Exhibit 10.24
Iwerks Entertainment, Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
August 3, 1998
Xx. Xxxx Xxxxxxxx
000 X. Xxxxxx Xxxxxx #X
Xxxxxxxx, XX 00000
Dear Xx. Xxxxxxxx
Xxxxxx Entertainment, Inc. (the "Company") and you have agreed as follows:
1. Employment and Services:
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The Company has employed you as Senior Vice President - World Wide Sales
and Marketing and you have agreed, commencing on June 29, 1998 (the
"Commencement Date"), to perform your exclusive and full-time services in that
capacity for the Company upon the terms and conditions herein set forth. You
shall report directly to the Company's Chief Executive Officer or his duly
authorized representatives. You shall have all the duties customarily accorded
to a Senior Vice President - World Wide Sales and Marketing of a corporation and
such additional duties commensurate with your offices as are from time to time
delegated to you by the Chief Executive Officer of the Company. You shall
devote your business time, energy and efforts faithfully and diligently to
promote the Company's interests. You will render your services primarily at the
Company's offices which shall be in the Los Angeles metropolitan area and which
are presently on West Valerio Street in Burbank, and shall travel on business on
a temporary basis to such other places as the Company may direct.
2. Term:
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The term of this Agreement shall be the Initial Period and the Additional
Period, if the Company's option is exercised, unless sooner terminated.
a. Initial Period: The initial period shall commence on the Commencement
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Date and continue for a two year period; and
b. Additional Period: The Company shall have the irrevocable option to
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extend the Term of this Agreement following the termination of the Initial
Period for an additional two year period (the "Additional Period"), upon the
same terms and conditions as during the Initial Period. Such option is
exercisable by written notice sent on or before March 29, 2000.
c. Notice at Expiration of Additional Term. If the option referred
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to in clause b above is exercised by the Company, the Company shall provide to
you written notice on or prior to March 29, 2000 as to whether it desires to
extend the Term beyond the Additional Term.
3. Salary:
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As compensation for all your services rendered under this Agreement, and
so long as you are not in default of any material obligation, for the period
ending on the date immediately preceding the first anniversary of the
Commencement Date, the Company shall pay you a base salary at an annual rate of
$160,000. Commencing on the first anniversary of the date of this Agreement,
your base salary for each subsequent contract year during the Term of your
employment (including the Initial Term and the Additional Term) shall be
increased by an amount equal to 4% of the base salary prevailing during the
prior contract year.
Such compensation shall be payable in equal installments on the Company's
regular paydays during the Term subject to the usual and required employee
payroll deductions, withholding and reduction to offset payments you receive
from governmental agencies or programs, including, but not limited to, State
Disability Insurance benefits. (You are obligated to seek such payments or
benefits and report them to the Company). The Company is not obligated to
actually utilize your services, subject to its obligations set forth in this
Agreement.
4. Performance Bonus:
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Commencing in Fiscal 1999, you will be eligible for a performance based
bonus pursuant to a bonus plan adopted by the Compensation Committee of the
Board of Directors. You will be eligible to receive a bonus in an amount of up
to 50% of your then current annual base salary upon achieving 100% of the
established performance goals. It is anticipated that the bonus plan will
provide bonus payments in amounts less than this percentage if the Company
achieves a portion of the stated goals and a percentage greater than 50% (up to
an agreed upon maximum contemplated to be set at 100%) if the Company's
performance exceeds the stated goals. Performance goals will be established by
the Compensation Committee of the Board of Directors after consultation with the
Chief Executive Officer during the first quarter of each fiscal year and shall
be commensurate with the corresponding bonus targets. It is anticipated that the
performance goals will include financial goals for the Company as well as
nonfinancial goals for the Company.
5. Stock Options:
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The Company will grant to you options to purchase 75,000 shares of common
stock of the Company upon commencement of your employment hereunder. Of these
75,000 options, 45,000 options shall be priced at the closing sale price of the
Company's common stock on the Nasdaq National Market on the trading date
immediately prior to the Commencement Date (the "Closing Price"). Of the
remaining options, 15,000 shall be priced at 125% of the Closing Price and
15,000 shall be priced at 150% of the Closing Price. Effective as of the
beginning of each fiscal year in which you are employed by the Company
(commencing with the fiscal year ending June 30, 2000) and if the Company
achieves 100% of the performance goals as established for purposes of the
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performance bonus described above for the prior fiscal year, you will be granted
options to purchase an additional 75,000 shares of common stock at the closing
sale price of the common stock on the Nasdaq National Market on the last trading
day of such prior fiscal year. If the Company achieves less than 100% of the
performance goals for any fiscal year, but you qualify for a bonus under the
bonus plan for such fiscal year, you shall be granted options for that number of
shares which bears the same ratio to 45,000 as the percentage bonus actually
received bears to 50%. Of the options described herein, 18,750 shall vest on the
first anniversary of your employment by the Company and the remaining options
shall vest in equal monthly installments over the next three years. All
options described herein shall be subject to accelerated vesting as described
below under "Severance Arrangements" and "Change of Control." All options shall
terminate on the earlier to occur of three years from the date of your
termination of employment and ten years from the date of grant.
6. Benefits:
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During the period for which the Company actually utilizes your services and
so long as you are not in default of any material obligation:
a. Vaction. You shall be entitled to three weeks paid vaction for each
calendar year during your employment; provided, however, that vaction shall
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only be taken at such times as not to interfere with the necessary performance
of your duties and obligations under this Agreement. Vacation time shall accrue
and may be carried over only in accordance with Company policy. It shall be your
responsibility to schedule and take all accrued vacation prior to the expiration
of the Term hereof.
b. Automobile. The Company shall provide you with an automobile allowance
in an amount equal to $1,000.00 per month.
c. Reimbursement. You shall be entitled to reimbursement from the Company
for the reasonable costs and expenses incurred in connection with the
performance of the duties and obligations provided for in this Agreement in
accordance with the Company's travel policies. Reimbursement shall be paid upon
prompt presentation of expense statements or vouchers and such other supporting
information as the Company may from time to time require.
d. Other Benefits; Insurance. During the term of your employment under
this Agreement, if and to the extent eligible, you shall be entitled to
participate in all operative employee benefit and welfare plans of the Company
then in effect ("Company Officer Benefit Plans"), including, to the extent then
in effect, group life, medical, disability and other insurance plans, all on the
same basis generally applicable to the executives of the Company; provided
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however, that nothing contained in this Section 6.d shall, in any manner
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whatsoever, directly or indirectly, require or otherwise prohibit the Company
from amending, modifying, curtailing, discontinuing or otherwise terminating,
any Company Officer Benefit Plan at any time (whether during or after the Term
hereof).
7. Severance Arrangements:
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In the event of a termination not "for cause" or a "defacto termination",
(either prior to or at the expiration of the Initial Term or Additional Term, as
applicable (i.e. whether you are terminated during the Initial Term or the
Additional Term, as applicable, or your employment is terminated as a result of
the Company's failure to renew your employment at the end of the Initial Term or
Additional Term, as applicable), you will be entitled to receive the following
(the "Severance Amount"): (I) a cash amount equal to the base salary which would
have been payable to you over the remaining Term (but not less than 15 months),
as computed based on your base salary at the date of notice of termination, (ii)
a cash amount equal to the pro rated portion (based on time served) of the
performance bonus which would have been paid to you under the performance bonus
plan for the fiscal year in which the termination occurs, if your employment had
continued through the end of the fiscal year and the Company had achieved 100%
of its scheduled performance goals, and (iii) the automobile allowance, (iv)
COBRA benefits for you and your family (medical and dental, if applicable), and
(v) other applicable benefits under other Company Officer Benefit Plans for the
remaining Term (but not less than 15 months). In addition, if termination occurs
for any of the foregoing reasons prior to or at the expiration of the Initial
Term or Additional Term, as applicable, all of the stock options then held by
you which would vest during the remainder of the Initial Term or Additional
Term, as applicable, and during the 12 months thereafter, shall become vested
and immediately exercisable and the time for exercise shall be extended until
the expiration of three years from the date of termination of employment.
Notwithstanding the foregoing, (x) if a termination giving rise to an obligation
by the Company to pay the Severance Amount occurs at any time during the Initial
Term or upon the expiration of the Initial Term, each reference to 15 months
above shall be deemed to refer to 18 months, and (y) if during the fiscal year
in which a termination giving rise to an obligation by the Company to pay the
Severance Amount occurs the Company achieves 100% of its scheduled performance
goals, the Company shall pay to you 100% of the performance bonus (in lieu of
the pro rated portion referred to above) as part of the Severance Amount. The
amounts payable to you pursuant to this Section 7 shall be paid to you within 10
days of your termination.
"For cause" is defined to mean (a) an act of fraud, embezzlement or similar
conduct by you involving the Company, (b) any action by you involving your
arrest for violation of any criminal statute constituting a felony or a
misdemeanor involving moral turpitude if the Board of Directors reasonably
determines that the continuation of your employment after such event would have
an adverse impact on the operations or reputation of the Company in the
financial community, (c) gross misconduct or habitual negligence in the
performance of your duties, (d) an act constituting a breach of your fiduciary
duty to the Company under the Delaware General Corporation Law, or (e) a
continuing, repeated and willful failure or refusal by you to perform your
duties. A "defacto termination" is defined to include any of the following
events: (a) the Company reduces your base salary in an aggregate amount in
excess of 10% from that paid in the prior fiscal year, except as part of a
general reduction of compensation of executive officers, (b) the Company fails
to cause you to remain an executive officer of the Company, (c) you were not
afforded the authority, powers, responsibilities and privileges customarily
accorded to an executive with your title, or (d) the Company requires your
primary services to be rendered in an area other than the Company's principal
offices in the greater Los Angeles metropolitan area.
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8. Change in Control:
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If there is a "change in control" of the Company during the Initial Term or
the Additional Term, as applicable, upon the expiration of 90 days (or such
longer period as is then mutually agreeable to you and the Company) following
the date of such Change in Control (if you are requested to serve during such
period) and for a 180 day period thereafter you shall be entitled to terminate
your employment by delivery of written notice and receive (I) a cash amount
equal to the base salary which would have been payable to you over the remaining
Term (but not less than 18 months), as computed based on your base salary at the
date of notice of termination, (ii) a cash amount equal to the performance bonus
which would have been paid to you under the performance bonus plan for the
fiscal year in which the termination occurs, if your employment had continued
through the end of the fiscal year and the Company had achieved 100% of its
scheduled performance goals, and (iii) the automobile allowance, (iv) COBRA
benefits for you and your family (medical and dental, if applicable), and (v)
other applicable benefits under other Company Officer Benefit Plans for the
remaining Term (but not less than 18 months). In addition, all options held by
you on the date of the Change in Control which are unvested shall vest and
become exercisable at the time of the Change in Control and will remain
exercisable (if they are not terminated as a result of the Change in Control)
for a period ending at the end of the third year following the date of such
Change in Control. Nothing contained in this Section 8 shall modify or alter the
Company's obligations under Paragraph 7 above with respect to termination
without cause or defacto termination during the period following a Change in
Control; provided, however, if a termination without cause or a defacto
termination occurs between the date of a Change in Control and the expiration of
the period in which you are entitled to terminate your employment pursuant to
this Section 8, the Severance Amount payable to you shall be the benefits
described in this Section 8 and not the benefits described in Section 7. The
amounts payable to you pursuant to this Section 8 shall be paid to you within 10
days of your termination.
A "change in control" is defined to mean (a) the acquisition by any
individual, entity or group (within the meaning of the Exchange Act of 1934, as
amended) of 25% or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote in the election of directors,
(b) a liquidation, dissolution, reorganization, merger or consolidation of the
Company, except where (I) more than 60% of the combined voting power of the then
outstanding voting securities of the resulting corporation entitled to vote in
the election of directors shall be owned by substantially all of the persons who
were owners immediately prior to such event in substantially the same
proportions as their respective ownership immediately prior to such event, or
(ii) no person owns 25% or more of the combined voting power of the resulting
corporation, or (iii) at least a majority of the members of the Board of
Directors shall have been members of the Board of Directors at the time of the
execution of the initial agreement providing for such event, or (c) a change in
the membership of the Board of Directors such that the directors sitting on the
Board of Directors on the effective date of this Agreement cease to constitute
at least a majority of the Board of Directors following the event.
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9. No Mitigation:
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The payments required to be paid to you by the Company pursuant to Sections
7 and 8 shall not be reduced by or mitigated by amounts which you earn or are
capable of earning during any period following your termination date.
10. Indemnification:
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The Company and you are parties to an Indemnification Agreement, pursuant
to which, inter alia, the Company has agreed, on the terms and conditions
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therein set forth, to indemnify you against certain claims arising by reason of
the fact that you were an officer or director of the Company.
11. Trade Secrets:
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The Company and you are parties to a separate confidentiality agreement
in a form which is required of all employees pursuant to the Company's personnel
policies.
12. Injunctive Relief
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You hereby recognize, acknowledge and agree that in the event of any
material breach by you of any of your covenants, agreements, duties or
obligations hereunder, the Company would suffer great and irreparable harm,
injury and damage, the Company would encounter extreme difficulty in attempting
to prove the actual amount of damages suffered by the Company as a result of
such breach, and the Company would not be reasonably or adequately compensated
in damages in any action at law. You therefore agree that, in addition to any
other remedy the Company may have at law, in equity, by statute or otherwise, in
the event of any material breach by you of any of the covenants, agreements,
duties or obligations hereunder, and after written notice is provided to you
with a reasonable opportunity to cure, the Company or its subsidiaries shall be
entitled to seek and receive temporary, preliminary and permanent injunctive and
other equitable relief from any court of competent jurisdiction to enforce any
of the rights of the Company or its subsidiaries or any of the covenants,
agreements, duties or obligations of you hereunder, or otherwise to prevent the
violation of any of the terms or provisions hereof, all without the necessity of
proving the amount of any actual damage to the Company or its subsidiaries
thereof resulting therefrom; provided, however, that nothing contained in this
Section 12 shall be deemed or construed in any manner whatsoever as a waiver by
the Company or its subsidiaries of any of the rights which any of them may have
against you at law, in equity, by statute or otherwise arising out of, in
connection with or resulting from the breach by you of any of your covenants,
agreements, duties or obligations hereunder.
13. Survivability:
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Without prejudice to the survival of any of your other rights or
obligations and/or any of the Company's other rights or obligations, you and we
expressly acknowledge that your obligations
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and/or the Company's rights under paragraphs 7, 8, 9, 12 and 13 will survive the
expiration or termination of this Agreement.
14. Notices:
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All notices, requests, consents and other communications required or
permitted to be given hereunder shall be written and shall be deemed to have
been duly given if delivered personally or sent by prepared telegram, by
facsimile, or mailed first-class, postage prepaid, as follows:
Employee: Xxxx Xxxxxxxx
000 X. Xxxxxx Xxxxxx #X
Xxxxxxxx, XX 00000
the Company: Iwerks Entertainment, Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XXxxxxxxxx 00000
with a copy to: Troop Xxxxxxxxx Xxxxxxx & Xxxxxx LLP
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: C.N. Xxxxxxxx Xxxxxxx III, Esq.
or at such other addresses as either party may specify by written notice to the
other.
15. General:
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a. During the Term of this Agreement, except within the final one hundred
eighty (180) days of the Term or a Change in Control (whichever is the first to
occur), you shall not seek, or negotiate for, employment other than with the
Company.
b. This Agreement set forth the entire agreement and understanding of the
parties hereto, and, effective on the Commencement Date hereof, supersedes all
prior agreements, arrangements, and understandings. No representation, promise
or inducement has been made by either party that is not embodied in this
Agreement.
c. Nothing herein contained shall be construed so as to require the
commission of any act contrary to law. Wherever there is any conflict between
any provision of this Agreement and any present or future statute, law,
ordinance or regulation, the latter shall prevail, but in such event the
provision of this Agreement affected shall be curtailed and limited only to the
extent necessary to bring it within legal requirements. Without limiting the
generality of the foregoing, in the event any compensation payable hereunder
shall be in excess of the amount permitted by any statute, law, ordinance or
regulation, payment of the maximum amount allowed thereby shall constitute full
compliance by the Company with the payment requirements of this Agreement.
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d. The section headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.
e. The provisions of this Agreement are severable, and if any one or more
provisions are determined to be judicially unenforceable, in whole or
in part, the remaining provisions shall nevertheless be binding and
enforceable.
f. This Agreement and all obligations and benefits of you and the Company
hereunder shall bind and inure to the benefit of you and the Company and your
and the Company's respective affiliates, successors and assigns; provided,
however, you shall not be entitled to assign any of your obligations under this
Agreement and the Company's right to assign this Agreement is subject to the
provisions of Section 8 hereof.
g. No amendment or waiver of any term or provision of this Agreement
shall be effective unless made in writing. Any written amendment or waiver shall
be effective only in the instance given and then only with respect to the
specific term or provision (or portion thereof) of this Agreement to which it
expressly relates, and shall not be deemed or construed to constitute a waiver
of any other term or provision (or portion thereof) waived in any other
instance.
h. This Agreement has been made and entered into in the State of
California and shall be construed in accordance with the laws of the State of
California without regard to the conflict of laws principles thereof.
i. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
j. You have read this Agreement, fully understand its contents and terms,
and have had the opportunity to ask the Company about any questions, concerns or
issues you may have in connection with the Agreement or the terms of the
Agreement. You also have had the opportunity, and taken it to the extent you
choose, to consult legal counsel or any other advisers of your choice in
connection with this Agreement.
Very truly yours,
IWERKS ENTERTAINMENT, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
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Xxxxxxx Xxxxxxxxx
Chief Executive Officer
AGREED:
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
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