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EXHIBIT 10.25
EMPLOYMENT AGREEMENT
Agreement, made this 27th day of July, 1998, between Hallmark Entertainment
Network, Inc., a Delaware corporation with offices at 1325 Avenue of the
Americas, Xxx Xxxx, Xxx Xxxx 00000 or its permitted assigns ("Employer"), and
Xxxx Xxxxxx, _____________________________ ("Employee").
WITNESSETH:
WHEREAS, Employer desires to retain the services of Employee and Employee
desires to be employed by Employer upon the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. Employment and Duties. (a) Effective July 27, 1998 (the "Effective
Date"), Employer hereby employs Employee and Employee hereby agrees to serve as
Executive Vice President, Chief Operating Officer of Employer reporting to the
President of Employer. Employee agrees to perform such services consistent with
Employee's position as shall, from time to time, be assigned to Employee.
Employee shall use Employee's best efforts to promote the interests of Employer
and shall devote Employee's full business time, energy and skill exclusively to
the business and affairs of Employer during the "Term" (as "Term" is defined in
Paragraph 2 below).
(b) Employee's primary duties shall concern all operations of Employer's
business concerning television programs and other audiovisual properties
(collectively, the "Properties" and individually, a "Property") as are assigned
to him.
(c) During the course of Employee's employment hereunder, Employer may be
incorporating subsidiary production companies for the development of individual
Properties. Employer shall have the right to loan or make available, without
additional compensation to Employee, Employee's services as an officer or
director of any such subsidiary to Hallmark Cards, Incorporated ("Hallmark") or
its subsidiaries or to perform services for any Property owned or controlled by
Hallmark or any such subsidiary, provided, that his duties as an officer
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of any such subsidiary shall be consistent with his duties hereunder. Employee
further agrees that all the terms of this Employment Agreement shall be
applicable to Employee's services for Hallmark and each such subsidiary.
2. Term of Employment. The term of Employee's employment ("Term") with
Employer shall commence on the Effective Date and shall end on July 30, 2000
unless terminated earlier as is provided in Paragraph 8 of this Agreement or
extended by mutual agreement of the parties. Employer shall have the option to
extend the Term until July 30, 2001 by giving written notice to Employee at
least 45 days prior to the end of the initial term.
3. Compensation.
(a) Salary. As compensation for Employee's services hereunder, Employer
shall pay to Employee a salary at the rate of $287,500 per year. Such salary
shall be paid biweekly, in arrears.
(b) Bonuses. Employee will be paid such bonus as Employer in its
discretion determines, provided that Employer shall pay Employee an annual
bonus of no less than 20% of his annual salary rate.
(c) Withholding. All payments of salary shall be made in appropriate
installments to conform with the regular payroll dates for salaried personnel
of Employer. Employer shall be entitled to deduct from each payment of
compensation to Employee such items as federal, state and local income taxes,
FICA, unemployment insurance and disability contributions, and such other
deductions as may be required by law.
(d) Expenses. During the Term, Employer shall pay or reimburse Employee on
an accountable basis for all reasonable and necessary out-of-pocket expenses
for entertainment, travel, meals, hotel accommodations and other expenditures
incurred by Employee in connection with Employee's services to Employer in
accordance with Employer's expense account policies for its executive personnel
or with the approval of the President.
(e) Fringe Benefits. During the Term, Employee shall be entitled to
receive the following fringe benefits: (i) 4 weeks paid vacation, annually,
(ii) group medical, dental, life and disability insurance, (iii) an allowance
of $950 per month for automobile, and (iv) any other fringe benefits, including
any phantom shares plan, on terms that are or may become available generally to
senior
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executive of Employer. Employee's level of participation in any phantom
shares or other incentive plan will be subject to Employer's discretion.
(f) Relocation. Employer will pay reasonable relocation expenses for
Employee and his family from the U.K. to the Denver area, in accordance with
Employer's standard relocation policies. If Employee does not have permanent
housing or have not received shipment of household goods in the Denver area
upon the Effective Date, Employer shall pay for temporary living expenses for a
period not to exceed one month and for an amount not exceed $15,000.
4. Place of Employment. During the Term, Employee shall be required to
perform Employee's duties at the principal office of Employer set forth above,
or at such other principal locations in Denver, Colorado metropolitan area as
Employer may reasonably designate, and Employee shall undertake all reasonable
travel required by Employer in connection with the performance of Employee's
duties hereunder.
5. Confidentiality; Intellectual Property; Name and Likeness.
(a) Employee agrees that Employee will not during the Term or thereafter
divulge to anyone (other than Employer (and its executives, representatives and
employees who need to know such information) or any persons designated by
Employer) any knowledge or information of any type whatsoever designated or
treated as confidential by Employer relating to the business of Employer or any
of its subsidiaries or affiliates, including, without limitation, all types of
trade secrets, business strategies, marketing and distribution plans as well as
concrete proposals, plans, scripts, treatments and formats described in
subparagraph (b) below. Employee further agrees that Employee will not
disclose, publish or make use of any such knowledge or information of a
confidential nature (other than in the performance of Employee's duties
hereunder) without the prior written consent of Employer. This provision does
not apply to information which becomes available publicly without the fault of
Employee or information which Employee discloses in confidence to her own
privileged representatives or is required to disclose in legal proceedings,
provided Employee gives advice notice to the President of Employer and an
opportunity to Employer to resist such disclosure in legal proceedings.
(b) During the Term, Employee will disclose to Employer all concrete
proposals, plans, scripts, treatments, and formats invented or developed by
Employee during the term which
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relate directly or indirectly to the business of Employer or any of its
subsidiaries or affiliates including, without limitation, any proposals and
plans which may be copyrightable, trademarkable, patentable or otherwise
exploitable. Employee agrees that all such proposals, plans, scripts,
treatments, and formants are and will be the property of Employer. Employee
further agrees, at Employer's request, to do whatever is necessary or desirable
to secure for the Employer the rights to said proposals, plans, scripts,
treatments, and formats, whether by copyright, trademark, patent or otherwise
and to assign, transfer and convey the rights thereto to Employer at Employer's
expense.
(c) Employer shall have the right in perpetuity to use Employee's name
reasonably in connection with credits for Properties for which Employee
performs any services.
6. Employee's Representations. Employee represents and warrants that:
(a) Employee has the right to enter into this Agreement and is not
subject to any contract, commitment, agreement, arrangement or restriction of
any kind which would prevent Employee from performing Employee's duties and
obligations hereunder;
(b) To the best of Employee's knowledge, Employee is not subject to any
undisclosed medical condition which might have a material effect on Employee's
ability to perform satisfactorily Employee's services hereunder.
7. Non-Competition: No Raid.
(a) During the Term, Employee shall not engage directly or indirectly,
whether as an employee, independent contractor, consultant, partner, shareholder
or otherwise, in a business or other endeavor which interferes with any of his
duties or obligations hereunder or which is directly competitive with the
business of the Employer or its subsidiaries, including but not limited to the
production, distribution or any other exploitation of audiovisual television
material (the "Other Business").
(b) Employee further agrees that during the Term and for a period of one
year thereafter, Employee will not employ or knowingly attempt to employ or
assist anyone else to employ any person who is, at the date of termination of
Employee's employment, working as an officer, policymaker or in high-level
creative development or distribution (including without
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limitation executive employees) for or rendering substantially full-time
services as such to Employer.
8. Termination.
(a) This Agreement may be terminated and the Term ended on five
business days' written notice for any one of the following reasons (except (i)
in which case termination shall occur on the date of death):
(i) The death of Employee;
(ii) The physical or mental disability of Employee to such
an extent that Employee is unable to render services to Employer for a period
exceeding an aggregate of 30 business days during any twelve month period of the
Term. For purposes of counting the aggregate of 30 business days, days properly
designated by Employee as vacation days shall not be counted;
(iii) For "cause," which for purposes of this Agreement shall
be defined as:
(A) the use of drugs and/or alcohol which interfere
materially with Employee's performance of Employee's services under this
Agreement;
(B) Employee's conviction of any act which constitutes a
felony under federal, state or local laws or the law of any foreign country;
(C) Employee's persistent failure after written notice to
perform, or Employee's persistent refusal to perform after written notice,
Employee's duties and responsibilities pursuant to this Agreement; or
(D) Employee's dishonesty in non-trivial financial dealings
with or on behalf of Employer, its subsidiaries, affiliates and parent
corporation or in conjunction with performance of her duties hereunder.
(b) Employer shall also have the right to terminate Employee prior to
the expiration of the Term in addition to pursuant to Paragraph 8(a) above by
providing Employee with not less than thirty (30) days' advance notice in
writing. In the event of a termination pursuant to this Paragraph 8(b): (i) the
Employer shall pay to the Employee within thirty (30) days after such notice of
termination the remaining amounts described in Paragraph 3(a) above for the
balance of the Term (or if less than one hundred eighty (180) days are left in
the Term at the expiration of such (30) days, for one hundred eighty (180) days
as if there had been no termination of this
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Agreement, discounted to the date of payment at the Adjusted Base Rate (as
such term is defined in an August, 1990 Credit Agreement as amended between
Employer and Chemical Bank) on the date payment is made pursuant to this
Paragraph 8(b), and except for any pro-rated annual bonus which Employee
is due hereunder, Employer shall have no further obligations to Employee
hereunder. If Employer terminates Employee under this Paragraph 8(b),
Paragraph 7(a) shall not apply from the date of termination.
(c) In the event that Employer terminates this Agreement due to any
of the reasons set forth in Paragraphs 8(a)(i) and 8(a)(iii)(A)-(D) above,
Employee shall be paid Employee's salary through the later of the
expiration of the five (5) business days period referred to in Paragraph
8(a) or the end of the month in which the termination event occurs after
which Employer's obligation to pay salary to Employee shall terminate.
Should Employer terminate this Agreement due to Employee's disability as
defined above in Paragraph 8(a)(ii), Employee shall continue to receive
six months of salary. After making the payments provided for in this
sub-paragraph (c), Employer shall have no further obligations to Employee
except as required in Employer-sponsored Benefit Program [Illegible].
(d) Upon termination of this Agreement, Employee shall promptly
return all of Employer's property to Employer.
(e) Upon termination of Employee's employment for any reason,
Employee shall tender Employee's resignation from the Board of Directors
of any of Employer's subsidiaries or affiliates on which Employee is
serving, and Employer shall accept such resignation forthwith.
9. Breach; Remedies. Both parties recognize that the services to be
rendered under this Agreement by Employee are special, unique and
extraordinary in character, and that in the event of the breach by
Employee of the terms and conditions of this Agreement, Employer shall be
entitled, inter alia, if it so elects, to institute and prosecute
proceedings in any court of competent jurisdiction, either in law or in
equity, to obtain damages for any breach of this Agreement, and to seek to
enforce the specific performance thereof by Employee, and/or to seek to
enjoin Employee from performing services for any other person, firm or
corporation. The parties further stipulate that the law of New York shall
apply to any dispute or action regarding this agreement and Employee
agrees to submit to the jurisdiction of any court of competent
jurisdiction in New York in any such action and agrees to waive all
objections to such jurisdiction, including (but not
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limited to) any objections based upon lack of personal jurisdiction or venue or
forum non conveniens.
10. Assignment. This Agreement is a personal contract and, except as
specifically set forth herein, the rights, interests and obligations of Employee
herein may not be sold, transferred, assigned, pledged or hypothecated, although
he may assign or use as security payments due hereunder from Employer. The
rights and obligations of Employer hereunder shall bind in their entirety the
successors and assigns of Employer, although Employer shall remain fully liable
hereunder. As used in this Agreement, the term "successor" shall include any
person, firm, corporation or other business entity which at the time, whether by
merger, purchase or otherwise, acquires all or substantially all of the assets
or business of Employer.
11. Amendment; Captions. This Agreement contains the entire agreement
between the parties. It may not be changed orally, but only by agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought. Paragraph headings are for convenience of
reference only and shall not be considered a part of this Agreement. If any
clause in this Agreement is found to be unenforceable, illegal or contrary to
public policy, the parties agree that this Agreement shall remain in full force
and effect except for such clause.
12 Prior Agreements. This Agreement supersedes and terminates all prior
agreements between the parties relating to the subject matter herein addressed,
and sets out the full agreement between the parties concerning its subject
matter.
13. Notices. Any notices or other communications required or permitted
hereunder shall be in writing and shall be deemed effective when delivered in
person or, if mailed, by registered or certified mail, return receipt
requested, in which case the notice shall be deemed effective on the date of
deposit in the mails, postage prepaid, addressed to Employee at Employee's
address first written above and, in the case of Employer, addressed to its
President with a copy to General Counsel, Hallmark Cards, Incorporated, 0000
XxXxx Xxxxxxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000. Either party may change the
address to which notices are to be addressed by notice in writing given to the
other in accordance with the terms hereof.
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14. Periods of Time. Whenever in this Agreement there is a period of time
specified for the giving of notices or the taking of action, the period shall
be calculated excluding the day on which the giver sends notice and excluding
the day on which action to be taken is actually taken.
15. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, and all of which, taken
together, shall constitute one instrument.
IN WITNESS WHEREOF, Employer has by its appropriate officer signed this
Agreement and Employee has signed this Agreement as of the day and year first
above written.
Hallmark Entertainment Network, Inc.
By /s/ XXXXXX X. XXXXX
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Title President & CEO
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EMPLOYEE:
/s/ XXXX XXXXXX
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Xxxx Xxxxxx
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AMENDMENT TO
EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement, dated as of July 1, 1999 between
Hallmark Entertainment Networks ("Employer") and Xxxx Xxxxxx ("Employee") (this
"Amendment") amends that certain Employment Agreement dated as of July 27, 1998
between Employer and Employee (the "Agreement").
1. Section 2 of the Agreement is amended to provide that the Term shall
end on June 30, 2002 unless terminated earlier as provided in
Paragraph 8 of the Agreement or extended by mutual agreement of the
parties.
2. Section 3(a) of the Agreement is amended to provide that for the
twelve month period commencing on July 1, 1999, Employer shall pay to
Employee a salary at the rate of $387,500 per annum. Commencing on
July 1, 2000 and annually thereafter during the Term, Employee's
salary shall be increased over the salary in effect during the prior
twelve month period by the greater of (i) seven per cent (7%) or (ii)
the increase, if any, of the Consumer Price Index calculated by the
Department of Labor for the region including the greater Denver
metropolitan area (the "CPI") as of July 1 of the relevant year as
compared to the CPI as of July 1 of the prior year.
3. Section 3(b) is amended to provide that Employee's bonus for the
twelve month period ending December 31, 1999 will be not less than
thirty percent (30%) of his salary for such twelve month period (i.e.
$116,250). Bonuses for subsequent years of the Term are not guaranteed
and will be determined in accordance with Employer's bonus program
then in effect for senior executives, provided that Employee's bonus
for each such year shall be not less that twenty percent (20%) of his
annual salary for such year.
4. Employee will be granted three hundred thousand (300,000) SARs, as of
July 1, 1999, in the Share Appreciation Rights Plan, subject to the
approval of Employer's Board of Directors. A copy of such plan is
attached as Exhibit A.
5. Except as amended by this Amendment, the Agreement remains in full
force and effect and is hereby reaffirmed by Employee and Employer.
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IN WITNESS WHEREOF, Employer has by its appropriate officer signed the
Agreement and Employee has signed this Agreement as of the day and year first
above written.
HALLMARK ENTERTAINMENT
NETWORKS
By: /s/ XXXXX X. XXXXX
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Its: PRESIDENT & CEO
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EMPLOYEE:
XXXXXX X. XXXXXX XX.
/s/ XXXX XXXXXX
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XXXX XXXXXX
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