EMPLOYMENT AGREEMENT
Exhiit 10.1
This Employment Agreement (the “Agreement”) is effective as of the 13th day of March, 2006
(the “Effective Date”) by and between SFX Entertainment, Inc., d/b/a Live Nation, a Delaware
corporation (the “Company”), and Xxxxxxx X. Xxxxxx (the “Employee”).
WHEREAS, the Company and the Employee desire to enter into an employment relationship under
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
1. TERM OF EMPLOYMENT.
The Employee’s term of employment starts on the Effective Date of this Agreement and ends on
the close of business on February 28, 2008 (the “Employment Period”). Beginning on March 1, 2008
and continuing for so long thereafter as the Employee is employed hereunder, the Employment Period
shall be automatically extended day to day so that there will always be exactly one (1) year
remaining in the Employment Period, unless either party terminates this Agreement in accordance
with Section 7 below.
2. TITLE AND DUTIES; EXCLUSIVE SERVICES.
(a) Title and Duties. The Employee’s title is Executive Vice President and General Counsel.
The Employee will have the customary powers, duties and responsibilities of the chief legal officer
of a similarly-sized publicly-traded company, and will oversee all legal affairs of the Company and
its affiliates and subsidiaries, including all legal aspects of each division of the Company,
acquisitions, corporate strategic and legal planning, financings, issuances of securities,
reporting requirements under federal and state securities laws, regulatory matters, labor and
litigation and hiring of all outside counsel and in-house counsel, and will perform additional
services and duties that the Company may from time to time designate that are consistent with the
usual and customary duties of this position. The Employee will report directly to the Chief
Executive Officer of Company, currently Xxxxxxx Xxxxxx. The Employee will devote his full working
time and efforts to the business and affairs of the Company.
(b) Exclusive Services. During employment with the Company, the Employee shall not be
employed elsewhere, nor shall he engage in any competitive activity and, except as set forth in the
preceding clause (a) of this Section 2, shall not render any services to any other person or
business or acquire any interest of any type in any other business which is in competition with the
Company; provided, however, that the foregoing shall not be deemed to prohibit the Employee from
acquiring, solely as an investment, (i) up to 10% of any securities of a partnership, trust,
corporation or other entity so long as the Employee remains a passive investor in such entity and
such entity is not, directly or indirectly, in competition with the Company or (ii) up to 5% of the
outstanding equity interests of any publicly-held company.
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3. COMPENSATION AND BENEFITS.
(a) Base Salary. The Company will pay the Employee an annual base salary of $400,000.00. The
Employee will be eligible for annual raises commensurate with Company policy. All payments of base
salary will be made in installments according to the Company’s regular payroll practice, prorated
monthly or weekly where appropriate, and subject to any increases that are determined to be
appropriate by the Board of Directors of the Company (the “Board”) or its Compensation Committee.
(b) Performance Bonus. Beginning with calendar year 2006, the Employee will be eligible to
receive an annual performance bonus as set forth in the Performance Bonus Calculation attached as
Exhibit A to this Agreement. The Employee is not required to be employed by the Company on the date
of any bonus payment in order to receive it. The Employee is entitled to a pro rata bonus for any
year in which his employment is terminated (it being understood that the Employee shall be eligible
for a full calendar year bonus for 2006); the amount (if any) of the bonus for that calendar year
will be pro rated based upon the number of months during such calendar year that the Employee
provided full-time services for the Company pursuant to this Agreement. However, the Employee
shall not be entitled to a pro rata bonus if his employment is terminated by the Company for Cause
(as defined in Section 7(c) below). The Company reserves the right to modify the Performance Bonus
Calculation, on terms which are no less favorable to the Employee, due to business circumstances
such as business acquisition, business sale, accounting or non-operational circumstances. If the
Performance Bonus Calculations for similarly-situated senior executives are modified during the
term of this Agreement, the Performance Bonus Calculation for the Employee shall be similarly
modified.
(c) Employment Benefit Plans. The Employee will be entitled to participate in all pension,
profit sharing and other retirement plans, all incentive compensation plans and all group health,
hospitalization and disability or other insurance plans, sick leave and other employee welfare
benefit plans in which other similarly-situated senior executives of the Company may participate as
stated in the Company’s employee guide.
(d) Vacation. The Employee will be eligible for twenty (20) days paid vacation annually, to be
awarded and taken in accordance with Company policy.
(e) Expenses. The Company will pay or reimburse the Employee for all normal and reasonable
travel and entertainment expenses incurred by the Employee in connection with the Employee’s
responsibilities to the Company upon submission of proper vouchers in accordance with the Company’s
expense reimbursement policy, including a monthly cellular phone reimbursement and reimbursement
for California bar association dues and costs of continuing legal education, including course fees
and travel expenses. The Company will provide the Employee with access to a credit card, subject to
the approval of the credit card company and based on the Employee’s credit history, and which
should only be used for business purposes. Payment is the responsibility of the Employee.
(f) Stock Options. Upon commencement of employment with the Company, the Employee shall
receive a grant of 20,000 stock options for shares of common voting stock in the Live Nation, Inc.
(LYV) (or, at the election of the Employee, a number of shares of restricted stock based on the
formula contained in the applicable stock option plan under which they are issued). The option
price shall be the fair market value on the grant date. Any future stock
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option (or similar equity compensation) grants will be granted based upon the performance of the
Employee, which will be assessed in the sole discretion of the Company and the Compensation
Committee of the Board; provided, however, that the Employee shall be considered for any such
grants in proportion to grants made to similarly-situated senior executives. All option grants
shall be made under the terms and conditions set forth in the applicable stock option plan under
which they are issued. The Company reserves the right to modify any future Company stock option
plan with respect to the change of control or any other provision of said plan. The Company’s
obligations under this Agreement to the Employee in the area of stock options are conditioned upon
and subject to the Company’s decision, in its sole discretion, to: 1) alter, suspend or discontinue
its stock option grant program; or 2) replace the program with an alternative form or method of
compensation.
4. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
During the course of the Employee’s employment with the Company, the Company will provide the
Employee with access to certain confidential information, trade secrets and other matters which are
of a confidential or proprietary nature, including, without limitation, the Company’s customer
lists, pricing information, production and cost data, compensation and fee information, strategic
business plans, budgets, financial statements and other information the Company treats as
confidential or proprietary (collectively, the “Confidential Information”). The Company provides
on an ongoing basis such Confidential Information as the Company deems necessary or desirable to
aid the Employee in the performance of his duties. The Employee understands and acknowledges that
such Confidential Information is confidential and proprietary, and agrees not to disclose such
Confidential Information to anyone outside the Company except to the extent that: (i) the Employee
deems such disclosure or use reasonably necessary or appropriate in connection with performing his
duties on behalf of the Company; (ii) the Employee is required by order of a court of competent
jurisdiction (by subpoena or similar process) to disclose or discuss any Confidential Information,
provided that in such case, the Employee shall promptly inform the Company of such event, shall
cooperate with the Company in attempting to obtain a protective order or to otherwise restrict such
disclosure, and shall only disclose Confidential Information to the minimum extent necessary to
comply with any such court order; or (iii) such Confidential Information becomes generally known to
and available for use in the industries in which the Company does business, other than as a result
of any action or inaction by the Employee. The Employee further agrees that he will not during
employment and/or at any time thereafter use such Confidential Information in competing, directly
or indirectly, with the Company. At such time as the Employee shall cease to be employed by the
Company, he will immediately turn over to the Company all Confidential Information, including
papers, documents, writings, electronically stored information, other property and all copies of
them, provided to or created by him during the course of his employment with the Company. This
nondisclosure covenant is binding on the Employee, as well as his heirs, successors and legal
representatives, and will survive the termination of this Agreement for any reason.
5. NONHIRE OF COMPANY EMPLOYEES.
To further preserve the rights of the Company pursuant to the nondisclosure covenant discussed
in Section 4 above, and for the consideration promised by the Company under this Agreement, during
the term of the Employee’s employment with the Company and for a period of twelve (12) months
thereafter, regardless of the reason for termination of employment, the Employee will not, directly
or indirectly, (i) hire any current or prospective employee of the
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Company, or any subsidiary or affiliate of the Company (including, without limitation, any
current or prospective employee of the Company within the six (6) month period preceding the
Employee’s last day of employment with the Company or within the twelve (12) month period of this
covenant) who worked, works or has been offered employment by the Company; (ii) solicit or
encourage any such employee to terminate their employment with the Company, or any subsidiary or
affiliate of the Company; or (iii) solicit or encourage any such employee to accept employment with
any business, operation, corporation, partnership, association, agency or other person or entity
with which the Employee may be associated. If, during the term of this non-hire covenant, the
Employee learns that any such employee has accepted employment with any business, operation,
corporation, partnership, association, agency or other person or entity with which the Employee may
be associated (other than the Company), the Employee will promptly send notice to the Company
identifying the employee and certifying that the Employee did not breach any provision of this
non-hire covenant.
6. NON-COMPETITION DURING TERM.
To further preserve the rights of the Company pursuant to the nondisclosure covenant discussed
in Section 4 above, and for the consideration promised by the Company under this Agreement, during
the Employee’s employment with the Company, the Employee will not, directly or indirectly, as an
owner, director, principal, agent, officer, employee, partner, consultant, servant or otherwise,
carry on, operate, manage, control or become involved in any manner with any business, operation,
corporation, partnership, association, agency or other person or entity which is in the same
business as the Company in any location in which the Company, or any subsidiary or affiliate of the
Company, operates or has plans or has projected to operate during the Employee’s employment with
the Company, including any area within a fifty (50) mile radius of any such location. The
foregoing shall not prohibit the Employee from owning up to 5% of the outstanding stock of any
publicly-held company.
The Company and the Employee agree that the restrictions contained in this noncompetition
covenant are reasonable in scope and duration and are necessary to protect the Company’s business
interests and Confidential Information.
7. TERMINATION.
The Employee’s employment with the Company may be terminated under the following
circumstances:
(a) Death. The Employee’s employment with the Company shall terminate upon his death.
(b) Disability. The Company may terminate the Employee’s employment with the Company if, as a
result of the Employee’s incapacity due to physical or mental illness, the Employee is unable to
perform his duties under this Agreement on a full-time basis for more than ninety (90) days in any
twelve (12) month period, as determined by the Company.
(c) Termination by Company. The Company may terminate the Employee’s employment with the
Company for any reason at any time after February 28, 2008. The Company may also terminate his
employment for “Cause” at any time during the Employment Period. A termination for Cause must be
for one or more of the following reasons: (i) conduct
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by the Employee constituting a material act of willful misconduct in connection with the
performance of his duties, including, without limitation, violation of the Company’s policy on
sexual harassment, misappropriation of funds or property of the Company or any of its affiliates
other than the occasional, customary and de minimis use of Company property for personal purposes
or other willful misconduct as determined in the reasonable discretion of the Company; (ii)
continued, willful and deliberate non-performance by the Employee of a material duty hereunder
(other than by reason of the Employee’s physical or mental illness, incapacity or disability);
(iii) the Employee’s refusal or failure to follow lawful directives consistent with his title and
position and the terms of this Agreement; (iv) a criminal or civil conviction of the Employee, a
plea of nolo contendere by the Employee or other conduct by the Employee that, as determined in the
reasonable discretion of the Board, has resulted in, or would result in if he were retained in his
position with the Company, material injury to the reputation of the Company, including, without
limitation, conviction of fraud, theft, embezzlement or a crime involving moral turpitude; (v) a
repeated failure by the Employee to comply with a material term of this Agreement after written
notice by the Company specifying the alleged failure; or (vi) a material violation by the Employee
of the Company’s employment policies. The Employee will be given thirty (30) days to cure any of
the Cause provisions set forth above that are susceptible to cure.
(d) Termination by Employee for Good Reason. The Employee may terminate this Agreement at any
time for “Good Reason,” which is defined as one of the following: (i) a repeated failure of the
Company to comply with a material term of this Agreement after written notice by the Employee
specifying the alleged failure; (ii) a substantial and unusual change in the Employee’s position,
duties, responsibilities or authority without an offer of additional reasonable compensation as
determined by the Company in light of compensation levels for similarly-situated employees; (iii) a
substantial and unusual reduction in Employee’s duties, responsibilities, authority or salary; (iv)
the requirement that the Employee move his residence outside the greater Los Angeles, California
metropolitan area; or (v) a Change in Control (as defined in Section 9 below) of the Company in
which the Employee is not offered continued employment as the general counsel of the Company or the
surviving entity. If the Employee elects to terminate for Good Reason under (i), (ii), (iii) or
(iv) above, the Company shall have thirty (30) days after written notice in which to cure.
(e) Termination by Employee Without Cause. The Employee may provide notice at any time after
February 28, 2008 of his intent to terminate his employment with the Company without cause. The
Employee must provide the Company with twelve (12) months prior written notice of his intent to
terminate the employment relationship. If the Employee terminates under this Section 7(e), the
Company may determine an earlier date on which employment will end. The Company shall not be
required to continue employment during the notice period. If the Company elects to terminate prior
to the expiration of the twelve (12) month notice period, such termination shall be deemed a
termination by the Company without Cause and Section 8(d) below shall apply.
8. COMPENSATION UPON TERMINATION.
(a) Death. If the Employee’s employment with the Company terminates by reason of his death,
the Company will, within the time period as required under the laws of the State of California, pay
in a lump sum amount to such person as the Employee shall designate in a notice filed with the
Company or, if no such person is designated, to the Employee’s estate, the
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Employee’s accrued and unpaid base salary, prorated bonus, if any (see Section 3(b) above and
Exhibit A), unreimbursed expenses and any payments to which the Employee’s spouse, beneficiaries or
estate may be entitled under any applicable employee benefit plan (according to the terms of such
plans and policies).
(b) Disability. If the Employee’s employment with the Company terminates by reason of his
disability, the Company shall, within the time period as required under the laws of the State of
California, pay in a lump sum amount to the Employee his accrued and unpaid base salary, prorated
bonus, if any (see Section 3(b) above and Exhibit A), unreimbursed expenses and any payments to
which he may be entitled under any applicable employee benefit plan (according to the terms of such
plans and policies).
(c) Termination By Company For Cause. If the Employee’s employment with the Company is
terminated by the Company for Cause at any time during the Employment Period, the Company will,
within the time period as required under the laws of the State of California, pay in a lump sum
amount to the Employee his accrued and unpaid base salary, unreimbursed expenses and any payments
to which he may be entitled under any applicable employee benefit plan (according to the terms of
such plans and policies).
(d) Termination by Company Without Cause or Termination by Employee for Good Reason. If the
Employee’s employment with the Company is terminated by the Company without Cause, or by Employee
for Good Reason, the Company will, within the time period as required under the laws of the State
of California, pay in a lump sum amount to the Employee his accrued and unpaid base salary,
prorated bonus, if any (see Section 3(b) above and Exhibit A), unreimbursed expenses and any
payments to which he may be entitled under any applicable employee benefit plan (according to the
terms of such plans and policies). Additionally, in lieu of a termination of employment, the
Employee has the option of continuing employment by electing to become a part-time consultant to
the Company in exchange for severance pay. In that event, the Company will pay the Employee’s base
salary for twelve (12) months (the “Consulting Period”) in periodic payments in accordance with
ordinary payroll practices and deductions. The payment will be owed and paid by the Company
provided that the Employee: (i) serves as an exclusive part-time consultant during the Consulting
Period; (ii) agrees not to compete with the Company, directly or indirectly, during the Consulting
Period in accordance with Section 2(b) above; and (iii) agrees to and signs a general release of
claims in a form and manner reasonably satisfactory to the Company. The amount of any severance
pay provided to the Employee under this Section 8(d) shall not be reduced by any compensation
earned by the Employee as the result of employment by another employer during the Consulting Period
or offset against any amount claimed to be owed by the Employee to the Company. In addition,
notwithstanding any other provision of this Agreement to the contrary, to the extent that (i) any
amount paid pursuant to this Section 8(d) is treated as nonqualified deferred compensation pursuant
to Section 409A of the Internal Revenue Code of 1986 as amended (the “Code”) and (ii) the Employee
is a “specified employee” pursuant to Section 409A(2)(B) of the Code, then payments for months one
(1) through six (6) of the Consulting Period shall be made on the date which is six (6) months
after the date of the termination of the Employee’s employment hereunder and all further payments
shall be made on a monthly basis for the remaining term of the Consulting Period.
(e) Termination by Employee Without Cause. If the Employee terminates his employment with the
Company in accordance with Section 7(e) above, and the Company
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determines an earlier termination date on which employment will end, the Company will pay to
the Employee in a lump sum amount his accrued and unpaid base salary through the termination date,
prorated bonus, if any (see Section 3(b) above and Exhibit A), unreimbursed expenses and any
payments to which he may be entitled under any applicable employee benefit plan (according to the
terms of such plans or policies). Additionally, in lieu of a termination of employment, the
Employee has the option of continuing employment by electing to become a part-time consultant to
the Company in exchange for severance pay. In that event, the Company will pay the Employee’s base
salary for the Consulting Period in periodic payments in accordance with ordinary payroll practices
and deductions. The payment will be owed and paid by the Company provided that the Employee: (i)
serves as an exclusive part-time consultant during the Consulting Period; (ii) agrees not to
compete with the Company, directly or indirectly, during the Consulting Period in accordance with
Section 2(b) above; and (iii) agrees to and signs a general release of claims in a form and manner
reasonably satisfactory to the Company. The amount of any severance pay provided to the Employee
under this Section 8(e) shall not be reduced by any compensation earned by the Employee as the
result of employment by another employer during the Consulting Period or offset against any amount
claimed to be owed by the Employee to the Company. In addition, notwithstanding any other
provision of this Agreement to the contrary, to the extent that (i) any amount paid pursuant to
this Section 8(d) is treated as nonqualified deferred compensation pursuant to Section 409A of the
Code and (ii) the Employee is a “specified employee” pursuant to Section 409A(2)(B) of the Code,
then payments for months one (1) through six (6) of the Consulting Period shall be made on the date
which is six (6) months after the date of the termination of the Employee’s employment hereunder
and all further payments shall be made on a monthly basis for the remaining term of the Consulting
Period.
(f) Effect Of Compliance With Compensation Upon Termination Provisions. Upon complying with
Sections 8(a) through 8(e) above, as applicable, the Company will have no further obligations to
the Employee except as otherwise expressly provided under this Agreement, provided that such
compliance will not adversely affect or alter the Employee’s rights under any employee benefit plan
of the Company in which the Employee has a vested interest, unless, otherwise provided in such
employee benefit plan or any agreement or other instrument attendant thereto.
9. CHANGE OF CONTROL.
In the event of a “Change of Control,” all of the Employee’s stock options for shares of
common stock in the Company granted pursuant to Section 3(f) above and any future stock option,
restricted stock or similar equity incentive grants in the Company that are outstanding on the date
of such Change of Control shall become immediately and fully exercisable in accordance with the
terms and conditions set forth in the applicable plan under which they are issued. For purposes of
this Agreement, “Change of Control” means: (i) any “person,” as such term is used in Sections
3(a)(9) and 13(d) of the Securities and Exchange Act of 1934, as amended (other than the Employee
or entities controlled by the Employee), becomes a beneficial owner of 50% or more of the voting
power of the Company; (ii) all or substantially all of the business or assets of the Company are
disposed of pursuant to a merger, consolidation, sale or other transaction (unless the stockholders
of the Company, immediately prior to such merger, consolidation, sale or other transaction,
beneficially own, directly or indirectly, in substantially the same proportion as they owned the
voting power of the Company, all of the voting power or other ownership interests of the entity or
entities, if any, that succeed to the business of the
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Company); (iii) the Company combines with another company and, immediately after such combination,
(A) the stockholders of the Company immediately prior to the combination do not hold, directly or
indirectly, more than 50% of the voting power of the combined company or (B) the members of the
Board immediately prior to the Board’s approval of the transaction do not constitute a majority of
the combined company’s board of directors; or (iv) the liquidation or dissolution of the Company.
10. PARTIES BENEFITED; ASSIGNMENTS.
This Agreement shall be binding upon the Employee, his heirs and his personal representative
or representatives, and upon the Company and its respective successors and assigns. Neither this
Agreement nor any rights or obligations hereunder may be assigned by the Employee, other than by
will or by the laws of descent and distribution.
11. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the internal laws of the
State of California without giving effect to any choice of law or conflict provisions or rule
(whether of the State of California any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California and the Employee hereby expressly
consents to the personal jurisdiction of the state and federal courts located in the State of
California for any lawsuit arising from or relating to this Agreement.
12. DEFINITION OF COMPANY.
As used in this Agreement, the term “Company” shall include SFX Entertainment, Inc., d/b/a
Live Nation and any of its past, present and future divisions, operating companies, subsidiaries
and affiliates.
13. LITIGATION AND REGULATORY COOPERATION.
During and after the Employee’s employment, the Employee shall reasonably cooperate with the
Company in the defense or prosecution of any claims or actions now in existence or which may be
brought in the future against or on behalf of the Company which relate to events or occurrences
that transpired while the Employee was employed by the Company; provided, however, that such
cooperation shall be at no cost to the Employee and shall not materially and adversely affect the
Employee or expose the Employee to an increased probability of civil or criminal litigation. The
Employee’s cooperation in connection with such claims or actions shall include, without limitation,
being available to meet with counsel to prepare for discovery or trial and to act as a witness on
behalf of the Company at mutually convenient times. During and after the Employee’s employment,
the Employee also shall cooperate fully with the Company in connection with any investigation or
review of any federal, state or local regulatory authority as any such investigation or review
relates to events or occurrences that transpired while the Employee was employed by the Company.
The Company will pay the Employee on an hourly basis (to be derived from his base salary) for
requested litigation and regulatory cooperation that occurs after his termination of employment,
and reimburse the Employee for all costs and expenses incurred in connection with his performance
under this paragraph, including, without limitation, reasonable attorneys’ fees and costs.
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14. INDEMNIFICATION AND INSURANCE; LEGAL EXPENSES.
The Company shall indemnify the Employee to the fullest extent permitted by law, in effect at
the time of the subject act or omission, and shall advance to the Employee reasonable attorneys’
fees and expenses as such fees and expenses are incurred (subject to an undertaking from the
Employee to repay such advances if it shall be finally determined by a judicial decision which is
not subject to further appeal that the Employee was not entitled to the reimbursement of such fees
and expenses), and the Employee will be entitled to the protection of any insurance policies that
the Company may elect to maintain generally for the benefit of its directors and officers against
all costs, charges and expenses incurred or sustained by him in connection with any action, suit or
proceeding to which he may be made a party by reason of his being or having been a director,
officer or employee of the Company or any of its subsidiaries, or his serving or having served any
other enterprise as a director, officer or employee at the request of the Company (other than any
dispute, claim or controversy arising under or relating to this Agreement). The Company covenants
to maintain during the Employee’s employment for the benefit of the Employee (in his capacity as an
officer and director of the Company) directors’ and officers’ insurance providing benefits to the
Employee no less favorable, taken as a whole, than the benefits provided to the other
similarly-situated employees of the Company by the directors’ and officers’ insurance maintained by
the Company on the date hereof; provided, however, that the Board may elect to terminate directors’
and officers’ insurance for all officers and directors, including the Employee, if the Board
determines in good faith that such insurance is not available or is available only at unreasonable
expense.
15. ARBITRATION.
The parties agree that any dispute, controversy or claim, whether based on contract, tort,
statute, discrimination, retaliation or otherwise, relating to, arising from or connected in any
manner to this Agreement, or to the alleged breach of this Agreement or arising out of or relating
to the Employee’s employment or termination of employment, shall, upon timely written request of
either party be submitted to and resolved by binding arbitration. The arbitration shall be
conducted in Los Angeles, California. The arbitration shall proceed in accordance with the
National Rules for Resolution of Employment Disputes of the American Arbitration Association
(“AAA”) in effect at the time the claim or dispute arose, unless other rules are agreed upon by the
parties. Unless otherwise agreed to by the parties in writing, the arbitration shall be conducted
by one arbitrator who is a member of the AAA and who is selected pursuant to the methods set out in
the National Rules for Resolution of Employment Disputes of the AAA. Any claims received after the
applicable/relevant statute of limitations period has passed shall be deemed null and void. The
award of the arbitrator shall be a reasoned award with findings of fact and conclusions of law.
Either party may bring an action in any court of competent jurisdiction to compel arbitration under
this Agreement, to enforce an arbitration award and to vacate an arbitration award. However, in
actions seeking to vacate an award, the standard of review to be applied by said court to the
arbitrator’s findings of fact and conclusions of law will be the same as that applied by an
appellate court reviewing a decision of a trial court sitting without a jury. The Company will pay
the actual costs of arbitration excluding attorneys’ fees. Each party will pay its own attorneys’
fees and other costs incurred by their respective attorneys; provided, however, that the Company
shall reimburse the Employee for reasonable attorneys’ fees and expenses incurred if the Employee
prevails on any issue which is the subject of such of a lawsuit or arbitration brought by the
Employee or the Company as a result of any dispute regarding the provisions of this Agreement.
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16. REPRESENTATIONS AND WARRANTIES OF THE EMPLOYEE.
The Employee represents and warrants to the Company that he is under no contractual or other
restriction which is inconsistent with the execution of this Agreement, the performance of his
duties hereunder or the other rights of the Company hereunder. The Employee also represents and
warrants to the Company that he is under no physical or mental disability that would hinder the
performance of his duties under this Agreement.
17. MISCELLANEOUS.
This Agreement contains the entire agreement of the parties relating to the subject matter
hereof. This Agreement supersedes any prior written or oral agreements or understandings between
the parties relating to the subject matter hereof. No modification or amendment of this Agreement
shall be valid unless in writing and signed by or on behalf of the parties hereto. The failure of
a party to require performance of any provision of this Agreement shall in no manner affect the
right of such party at a later time to enforce any provision of this Agreement. A waiver of the
breach of any term or condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition. This Agreement is intended to be
performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances,
rules and regulations. If any provision of this Agreement, or the application thereof to any
person or circumstance, shall, for any reason and to any extent, be held invalid or unenforceable,
such invalidity and unenforceability shall not affect the remaining provisions hereof or the
application of such provisions to other persons or circumstances, all of which shall be enforced to
the greatest extent permitted by law. The headings in this Agreement are inserted for convenience
of reference only and shall not be a part of or control or affect the meaning of any provision
hereof.
IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the date
first written above.
| EMPLOYEE: | ||||||||||
DATE: March 13, 2006
|
/s/ XXXXXXX X. XXXXXX | |||||||||
| XXXXXXX X. XXXXXX | ||||||||||
| COMPANY: | ||||||||||
| SFX ENTERTAINMENT, INC. d/b/a LIVE NATION |
||||||||||
DATE: March 13, 2006
|
BY: | /s/ XXXXXXX XXXXXX | ||||||||
| XXXXXXX XXXXXX CHIEF EXECUTIVE OFFICER |
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Exhibit
A - Xxxxxxx X. Xxxxxx - Performance Bonus Calculation
Page i of vi
Page i of vi
EXHIBIT A
PERFORMANCE BONUS CALCULATION
PERFORMANCE BONUS CALCULATION
The Employee will be eligible for an annual Performance Bonus (“Performance Bonus”). The
Performance Bonus is based upon (i) year-over-year EBITDA (as defined below) growth in 1%
increments for SFX Entertainment, Inc. d/b/a Live Nation, a Delaware corporation (“Live Nation”),
and (ii) the achievement of personal goals and objectives related to the individual performance of
the Employee (“Goals”), as set and determined by the Chief Executive Officer for each calendar
year. The calculation of the Performance Bonus is set forth below; provided, however, that the
dollar figures in the tables below shall be deemed adjusted accordingly upon any increase in the
Employee’s base salary.
The EBITDA Target Bonus for 2006 is $100,000.00 at 15% EBITDA growth for Live Nation. The
Target Bonus for Goals shall be $200,000.00 at 100% achievement of Goals. Regardless of the growth
rate for 2005, the Performance Bonus for 2006 shall be calculated pursuant to Section 1 below
(“Annual Performance Bonus – Positive Growth in Prior Year”).
The EBITDA Target Bonus for 2007 and subsequent years is $145,000.00 at 15% EBITDA growth for
Live Nation. The Target Bonus for Goals shall be $290,000.00 at 100% achievement of Goals.
1. Annual Performance Bonus – Positive Growth in Prior Year.
(a) If Live Nation experienced a year-over-year increase in EBITDA in the year preceding the
calendar year to which the Performance Bonus relates, then the amount of the Performance Bonus
attributable to Live Nation will be determined utilizing the schedule set forth in Section 1(b)
below. Percentage Bonus amount for Goals achieved will be determined by the Chief Executive
Officer on an annual basis.
(b) The Performance Bonus attributable to Live Nation to which this Section 1(b) applies shall
be equal to (i) the Target Bonus (as defined above) multiplied by the Percentage Bonus Amount in
the Table A below that corresponds to Live Nation’s year-over-year EBITDA growth in the year to
which the Performance Bonus relates, plus (ii) the Bonus Amount Based on Goals Achieved in Table B
below. In 2007 and subsequent years, the same scaling will apply as below but with a maximum of
$290,000 at 25% EBITDA growth and $290,000 for 100% achievement of Goals.
Exhibit
A - Xxxxxxx X. Xxxxxx - Performance Bonus Calculation
Page ii of vi
Page ii of vi
TABLE A:
| Bonus Amount | ||||||||||||
| EBITDA | Live Nation | Based on EBITDA | ||||||||||
| Growth | Percentage | Growth of | ||||||||||
| Positive Growth Model | Rate | Bonus Amount | Live Nation | |||||||||
| 1 | % | 2.5 | % | $ | 2,500.00 | |||||||
| 2 | % | 5.0 | % | $ | 5,000.00 | |||||||
| 3 | % | 7.5 | % | $ | 7,500.00 | |||||||
| 4 | % | 10.0 | % | $ | 10,000.00 | |||||||
| 5 | % | 12.5 | % | $ | 12,500.00 | |||||||
| 6 | % | 20.0 | % | $ | 20,000.00 | |||||||
EBITDA Target |
7 | % | 27.5 | % | $ | 27,500.00 | ||||||
Bonus: |
8 | % | 35.0 | % | $ | 35,000.00 | ||||||
2006: $100,000.00 |
9 | % | 42.5 | % | $ | 42,500.00 | ||||||
2007 and |
10 | % | 50.0 | % | $ | 50,000.00 | ||||||
subsequent years: |
11 | % | 60.0 | % | $ | 60,000.00 | ||||||
$145,000.00 |
12 | % | 70.0 | % | $ | 70,000.00 | ||||||
| 13 | % | 80.0 | % | $ | 80,000.00 | |||||||
| 14 | % | 90.0 | % | $ | 90,000.00 | |||||||
Target 15% Growth |
15 | % | 100.00 | % | $ | 100,000.00 | ||||||
| 16 | % | 110.0 | % | $ | 110,000.00 | |||||||
| 17 | % | 120.0 | % | $ | 120,000.00 | |||||||
| 18 | % | 130.0 | % | $ | 130,000.00 | |||||||
| 19 | % | 140.0 | % | $ | 140,000.00 | |||||||
| 20 | % | 150.0 | % | $ | 150,000.00 | |||||||
| 21 | % | 160.0 | % | $ | 160,000.00 | |||||||
| 22 | % | 170.0 | % | $ | 170,000.00 | |||||||
| 23 | % | 180.0 | % | $ | 180,000.00 | |||||||
| 24 | % | 190.0 | % | $ | 190,000.00 | |||||||
| 25 | % | 200.0 | % | $ | 200,000.00 | |||||||
Exhibit
A - Xxxxxxx X. Xxxxxx - Performance Bonus Calculation
Page iii of vi
Page iii of vi
TABLE B:
| Percentage Bonus Amount Based on Goals Achieved (For Both Positive Growth Model and EBITDA Decrease Model) | Percent of Goals Achieved | Bonus Amount | ||||||
| 2.5 | % | $ | 5,000.00 | |||||
| 5.0 | % | $ | 10,000.00 | |||||
| 7.5 | % | $ | 15,000.00 | |||||
Target Goals Bonus: |
10.0 | % | $ | 20,000.00 | ||||
2006: For 100% |
12.5 | % | $ | 25,000.00 | ||||
Achievement of |
20.0 | % | $ | 40,000.00 | ||||
Goals: $200,000.00 |
27.5 | % | $ | 55,000.00 | ||||
2007 and subsequent |
35.0 | % | $ | 70,000.00 | ||||
years: |
42.5 | % | $ | 85,000.00 | ||||
For 100% Achievement of |
50.0 | % | $ | 100,000.00 | ||||
Goals: $290,000.00 |
60.0 | % | $ | 120,000.00 | ||||
| 70.0 | % | $ | 140,000.00 | |||||
| 80.0 | % | $ | 160,000.00 | |||||
| 90.0 | % | $ | 180,000.00 | |||||
| 100.00 | % | $ | 200,000.00 | |||||
(c) The following is an example of a positive growth Performance Bonus provided for
illustrative purposes only:
Assume that in 2005, Live Nation achieved positive year-over-year EBITDA growth when
compared to 2004. Assume also that in 2006 the year-over-year EBITDA growth for Live Nation
is 16%. In addition, assume the Employee achieved 70% of his Goals. On this
example, the Percentage Bonus amount for Live Nation EBITDA growth for calendar year
2006 would be 16% (per Table A in Section 1(b) above) resulting in (i) an EBITDA Target
Bonus for calendar year 2006 of 110% of the Target Bonus, or $110,000.00, and (ii) a
Bonus for Goals achieved would be in the amount of $140,000.00 (per Table B in Section 1(b)
above), resulting in a total Performance Bonus for calendar year 2006 of
$250,000.00.
2. Annual Performance Bonus – EBITDA Decrease.
(a) If Live Nation experienced a year-over-year decrease in EBITDA in the year preceding the
calendar year to which the Performance Bonus relates, then the amount of the Performance Bonus
attributable to Live Nation will be determined utilizing the schedule set forth in Section 2(b)
below. Percentage Bonus amount for Goals achieved will be determined by the Chief Executive
Officer on an annual basis.
(b) The Performance Bonus attributable to Live Nation to which this Section 1(b) applies shall
be equal to (i) the Target Bonus (as defined above) multiplied by the Percentage Bonus Amount in
the Table A below that corresponds to Live Nation’s
year-over-year EBITDA growth in the year to which the Performance Bonus relates, plus (ii) the Bonus Amount Based on
Goals Achieved in Table B below.
Exhibit
A - Xxxxxxx X. Xxxxxx - Performance Bonus Calculation
Page iv of vi
Page iv of vi
TABLE A:
| 100% | ||||||||||||
| EBITDA | Live Nation | |||||||||||
| Growth | Percentage Bonus | |||||||||||
| Prior Year - EBITDA Decrease Growth Model | Rate | Amount | Bonus Amount | |||||||||
| 1 | % | 0.0 | % | $ | 0.00 | |||||||
| 2 | % | 0.0 | % | $ | 0.00 | |||||||
EBITDA Target |
3 | % | 0.0 | % | $ | 0.00 | ||||||
Bonus: |
4 | % | 0.0 | % | $ | 0.00 | ||||||
2006: $100,000.00 |
5 | % | 2.5 | % | $ | 25000.00 | ||||||
2007 and |
6 | % | 5.0 | % | $ | 5,000.00 | ||||||
subsequent years: |
7 | % | 7.5 | % | $ | 7,500.00 | ||||||
$145,000.00 |
8 | % | 10.0 | % | $ | 10,000.00 | ||||||
| 9 | % | 12.5 | % | $ | 12,500.00 | |||||||
| 10 | % | 15.0 | % | $ | 15,000.00 | |||||||
| 11 | % | 20.0 | % | $ | 20,000.00 | |||||||
| 12 | % | 25.0 | % | $ | 25,000.00 | |||||||
| 13 | % | 30.0 | % | $ | 30,000.00 | |||||||
| 14 | % | 40.0 | % | $ | 40,000.00 | |||||||
| 15 | % | 50.0 | % | $ | 50,000.00 | |||||||
| 16 | % | 60.0 | % | $ | 60,000.00 | |||||||
| 17 | % | 70.0 | % | $ | 70,000.00 | |||||||
| 18 | % | 80.0 | % | $ | 80,000.00 | |||||||
| 19 | % | 90.0 | % | $ | 90,000.00 | |||||||
Target 20% Growth |
20 | % | 100.0 | % | $ | 100,000.00 | ||||||
| 21 | % | 110.0 | % | $ | 110,000.00 | |||||||
| 22 | % | 120.0 | % | $ | 120,000.00 | |||||||
| 23 | % | 130.0 | % | $ | 130,000.00 | |||||||
| 24 | % | 140.0 | % | $ | 140,000.00 | |||||||
| 25 | % | 145.0 | % | $ | 150,000.00 | |||||||
Exhibit
A - Xxxxxxx X. Xxxxxx - Performance Bonus Calculation
Page v of vi
Page v of vi
TABLE B:
| Percentage Bonus Amount Based on Goals Achieved (For Both Positive Growth Model and EBITDA Decrease Model) | Percent of Goals Achieved | Bonus Amount | ||||||
| 2.5 | % | $ | 5,000.00 | |||||
| 5.0 | % | $ | 10,000.00 | |||||
| 7.5 | % | $ | 15,000.00 | |||||
Target Goals Bonus: |
10.0 | % | $ | 20,000.00 | ||||
2006: For 100% |
12.5 | % | $ | 25,000.00 | ||||
Achievement of |
20.0 | % | $ | 40,000.00 | ||||
Goals: $200,000.00 |
27.5 | % | $ | 55,000.00 | ||||
2007 and subsequent |
35.0 | % | $ | 70,000.00 | ||||
years: |
42.5 | % | $ | 85,000.00 | ||||
For 100% Achievement of |
50.0 | % | $ | 100,000.00 | ||||
Goals: $290,000.00 |
60.0 | % | $ | 120,000.00 | ||||
| 70.0 | % | $ | 140,000.00 | |||||
| 80.0 | % | $ | 160,000.00 | |||||
| 90.0 | % | $ | 180,000.00 | |||||
| 100.00 | % | $ | 200,000.00 | |||||
(c) The following is an example of a prior year EBITDA decrease Performance Bonus
provided for illustrative purposes only:
Assume that in 2005, Live Nation experienced a decrease in year-over-year EBITDA growth
when compared to 2004. Assume also that in 2006, the year-over-year EBITDA growth of Live
Nation was 16%. In addition, assume the Employee achieved 70% of his Goals. On this
example, the Percentage Bonus amount for Live Nation EBITDA growth for calendar year 2006
would be 16% (per Table A in Section 2(b) above) resulting in (i) an EBITDA Target Bonus for
calendar year 2006 of 60% of the Target Bonus, or $60,000.00, and (ii) a Bonus for Goals
achieved would be in the amount of $140,000.00 (per Table B in Section 2(b) above),
resulting in a total Performance Bonus for calendar year 2006 of $200,000.00.
Exhibit
A - Xxxxxxx X. Xxxxxx - Performance Bonus Calculation
Page vi of vi
Page vi of vi
3. Procedural Provisions.
If the Performance Bonus is paid for any calendar year, it is calculated through the last day
of the calendar year and generally will be payable to the Employee within ninety (90) days after
the end of such calendar year or, as soon as reasonably practicable after such time as the Company
has completed its internal accounting and audit processes for purposes of determining the relevant
EBITDA identified above (the “Bonus Pay Date”). Following the end of each calendar year, the
Employee shall provide information and assistance as appropriate and necessary for purposes of
completing the relevant EBITDA. If the Employee is entitled to a pro rata bonus for any year in
which his employment is terminated, then the amount (if any) of the Performance Bonus for that
calendar year will be pro rated based upon the number of months during such calendar year that the
Employee provided full–time services for the Company pursuant to this Agreement.
The Company reserves the right to modify the Performance Bonus Calculation, on terms which are
no less favorable to the Employee, due to business circumstances such as business acquisition,
business sale, accounting or non-operational circumstances.
4. Definitions.
(a) “EBITDA.” As used herein, the term “EBITDA” shall mean, for any calendar year, the
earnings of Live Nation (excluding extraordinary non-recurring items) for such calendar year (as
determined by the Company’s Chief Financial Officer in accordance with generally accepted
accounting principles) before deduction of interest, taxes, depreciation and amortization. The
parties expressly acknowledge and agree that due to circumstances such as business acquisitions,
business divestitures, accounting changes or non-operational circumstances, additional
modifications may be needed and appropriate for the definition of EBITDA as the Company determines
in its good faith discretion, including, without limitation, conversion of EBITDA to EBIT, with
concomitant changes to the required percentage growth thresholds, in order to take account of the
depreciation associated with major acquisition or capital investments. By way of example and
without limiting the generality of the foregoing provisions, the parties acknowledge that the
application of the foregoing provisions might include pro forma accounting adjustments for newly
developed amphitheaters. The computation of the prior year increase in EBITDA must include payment
of employee bonuses.
