its parent, affiliates, or subsidiaries in connection with his
employment hereunder. All copyrightable works that Employee creates in connection with his
obligations under this Agreement and any other period of employment with the Company, its parent,
affiliates, or subsidiaries shall be considered “work made for hire” and therefore the property of
the Company. To the extent any work so produced or other intellectual property so generated by
Employee is not deemed to be a “work made for hire,” Employee hereby assigns and agrees to assign
to the Company (or as otherwise directed by the Company) Employee’s full right, title and interest
in and to all such works and other intellectual property. Employee agrees to execute any and all
applications for domestic and foreign copyrights or other proprietary rights and to do such other
acts (including without limitation the execution and delivery of instruments of further assurance
or confirmation) requested by the Company to assign the intellectual property to the Company and to
permit the Company to enforce any copyrights or other proprietary rights to the intellectual
property. Employee will not charge the Company for time spent in complying with these obligations.
This Section 9 shall apply only to that intellectual property which related at the time of
conception to the Company’s then current or anticipated business or resulted from work performed by
Employee for the Company. Employee hereby acknowledges receipt of written notice from the Company
pursuant to California Labor Code Section 2872 that this Agreement (to the extent it requires an
assignment or offer to assign rights to any invention of Executive) does not apply fully to an
invention which qualifies fully under California Labor Code Section 2870.
10. Employee shall not assign any of his rights or delegate any of his duties under this
Agreement.
11. The parties acknowledge and agree that during the Term of this Agreement and in the course
of the discharge of his duties hereunder and at any other period of employment with the Company,
its parent, affiliates, or subsidiaries, Employee shall have and has had access to information
concerning the operation of the Company and its affiliated entities, including without limitation,
financial, personnel, sales, planning and other information that is owned by the Company and
regularly used in the operation of the Company’s business and (to the extent that such confidential
information is not subsequently disclosed) that this information constitutes the Company’s trade
secrets. Employee agrees that he shall not disclose any such trade secrets, directly or indirectly,
to any other person or use them in any way, either during the Term of this
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Agreement or at any other time thereafter, except as is required in the course of his
employment for the Company. Employee shall not use any such trade secrets in connection with any
other employment and/or business opportunities following the Term. In addition, Employee hereby
expressly agrees that Employee will not disclose any confidential matters of the Company that are
not trade secrets prior to, during or after Employee’s employment including the specifics of this
Agreement. Employee shall not use any such confidential information in connection with any other
employment and/or business opportunities following the Term. In addition, in order to protect the
Confidential Information, Employee agrees that during the Term and for a period of two (2) years
thereafter, Employee will not, directly or indirectly, induce or entice any other executive of the
Company to leave such employment or cause anyone else to leave such employment.
12. Any dispute, controversy or claim arising out of or in respect to this Agreement (or its
validity, interpretation or enforcement), the employment relationship or the subject matter hereof
shall at the request of either party be submitted to and settled by binding arbitration conducted
before a single arbitrator in Los Angeles in accordance with the Federal Arbitration Act, to the
extent that such rules do not conflict with any provisions of this Agreement. Said arbitration
shall be under the jurisdiction of Judicial Arbitration and Mediation Services, Inc. (“JAMS”) in
Los Angeles, California. All such actions must be instituted within one year after the controversy
or claim arose or forever be waived. Failure to institute an arbitration proceeding within such
period shall constitute an absolute bar to the institution of any proceedings respecting such
controversy or claim, and a waiver thereof. The arbitrator shall have the authority to award
damages and remedies in accordance with applicable law. Any award, order of judgment pursuant to
such arbitration shall be deemed final and binding and may be entered and enforced in any state or
federal court of competent jurisdiction. Each party agrees to submit to the jurisdiction of any
such court for purposes of the enforcement of any such award, order of judgment. The Company shall
pay for the administrative costs of such hearing and proceeding.
13. It is intended that any amounts payable under this Agreement and any exercise of authority
or discretion hereunder by the Company or Employee shall comply with Section 409A of the Code
(including the Treasury regulations and other published guidance relating thereto) (“Section 409A”)
so as not to subject Employee to payment of any interest or additional tax imposed under Section
409A. To the extent that any amount payable under this Agreement would trigger the additional tax
imposed by Section 409A, this Agreement shall be construed and interpreted in a manner to avoid
such additional tax yet preserve (to the nearest extent reasonably possible) the intended benefit
payable to Employee.
Notwithstanding any other provision herein, if Employee is a “specified employee” within the
meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Employee’s Separation from
Service, Employee shall not be entitled to any payment or benefit pursuant to Section 7(e) or 7(f)
above until the earlier of (i) the date which is six (6) months after his or her Separation from
Service for any reason other than death, or (ii) the date of Employee’s death. Any amounts
otherwise payable to Employee upon or in the six (6) month period following Employee’s Separation
from Service that are not so paid by reason of this paragraph shall be paid (without interest) as
soon as practicable (and in all events within thirty (30) days) after the date that is six (6)
months after Employee’s Separation from Service (or, if earlier, as soon as
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practicable, and in all events within thirty (30) days, after the date of Employee’s death).
The provisions of this paragraph shall only apply if, and to the extent, required to avoid the
imputation of any tax, penalty or interest pursuant to Section 409A of the Code.
Any reimbursements made to Employee hereunder will be made in accordance with the Company’s
reimbursement policies, practices and procedures in effect from time to time. To the extent that
any reimbursements pursuant to Section 4 of this Agreement are taxable to Employee, any
reimbursement payment due to Employee pursuant to such provision shall be paid to Employee on or
before the last day of Employee’s taxable year following the taxable year in which the related
expense was incurred. The benefits and reimbursements pursuant to such provision are not subject to
liquidation or exchange for another benefit and the amount of such benefits and reimbursements that
Employee receives in one taxable year shall not affect the amount of such benefits or
reimbursements that Employee receives in any other taxable year
14. This Agreement expresses the binding and entire agreement between Employee and the Company
and shall replace and supersede all prior arrangements and representations, either oral or written,
as to the subject matter hereof (including, without limitation, the Prior Employment Agreement,
except as expressly provided herein). All modifications or amendments to this Agreement must be in
writing, signed by both parties.
Please acknowledge your confirmation of the above terms by signing below where indicated and
returning this letter to me. If you have any questions relating to the matters described in this
letter, please call at (310) 255-XXXXx.
Very truly yours,
| LIONS GATE FILMS, INC. | ||||
By:
|
/s/ Xxxxx Xxxxx
President and Co-Chief Operating Officer |
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| AGREED AND ACCEPTED | ||||
By:
|
/s/ Xxxxx Xxxxx
|
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