1
[INERNATIONAL FAMILY ENTERTAINMENT* LETTERHEAD]
As of April 1, 1996
X. Xxxx Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx Xxxxx, XX 00000-4712
Dear Xxxx:
This letter will set forth the terms of the agreement between you and
International Family Entertainment, Inc. ("IFE"), regarding your employment
with IFE.
1. Employment
You will serve as IFE's Senior Vice President - International Business
Development, and as such you will report to and perform those duties which are
reasonably assigned to you by IFE's Board of Directors or such person or
persons as the Board of Directors may, from time to time, designate (the Board
of Directors and such person or persons, collectively referred to as
"Management"). You will perform full-time service on an exclusive basis for
IFE. Your principal base of employment shall be in Virginia Beach, Virginia,
U.S.A., or as Management shall otherwise reasonably determine. You acknowledge
that IFE is not required to actually utilize your services hereunder, but that
IFE's sole obligation shall be to pay you the compensation and provide you the
benefits set forth herein, subject to all the terms and conditions of this
Agreement.
2. Term
Your employment under this Agreement shall commence April 1, 1996, and, unless
sooner terminated pursuant to the terms of Paragraph 6 of this Agreement, shall
continue for an initial period of five (5) years (as completed or earlier
terminated, the "Initial Period"). Following the completion of the Initial
Period, unless thereupon terminated pursuant to the terms of this Paragraph 2,
your employment under this Agreement shall continue from year to year, subject
to earlier termination pursuant to the terms of Paragraph 6 of this Agreement
(each subsequent year, as completed or earlier terminated, a "Renewal Period,"
2
D. Xxxx Xxxxxx
As of April 1, 1996
Page 2
and together with the Initial Period, the "Term"). Either party may terminate
this Agreement as of the last day of the Initial Period or any Renewal Period
by giving the other party written notice of such termination not less than
thirty (30) days prior to such date. You acknowledge and agree that IFE has no
obligation to allow this Agreement to renew or to otherwise continue your
employment after expiration of the Initial Period or any Renewal Period, and
you expressly acknowledge that no promises or understandings to the contrary
have been made or reached. The terms of Paragraph 7(a) shall not apply to
IFE's termination of this Agreement pursuant to this Paragraph 2.
3. Base Compensation
As compensation for your services hereunder, IFE shall pay you, and you shall
accept, an initial annual base salary of Two Hundred Fifty Thousand Dollars
($250,000.00), less all appropriate deductions and withholdings, payable in
accordance with the schedule IFE may adopt or alter from time to time in its
discretion. Management shall review the financial condition and performance of
IFE and IFE's International Business Development ("IBD") division, and the
performance of your duties hereunder on at least an annual basis. Provided the
financial condition and performance of IFE and the IBD division and your
performance hereunder is within acceptable limits as established, from time to
time, by Management, your annual base salary may be increased, in Management's
discretion, on January 1 of each calendar year of the Term. For each Renewal
Period, your annual base salary shall be as determined by the Board; provided,
however, that in any event your annual base salary for any Renewal Period shall
be not less than your annual base salary for the final calendar year of the
Initial Period.
4. Bonus Structure
a. Annual Bonus. In accordance with the executive bonus plan established
by Management, as may be amended from time to time, in addition to
annual base salary, you shall be eligible to earn and receive an
annual bonus based on your achievement of certain goals during each
annual review period (which shall commence January 1 and conclude
December 31 of each calendar year of the Term). Within ninety (90)
days of the date of this Agreement, Management, with your
consultation,
3
D. Xxxx Xxxxxx
As of April 1, 1996
Page 3
shall establish reasonable goals for you and the IBD division to
achieve during the 1996 review period. During the first forty-five
(45) days of each subsequent annual review period of the Term,
Management, with your consultation, shall establish reasonable goals
for you and the IBD division to achieve during such review period.
In the event Management determines that the goals set for any annual
review period have been achieved, you shall be entitled to receive a
targeted bonus of twenty per cent (20%) of your base salary for such
calendar year, with the exact amount of such bonus to be determined in
the discretion of Management, subject to the terms of the executive
bonus plan then in effect. In the event Management determines that
the goals set for any annual review period have not been achieved
during such annual review period, you shall receive bonus compensation
for such year, if any, as Management, in its discretion, deems
appropriate.
b. Apportionment. For those periods of your employment which do not
coincide with the calendar year, the amount of the annual bonus shall
be prorated for the number of months you are in the employ of IFE
during such period.
c. Payment. Payment of the annual bonus shall be made no later than
March 31 of the year following the annual review period for which the
annual bonus is calculated.
5. Reimbursement for Expenses
The parties recognize that in the course of performing your duties hereunder,
you will necessarily incur expenses in connection with your duties for such
items as entertainment, traveling, hotels, and similar items. You shall be
entitled to have paid or be reimbursed all reasonable expenses (including, but
not limited to, expenses for first class airfare when traveling on business
internationally) so incurred by you in the performance of your duties
hereunder, subject to such requirements, procedures, and rules as may be
established by IFE for similarly situated executives from time to time in its
discretion, including, without limitation, the requirement of submission of
appropriate receipts for such expenses prior to reimbursement.
6. Termination
Either party shall have the right to terminate this Agreement, and the
employment relationship created hereunder, at any time, without cause, upon
thirty (30) days prior written notice to the other. IFE shall have the right
to terminate this Agreement, and your employment hereunder, at any time, for
4
D. Xxxx Xxxxxx
As of April 1, 1996
Page 4
cause, immediately upon written or oral notice to you. As used herein,
termination of this Agreement "for cause" shall mean termination due to your
willful breach of contract, habitual neglect of duties, or gross misconduct.
Except as otherwise specifically set forth herein, all benefits set forth in
this Agreement shall cease as of the last day of your employment hereunder.
7. Severance Payment
a. In the event IFE terminates this Agreement without cause at any time
during the Term, then IFE's sole obligation shall be to pay you (i)
for all accrued but unused vacation, which sum shall be paid to you,
less all appropriate deductions and withholdings, in a single payment
not more than thirty (30) days following the effective date of such
termination; and (ii) a severance payment equal to your then current
base salary for twenty-four (24) months, which shall be paid to you,
less all appropriate deductions and withholdings, in equal, bi-weekly
installments over a period of twenty-four (24) months.
b. In the event that you terminate this Agreement pursuant to Paragraph 6
of this Agreement, or IFE terminates this Agreement for cause at any
time during the Term, or this Agreement is not renewed by either party
pursuant to Paragraph 2 of this Agreement, then IFE's sole obligation
shall be to pay you for all accrued but unused vacation, which shall
be paid to you, less all appropriate deductions and withholdings, in a
single payment not more than thirty (30) days following the effective
date of such termination.
c. Notwithstanding any other provision of this Agreement to the contrary,
in the event of termination of this Agreement for any reason, you
agree that IFE may offset from any payment made under this Paragraph 7
any sums owed by you to IFE.
8. Other Benefits
a. Vacation. For each year of the Term of this Agreement, you will be
entitled to four (4) weeks vacation with pay, subject to IFE's normal
personnel policies regarding vacation for similarly situated
executives, as such policies may be modified from time to time in the
discretion of IFE.
b. Health Plans. IFE may, in its discretion, from time to time establish
and maintain employee health, medical, life, and disability insurance
benefit
5
D. Xxxx Xxxxxx
As of April 1, 1996
Page 5
plans. During the Term of this Agreement, your eligibility to
participate in such plans shall be governed by the generally
applicable terms and conditions of the particular plan, as such terms
and conditions may be amended from time to time in the discretion of
IFE.
c. 401(k) Plan. IFE may, in its discretion, from time to time, establish
and maintain, or participate in an affiliated company's, 401(k)
retirement plan. During the Term of this Agreement, your eligibility
to participate in such plan shall be governed by the generally
applicable terms and conditions of such plan, as such terms and
conditions may be amended from time to time in the discretion of IFE
or such affiliated company.
d. House Hunting Trip. In addition to any amounts otherwise payable
under this Agreement, IFE shall reimburse your reasonable,
out-of-pocket expenses incurred for airfare, lodging, meals, and
ground transportation for you and your spouse for up to two (2) weeks
of travel to Virginia Beach, Virginia, for the purpose of securing
housing, subject to IFE's normal personnel policies regarding
reimbursement for such expenses, as such policies may be modified from
time to time in the discretion of IFE.
e. Relocation Expenses. In addition to any amounts otherwise payable
under this Agreement, IFE shall reimburse your reasonable,
out-of-pocket expenses incurred to move your family and your family's
effects to Virginia (which expenses shall include, but not be limited
to, expenses incurred to transfer money from the United Kingdom to the
United States); provided, however, that such expenses shall be subject
to IFE's normal personnel policies regarding relocation expenses, as
such policies may be modified from time to time in the discretion of
IFE.
IFE shall also reimburse your reasonable, out-of-pocket expenses
incurred to move your family and your family's effects to the United
Kingdom in the event IFE elects not to renew this Agreement,
terminates this Agreement other than for cause, or you terminate this
Agreement for any reason within the first two (2) years of the Initial
Period. For the avoidance of doubt, such relocation expenses shall
include such reasonable legal costs you may incur in purchasing real
property in the United Kingdom upon relocation.
f. Housing Allowance. During the first twenty-four months of the Initial
Period, in addition to any amounts otherwise payable under this
Agreement, IFE shall pay you a housing allowance of Three Thousand
6
D. Xxxx Xxxxxx
As of April 1, 1996
Page 6
Five Hundred Dollars ($3,500.00) per month, subject to IFE's normal
personnel policies regarding housing allowances, as such policies may
be modified from time to time in the discretion of IFE.
g. Appliance Allowance. In addition to any amounts otherwise payable
under this Agreement, IFE shall reimburse your reasonable,
out-of-pocket expenses incurred to replace your audio, video, and
other household electronic equipment to the extent such equipment is
incompatible with the electrical and other technical standards
generally prevalent in the United States of America; provided,
however, that such expenses shall not exceed the sum of Five Thousand
Dollars ($5,000.00) and shall be subject to IFE's normal personnel
policies regarding reimbursement of such expenses, as such policies
may be modified from time to time in the discretion of IFE.
h. Car Allowance. During the first twenty-four months of the Initial
Period, in addition to any amounts otherwise payable under this
Agreement, IFE shall pay you a car allowance of Five Hundred Dollars
($500.00) per month, subject to IFE's normal personnel policies
regarding car allowances, as such policies may be modified from time
to time in the discretion of IFE.
i. Travel to the United Kingdom. During the first thirty (30) months of
the Initial Period, in addition to any amounts otherwise payable under
this Agreement, IFE shall reimburse your reasonable, out-of-pocket
expenses incurred for round-trip airfare and airport transfers for you
and your family for travel to the United Kingdom up to two (2) times
during such thirty (30) month period, subject to IFE's normal
personnel policies regarding reimbursement for such expenses, as such
policies may be modified from time to time in the discretion of IFE.
j. Additional Benefits. You expressly agree and acknowledge that
following the Term of this Agreement, you will be entitled to no
additional benefits except as otherwise specifically set forth in this
Agreement, and except as specifically provided under the benefit plans
referred to in this Paragraph 8 and those benefit plans in which you
may subsequently become a participant, subject in every case to the
terms and conditions of each such plan.
7
X. Xxxx Xxxxxx
As of April 1, 1996
Page 7
9. Duty to Mitigate; Offset
It is expressly agreed and understood that in the event of the termination of
this Agreement by IFE you shall have no affirmative duty to mitigate the
damages payable to you by IFE and further that no amounts actually earned or
accrued by you for employment or similar services during the period of time
subsequent to such termination will be offset against any amounts to which you
are otherwise entitled hereunder.
10. Non-Compete
You agree that in the event of IFE's termination of this Agreement for cause
pursuant to Paragraph 6 of this Agreement, you will not work for a direct
competitor of IFE within the United States of America for a period of twelve
(12) months, unless otherwise agreed in writing by IFE. Direct competitors
shall include other broadcast or satellite-delivered television networks and
television and motion picture production or distribution companies.
11. Remedy For Breach
Notwithstanding the agreement to settle disputes by arbitration as provided in
Paragraph 12 of this Agreement, both parties recognize that the services to be
rendered under this Agreement by you are special, unique, and of an
extraordinary character, and that in the event of a breach by you of any term
or condition of this Agreement, IFE shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction to
obtain the specific performance thereof by you, or to enjoin you from
performing services for any other person, firm, or corporation, during the
period herein contracted for, and nothing herein contained shall be construed
to prevent such remedy. In the event IFE institutes proceedings against you
pursuant to this Paragraph 10 and is the prevailing party, you shall pay to IFE
the amount of any fees (including reasonable attorneys' fees), costs, or
expenses incurred by IFE in the prosecution of any such proceeding.
12. Disputes
Except as provided in Paragraph 11 of this Agreement, any and all disputes,
controversies, or claims arising out of or relating to your employment or
cessation of employment with IFE shall be settled exclusively by final and
binding arbitration in Virginia Beach, Virginia, before an arbitrator selected
in accordance with the Employment Dispute Resolution Rules of the American
8
D. Xxxx Xxxxxx
As of April 1, 1996
Page 8
Arbitration Association ("AAA"). Such disputes include, but are not limited
to, claims arising under this Agreement as well as other employment-related
legal claims such as discrimination or tort. Any arbitration shall be
conducted in accordance with the Employment Dispute Resolution Rules of the
AAA.
13. Entire Agreement; Modification
Except as specifically referenced herein, this instrument contains the entire
Agreement between you and IFE with respect to the subject matter hereof and
supersedes all prior or contemporaneous understandings or agreements. This
Agreement may be altered only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, or discharge is
sought.
14. Choice of Law; Binding Effect
This Agreement shall be governed by and construed in accordance with the laws
of the Commonwealth of Virginia without reference to conflicts of laws
principles and shall be binding upon and inure to the benefit of any successor
or successors of IFE and the personal representatives of you. The parties to
this Agreement hereby consent to the exclusive personal jurisdiction of the
Circuit Court of the City of Virginia Beach or, provided other jurisdictional
requirements are satisfied, the United States District Court for the Eastern
District of Virginia, Norfolk Division, for the adjudication of any proceedings
referenced in Paragraph 11 of this Agreement, or the enforcement of any final
and binding arbitration pursuant to Paragraph 12 of this Agreement, or for the
resolution of any other dispute arising from, relating to, or in any other way
connected with this Agreement or your employment hereunder.
15. Severability
If any clause or provision of this Agreement shall be adjudged invalid or
unenforceable by a court of competent jurisdiction or by operation of any
applicable law, it shall not affect the validity of any other clause or
provision, which shall remain in full force and effect.
16. Confidential Information
You agree that any information received by you during the Term which concerns
the financial, business, or other affairs of IFE, its clients, or its
affiliates will be treated by you in full confidence and that you shall not, at
any time during or after
9
X. Xxxx Xxxxxx
As of April 1, 1996
Page 9
the Term, reveal, directly or indirectly, to any persons, firms, or
organizations, or otherwise make use of such confidential information. The
obligation set forth in this Paragraph 15 shall survive the expiration or
termination of this Agreement.
17. Remedies Cumulative; No Waiver
All remedies, rights, undertakings, obligations, and agreements contained in
this Agreement shall be cumulative, and none of them shall be in limitation of
any other remedy, right, undertaking, obligation, or agreement of either party,
whether under this Agreement or otherwise. The failure of IFE to insist upon
strict performance of any provision of this Agreement shall not be construed as
a waiver of any subsequent breach of the same or similar nature.
18. Paragraph Headings
The titles of the paragraphs of this Agreement are for convenience only and
shall not in any way affect the interpretation of any paragraphs of this
Agreement or of the Agreement itself.
If this letter accurately sets forth our agreement, please sign where indicated
below.
Very truly yours,
International Family Entertainment, Inc.
/s/ XXXXXXX X. XXXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
READ AND AGREED:
/s/ X. XXXX XXXXXX
------------------------
D. Xxxx Xxxxxx
