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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement is entered as of September 29, 1999, by and between ACME
Communications, Inc., a Delaware corporation (the "Company") as employer and
Xxxxxx X. Xxxxx ("Executive"). This Agreement will be effective on the date on
which the Company has closed its initial public offering of shares of its common
stock.
1. EMPLOYMENT.
1.1 TITLE; DUTIES. The Company hereby employs Executive as Executive Vice
President and Chief Financial Officer to perform such management and
executive duties on behalf of the Company as the Chief Executive Officer
or Board of Directors of the Company may from time to time determine.
Executive will have such duties and responsibilities as are generally
consistent with such position in a public company of comparable present
and projected size. Executive will also serve without additional
compensation in an executive capacity for one of more direct or indirect
subsidiaries of the Company if the Board from time to time requests.
Executive will also, subject to Executive's election as such, serve as a
member of the Board, as well as a member of any committee of the Board
to which Executive may be elected or appointed.
1.2 TERM. Executive will be employed until June 16, 2002, unless Executive's
employment is terminated before that date pursuant to the provisions
hereof or extended in accordance with the next sentence. The Company
will have the option to extend the term of Executive's employment until
September 29, 2003. The Company must give Executive notice of its
exercise of its extension option by March 16, 2002. If the extension
option is exercised, Executive's then current Base Salary would be
increased by 10% for the period of the extension. If the extension
option is not exercised, vesting of all of Executive's options granted
as of the date this Agreement becomes effective will accelerate and
become immediately exercisable on June 16, 2002.
2. COMPENSATION
2.1 COMPENSATION. As compensation for his services hereunder, the Company
will pay Executive the following:
2.1.1 BASE SALARY. A base salary ("Base Salary") of $300,000 per annum
payable in monthly installments in accordance with the Company's normal
payroll practices. On January 1, 2000, the Base Salary will increase to
$375,000 per annum. Starting January 1, 2001, (a) the Base Salary will
increase annually as of January 1 by the amount of the increase in the
Consumer Price Index (All Urban Consumers) during the previous year, and
(b) will be reviewed annually by the Company's Compensation Committee to
determine whether an additional increase is appropriate.
2.1.2 PERFORMANCE BONUS. The Company's Compensation Committee will
recommend to the Company's Board of Directors for the Board's adoption
no later than November 30, 1999 a cash incentive plan under which
Executive will be eligible to
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receive awards. No later than January 1, 2000, Executive will be awarded
cash incentives under such plan if Executive meets performance targets
during fiscal 2000.
2.1.3 BONUSES.
(a) On January 1, 2000, Executive will receive a $802,500 special,
one-time bonus.
(b) Executive will be eligible to receive additional annual bonuses
to the extent, if any, awarded by the Company's Compensation
Committee.
2.1.4 ADDITIONAL BENEFITS.
(a) During the term of this Agreement, Executive will be entitled to
participate, to the extent he is eligible under the terms and
conditions thereof, in any pension, profit sharing, retirement,
hospitalization, insurance, medical service or other employee
benefit plan generally available to the executives of the
Company which may be in effect from time to time during the
period of his employment hereunder, it being understood that the
Company will pay the entire costs of any health insurance or
disability insurance maintained by the Company for Executive in
accordance with Company's policies generally in effect.
(b) Executive will be provided a leased vehicle to be acquired in a
"trade deal" (i.e. non-cash); provided, however, that the
Compensation Committee will have the discretion to determine the
value of such trade deal.
2.1.5 VACATIONS. Executive shall be entitled to four (4) weeks of paid
vacation (in addition to Company-wide holiday periods) annually, two
weeks of which may be carried forward to the following year.
2.2 REIMBURSEMENT. The Company will reimburse Executive for all expenses
reasonably incurred by him in connection with the performance of his
duties hereunder or in the business of the Company.
3. NON-COMPETITION AND BUSINESS OPPORTUNITIES.
3.1 COMPETITIVE ENTERPRISES. While employed by the Company, and for a period
of twelve (12) months after termination of employee status for any
reason, Executive must not, without the express written consent of the
Board, directly or indirectly, engage in any activity that is, or
participate or invest in or assist (whether as owner, part-owner,
stockholder, partner, director, officer, trustee, employee, agent,
independent contractor or consultant, or in any other capacity) a
Competitive Enterprise. "Competitive Enterprise" means any entity that
operates television stations, cable distribution systems or other video
broadcast or distribution enterprises exclusively in a designated market
area ("DMA") where the Company or any affiliate (as defined in the
Securities Exchange Act of 1934) of the Company owns and/or operates
stations.
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3.1.1 EXCEPTIONS. Notwithstanding the foregoing, nothing in this
Section 3 will prohibit Executive, after termination of Executive's
employee status, from engaging in any activity on behalf of, or being
employed in any capacity by, a group television station operator so long
as no more than 5% of such operator's revenues result from a Competitive
Enterprise. Executive must not, until July 1, 2000, own any equity
interests in any privately-held television enterprise or more than 5% of
the equity interests in any publicly-held television enterprise if, in
either case, such enterprise is engaged in a Competitive Enterprise.
3.1.2 CORPORATE OPPORTUNITY. Executive agrees, while serving as an
officer or employee of the Company, to offer or otherwise make known or
available to the Company without compensation or consideration, any
business prospects, contracts or other business opportunities that
Executive may discover, find, develop or otherwise have available to
acquire, own or manage any television stations, cable distribution
systems or other video broadcast or distribution enterprises that could
deliver WB Network programming for DMAs 20 to 100, excluding any Web
Network opportunities controlled by The WB Network and/or Time Warner
(such prospects, contracts or opportunities are referred to as
"Television Station Opportunities"), and further agrees that any such
Television Station Opportunities will be the property of the Company.
3.1.3 NON-SOLICITATION. Executive must not, until the second
anniversary his employee status is terminated, whether on behalf of a
Competitive Enterprise or otherwise, hire or attempt to hire any officer
or other senior employee of the Company or any affiliate of the Company
or encourage any officer or other senior employee of the Company or any
affiliate of the Company to terminate his or her relationship with the
Company or any affiliate of the Company.
4. TERMINATION.
4.1 DEATH; DISABILITY. If Executive's employment is terminated by reason of
Executive's death or disability, Executive or his estate will be
entitled to one year's Base Salary in effect at the time of his
termination as severance pay, payable in monthly installments in
advance.
4.2 WITHOUT CAUSE. If Executive's employment is terminated by the Company,
without Cause, as defined in clause 4.6 below, he will be entitled to
receive severance pay for a period of eighteen months based upon his
Base Salary in effect at the time of his termination, payable in monthly
installments in advance.
4.3 RESIGNATION; FOR CAUSE. If the Executive's employment is terminated as a
result of his resignation or termination for Cause, he will not be
entitled to any severance payments.
4.4 NO MITIGATION. The Executive has no duty to mitigate any amounts of
severance payable hereunder.
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4.5 DISABILITY DEFINED. "Disability" means that Executive has been
substantially unable, by reason of injury, illness or similar cause
(physical or mental), to have performed his duties and responsibilities
for a period of one hundred and eighty (180) consecutive days or shorter
periods aggregating 180 days in any consecutive twelve (12) month
period, and such person is not anticipated to recover the ability to
perform such duties and responsibilities with the foreseeable future.
4.6 CAUSE DEFINED. "Cause" will be determined by the Company's Board of
Directors and will mean: (A) the conviction of Executive of, or a plea
of guilty or nolo contendere entered by or on behalf of Executive with
respect to, a felony or crime, where such felony or crime involves moral
turpitude or where such conviction or plea is likely to have a material
adverse effect on the Company or upon Executive's ability to perform his
duties as an Executive of the Company; (B) fraud, embezzlement or other
act of dishonesty by Executive with respect to the Company; (C) the
continued willful refusal or neglect of Executive to perform or
discharge any substantial portion of his duties and responsibilities for
a period in excess of thirty (30) days, which willful refusal or neglect
continues for an additional thirty (30) day after written notice to
Executive from the Company with regard thereto; (D) intentional and
willful violation by Executive of any rule, regulation or policy of the
Federal Communications Commission ("FCC") that would reasonably be
expected to (i) result in a material loss to the Company, (ii) result in
the termination, cancellation or suspension of any of the Company's
material FCC licenses or permits, or (iii) otherwise have a material
adverse effect on the Company's business or financial condition; or (iv)
the material breach (after expiration of any notice and cure period) of
this Agreement.
4.7 LIMITATION ON SEVERANCE PAYMENTS. If the vesting of any options or
other awards granted to Executive under any incentive plan upon a change
in control event (as defined under the Company's 1999 Stock Incentive
Plan) together with all other payments and the value of any benefit
received or to be received by Executive would result in all or a portion
of such payments to be subject to excise tax under Section 4999 of the
Internal Revenue Code (the "Code"), then Executive's payments will be
either (a) the full payments or (b) such lesser amount that would result
in no portion of the payments being subject to excise tax under Section
4999 of the Code, whichever of the foregoing amounts, taking into
account the applicable Federal, state, and local employment taxes,
income taxes, and the excise tax imposed by Section 4999 of the Code,
results in the receipt by Executive, on an after-tax basis, of the
greatest amount of the payments notwithstanding that all or some portion
of the payments may be taxable under Section 4999 of the Code. Executive
will be entitled to receive the foregoing full payments, however, only
if the excess of (c) the "parachute payments" as defined in Section
280G(b)(2) of the Code, over (d) 2.99 times Executive's "base amount" as
defined in Section 280G(b)(3) of the Code exceeds the sum of (x) the
greater of (i) $100,000 or (ii) ten (10) percent of the payments under
this Agreement plus (y) the excise tax imposed under Section 4999 of the
Code, plus (z) the applicable federal, state, and local employment taxes
and income taxes imposed on the excess of (i) the "parachute payments"
as defined in Section 280G(b)(2) of the Code, over (ii) 2.99 times
Executive's
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"base amount" as defined in Section 280G(b)(3) of the Code. All
determinations required to be made under this Section will be made by
any nationally recognized accounting firm that is the Company's outside
auditor at the time of such determination (the "ACCOUNTING FIRM"). The
Company will cause the Accounting Firm to provide detailed supporting
calculations of its determinations to the Company and Executive. Notice
must be given to the Accounting Firm within fifteen (15) business days
after an event entitling Executive to a payment under this Agreement.
All fees and expenses of the Accounting Firm will be borne solely by the
Company. The Accounting Firm's determinations must be made with
substantial authority (within the meaning of Section 6662 of the Code).
5. MISCELLANEOUS
5.1 EXECUTIVE'S REPRESENTATIONS AND WARRANTIES. Executive represents and
warrants to the Company that: (A) the Executive has the unfettered right
to enter into this Agreement on the terms and subject to the conditions
hereof and (B) neither the execution and delivery of this Agreement nor
the performance by Executive of any of Executive's obligations hereunder
constitute or will constitute a violation or breach of or a default
under any agreement, arrangement or understanding or any other
restriction of any kind to which Executive is a party or by which
Executive is bound.
5.2 INSURANCE. The Company will have the right to take out life, health,
accident, "Key-man" or other insurance covering Executive in the name of
the Company and at the Company's expense in any amount deemed
appropriate by the Company. Executive will assist the Company in
obtaining such insurance, including, but not limited to, submitting to
any reasonably required medical examination.
5.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and understandings among the parties or any of
them. There are no representations, warranties, agreements or
understandings other than those expressly contained herein. No
termination, alteration, modification, variation or waiver of this
Agreement or any of the provisions hereof shall be effective unless in
writing and signed by the party against whom enforcement thereof is
sought.
5.4 NOTICE. Any notice required, permitted or desired to be given pursuant
to any of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if sent by certified or
registered mail, return receipt and postage prepaid, hand delivered,
overnight delivery service or sent by telephone facsimile as follows:
If to the Company, to it at:
ACME Communications, Inc.
00000 Xxxxx Xxxx., Xxxxx 000
Xx. Xxxxx, XX 00000
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Attention: Xxxx Xxxxx
Facsimile No.: (000) 000-0000
If to Executive, to him at:
0000 Xxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Either of the parties may at any time and from time to time change the address
to which notice will be sent hereunder by notice to the other party given under
this Section. The date of the giving of any notice sent by mail will be the date
of the posting of the mail; by any other means of delivery it will be the date
of receipt.
5.5 ASSIGNMENT. Neither this Agreement nor the right to receive any payments
hereunder may be assigned by Executive nor Company.
5.6 WAIVER. No course of dealing nor any delay on the part of the Company in
exercising any rights hereunder will operate as a waiver of any such
rights. No waiver of any default or breach of this Agreement shall be
deemed a continuing waiver or a waiver of any other breach or default.
5.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to
agreements executed and to be performed entirely therein.
5.8 SEVERABILITY. Should any clause, paragraph or part of this Agreement be
held or declared to be void or illegal for any reason, all other
clauses, paragraphs or parts of this Agreement which can be effected
without such illegal clause, paragraph or part shall nevertheless remain
in full force and effect. If, in the opinion of any court, any clause,
paragraph or part of this Agreement is unreasonable or unenforceable,
such court shall have the right, power and authority to excise or modify
such provisions, or portions thereof, of this Agreement as the court
shall find not be reasonable or enforceable and to enforce the remainder
of such clause, paragraph or part as so excised or modified.
5.9 BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of the Company, Executive and Executive's heirs and personal
representatives.
5.10 HEADINGS. The headings of the paragraphs of this Agreement are inserted
for convenience only and do not constitute a part hereof or affect in
any way the meaning or interpretation of this Agreement.
5.11 CONFIDENTIALITY. Executive will hold all Confidential Information in a
fiduciary capacity for the benefit of the Company. After termination of
Executive's employment, Executive will not, without the prior written
consent of the Company or as may otherwise be required by law or legal
process, communicate or divulge any such Confidential
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Information to anyone other than the Company and those designated by it.
"CONFIDENTIAL INFORMATION" means information not known by the trade
generally or not reasonably available to a knowledgeable person in the
trade, even though such information may have been disclosed to one or
more third parties pursuant to consulting agreements, joint research
agreements, or other agreements entered into by the Company.
Confidential Information does not include information that is required
to be disclosed by law, statute, regulation or legal or administrative
process
5.12 OWNERSHIP OF WORK PRODUCT. If Executive conceives of, discovers, invents
or creates inventions, improvements, new contributions, literary
property, material, ideas and discoveries, whether patentable or
copyrightable or not (all of the foregoing being collectively referred
to herein as "WORK PRODUCT"), or receives information about business
opportunities for the Company, unless Company otherwise agrees in
writing, all of the foregoing will be owned by and belong exclusively to
Company and that Executive will have no personal interest therein, if
they are either related in any manner to the business (commercial or
experimental) of Company, or are, in the case of Work Product, conceived
or made on Company's time or with the use of Company's facilities or
materials, or, in the case of business opportunities, are presented to
Executive for the possible interest or participation of Company.
Executive will further, unless Company otherwise agrees in writing, (a)
promptly disclose any such Work Product and business opportunities to
Company; (b) assign to Company, upon request and without additional
compensation, the entire rights to such Work Product and business
opportunities; (c) sign all papers necessary to carry out the foregoing;
and (d) give testimony in support of Executive's inventorship or
creation in any appropriate case. Executive will not to assert any
rights to any Work Product or business opportunity as having been made
or acquired by executive before the date of this Agreement except for
Work Product or business opportunities, if any, disclosed to and
acknowledged by Company in writing before the date of this Agreement.
5.13 REASONABLE REIMBURSEMENT. The Company will reimburse Executive for
reasonable attorney fees in connection with the negotiation of this
Agreement upon its receipt of invoices and such other supporting
documentation reasonably necessary to substantiate the nature and
payment of such expenses.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first above written.
ACME Communications, Inc.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
President
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
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