November 13, 2015 Mr. Brian Goldsmith Santa Monica, California 90404 RE: Employment Agreement Dear Mr. Goldsmith:
November 13, 2015
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Dear ▇▇. ▇▇▇▇▇▇▇▇▇:
On behalf of Lions Gate Films Inc. (the “Company”), this is to confirm the terms of your employment by the Company. We refer to you herein as “Employee.” The terms of Employee’s employment are as follows:
1. TERM
(a) The term of this agreement (“Agreement”) will begin October 1, 2015 (the “Effective Date”) and end September 30, 2019, subject to earlier termination as provided for in Section 7 below (the “Term”). Until October 1, 2015 the employment agreement dated October 3, 2012 between the Company and Employee (the “Prior Agreement”) shall govern the terms and conditions of Employee’s employment. During the Term of this Agreement, Employee will serve as Co-Chief Operating Officer, reporting to the Chief Executive Officer (the “CEO”), currently ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, with additional dotted-line reporting to the Vice Chairman, currently ▇▇▇▇▇▇▇ ▇▇▇▇▇. In such capacity, among other duties reasonably assigned by the Company, Employee shall: (i) act as the Company’s head of corporate development (having non-exclusive oversight of mergers and acquisitions); (ii) strategically oversee existing and future joint ventures, channels and digital ventures/initiatives (excluding digital licensing); (iii) oversee the Company’s Board of Directors’ (“Board”) materials/memoranda relating to the financial analysis of the Company’s operations and strategic initiatives; (iv) oversee financial analysis and strategy with respect to business unit operations and performance; and, (v) exclusively or non-exclusively, as may be determined on a case-by-case basis, oversee corporate and project finance and capital structure and related transactions. Employee shall render such services as are customarily rendered by persons in Employee’s capacity in the entertainment industry and as may be reasonably requested by the Company.
(b) So long as this Agreement shall continue in effect, Employee shall devote Employee’s full business time, energy and ability exclusively to the business, affairs and interests of the Company and matters related thereto, shall use Employee’s best efforts and abilities to promote the Company’s interests, and shall perform the services contemplated by this Agreement in accordance with policies established by the Company. As long as Employee’s meaningful business time is devoted to the Company, Employee may devote a reasonable amount of time to management of personal investments and charitable, political and civic activities, so long as these activities do not conflict with the Company’s interests or otherwise interfere with Employee’s performance under this Agreement.
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(c) Subject to travel required by Employee’s position and consistent with the reasonable business of the Company, Employee will be based in the Los Angeles, California area.
(d) During the Term, the Company shall pay for the services of an assistant to the extent available in keeping with the Company’s policy and practice.
2. COMPENSATION
(a) Salary. During the Term of this Agreement, Employee will be entitled to receive base salary (“Base Salary”), payable in accordance with the Company’s normal payroll practices in effect. During the Term, Employee’s annual rate of Base Salary will be $900,000.
(b) Payroll. Nothing in this Agreement shall limit the Company’s right to modify its payroll practices, as it deems necessary.
(c) Bonuses.
(i) | For each fiscal year during the Term, Employee shall be eligible to receive annual performance bonuses based upon such Company and/or individual performance criteria as determined by the Compensation Committee (the “CCLG”) of the Board of Directors (the “Board”) of Lions Gate Entertainment Corp. (“Lions Gate”), the Company’s parent, in its discretion and in consultation with the CEO, provided that, except as expressly provided in Section 7(a)(v) and (vii) below, Employee must be employed with the Company through the end of the Company’s fiscal year to be eligible to receive a bonus for a given fiscal year. Any such bonus will be paid as soon as practicable after the end of the applicable fiscal year and in all events within the “short-term deferral” period provided under Treasury Regulation Section 1.409A-1(a)(4) (generally within two and one‑half months after the end of the fiscal year for which the bonus is paid). |
(ii) | EBITDA Bonus. For each fiscal year during the Term, Employee shall be entitled to receive an additional annual bonus based on the Company’s attainment of an EBITDA target (the “E Target”) if such E Target is attained in the following amounts: |
(A) | If the Company attains at least 105% of the E Target, Employee shall receive a bonus equal to 12.5% of his Base Salary; |
(B) | If the Company attains at least 115% of the E Target, Employee shall receive an additional bonus equal to 12.5% of his Base Salary. |
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For each such fiscal year, the Company shall designate the upcoming year’s E Target after it is approved by the Board, on or before the first day of the applicable fiscal year, or as soon thereafter as approved by the Board, and it shall notify Employee in writing of such E Target for the fiscal year to which the E Target applies. The E Target shall not be greater than the E Target for other similarly situated executives of the Company receiving a similar bonus based on an EBITDA target. The Company shall establish a reserve amount for uncollectible receivables equal to 2% (the “E Reserve”). The E Target shall include the E Reserve. If Employee’s employment terminates for any reason during a fiscal year (excepting only if Employee is terminated by the Company for “cause” pursuant to Section 7(a)(iv) below), Employee shall be entitled to a pro-rata portion of the EBITDA bonus for that year, if and when earned, except as otherwise set forth in Section 7(a)(viii) below. Any bonus payable to Employee hereunder shall be paid within thirty (30) days following the end of the audit for the applicable fiscal year and in all events within the “short-term deferral” period provided under Treasury Regulation Section 1.409A-1(a)(4).
(iii) | Credit Facility Bonus. In the event that, during the Term, the Company either refinances its existing corporate credit facility or closes a corporate credit facility for a commitment amount of not less than $600 million, Employee shall be entitled to receive an additional one-time bonus in the amount of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) (the “Credit Facility Bonus”), subject to Employee’s continued employment with the Company through the date of such refinancing or closing. The Credit Facility Bonus will be paid as soon as practicable after the date of such event and in all events within the “short-term deferral” period provided under Treasury Regulation Section 1.409A-1(a)(4). |
(d) Tax Withholding. Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such federal, state and local income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.
3. BENEFITS
As an employee of the Company, Employee will continue to be eligible to participate in all benefit plans to the same extent as other similarly situated salaried employees of the Company and in all events subject to the terms of such plans. For the sake of clarity, such plans do not include compensation and/or any bonus plans.
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4. VACATION AND TRAVEL
(a) Employee shall be entitled to take paid time off without a reduction in salary, subject to (i) the approval of Employee’s supervisor, and (ii) the demands and requirements of Employee’s duties and responsibilities under this Agreement. Employee shall accrue no paid vacation.
(b) Employee will be eligible to be reimbursed for any business expenses in accordance with the Company’s current Travel and Entertainment policy.
(c) In addition, to the extent all of the following are within the Company’s policy and practice for similarly situated employees, Employee shall be entitled to: (i) business class travel for flights in excess of four (4) hours; (ii) all customary “perqs” of division heads within the Company; (iii) a cell phone, which may be expensed; and (iv) a reserved parking space.
5. EQUITY GRANTS
(a) Time-Based Grants. On November 13, 2015, the CCLG approved the grant to Employee of 56,250 restricted stock units (the “Time-Based RSU Grant”) and an option to purchase 101,250 common shares of Lions Gate at a per-share exercise price equal to the closing price of a Lions Gate common share on the date of grant of the option (the “Time-Based Option,” and together with the Time-Based RSU Grant, the “Time-Based Grants”). Each Time-Based Grant shall be evidenced by and subject to the terms of an award agreement in the form generally then used by Lions Gate to evidence grants of that type under Lions Gate’s 2012 Performance Incentive Plan (the “Plan”).
(i) | Vesting. Subject to Section 5(a)(ii) below, the Time-Based Grants shall each vest as to one-third (1/3) of the award on each of September 30, 2016 and September 30, 2017, and as to one-sixth (1/6) of the award on each of September 30, 2018 and September 30, 2019. |
(ii) | Continuance of Employment. The vesting schedule in Section 5(a)(i) above requires Employee’s continued employment with the Company through the applicable vesting date as a condition to the vesting of each installment of the applicable Time-Based Grant and the rights and benefits thereto, except as otherwise set forth herein. |
(b) Performance-Based Grants. On November 13, 2015, the CCLG approved the grant to Employee of 93,750 performance-based restricted stock units (the “Performance-Based RSU Grant”) and a performance-based option to purchase 168,750 common shares of Lions Gate at a per-share exercise price equal to the closing price of a Lions Gate common share on the date of grant of the option (the “Performance-Based Option,” and together with the Performance-Based RSU Grant, the “Performance-Based Grants”). Each Performance-Based Grant shall be evidenced by and subject to the terms of an award agreement in the form generally then used by Lions Gate to evidence grants of that type under the Plan.
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(i) | Vesting. Subject to Section 5(b)(ii) below, each Performance-Based Grant shall be eligible to vest as follows (each vesting date a “Performance Vesting Date”): |
(A) | one-fifth (1/5) of each Performance-Based Grant will vest on September 30, 2016; |
(B) | one-fifth (1/5) of each Performance-Based Grant will vest on September 30, 2017; |
(C) | three-tenths (3/10) of each Performance-Based Grant will vest on September 30, 2018; and |
(D) | three-tenths (3/10) of each Performance-Based Grant will vest on September 30, 2019. |
The vesting of each Performance-Based Grant on the applicable Performance Vesting Date shall be subject to an assessment of Employee’s personal performance over the twelve (12) month period ending on such Performance Vesting Date (or, if so determined by the CCLG, performance over a fiscal year of Lions Gate that overlaps with such twelve (12)-month period), based on such Company and/or individual performance criteria determined by the CCLG, in consultation with the CEO, which shall include the criteria listed in Exhibit A to this Agreement. Such performance assessment and the determination as to the portion (if any) of each Performance-Based Grant that will vest on such Performance Vesting Date shall be made by the CCLG in its discretion, in consultation with the CEO. Any portion of the Performance-Based RSU Grant or the Performance-Based Option that does not vest on the applicable Performance Vesting Date shall expire on that date with no possibility of further vesting; provided, however, that the CCLG may, in its sole discretion, provide that any installment of a Performance-Based Grant eligible to vest on a particular Performance Vesting Date that does not vest on such date may vest on any future Performance Vesting Date (but in no event shall either award vest as to more than 100% of the shares subject to such award).
(ii) | Continuance of Employment. The vesting schedule in Section 5(b)(i) above requires Employee’s continued employment with the Company through the applicable vesting date as a condition to the vesting of each installment of the applicable Performance-Based Grant and the rights and benefits thereto, except as otherwise set forth herein. |
(c) Acceleration of Equity Awards. The following provisions shall apply to the equity awards contemplated by this Section 5:
(i) | In the event that either (A) Employee’s employment terminates due to his death, or (B) a Change of Control (as defined herein) occurs during the Term of this Agreement and on or within twelve (12) months following such Change of |
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Control, Employee’s employment is terminated by the Company “without cause” or by Employee for “Good Reason” (as such terms are defined in Section 7 below), the Time-Based Grants and Performance-Based Grants provided in Sections 5(a) and (b) above, to the extent then outstanding and unvested, shall immediately accelerate and become fully vested.
(ii) | In the event that during the Term, either (A) Employee’s employment is terminated at any time by the Company “without cause” as contemplated by Section 7(a)(v) below, or (B) the employment of both ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ with the Company terminates (the second such termination to occur, a “Change in Management”) and on or within twelve (12) months following such Change in Management, Employee’s employment is terminated by Employee for “Good Reason” (as such term is defined in Section 7(a)(vi) below), then each installment of the Time-Based Grants and Performance-Based Grants provided in Sections 5(a) and (b) above that is then outstanding and unvested and is scheduled to vest within the period of twelve (12) months following such termination of employment shall vest in full on the termination date, and fifty percent (50%) of each installment of the Time-Based Grants and Performance-Based Grants provided in Sections 5(a) and (b) above that is then outstanding and unvested and is scheduled to vest within the period commencing twelve (12) months following such termination of employment and ending twenty-four (24) months following such termination of employment shall vest on the termination date. |
(iii) | Any portion of the Time-Based Grants and Performance-Based Grants that is unvested after giving effect to the accelerated vesting provisions in paragraph (ii) above shall terminate on the date of Employee’s termination of employment. |
(iv) | Notwithstanding any provision to the contrary herein or in any equity award or other agreement, the provisions for accelerated vesting of equity awards in this Section 5(c) shall apply to, in addition to the Time-Based Grants and Performance-Based Grants, any other equity-based awards granted by the Company to Employee that are (A) outstanding as of the date of this Agreement or (B) granted during the Term at any time after the date of this Agreement (unless otherwise expressly provided by the CCLG at the time it approves the applicable grant). |
(d) Definition of Change in Control. For the purposes of this Agreement, “Change of Control” shall mean:
(i) | if any person, other than (A) any person who holds or controls entities that, in the aggregate (including the holdings of such person), hold or control thirty-three percent (33%) or more of the outstanding shares of Lions Gate on the date of execution of this Agreement by each party hereto (collectively, a “Thirty-Three Percent Holder”) or (B) a trustee or other fiduciary holding securities of Lions Gate under an employee benefit plan of Lions Gate, becomes the |
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beneficial owner, directly or indirectly, of securities of Lions Gate representing thirty-three percent (33%) or more of the outstanding shares as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, excluding any transactions or series of transactions involving a sale or other disposition of securities of Lions Gate by a Thirty-Three Percent Holder;
(ii) | if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, there is a sale or disposition of thirty-three percent (33%) or more of Lions Gate's assets (or consummation of any transaction, or series of related transactions, having similar effect); |
(iii) | if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, there occurs a change or series of changes in the composition of the Board as a result of which half or less than half of the directors are incumbent directors; |
(iv) | if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate (excluding any sale or other disposition of securities of Lions Gate by a Thirty-Three Percent Holder in a single transaction or a series of transactions), a shareholder or group of shareholders acting in concert, other than a Thirty-Three Percent Holder in a single transaction or a series of transactions, obtain control of thirty-three percent (33%) or more of the outstanding shares of Lions Gate; |
(v) | if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, a shareholder or group of shareholders acting in concert obtain control of at least half of the Board, excluding any transactions or series of transactions involving a sale or other disposition of securities of Lions Gate by a Thirty-Three Percent Holder; |
(vi) | if there is a dissolution or liquidation of Lions Gate; or |
(vii) | if there is any transaction or series of related transactions that has the substantial effect of any one or more of the foregoing, excluding any transaction or series of transactions involving a Thirty-Three Percent Holder. |
6. HANDBOOK
Employee agrees that the Company Employee Handbook outlines other policies in addition to the terms set forth in this Agreement, which will apply to Employee’s employment with the Company, and Employee acknowledges receipt of such handbook. Employee
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acknowledges and agrees that it is Employee’s obligation to read, understand and adhere to the rules and policies set forth in such handbook. Employee acknowledges and agrees that the Company retains the right to revise, modify or delete any such policy or any employee benefit plan it deems appropriate.
7. TERMINATION
(a) This Agreement and the Term shall terminate upon the happening of any one or more of the following events:
(i) | The mutual written agreement between the Company and Employee; |
(ii) | The death of Employee; |
(iii) | Employee’s having become so physically or mentally disabled as to be incapable, even with a reasonable accommodation, of satisfactorily performing Employee’s duties hereunder for a period of ninety (90) days or more, provided that Employee has not cured disability within ten (10) days of written notice; |
(iv) | The determination on the part of the Company that “cause” exists for termination of this Agreement. As used herein, “cause” is defined as the occurrence of any of the following: |
(A) | Employee’s conviction of a felony or plea of nolo contendere to a felony (other than a traffic violation); |
(B) | commission, by act or omission, of any material act of dishonesty in the performance of Employee’s duties hereunder; |
(C) | material breach of this Agreement by Employee; or |
(D) | any act of misconduct by Employee having a substantial adverse effect on the business or reputation of the Company; |
Prior to terminating Employee's employment for “cause,” the Company shall provide Employee with written notice of the grounds for the proposed termination. If the grounds for termination are capable of cure, the Employee shall have fifteen (15) days after receiving such notice in which to cure such grounds to the extent such cure is possible. If not cure is possible or Employee has failed to cure, Employee's employment shall terminate upon the 15th day following notice of termination.
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(v) | Employee is terminated “without cause.” Termination “without cause” shall be defined as Employee being terminated by the Company for any reason other than as set forth in Sections 7(a)(i)-(iv) above. In the event of a termination “without cause,” subject to Employee’s execution and delivery to the Company of a general release of claims in a form acceptable to the Company not more than twenty-one (21) days after the date the Company provides such release (and Employee’s not revoking such release within any revocation period provided under applicable law), Employee shall be entitled to receive a severance payment equal to 50% of the amount of the Base Salary that Employee would have been entitled to receive for the period commencing on the date of such termination and ending on the last day of the Term had Employee continued to be employed with the Company through such date (but no less than the greater of either (x) twelve (12) months’ Base Salary at the rate in effect on Employee’s termination or (y) the amount Employee would receive from the Company’s severance policy for non-contract employees that is in effect at the time of termination). Subject to the release provision set forth above, such amount shall be paid in cash in a lump sum as soon as practicable after (and in all events within sixty (60) days after the date of Employee’s “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h)) with the Company; provided, however, that if the 60-day period following Employee’s separation from service spans two calendar years, such lump sum payment shall be made within such 60-day period but in the second of the two calendar years. The Company shall provide the final form of release agreement to Employee not later than seven (7) days following the termination date. The Company’s provision of the payments and benefits referred to in this Section 7(a)(v) and Section 5 and Section 7(a)(vii), in addition to the accrued obligations described in Section 7(b) below, shall relieve the Company of any and all obligations to Employee. |
(vi) | The foregoing notwithstanding, if Employee’s employment with the Company terminates on or within twelve (12) months following a Change of Control or a Change in Management (as defined in Section 5(c)) pursuant to a termination by the Company “without cause” or by Employee for “Good Reason” (as defined below), then Employee shall be entitled to receive (in addition to any rights to accelerated vesting of equity awards under Section 5 hereof and in lieu of the severance provided in Section 7(a)(v) above) a severance payment equal to 100% of the amount of the Base Salary that Employee would have been entitled to receive for the period commencing on the date of such termination and ending on the last day of the Term had Employee continued to be employed with the Company through such date (but no less than the greater of either (x) twelve (12) months’ Base Salary at the rate in effect on Employee’s termination or (y) the amount Employee |
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would receive from the Company’s severance policy for non-contract employees that is in effect at the time of termination); provided, however, that Employee’s right to receive such payments shall be subject to satisfaction of the requirement to provide a general release of claims in accordance with Section 7(a)(v). Subject to such release requirement, the amount referred to in the foregoing clause shall be paid in cash in a lump sum as soon as practicable after (and in all events within sixty (60) days after the date of Employee’s “separation from service” (within the meaning of Treasury Regulation Section 1.409A-1(h)) with the Company; provided, however, that if the 60-day period following Employee’s separation from service spans two calendar years, such lump sum payment shall be made within such 60-day period but in the second of the two calendar years. The Company’s provision of the payments and benefits referred to in this Section 7(a)(vi) and in Section 5 and Section 7(a)(vii), in addition to the accrued obligations described in Section 7(b) below, shall relieve the Company of any and all obligations to Employee.
For purposes of this Agreement, “Good Reason” shall mean any material diminution by the Company in Employee’s responsibilities as measured against Employee’s responsibilities prior to the Change of Control or Change in Management, as applicable, or any change in the positions to which Employee reports which results in Employee reporting to individuals with a materially lower level of authority than the individuals to whom Employee currently reports; provided, however, that any such condition shall not constitute “Good Reason” unless both (x) Employee provides written notice to the Company of the condition claimed to constitute Good Reason within ninety (90) days of the initial existence of such condition, and (y) the Company fails to remedy such condition within thirty (30) days of receiving such written notice thereof; and provided, further, that in all events the termination of Employee’s employment with the Company shall not be treated as a termination for “Good Reason” unless such termination occurs not more than one (1) year following the initial existence of the condition claimed to constitute “Good Reason.” For these purposes, if the Company is purchased by another entity, it shall not be considered a material diminution in responsibility if Employee is made Co-Chief Operating Officer (or similar role) at that other entity.
(vii) | In addition, if Employee becomes entitled to receive the severance benefits provided in either Section 7(a)(v) or 7(a)(vi) above and subject to the release requirement set forth therein, or if Employee’s employment terminates pursuant to either Section 7(a)(ii) or 7(a)(iii) above, Employee shall also be entitled to (A) payment by the Company of any bonus payable pursuant to Section 2(c)(i) on a prorated basis for the fiscal year in which such termination of employment occurs based on the amount of |
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such fiscal year worked by Employee (any such bonus to be paid at the time provided in Section 2 above and no such bonus to be payable for any fiscal year subsequent to the year of termination of employment); and (B) if Employee timely elects continued health coverage pursuant to COBRA, payment by the Company of his COBRA premiums for six (6) months following his date of termination (or, if earlier, the date he becomes eligible for coverage under the health plan of a future employer or the Company is otherwise no longer required to offer COBRA coverage to Employee).
(viii) | In addition, if Employee becomes entitled to receive the severance benefits provided in either Section 7(a)(v) or 7(a)(vi) above and subject to the release requirement set forth therein, or if Employee’s employment terminates pursuant to either Section 7(a)(ii) or 7(a)(iii) above, Employee shall be eligible for a bonus amount for the fiscal year in which such termination occurs based upon the criteria in Section 2(c)(ii) above, prorated to reflect the actual length of Employee’s employment with the Company during such fiscal year and to be paid on the date that such bonus, if any, is otherwise payable as provided in such section; provided however that in the event such termination of employment occurs on or within six (6) months following a Change in Management, instead of this prorated bonus amount Employee shall be paid, if the Company achieves at least 105% of the E Target for the fiscal year in which such termination occurs, the full amount of the bonus Employee would have been entitled to receive under Section 2(c)(ii) above had Employee’s employment with the Company not terminated, such bonus to be paid at the same time such bonus would otherwise have been paid under such section. |
(b) In the event that this Agreement is terminated pursuant to Sections 7(a)(i)-(iv) above, neither the Company nor Employee shall have any remaining duties or obligations hereunder, except that the Company shall pay to Employee, any base salary that had accrued but had not been paid (including accrued and unpaid vacation time) as of the date of termination (and, in the case of a termination pursuant to Section 7(a)(ii), shall provide the benefits provided in Section 5(c)(i), and in the case of a termination pursuant to Section 7(a)(ii) or 7(a)(iii), shall provide the benefits provided in Section 7(a)(vii) and 7(a)(viii)). Following the termination of the Term and/or this Agreement for any reason, Sections 9 through 15 shall, notwithstanding anything else herein to the contrary, survive and continue to be binding upon the parties following such termination.
8. EXCLUSIVITY AND SERVICE
Employee’s services shall be exclusive to the Company during the Term. Employee shall render such services as are customarily rendered by persons in Employee’s capacity in the entertainment industry and as may be reasonably requested by the Company. Employee hereby
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agrees to comply with all reasonable requirements, directions and requests, and with all reasonable rules and regulations made by the Company in connection with the regular conduct of its business. Employee further agrees to render services during Employee’s employment hereunder whenever, wherever and as often as the Company may reasonably require in a competent, conscientious and professional manner, and as instructed by the Company in all matters, including those involving artistic taste and judgment, but there shall be no obligation on the Company to cause or allow Employee to render any services, or to include all or any of Employee’s work or services in any motion picture or other property or production.
9. INTELLECTUAL PROPERTY
(a) Employee agrees that the Company shall be the sole and exclusive owner throughout the universe in perpetuity of all of the results and proceeds of Employee’s services, work and labor in connection with Employee’s employment by the Company, during the Term and any other period of employment with the Company, free and clear of any claims, liens or encumbrances. Employee shall promptly and fully disclose to the Company, with all necessary detail for a complete understanding of the same, any and all developments, clients and potential client lists, discoveries, inventions, improvements, conceptions, ideas, writings, processes, formulae, contracts, methods, works, whether or not patentable or copyrightable, which are conceived, made, acquired, or written by Employee, solely or jointly with another, while employed by the Company (whether or not at the request or upon the suggestion of the Company) and which are substantially related to the business or activities of the Company its parent, affiliates, or subsidiaries that are within the scope of Employee’s employment and responsibilities hereunder (collectively, “Proprietary Rights”).
(b) All copyrightable works that Employee creates in connection with Employee’s obligations under this Agreement and any other period of employment with the Company, its parent, affiliates, or subsidiaries shall be considered “work made for hire” and therefore the property of the Company. To the extent any work so produced or other intellectual property so generated by Employee is not deemed to be a “work made for hire,” Employee hereby assigns and transfers and agrees to assign and transfer to the Company (or as otherwise directed by the Company) Employee's full rights, title and interests in the Proprietary Rights to the Company or its designee. In addition, Employee shall deliver to the Company any and all drawings, notes, specifications and data relating to the Proprietary Rights. Whenever requested to do so by the Company, Employee shall execute and deliver to the Company any and all applications, assignments and other instruments and do such other acts that the Company shall reasonably request to apply for and obtain patents and/or copyrights in any and all countries or to otherwise protect the Company’s interest in the Proprietary Rights and/or to vest title thereto to the Company. Employee further agrees not to charge the Company for time spent in complying with these obligations. This Section 9 shall apply only to that intellectual property which related at the time of conception to the Company's then current or anticipated business or resulted from work performed by Employee for the Company. Employee hereby acknowledges receipt of written notice from the Company pursuant to California Labor Code Section 2872 that this Agreement (to the extent it requires an assignment or offer to assign rights to any
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invention of Employee) does not apply to an invention which qualifies fully under California Labor Code Section 2870.
10. ASSIGNMENT AND DELEGATION
Employee shall not assign any of Employee’s rights or delegate any of Employee’s duties granted under this Agreement. Any such assignment or delegation shall be deemed void ab initio.
11. TRADE SECRETS
The parties acknowledge and agree that during the Term of this Agreement and in the course of the discharge of Employee’s duties hereunder and at any other period of employment with the Company, its parent, affiliates, or subsidiaries, Employee shall have and has had access to information concerning the operation of the Company and its parent, affiliated and subsidiary entities, including without limitation, financial, personnel, sales, planning and other information that is owned by the Company and regularly used in the operation of the Company’s business and (to the extent that such confidential information is not subsequently disclosed or otherwise becomes known to the public generally other than by breach of this Agreement by Employee) that this information constitutes the Company’s trade secrets. Employee agrees that Employee shall not disclose any such trade secrets, directly or indirectly, to any other person or use them in any way, either during the Term of this Agreement or at any other time thereafter, except as is required in the course of Employee’s employment for the Company, as required by applicable law or court order, or if authorized in writing by the Company. Employee shall not use any such trade secrets in connection with any other employment and/or business opportunities following the Term. In addition, Employee hereby expressly agrees that Employee will not disclose any confidential matters of the Company and its parent, affiliated and subsidiary entities that are not trade secrets prior to, during or after Employee’s employment including the specifics of this Agreement. Employee shall not use any such confidential information in connection with any other employment and/or business opportunities at any time during or following the Term. In addition, in order to protect any such confidential information, Employee agrees that during the Term and for a period of eighteen (18) months thereafter, Employee will not, directly or indirectly, induce or entice any other executive or employee of the Company, with the exception of Employee’s exclusive assistant if the Company has employed an individual in such role, to leave such employment.
12. ARBITRATION
Any dispute, controversy or claim arising out of or in respect to this Agreement (or its validity, interpretation or enforcement), the employment relationship or the subject matter hereof shall at the request of either party be submitted to and settled by binding arbitration conducted before a single arbitrator in Los Angeles in accordance with the Federal Arbitration Act, to the extent that such rules do not conflict with any provisions of this Agreement. Said arbitration shall be under the jurisdiction of Judicial Arbitration and Mediation Services, Inc. (“JAMS”) in Los Angeles, California. All such actions must be brought within the statute of
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limitations period applicable to the claim as if that claim were being filed with the judiciary or forever be waived. Failure to institute an arbitration proceeding within such period shall constitute an absolute bar to the institution of any proceedings respecting such controversy or claim, and a waiver thereof. The arbitrator shall have the authority to award damages and remedies in accordance with applicable law. Any award, order, or judgment pursuant to such arbitration shall be deemed final and binding and may be entered and enforced in any state or federal court of competent jurisdiction. Each party agrees to submit to the jurisdiction of any such court for purposes of the enforcement of any such award, order, or judgment. The Company shall pay for the administrative costs of such hearing and proceeding.
13. INDEMNIFICATION
Except with respect to claims resulting from Employee’s willful misconduct or acts outside the scope of his employment hereunder, Employee shall continue to be defended, indemnified and held harmless by Company in respect of all claims arising from or in connection with his position or services as an Employee of the Company to the maximum extent permitted in accordance with Lions Gate’s Articles of Incorporation, Bylaws, Board Resolutions and under applicable California and British Columbia law (including, without limitation and as applicable, attorney’s fees), and shall be covered by the Company’s applicable directors and officers insurance policy.
14. LIMIT ON BENEFITS
(a) Notwithstanding anything contained in this Agreement to the contrary, to the extent that the payments and benefits provided under this Agreement and benefits provided to, or for the benefit of, Employee under any other Company plan or agreement (such payments or benefits are collectively referred to as the “Benefits” for purposes of this Section 20) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), the Benefits shall be reduced (but not below zero) if and to the extent that a reduction in the Benefits would result in Employee retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if Employee received all of the Benefits (such reduced amount is referred to hereinafter as the “Limited Benefit Amount”). In such case, unless Employee has given prior written notice to the Company specifying a different order to effectuate the reduction of the Benefits (any such notice consistent with the requirements of Section 409A of the Code to avoid the imputation of any tax, penalty or interest thereunder), the Benefits shall be reduced or eliminated by first reducing or eliminating cash severance payments, then by reducing or eliminating other cash payments, then by reducing or eliminating those payments or benefits which are not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by Employee pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Employee’s rights and entitlements to any benefits or compensation.
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(b) A determination as to whether the Benefits shall be reduced to the Limited Benefit Amount pursuant to this Agreement and the amount of such Limited Benefit Amount shall be made by Company’s independent public accountants or another certified public accounting firm of national reputation designated by Lions Gate (the “Accounting Firm”). Company and Employee shall use their reasonable efforts to cause the Accounting Firm to provide its determination (the “Determination”), together with detailed supporting calculations and documentation to Company and Employee within five (5) days of the date of termination of Employee’s employment, if applicable, or such other time as requested by Company or Employee (provided Employee reasonably believes that any of the Benefits may be subject to the Excise Tax), and if the Accounting Firm determines that no Excise Tax is payable by Employee with respect to any Benefits, Company and Employee shall use their reasonable efforts to cause the Accounting Firm to furnish Employee with an opinion reasonably acceptable to Employee that no Excise Tax will be imposed with respect to any such Benefits. Unless Employee provides written notice to Company within ten (10) days of the delivery of the Determination to Employee that he disputes such Determination, the Determination shall be binding, final and conclusive upon Company and Employee.
15. INTEGRATION, AMENDMENT, NOTICE, SEVERABILITY, AND FORUM
(a) This Agreement expresses the binding and entire agreement between Employee and the Company and, from and after the Effective Date, shall replace and supersede all prior arrangements and representations, either oral or written, as to the subject matter hereof. Notwithstanding the foregoing, Section 5 of the Prior Agreement, the terms of any equity grants that have been made under any other employment agreements between Company and Employee, and the terms of any equity grants that have been provided by Company to Employee outside the terms of any employment agreement, in each case to the extent the applicable equity award is outstanding on the date hereof, shall remain in full force and effect (subject in each case to Section 5(c)(iv) above).
(b) All modifications or amendments to this Agreement must be made in writing and signed by both parties.
(c) Any notice required herein shall be in writing and shall be deemed to have been duly given when delivered by hand, received via electronic mail or on the depositing of said notice in any U.S. Postal Service mail receptacle with postage prepaid, addressed to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and to Employee at the address set forth above, or to such address as either party may have furnished to the other in writing in accordance herewith.
(d) If any portion of this Agreement is held unenforceable under any applicable statute or rule of law then such portion only shall be deemed omitted and shall not affect the validity of enforceability of any other provision of this Agreement.
(e) This Agreement shall be governed by the laws of the State of California. The state and federal courts (or arbitrators appointed as described herein) located in Los Angeles,
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California shall, subject to the arbitration agreement set forth in Section 12 above, be the sole forum for any action for relief arising out of or pursuant to the enforcement or interpretation of this Agreement. Each party to this Agreement consents to the personal jurisdiction and arbitration in such forum and courts and each party hereto covenants not to, and waives any right to, seek a transfer of venue from such jurisdiction on any grounds.
16. SECTION 409A
(a) It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the U.S. Internal Revenue Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject Employee to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to Employee.
(b) Notwithstanding any provision of this Agreement to the contrary, if Employee is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Employee’s separation from service (as defined above), Employee shall not be entitled to any payment or benefits pursuant to Section 7(a)(v) until the earlier of (i) the date which is six (6) months after Employee’s separation from service for any reason other than death, or (ii) the date of Employee’s death. Any amounts otherwise payable to Employee upon or in the six (6) month period following Employee’s separation from service that are not so paid by reason of this paragraph shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Employee’s separation from service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of Employee’s death). The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A.
(c) To the extent that any reimbursements pursuant to the provisions of this Agreement are taxable to Employee, any such reimbursement payment shall be paid to Employee on or before the last day of Employee’s taxable year following the taxable year in which the related expense was incurred. The benefits and reimbursements pursuant to such provisions are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that Employee receives in one taxable year shall not affect the amount of such benefits or reimbursements that Employee receives in any other taxable year.
(d) Each payment made pursuant to any provision of this Agreement shall be considered a separate payment and not one of a series of payments for purposes of Code Section 409A.
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Please acknowledge your confirmation of the above terms by signing below where indicated.
Very truly yours,
LIONS GATE FILMS INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its: President
AGREED AND ACCEPTED
This 13th day of November, 2015
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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