EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of February 27, 1995, between TELEMUNDO
GROUP, INC., a Delaware corporation (the "Company"), and XXXXXXX X. XXXXX (the
"Executive").
Section 1. EMPLOYMENT AND TERM. The Company agrees to employ the
Executive and the Executive agrees to serve as an employee of the Company with
the duties set forth in Section 2 for a term (the "Term") beginning as of
February 27, 1995 (the "Commencement Date") and ending at the close of business
on February 27, 1996, any earlier date of termination under Section 6 or any
later date of termination after extension under Section 7 (the "Termination
Date").
Section 2. DUTIES. The Executive agrees during the Term to serve as
Executive Vice President of the Company. The Executive agrees to use his best
efforts to promote the interest of the Company, subject at all times to the
direction of the President and Chief Executive Officer of the Company (the
"President"), to whom the Executive shall report. The Executive agrees to
devote his entire business time and attention, with undivided loyalty, to the
performance of such duties.
Section 3. CONSIDERATION; SALARY AND BONUS DURING TERM.
(a) CONSIDERATION. The consideration for entering
into this Agreement shall be the performance of services by the
Executive pursuant to this Agreement and the employment of the
Executive by the Company as well as the payments and benefits provided
under this Agreement.
(b) SALARY. The Company shall pay salary to the
Executive at the annual rate of $290,000 during the first year of the
Term, and, if the term is extended for a second year, at the rate of
$320,000 during such year, and if the Term is extended for a third
year, at the rate of $350,000 during such year, to be paid (subject to
required withholdings) in accordance with the Company's regular
payroll practices.
(c) BONUS. During the Term, the Executive will be
eligible for a bonus each year in an amount computed in accordance
with Exhibit A hereto. Bonuses hereunder shall be paid at the times
bonuses are customarily paid to the Company's executives. Except as
set forth in the last sentences of Sections 6(b) and 6(c), the
Executive must be employed by the Company on the last day of the
calendar year to receive a bonus for such year.
Section 4. VACATIONS. The Executive shall be entitled during the Term to
vacations in accordance with the policies of the Company, except that he shall
be entitled to three weeks of vacation per calendar year during the first year
of employment hereunder and four weeks of vacation per calendar year during the
second and third years of employment (pro rata for partial
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years). The Company shall not pay the Executive any additional compensation for
any vacation time not used by the Executive. To the extent that the Executive
cannot take his vacation as a result of the request of the President of the
Company, he may carry such unused vacation over to the following calendar year.
Section 5. FRINGE BENEFITS. During the Term, the Executive shall enjoy
the benefits, including, without limitation, participation in medical insurance,
group term life insurance and retirement and savings plans, and salary
continuation benefits, customarily afforded to executives of the Company in
positions comparable to the Executive's. Nothing in this Agreement shall
restrict the right of the Company generally to amend, modify or terminate any
such benefits for executives in positions comparable to the Executive's, but at
no time shall they be less favorable to the Executive than those generally
afforded to executives with lower level positions than the Executive.
Section 6. TERMINATION.
(a) The Company may terminate this Agreement for Cause as determined
by the President. "Cause" means the Executive's willful
misconduct in the performance of (or failure to perform) his
duties hereunder; the Executive's fraudulent or unlawful behavior
whether or not in connection with his employment; or the
Executive's grossly negligent performance of his duties
hereunder. Upon the effective date of termination under this
Section 6(a), the obligations of the parties under this Agreement
shall cease, except for the obligations of the Executive
contained in Sections 8 and 9.
(b) This Agreement shall terminate immediately upon the death or
other event rendering the Executive unable to perform his duties
and obligations under this agreement for a period in excess of 90
days, whether or not consecutive, during the Term as determined
by the President. Upon the effective date of termination under
this Section 6(b), the obligations of the parties under this
Agreement shall cease, except (i) the obligations of the
Executive contained in Sections 8 and 9, and (ii) if the
Executive would otherwise have been entitled to a bonus under
Section 2(c), the Executive (or Executive's heirs, in the event
of death), shall be entitled to a proportionate amount of such
bonus based upon the amount of the year worked prior to
termination.
(c) If the Company terminates this Agreement other than pursuant to
Section 6(a) or 6(b) or if the Executive terminates this
Agreement pursuant to Section 6(d), then, except as provided in
Section 7, the Company's sole obligation to the Executive shall
be to continue to pay salary in accordance with Section 3(b) and
maintain benefits in accordance with Section 5 until the
Termination Date. Upon the effective date of termination under
this Section 6(c), the obligations of the parties under this
Agreement shall cease, except (i) the obligations of the Company
under the preceding sentence and under Section 7; (ii) the
obligations of the Executive contained in Sections 8 and 9, and
(iii) if the Executive would otherwise have been
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entitled to a bonus under Section 2(c), the Executive (or
Executive's heirs, in the event of death), shall be entitled to a
proportionate amount of such bonus based upon the amount of the
year worked prior to termination.
(d) The Executive shall have the right to terminate his employment
under this Agreement in the event that he suffers a Diminution of
Duty (as defined below) within sixty days' of a Change of Control
(as such term is defined in the Company's 1994 Stock Plan). A
"Diminution in Duty" means a change in the Executive's
responsibilities which represents a material demotion or material
diminution from his responsibilities as in effect on the date
hereof. A Diminution in Duty shall not be deemed to have
occurred prior to the giving of written notice by the Executive
to the Company specifically describing the alleged diminution or
demotion, and the actions the Executive believes are necessary to
cure such alleged Diminution in Duty, and the Company's failure
to so cure within 15 days of receipt of such notice. The giving
of such notice and the action or failure to take action by the
Company shall be irrelevant in determining whether a material
demotion or material diminution constituting a Diminution in Duty
has in fact occurred.
Section 7. EXTENSION OF THE TERM.
(a) The Company shall have the right, exercisable in its sole
discretion by written notice to the Executive on or before
January 13, 1996, to extend the Term for an additional one year
period, and the right to extend the Term for a second additional
one year period upon written notice to the Executive on or before
January 13, 1997. The terms of such additional one year periods
shall be those set forth herein. The Executive shall have the
right to reject each of the proposed extensions by written notice
to the Company on or before January 18, 1996 and January 18,
1997, respectively.
(b) If the 1995 budget is achieved, as set forth on Exhibit A, and
the Company does not exercise its option to extend the Term
pursuant to Section 7(a) above for the initial additional one
year period, the Employee shall be entitled to severance pay for
a one year period following the Termination Date at the rate of
$145,000 per annum, to be paid (subject to required withholding)
in bi-weekly installments.
Section 8. CONFIDENTIALITY. Except as required in his duties hereunder,
the Executive will not, directly or indirectly, use, disseminate or disclose any
Confidential Information. Upon expiration or termination of the Term, all
documents, records and similar repositories of or containing Confidential
Information, including copies thereof, then in the Executive's possession,
whether prepared by the Executive or others, will be left with the Company.
"Confidential Information" means nonpublic information relating to the Company
or any affiliate of the Company. Following the expiration or termination of the
Term, the Executive agrees to reasonably cooperate with the Company and its
affiliates with respect to matters with which the Executive was involved during
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the Term. This Section 8 shall survive the expiration or termination of the
Term. If in connection with Executive's cooperation with respect to legal
matters, it is necessary for Executive to be represented by separate counsel,
the Company will pay the reasonable fees of such counsel, provided that if
Executive is named as a defendant in an action or proceeding by reason of fact
that he was an officer of the Company, any fees or expenses paid by the Company
will be subject to procedures and rights of indemnification of officers and
directors of the Company under the Company's By-Laws and the laws of the State
of Delaware.
Section 9. COVENANT NOT TO INTERFERE. The Executive agrees and covenants
that, for a period of one year following the expiration or termination of the
Term, he will not interfere directly or indirectly in any way with the Company.
"Interfere" means to influence or attempt to influence, directly or indirectly,
customers, program suppliers, employees, performers or independent contractors
of the Company, its subsidiaries or any of its network affiliates to restrict,
reduce, sever or otherwise alter their relationship with the Company, its
subsidiaries or any of its network affiliates. In the event any court having
jurisdiction shall reduce the duration or scope of the covenant not to interfere
set forth in this Section 9, such covenant, in its reduced form, shall be
enforceable. This Section 9 shall survive the expiration or termination of the
Term.
Section 10. ASSIGNABILITY, ETC. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. The Executive acknowledges that the
services to be rendered by him are unique and personal and accordingly that he
may not assign any of his rights or delegate any of his duties or obligations
under this Agreement.
Section 11. NOTICES. All notices given hereunder shall be in writing and
shall be sent by registered or certified mail or delivered by hand and shall be
deemed to be given on the date received. Any notice by the Company to the
Executive shall be mailed or delivered to:
Xxxxxxx X. Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
or such other address as may from time to time be provided by the Executive to
the Company for such purposes. Any notice by the Executive to the Company shall
be mailed or delivered to:
Telemundo Group, Inc.
0000 Xxxx 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: President and Chief Executive Officer
and
Telemundo Group, Inc.
0000 Xxxx 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: General Counsel
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or such address or addresses as may from time to time be provided by the Company
to the Executive for such purpose.
Section 12. CAPTIONS. The captions in this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
Section 13. AMENDMENTS. ETC. This Agreement may be amended, modified or
terminated only by an instrument in writing signed by the parties hereto.
Section 14. GOVERNING LAW. This Agreement is made in and shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to conflict of law principles. The Executive hereby
consents to the jurisdiction of the courts of the State of New York.
Section 15. REMEDIES. Each of the parties to this Agreement will be
entitled to enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement. Such specific performance
and/or injunctive relief shall be available without the posting of any bond or
other security.
Section 16. ENTIRE AGREEMENT: SEVERABILITY. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof. Wherever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
Section 17. NO CONFLICTS. The Executive represents and warrants to the
Company that the execution and performance of this Agreement by the Executive
does not violate or conflict with any agreement, arrangement, understanding or
restriction, written or oral, between the Executive and any other firm or
person. The Executive shall indemnify and hold harmless the Company and its
subsidiaries, shareholders, directors and officers from any all loss, damage or
expense, including attorneys' fees, arising out of any breach of the foregoing
representation and warranty by the Executive.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
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TELEMUNDO GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
President and Chief Executive Officer
/s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
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EXHIBIT A
TO AGREEMENT DATED AS OF FEBRUARY 27, 1995
BETWEEN TELEMUNDO GROUP, INC. AND
XXXXXXX X. XXXXX
(dollars in thousands)
% of Salary if
Target Achieved (2) 1995 Targets 1996 Target (3) 1997 Targets (3)
----------------- ------------ --------------- ----------------
100% $33,187 $39,824 $47,789
75% $28,858 (Budget) $34,630 $41,556
50% $24,529 $29,435 $35,322
ADJUSTED NET CONTRIBUTION (1)
(1) "Adjusted Net Contribution" means operating income plus depreciation and
amortization determined in accordance with generally accepted accounting
principles, without giving effect to any income, gain or loss associated
with TeleNoticias del Mundo, L.P., but determined consistent with the
accounting method for determining "Net Contribution before TeleNoticias" on
the Company's internal financial statements in prior periods and adjusted
to eliminate the impact of changes in accounting principles after the date
of this Agreement and of acquisitions or divestitures of operating units
after the date of this Agreement if taking such operating units into
account would either increase or decrease the actual Net Contribution by at
least 5% of the Adjusted Net Contribution target in the year of acquisition
or divestiture on an annualized basis and also adjusted to eliminate: (i)
all monetary compensation paid to executive officers who are terminated
during calendar year 1995 (but only such compensation paid after such
termination); (ii) any legal fees and costs paid by the Company with
respect to item (i); (iii) $95,000 of expenses in 1995; (iv) the expense
associated with the exercise of options to acquire common stock held on
March 7, 1995 by the executive officers of the Company, to the extent not
in the Company's budget; (v) the expense associated with the exercise of
options issued to those persons who are executive officers of the Company
on March 7, 1995 in connection with their termination prior to July 1995,
to the extent not in the Company's budget; (vi) direct costs incurred in
the Company's bankruptcy reorganization, to the extent not included in the
Company's budget; (vii) direct costs incurred in settling the Xxxxx
litigation, to the extent not include in the Company's budget; and (viii)
certain contingent expenses relating to Puerto Rico as discussed between
the parties, to the extent not included in the Company's budget. The
adjustments set forth in clauses (i) - (viii) (other than clause (iii))
shall occur only when and to the extent actually expensed by the Company
and to the extent considered in the calculation of Adjusted Net
Contribution.
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(2) Each bonus payment shall be subject to required withholdings. For purposes
of computing the bonus in 1995, the salary shall be deemed to be $290,000
for the entire year. For subsequent years, the bonus shall be based on the
actual annualized salary for that calendar year. Calculations hereunder
shall be based upon data provided by the Company's Chief Financial Officer
to the Chief Executive Officer, whose decision shall be final.
(3) 1996 and 1997 Targets apply only if the Term of the Agreement is extended
pursuant to Section 7(a).
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EXHIBIT B
TO AGREEMENT DATED FEBRUARY 27, 1995
(AS AMENDED, MAY 30, 1995)
BETWEEN TELEMUNDO GROUP, INC.
AND XXXXXXX X. XXXXX
For the calendar year 1995, Executive shall be eligible for bonuses based on the
attainment of certain Gross Revenue (1) by KVEA, Los Angeles as follows:
Bonus Payment if
Target Achieved (3) 1995 Targets
------------------- ------------
$50,000 $26,000,000
$50,000 (additional) $29,000,000
For the calendar years 1996 and 1997, Executive shall be eligible for bonuses
based on the attainment of certain Broadcast Cash Flow (2) by KVEA, Los Angeles
as follows:
Bonus Payment if Target Achieved (3)
------------------------------------
Target 1996 1997
------ ---- ----
85% of Budget $56,667 $76,667
Budget (4) $85,000 $115,000
115% of Budget $113,333 $153,333
(1) Gross Revenue includes local and national spot commercial air time sales
and sales of broker and block air time before agency commissions. Gross
Revenue excludes trade, barter and other revenue and is determined in
accordance with generally accepted accounting principles and is determined
consistent with the accounting method for determining gross commercial
airtime and block air time on the Company's internal financial statements
in prior periods and the 1995 budget and forecast.
(2) "Broadcast Cash Flow" is KVEA's operating income plus depreciation and
amortization determined in accordance with generally accepted accounting
principles and those used in preparing the Budget.
EXHIBIT B
PAGE 2
(3) Each bonus payment shall be subject to required withholdings. Bonus
payments shall be made on a calendar year basis, with such bonus paid at
the time bonuses are customarily paid to the Company's executives. Each
target is a threshold which must be achieved in order to earn the
respective bonus payment. Amounts between target levels for 1995 are not
prorated. Amounts between target levels for 1996 and 1997 are prorated. For
1996 and 1997, bonus amounts set out at different target levels are not
cumulative. Calculations hereunder shall be based upon data provided by
the Company's Chief Financial Officer to the Chief Executive Officer, whose
decision shall be final.
(4) 1996 and 1997 "Budget" is the amount of Broadcast Cash Flow set forth on
the final approved budget for such year.
XXXXXXX X. XXXXX
May 30, 1995
May 30, 1995
Xx. Xxxxxxx X. Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
RE: AMENDMENT TO EMPLOYMENT AGREEMENT
Dear Xx. Xxxxx:
Reference is made to that certain employment agreement, dated as of February 27,
1995 between Telemundo Group, Inc. , a Delaware Corporation ("the Company") and
Xxxxxxx X. Xxxxx ("you" or "Executive") (the "Original Agreement"). When signed
by the parties, this letter ("Amendment") shall be deemed part of the agreement
between Company and Executive and together with the Original Agreement shall
constitute the "Employment Agreement" between Company and Executive.
For the consideration set forth below, you and the Company desire to amend the
terms of the Original Agreement as stated herein. Accordingly, the terms of the
Original Agreement are hereby amended as follows:
1) In Section 1, the reference to "February 27, 1996" is changed to "February
27, 1998."
2) Section 3(b) of the Original Agreement is amended to read in its entirety as
follows:
"(b) SALARY. The Company shall pay salary to the Executive at
the annual rate of $290,000 during the first year of the Term,
$320,000 during the second year of the Term, and $350,000 during the
third year of the Term, to be paid (subject to required withholdings)
in accordance with the Company's regular payroll practices."
3) A new subsection (d) is added to Section 3 which reads as follows:
"(d) KVEA BONUS. For the calendar year 1995 and any other calendar
year during the Term in which Executive is based in Los Angeles and a
material portion of Executive's duties include management of KVEA,
Executive shall be eligible for bonuses based
XXXXXXX X. XXXXX
May 30, 1995
on the attainment of certain performance levels by KVEA as set forth
on Exhibit B attached hereto. Any bonuses earned under this
subsection (d) shall be paid at the times bonuses are customarily paid
to the Company's executives, and shall be subject to all required
withholdings. Except as set forth in the last sentences of Sections
6(b) and 6(c), Executive must be employed on the last day of the
calendar year to receive any bonus under this subsection (d).
4) A new subsection (e) is added to Section 6 which reads as follows:
"(e) FAILURE OF COMPANY TO ACHIEVE ADJUSTED NET CONTRIBUTION. The
Company may terminate Executive's employment for failure of the
Company and its consolidated subsidiaries to achieve 80% of the
"Adjusted Net Contribution" of at least $34,630,000 for the fiscal
year ended December 31, 1996 by giving Executive notice of termination
no later than April 30, 1997 which states a date of termination no
later than 30 days following such notice. Upon the effective date of
termination of the Agreement under this Section 6(e), the obligations
of the parties shall cease except for Executive's obligations under
Sections 8 and 9. "Adjusted Net Contribution" shall be defined as on
Exhibit A to that certain "NONQUALIFIED STOCK OPTION AGREEMENT"
between Company and Executive dated May 30, 1995."
5) Section 7 of the Original Agreement is deleted in its entirety and replaced
with the following:
"Section 7. Intentionally Omitted."
6) Footnote 3 on Exhibit A to the Original Agreement is deleted.
7) A new Exhibit B, in the form of Exhibit B attached to this Amendment, is
deemed attached to, and part of, the Employment Agreement.
Except as specifically amended herein, all terms and conditions of the Original
Agreement remain in full force in effect and part of the Employment Agreement.
This Amendment is entered into and effective as of May 30, 1995.
XXXXXXX X. XXXXX
May 30, 1995
Telemundo Group, Inc.
/s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
AGREED AND ACCEPTED
/s/ Xxxxxxx X. Xxxxx
-----------------------------
Xxxxxxx X. Xxxxx
