Exhibit 10.65
KEY EXECUTIVE SEVERANCE AGREEMENT
This Key Executive Severance Agreement (the "Agreement") is dated as of
September 22, 1999, and is made by and between NewStar Media Inc., a California
corporation (the "Company"), and Xxxx X. Xxxxx who is presently Vice President
and Chief Financial Officer of the Company (the "Executive").
WITNESSETH:
WHEREAS:
A. The Executive is Vice President and Chief Financial Officer of the
Company and an integral part of the Company's management.
B. The Company wishes to assure both itself and the Executive of
continuity of management generally, including continuity of management in the
event of any actual change in control of the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and in further consideration of services performed and to be performed
by Executive for the Company, it is hereby agreed by and between the parties as
follows:
1. COMPANY'S RIGHT TO TERMINATE. The Company may not terminate the
Executive's employment unless, to the extent provided for herein, the Company
provides the benefits hereinafter specified in accordance with the terms hereof.
2. EVENT. For Purposes of this Agreement, an "Event" shall mean any of
the following:
(1) Approval by the shareholders or the Board of
Directors of the Company of the dissolution or
liquidation of the Company;
(2) Approval by the shareholders or the Board of
Directors of the Company of an agreement to merge or
consolidate, or otherwise reorganize, with or into
one or more entities, as a result of which less than
50% of the outstanding voting securities of the
surviving or resulting entity are, or are to be,
owned by former shareholders of the Company;
(3) Approval by the shareholders or the Board of
Directors of the Company of the sale of 50% or more
of the Company's business and/or assets or the
Company's publishing business and/or assets to a
person or entity which is not a Subsidiary; or
(4) A Change in Control. A "Change in Control" shall be
deemed to have occurred if (A) any "person" (as such
term is used in Sections 13 (d) and 14 (d) of the
Exchange Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under he Exchange Act),
directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power
of the Company's then outstanding securities; or (B)
during any period of two consecutive years,
individuals who at the beginning of such period
constitute the Board of Directors cease for any
reason to constitute at least a majority thereof.
3. CERTAIN BENEFITS UPON OCCURRENCE OF EVENT. Upon the occurrence of an
Event, any and all options to purchase common stock that were granted to the
Executive on or prior to the date of such Event (the "Options") shall become
immediately exercisable to the full extent theretofore not exercisable.
Notwithstanding anything to the contrary contained in any agreement pursuant to
which any Options may have been granted (including, without limitation, any
stock option or similar plan of the Company) (a "Stock Option Agreement") if an
Event shall have occurred, any and all Options shall not terminate or expire and
shall remain exercisable for the longer of (i) the one year period following the
date of such Event (whether or not the Executive shall remain employed by the
Company) and (ii) the period provided in the applicable Stock Option Agreement.
4. CERTAIN BENEFITS UPON TERMINATION OF EMPLOYMENT.
(a) If an Event shall have occurred, and there is a
Termination of the Employment of the Executive in
anticipation of such Event or within one (1) year
after the occurrence of such Event, the Executive
shall be entitled to receive the benefits provided in
Section 4(b) hereof.
(b) If there is a Termination of the Employment of the
Executive as provided in Section 4(a) hereof, the
Executive shall be entitled to the following
benefits:
(i) The Company shall pay the Executive his full
employment compensation through the Date of
Termination at the rate in effect at the
time Notice of Termination; and
(ii) The Company shall pay the Executive, on the
Date of Termination, a lump sum payment
equal to his full employment compensation
for a one-year period at the rate in effect
at the time Notice of Termination is given.
(c) The phrase "Termination of the Employment" of the
Executive for purposes of this Agreement shall mean:
(i) Termination by the Company of the employment
of the Executive for any reason other than
death, Disability or for Cause as defined
below; or
(ii) Termination by the Executive of his
employment with the Company within six (6)
months of the occurrence of any of the
following events:
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(A) The assignment to the Executive of
any duties materially inconsistent
with his positions, duties,
responsibilities and status with
the Company immediately prior
thereto, or a material change in
the Executive's reporting
responsibilities, titles or offices
as in effect immediately prior
thereto, or any removal of the
Executive from or any failure to
appoint the Executive to any of
such positions, except in
connection with the termination of
the Executive's employment due to
death, Disability or for Cause;
(B) A reduction by the Company in the
Executive's compensation as in
effect on the date hereof or as the
same may be increased from time to
time;
(C) Subsequent to an Event, the failure
by the Company to continue in
effect any benefit or compensation
plan, stock ownership plan, stock
purchase plan, stock option plan,
life insurance plan,
health-and-accident plan or
disability plan in which the
Executive is participating at the
time of an Event (or plans
providing him with substantially
similar benefits), or the taking of
any action by the Company which
would materially adversely affect
the Executive's benefits under any
of such plans or deprive the
Executive of any fringe benefit
enjoyed by him at the time of the
Event;
(D) Any purported termination of the
Executive's employment which is to
be effected pursuant to a Notice of
Termination satisfying the
requirements of Section 4(f) below;
and for purposes of this Agreement,
no such purported termination shall
be effective.
(d) The words "Disability" and "Cause" for
purposes of this Agreement shall mean:
(i) DISABILITY. Termination by the
Company of the Executive's
employment based on "Disability"
shall mean termination because of
the Executive's absence from his
duties with the Company (or its
subsidiaries) on a full-time basis
for 130 consecutive business days,
as a result of incapacity due to
physical or mental illness, unless
within thirty (30) days after
Notice of Termination (as
hereinafter defined) is given
following such absence the
Executive shall have returned to
the regular performance of his
duties.
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(ii) CAUSE. Termination by the Company
of the Executive's employment for
"Cause" shall mean termination upon
(A) the willful and continued
failure by Executive to
substantially perform his duties
with the Company (or its
subsidiaries) other than any such
failure resulting from his
incapacity due to physical or
mental illness, after a demand for
substantial performance is
delivered to the Executive by the
Chief Executive Officer of the
Company, which specifically
identifies the manner in which the
Executive has not substantially
performed his duties, or (B) the
willful engaging by the Executive
in misconduct which is materially
injurious to the Company (or its
subsidiaries), monetarily or
otherwise, and that constitutes on
the part of the Executive common
law fraud or a felony.
(e) Any purported termination by the Company
pursuant to Sections 4(c)(i) or 4(d) above,
or by the Executive pursuant to Section
4(c)(ii) shall be communicated by written
Notice of Termination to the other party
hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice
which shall indicate the specific
termination provision in this Agreement
relied upon and shall set forth in
reasonable detail the facts and
circumstances claimed to provide a basis for
termination of the Executive's employment
under the provision so indicated.
(f) "Date of Termination" shall mean (i) if the
Executive's employment is terminated for
Disability, thirty (30) days after Notice of
Termination is given (provided that the
Executive shall not have returned to the
performance of his duties on a regular basis
during such thirty (30) day period), and
(ii) if the Executive's employment is
terminated for any other reason, the date on
which a Notice of Termination is given.
5. MITIGATION OF DAMAGES. The Executive shall not be required to
mitigate the amount of any payment provided for in Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
Section 4 be reduced by any compensation earned by the Executive as the result
of employment by or consultancy to another employer after the Date of
Termination, or otherwise.
6. SUCCESSORS: BINDING AGREEMENT.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company or the publishing division of the Company, by
agreement in form and substance reasonably satisfactory to the
Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession
had taken place.
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(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should
die while any amount would still be payable to him hereunder
if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to his devisee, legatee or other
designee or, if there be no such designee, to his estate.
7. NOTICE. For the purpose of this Agreement, notices and all other
communication provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid.
8. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer as may be specifically
designated by the Board of Directors of the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provision or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement; it being understood that this Agreement shall not
provide or constitute any term of employment to the Executive, only certain
severance provisions in the case of termination under certain circumstances.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have agreed as set forth above.
NEWSTAR MEDIA INC.
/s/ Xxxxxxxx X. Xxxxx
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EXECUTIVE:
/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
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