EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of December 11, 2003, between Marvel
Enterprises, Inc., a Delaware corporation (the "Company") and Xxxxx Xxxxxx (the
"Executive").
WHEREAS, the Company wishes to employ the Executive, and the Executive
wishes to accept such employment, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties hereto
agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment, Duties. The Company hereby employs the Executive for
the Term (as defined in Section 2.1), to render exclusive and full-time services
to the Company as President and Chief Operating Officer of Marvel Studios or in
such other executive position as may be mutually agreed upon in writing by the
Company and the Executive (the "Position"). The Executive shall report to the
Chairman and Chief Executive Officer of Marvel Studios and shall perform such
other duties consistent with such Positions as may be assigned to the Executive
by the Chairman and Chief Executive Officer of Marvel Studios or the Company's
Board of Directors.
1.2 Acceptance. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, to devote the Executive's entire business time, energy and skill to
such employment and to use the Executive's professional efforts, skill and
ability to promote the Company's interests. Notwithstanding the foregoing,
Executive shall be permitted to engage in those business activities listed on
Schedule I attached hereto without being in breach of this Agreement. The
Executive further agrees to accept election, and to serve during all or any part
of the Term, as an officer or director of the Company and of any subsidiary or
affiliate of the Company, without any compensation therefor other than that
specified in this Agreement or in any applicable director incentive compensation
plan, if elected to any such position by the stockholders or by the Board of
Directors of the Company or of any subsidiary or affiliate, as the case may be.
1.3 Location. The duties to be performed by the Executive hereunder
shall be performed primarily at the offices of the Company in Los Angeles,
subject to reasonable travel requirements on behalf of the Company, including
periodic trips to the Company's headquarters in New York City.
2. Term of Employment
2.1 The Term. The term of the Executive's employment under this
Agreement (the "Term") shall commence on January 12, 2004 (the "Effective Date")
and shall end on January 12, 2009 (the "Expiration Date"). The Term shall end
earlier than the Expiration Date if sooner terminated pursuant to Section 4
hereof.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Executive during the Term a
base salary, payable bi-weekly in arrears, at the annual rate of five hundred
thousand dollars $500,000 less such deductions or amounts to be withheld as
required by applicable law and regulations and deductions authorized by the
Executive in writing. The Executive's base salary shall be reviewed no less
frequently than annually by the Board of Directors and may be increased, but not
decreased, by the Board of Directors. The Executive's base salary as in effect
from time to time is referred to in this Agreement as the "Base Salary".
3.2 Bonus. In addition to the amounts to be paid to the Executive
pursuant to Section 3.1 hereof, the Executive will be entitled to receive the
following:
(a) a cash bonus ("Cash Bonus") in respect of calendar year 2004 and
each calendar year thereafter during the Term based in whole or in part upon the
attainment of performance goals set by the Board of Directors of the Company
(the "Bonus Performance Goals"). The Executive's target annual Cash Bonus amount
shall be 50% of his Base Salary for the then applicable year. Each annual Cash
Bonus shall be paid when annual bonuses are paid generally to the Company's
other senior executive officers but in no event later than the ninetieth day of
the next calendar year. If during any calendar year Executive's Base Salary is
increased, the Base Salary for purposes of calculating the Cash Bonus and
Non-Cash Bonus (as defined below) shall be the weighted average of the Base
Salary for that year.
(b) a grant under the Company's Stock Incentive Plan in respect of
calendar year 2004 and each calendar year thereafter during the Term consisting
of a stock options, restricted stock, stock appreciation rights and/or other
forms of non-cash compensation ("Non-Cash Bonus"), having a value at the time of
the grant equal to three (3) times the then applicable Base Salary and the then
awarded Cash Bonus. The value of the grant shall be determined on the same
method used by the Company for valuing grants under the Stock Incentive Plan to
the other senior executives of the Company. The Non-Cash Bonus shall be given to
Executive on or before December 31st of each year and shall vest and/or the
restrictions or risk of forfeiture shall lapse, over such period and subject to
such performance goals as determined by the Compensation Committee of the Board
of Directors of the Company. Executive agrees that 100,000 of the 250,000
options granted pursuant to the Consulting Agreement referred to in paragraph
2(a) of Schedule I shall be included in the calculation of Executive's Non-Cash
Bonus for 2004. The value of said 100,000 options for purposes of determining
the grant of Executive's 2004 Non-Cash Bonus shall be the value of such 100,000
options determined as of date the remainder, if any, of the 2004 Non-Cash Bonus
is awarded.
3.3 Business Expenses. The Company shall pay for or reimburse the
Executive for all reasonable expenses actually incurred by or paid by the
Executive during the Term in the performance of the Executive's services under
this Agreement, upon presentation of expense statements or vouchers or such
other supporting information as the Company customarily may require of its
officers.
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3.4 Vacation. During the Term, the Executive shall be entitled to a
vacation period or periods of four (4) weeks per year taken in accordance with
the vacation policy of the Company during each year of the Term. Vacation time
not used by the end of a calendar year shall be forfeited.
3.5 Fringe Benefits. During the Term, the Executive shall be entitled
to all benefits for which the Executive shall be eligible under any qualified
pension plan, 401(k) plan, group insurance or other so-called "fringe" benefit
plan which the Company provides to its employees generally or its other senior
executives, together with executive medical benefits for the Executive, as from
time to time in effect for executive employees of the Company generally.
3.6 Additional Benefits. During the Term, the Executive shall be
entitled to such other benefits as are specified in Schedule I to this Agreement
and benefits given to employees of the Company generally.
4. Termination.
4.1 Death. If the Executive shall die during the Term, the Term shall
terminate immediately.
4.2 Disability. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's principal services hereunder for
(i) a period of four (4) consecutive months or (ii) for shorter periods
aggregating six (6) months during any eighteen (18) month period, the Company
may at any time after the last day of the four (4) consecutive months of
disability or the day on which the shorter periods of disability shall have
equaled an aggregate of six (6) months, by written notice to the Executive (but
before the Executive has recovered from such disability), terminate the Term.
4.3 Cause. The Term may be terminated by the Company upon notice to
the Executive upon the occurrence of any event constituting "Cause" as defined
herein. As used herein, the term "Cause" means: (i) the Executive's willful and
intentional failure or refusal to perform or observe any of his material duties,
responsibilities or obligations; provided, however, that the Company shall not
be deemed to have Cause pursuant to this clause (i) unless the Company gives the
Executive written notice of the specified conduct that has occurred and making
specific reference to this Section 4.3(i) and the Executive fails to cure the
conduct within thirty (30) days after receipt of such notice; (ii) material
breach by the Executive of any of his obligations under Section 5 hereof; (iii)
any willful and intentional acts of the Executive involving fraud, theft,
misappropriation of funds, embezzlement or material dishonesty affecting the
Company or any of its subsidiaries or affiliates or willful misconduct by the
Executive which has, or could reasonably be expected to have, a material adverse
effect on the Company or any of its subsidiaries or affiliates or (iv) the
Executive's conviction of, or plea of guilty or nolo contendre to, an offense
which is a felony in the jurisdiction involved or which involves the property of
the Company or any of its subsidiaries or affiliates.
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4.4 Permitted Termination by the Executive. (a) The Term may be
terminated by the Executive upon notice to the Company of any event constituting
"Good Reason" as defined herein. As used herein, the term "Good Reason" means
the occurrence of any of the following, without the prior written consent of the
Executive: (i) assignment of the Executive to duties materially inconsistent
with the Executive's positions as described in Section 1.1 hereof, or any
significant diminution in the Executive's duties or responsibilities, other than
in connection with the termination of the Executive's employment for Cause or
disability or by the Executive other than for Good Reason; (ii) any material
breach of this Agreement by the Company which is continuing; or (iii) a change
in the location of the Executive's principal place of employment to a location
other than as specified in Section 1.3 hereof; provided, however, that the
Executive shall not be deemed to have Good Reason pursuant to clauses (i) and
(ii) above unless the Executive gives the Company written notice that the
specified conduct or event has occurred and making specific reference to this
Section 4.4 and the Company fails to cure such conduct or event within thirty
(30) days of receipt of such notice.
(b) The Term may be terminated by the Executive at any time by giving
the Company a notice of termination specifying a termination date no less than
sixty (60) days after the date the notice is given.
4.5 Severance. (a) If the Term is terminated pursuant to Section 4.1,
4.2 or 4.3 hereof, or by the Executive other than pursuant to Section 4.4(a),
the Executive shall be entitled to receive his Base Salary, benefits and
reimbursements provided hereunder at the rates provided in Sections 3.1, 3.3,
3.4 (to the extent accrued) and 3.5 hereof to the date on which such termination
shall take effect. In addition, if the Term is terminated pursuant to Section
4.1 or 4.2, the Executive shall also be entitled to receive any Cash Bonus and
Non-Cash Bonus which has been awarded under Section 3.2 in respect of a
previously completed fiscal year but which has not yet been paid and a pro rata
portion (based on time) of the annual Cash Bonus for the year in which the
termination date occurs (a "Pro Rata Cash Bonus"). The Pro Rata Cash Bonus to
which the Executive is entitled, if any, shall be determined by reference to the
attainment of the Bonus Performance Goals as of the end of the fiscal year in
which termination of employment occurs and shall be paid when cash bonuses in
respect of that year are generally paid to the Company's other executives but in
no event later than the ninetieth day of the next fiscal year.
(b) Except as provided in Section 4.5(c), if the Term is terminated by
the Executive pursuant to clauses (i), (ii) or (iii) of Section 4.4(a) or by the
Company other than pursuant to Section 4.1, 4.2 or 4.3 (in accordance with
Section 4.6), the Company shall continue thereafter to provide the Executive (i)
payments of Base Salary in the manner and amounts specified in Section 3.1 until
the twelve (12) month anniversary of the date of termination, (ii) if
termination occurs at any time after a Cash Bonus has been awarded under Section
3.2(a) and a Non-Cash Bonus has been awarded under Section 3.2(b) in respect of
a previously completed fiscal year and prior to the time that the bonus has been
paid, the amount of that bonus, (iii) a Pro Rata Cash Bonus for the year in
which termination occurs, (iv) a Pro Rata Non-Cash Bonus for the year in which
termination occurs, (v) fringe benefits in the manner and amounts specified in
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Section 3.5 until the earlier of the Expiration Date, the period ending on the
date the Executive begins work as an employee for any other entity or twelve
(12) months after the date of termination, and (vi) vesting of any options
granted to Executive under the Company's Stock Incentive Plan (as defined in
Schedule I attached hereto) until the twelve (12) month anniversary of the date
of termination. Cash Bonuses and Non-Cash Bonuses payable pursuant to this
Section 4.5(b), other than the Pro Rata Bonus, shall be payable in the manner
described in Section 3.2. The Pro Rata Bonus to which the Executive is entitled,
if any, shall be paid within the time period provided in Section 4.5(a). The
Executive shall have no duty or obligation to mitigate the amounts or benefits
required to be provided pursuant to this Section 4.5(b), nor shall any such
amounts or benefits be reduced or offset by any other amounts to which Executive
may become entitled; provided, that if the Term is terminated by Executive
pursuant to Section 4.4(a) and Executive becomes employed by a new employer
prior to the earlier of the Expiration Date or twelve (12) months after the date
of termination, the Base Salary payable to the Executive pursuant to this
Section 4.5(b) shall be reduced by an amount equal to the amount earned from
such employment with respect to that period (and the Executive shall be required
to return to the Company, without interest, any amount by which such cash
payments pursuant to this Section 4.5(b) exceed the Base Salary to which the
Executive is entitled after giving effect to that reduction) and, if the
Executive becomes eligible to receive medical or other welfare benefits under
another employer provided plan, the corresponding medical and other welfare
benefits provided under this Section 4.5(b) shall be terminated. As a condition
to the Executive receiving the payments under Section 4.5(b), the Executive
agrees to permit verification of his employment records and Federal income tax
returns by an independent attorney or accountant, selected by the Company, who
agrees to preserve the confidentiality of the information disclosed by the
Executive except to the extent required to permit the Company to verify the
amount received by Executive from other active employment.
(c) If the Term is terminated by the Executive pursuant to Section
4.4(a), or by the Company other than pursuant to Section 4.1, 4.2 or 4.3 (in
accordance with Section 4.6), and, in any such event, the termination shall
occur upon or within twelve (12) months following the occurrence of a Third
Party Change in Control (as defined in Section 4.5(d)) or in contemplation of a
Third Party Change in Control, the Company shall thereafter provide the
Executive (i) an amount equal to two (2) times the sum of (x) the then current
Base Salary and (y) the average of the two most recent annual Cash Bonuses paid
(treating any annual Cash Bonus which is not paid as a result of the Executive's
failure to attain the Bonus Performance Goals as having been paid in an amount
equal to zero) to the Executive during the Term (or if only one annual Cash
Bonus has been paid, the amount of that annual Cash Bonus, to be paid in a lump
sum within 30 days after the date of termination), and (ii) benefits in the
manner and amounts specified in Section 3.5 until twelve (12) months after the
date of termination or, with respect to medical and other welfare benefits, when
the Executive becomes eligible to receive medical or other welfare benefits
under another employer provided plan if sooner than twelve (12) months after the
date of termination. In addition, all equity arrangements provided to the
Executive hereunder or under any employee benefit plan of the Company shall
continue to vest until twelve (12) months after the date of termination unless
vesting is accelerated upon the occurrence of the Third Party Change in Control
as described in subparagraph (d) below.
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(d) For purposes of this Agreement, a Third Party Change in Control
shall be deemed to have occurred if (i) any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than an Excluded Person or Excluded Group
(as defined below) (hereinafter, a "Third Party"), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then outstanding securities
entitled to vote in the election of directors of the Company, (ii) the Company
is a party to any merger, consolidation or similar transaction as a result of
which the shareholders of the Company immediately prior to such transaction
beneficially own securities of the surviving entity representing less than fifty
percent (50%) of the combined voting power of the surviving entity's outstanding
securities entitled to vote in the election of directors of the surviving entity
or (iii) all or substantially all of the assets of the Company are acquired by a
Third Party. "Excluded Group" means a "group" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that includes one or more Excluded Persons;
provided that the voting power of the voting stock of the Company "beneficially
owned" (as such term is used in Rule 13d-3 promulgated under the Exchange Act)
by such Excluded Persons (without attribution to such Excluded Persons of the
ownership by other members of the "group") represents a majority of the voting
power of the voting stock "beneficially owned" (as such term is used in Rule
13d-3 promulgated under the Exchange Act) by such group. "Excluded Person" means
Xxxxx Xxxxxxxxxx and Xxx Xxxx or any of their affiliates.
(e) (i) If any payment or benefit (within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), to
the Executive or for the Executive's benefit paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in connection
with, or arising out of, the Executive's employment with the Company or a change
in ownership or effective control of the Company or of a substantial portion of
its assets (a "Parachute Payment" or "Parachute Payments"), would be subject to
the excise tax imposed by Section 4999 of the Code or any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive will be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties,
other than interest and penalties imposed by reason of the Executive's failure
to file timely a tax return or pay taxes shown to be due on the Executive's
return), including any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Parachute Payments.
(ii) An initial determination as to whether a Gross-Up Payment is
required pursuant to this Agreement and the amount of such Gross-Up Payment
shall be made at the Company's expense by the Company's regular outside auditors
(the "Accounting Firm"). The Accounting Firm shall provide its determination
(the "Determination"), together with detailed supporting calculations and
documentation to the Company and the Executive within ten days of the
Termination Date if applicable, or promptly upon request by the Company or by
the Executive (provided the Executive reasonably believes that any of the
Parachute Payments may be subject to the Excise Tax) and if the Accounting Firm
determines that no Excise Tax is payable by the Executive with respect to a
Parachute Payment or Parachute Payments, it shall furnish the Executive with an
opinion reasonably acceptable to the Executive that no Excise Tax will be
imposed with respect to any such Parachute Payment or Parachute Payments. Within
ten days of the delivery of the Determination to the Executive, the Executive
shall have the right to dispute the Determination (the "Dispute"). The Gross-Up
Payment, if any, as determined pursuant to this Section 4.5(e)(ii) shall be paid
by the Company to the Executive within ten days of the receipt of the accounting
Firm's determination notwithstanding the existence of any Dispute. If there is
no Dispute, the Determination shall be binding, final and conclusive upon the
Company and the Executive subject to the application of Section 4.5(e)(iii)
below. The Company and the Executive shall resolve any Dispute in accordance
with the terms of this Agreement.
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(iii) As a result of the uncertainty in the application of Sections
4999 and 280G of the Code, the parties acknowledge that it is possible that a
Gross-Up Payment (or a portion thereof) will be paid which should not have been
paid (an "Excess Payment") or a Gross-Up Payment (or a portion thereof) which
should have been paid will not have been paid (an "Underpayment"). An
Underpayment shall be deemed to have occurred (i) upon notice (formal or
informal) to the Executive from any governmental taxing authority that the
Executive's tax liability (whether in respect of the Executive's current taxable
year or in respect of any prior taxable year) may be increased by reason of the
imposition of the Excise Tax on a Parachute Payment or Parachute Payments with
respect to which the Company has failed to make a sufficient Gross-Up Payment,
(ii) upon a determination by a court, (iii) by reason of determination by the
Company (which shall include the position taken by the Company, together with
its consolidated group, on its federal income tax return) or (iv) upon the
resolution of the Dispute to the Executive's satisfaction. If an Underpayment
occurs, the Executive shall promptly notify the Company and the Company shall
promptly, but in any event, at least five days prior to the date on which the
applicable government taxing authority has requested payment, pay to the
Executive an additional Gross-Up Payment equal to the amount of the Underpayment
plus any interest and penalties (other than interest and penalties imposed by
reason of the Executive's failure to file timely a tax return or pay taxes shown
to be due on the Executive's return) imposed on the Underpayment. An Excess
Payment shall be deemed to have occurred upon a "Final Determination" (as
hereinafter defined) that the Excise Tax shall not be imposed upon a Parachute
Payment or Parachute Payments (or portion thereof) with respect to which the
Executive had previously received a Gross-Up Payment. A "Final Determination"
shall be deemed to have occurred when the Executive has received from the
applicable government taxing authority a refund of taxes or other reduction in
the Executive's tax liability by reason of the Excise Payment and upon either
(x) the date a determination is made by, or an agreement is entered into with,
the applicable governmental taxing authority which finally and conclusively
binds the Executive and such taxing authority, or in the event that a claim is
brought before a court of competent jurisdiction, the date upon which a final
determination has been made by such court and either all appeals have been taken
and finally resolved or the time for all appeals has expired or (y) the statute
of limitations with respect to the Executive's applicable tax return has
expired. If an Excess Payment is determined to have been made, the amount of the
Excess Payment shall be treated as a loan by the Company to the Executive and
the Executive shall pay to the Company on demand (but not less than 10 days
after the determination of such Excess Payment and written notice has been
delivered to the Executive) the amount of the Excess Payment plus interest at an
annual rate equal to the Applicable Federal Rate provided for in Section 1274(d)
of the Code from the date the Gross-Up Payment (to which the Excess Payment
relates) was paid to the Executive until the date of repayment to the Company.
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(iv) Notwithstanding anything contained in this Agreement to the
contrary, in the event that, according to the Determination, an Excise Tax will
be imposed on any Parachute Payment or Parachute Payments, the Company shall pay
to the applicable government taxing authorities as Excise Tax withholding, the
amount of the Excise Tax that the Company has actually withheld from the
Parachute Payment or Parachute Payments or the Gross Up Payment.
(f) Except as provided in this Section 4.5, pursuant to the Marvel
Enterprises, Inc. Stock Incentive Plan as provided in Schedule I to this
Agreement and as required by law, the Company shall have no further obligation
to the Executive after termination of the Term.
4.6 Restriction on Termination. Notwithstanding anything to the
contrary contained in this Agreement, commencing on the Effective Date and
through the first anniversary of the Effective Date the Company may only
terminate this Agreement and the Term pursuant to Sections 4.2 or 4.3. If the
Company terminates this Agreement in contravention to this Section 4.6, (a) such
termination shall be deemed to have occurred on the first business day following
the first anniversary date of the Effective Date (the "First Termination Date"),
(b) Executive shall be entitled to all of the benefits of this Agreement, the
Nonqualified Stock Incentive Agreement, the Restricted Stock Agreement and under
the Stock Incentive Plan as if Executive had been employed through the First
Termination Date, and (c) the severance provisions set forth in Section 4.5(b)
shall be deemed to commence as of the First Termination Date.
5. Protection of Confidential Information; Non-Competition
5.1 In view of the fact that the Executive's work for the Company will
bring the Executive into close contact with many confidential affairs of the
Company not readily available to the public, as well as plans for future
developments by the Company, the Executive agrees:
5.1.1 To keep and retain in the strictest confidence all confidential
matters of the Company, including, without limitation, "know how", trade
secrets, customer lists, pricing policies, operational methods, technical
processes, formulae, inventions and research projects, and other business
affairs of the Company ("Confidential Information"), learned by the Executive
(i) in the course of his communications with the Company and its representatives
heretofore with respect to his service as a consultant to the Company or his
prospective employment hereunder or (ii) heretofore or hereafter, and not to use
or disclose them to anyone outside of the Company, either during or after the
Executive's employment with the Company, except in the course of performing the
Executive's duties hereunder or with the Company's express written consent;
provided, however, that the restrictions of this Section 5.1.1 shall not apply
to that part of the Confidential Information that the Executive demonstrates is
or becomes generally available to the public other than as a result of a
disclosure by the Executive or is available, or becomes available, to the
Executive on a non-confidential basis, but only if the source of such
information is not prohibited from transmitting the information to the Executive
by a contractual, legal, fiduciary, or other obligation; and
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5.1.2 To deliver or make available promptly to the Company on
termination of the Executive's employment by the Company, or at any time the
Company may so request, all memoranda, notes, records, reports, manuals,
drawings, blueprints and other documents (and all copies thereof) relating to
the Company's business and all property associated therewith, which the
Executive may then possess or have under the Executive's control.
5.2 For a period of one (1) year after he ceases to be employed by the
Company under this Agreement or otherwise, if such cessation arises pursuant to
Section 4.3, or as a result of termination by the Executive which is not
pursuant to Section 4.4(a), the Executive shall not, directly or indirectly,
enter the employ of, or render any services to any company that as its primary
business distributes DVD's directly to consumers or any division of a company
that as its primary business distributes DVD's directly to consumers as an
individual, partner, shareholder, director, officer, principal, agent, employee,
trustee, consultant, or in any other relationship or capacity; provided,
however, that nothing contained in this Section 5.2 shall be deemed to prohibit
the Executive from acquiring, solely as an investment, up to five percent (5%)
of the outstanding shares of capital stock of any corporation whose stock is
publicly traded.
5.3 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Section 5.1 or Section 5.2 hereof, the
Company shall have the following rights and remedies:
5.3.1 The right and remedy to seek to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, as it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to account for and
pay over to the Company all compensation, profits, monies, accruals, increments
or other benefits (collectively "Benefits") derived or received by the Executive
as the result of any transactions constituting a breach of any of the provisions
of Section 5.2 hereof, and the Executive hereby agrees to account for and pay
over such Benefits to the Company. Each of the rights and remedies enumerated
above shall be independent of the other, and shall be severally enforceable, and
all of such rights and remedies shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company under law or in equity.
5.4 If any of the covenants contained in Section 5.1 or Section 5.2
hereof, or any part thereof, hereafter are construed to be invalid or
unenforceable, the same shall not affect the remainder of the covenant or
covenants, which shall be given full effect, without regard to the invalid
portions.
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5.5 If any of the covenants contained in Sections 5.1 or 5.2 hereof,
or any part thereof, are held to be unenforceable because of the duration of
such provision or the area covered thereby, the parties hereto agree that the
court making such determination shall have the power to reduce the duration
and/or area of such provision and, in its reduced form, said provision shall
then be enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 hereof upon the courts
of New York State and of any other state within the geographical scope of such
covenants where the Executive maintains his principal office at the time of
enforcement. In the event that the courts of either such state shall hold such
covenants wholly unenforceable by reason of the breadth of such covenants or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the Company's right to the relief provided above in the
courts of the other such state as to breaches of such covenants in such other
state, the above covenants as they relate to each state being for this purpose
severable into diverse and independent covenants.
5.7 In the event that any action, suit or other proceeding in law or
in equity is brought to enforce the covenants contained in Section 5.1 or
Section 5.2 hereof or to obtain money damages for the breach thereof, and such
action results in the award of a judgment for money damages or in the granting
of any injunction in favor of the Company, all expenses (including reasonable
attorneys' fees) of the Company in such action, suit or other proceeding shall
(on demand of the Company) be paid by the Executive. In the event the Company
fails to obtain a judgment for money damages or an injunction in favor of the
Company, all expenses (including reasonable attorneys' fees) of the Executive in
such action, suit or other proceeding shall (on demand of the Executive) be paid
by the Company.
6. Prior Restrictions; Promise Not to Solicit
6.1 The Executive represents that he is free to enter into this
Agreement is not restricted in any manner from performing under this Agreement
by any prior agreement, commitment, or understanding with any third party. If
Executive has acquired confidential or proprietary information in the course of
his prior employment or as a consultant, he will fully comply with any duties
not to disclose such information then applicable to him during the Term.
6.2 The Executive will not, during the Term and for a period of one
(1) year from the last payment to Executive hereunder, induce or attempt to
induce any employee of the Company or its subsidiaries to stop working for the
Company or its subsidiaries or affiliates to work for any competitor of the
Company or its subsidiaries.
7. Inventions and Patents; Intellectual Property.
7.1 The Executive agrees that all processes, technologies and
inventions, including new contributions, improvements, ideas and discoveries,
whether patentable or not, conceived, developed, invented or made by him during
his employment by the Company (collectively, "Inventions") shall belong to the
Company, provided that such Inventions grew out of the Executive's work with the
Company or any of its subsidiaries or affiliates, are related to the business
(commercial or experimental) of the Company as then conducted or any of its
subsidiaries or affiliates or are conceived or made on the Company's time or
with the use of the Company's facilities or materials. The Executive shall
promptly disclose such Inventions to the Company and shall, subject to
reimbursement by the Company for all reasonable expenses incurred by the
Executive in connection therewith, (a) assign to the Company, without additional
compensation, all patent and other rights to such Inventions for the United
States and foreign countries; (b) sign all papers necessary to carry out the
foregoing; and (c) give testimony in support of the Executive's inventorship.
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7.2 The Company shall be the sole owner of all the products and
proceeds of the Executive's services hereunder, including, but not limited to,
all materials, ideas, concepts, formats, suggestions, developments,
arrangements, packages, programs and other intellectual properties that the
Executive may acquire, obtain, develop or create in connection with and during
his employment, free and clear of any claims by the Executive (or anyone
claiming under the Executive) of any kind or character whatsoever (other than
the Executive's right to receive payments hereunder). The Executive shall, at
the request of the Company, execute such assignments, certificates or other
instruments as the Company may from time to time deem necessary or desirable to
evidence, establish, maintain, perfect, protect, enforce or defend its right,
title or interest in or to any such properties.
8. Indemnification.
To the fullest extent permitted by applicable law, Executive shall be
indemnified and held harmless for any action or failure to act in his capacity
as an officer or employee of the Company or any of its affiliates or
subsidiaries. In furtherance of the foregoing and not by way of limitation, if
Executive is a party or is threatened to be made a party to any suit because he
is an officer or employee of the Company or such affiliate or subsidiary, he
shall be indemnified against expenses, including reasonable attorney's fees,
judgments, fines and amounts paid in settlement if he acted in good faith and in
a manner reasonably believed to be in or not opposed to the best interest of the
Company, and with respect to any criminal action or proceeding, he had no
reasonable cause to believe his conduct was unlawful. Indemnification under this
Section 8 shall be in addition to any other indemnification by the Company of
its officers and directors. Expenses incurred by Executive in defending an
action, suit or proceeding for which he claims the right to be indemnified
pursuant to this Section 8 shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of Executive to repay such amount in the event that it shall
ultimately be determined that he is not entitled to indemnification by the
Company. Such undertaking shall be accepted without reference to the financial
ability of Executive to make repayment. The provisions of this Section 8 shall
apply as well to the Executive's actions and omissions as a trustee of any
employee benefit plan of the Company, its affiliates or subsidiaries.
9. Arbitration; Legal Fees
Except with respect to injunctive relief under Section 5 of this
Agreement, any dispute or controversy arising out of or relating to this
Agreement shall be resolved exclusively by arbitration in New York City in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect. The parties agree to allow discovery in accordance
with the Federal Rules of Civil Procedure then in effect. Judgment on the award
may be entered in any court having jurisdiction thereof. The Company shall
reimburse the Executive's reasonable costs and expenses incurred in connection
with any arbitration proceeding pursuant to this Section 9 if the Executive is
the substantially prevailing party in that proceeding.
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10. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
If to the Company, to:
Marvel Enterprises, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
If to the Executive, to:
Xxxxx Xxxxxx
0000 Xxxxxxx Xxxxxxxxx, Xxx 000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000
with a copy to:
Liner Yankelevitz Sunshine & Regenstreif LLP
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
11. General.
11.1 This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely in New York, without regard to the conflict of law
principles of such state.
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11.2 The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
11.3 This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter hereof and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof. No representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so
set forth. This Agreement expressly supersedes all agreements and understandings
between the parties regarding the subject matter hereof and any such agreement
is terminated as of the date first above written.
11.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any subsidiary or
affiliate (provided, that the Company shall not be relieved thereby of any of
its obligations hereunder) or (ii) to third parties in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of the Company hereunder shall be binding
on its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
11.5 This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any time
or times to require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
11.6 This Agreement may be executed in one or more counterparts, each
of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
12 Subsidiaries and Affiliates.
As used herein, the term "subsidiary" shall mean any corporation or
other business entity controlled directly or indirectly by the Company or other
business entity in question, and the term "affiliate" shall mean and include any
corporation or other business entity directly or indirectly controlling,
controlled by or under common control with the Company or other business entity
in question.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
MARVEL ENTERPRISES, INC. EXECUTIVE:
By:/s/ Xxxxx X. Xxxxxx /s/ Xxxxx Xxxxxx
-------------------------- --------------------------
Xxxxx X. Xxxxxx Xxxxx Xxxxxx
President and Chief Executive Officer
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SCHEDULE I
Additional Benefits:
1. Automobile Allowance. The Executive shall be eligible for an automobile
allowance in the amount of $1,100 per month in accordance with the Company's
policy.
2. Stock Incentive Plan.
(a) As set forth in the consultancy agreement between the Company and
the Executive December 11, 2003, the Executive shall be eligible to participate
in the Marvel Enterprises, Inc. 1998 Stock Incentive Plan (the "Stock Incentive
Plan"). Pursuant to the consultancy agreement, the Executive has already been
made entitled to receive 250,000 options to purchase shares (the "Shares") of
the common stock, par value $.01 per share ("Common Stock"), of the Company
pursuant to the terms of the Stock Incentive Plan and related Stock Option
Agreement subject to the terms and conditions approved by the committee of the
Board of Directors of the Company which administers the Stock Incentive Plan.
The Executive's participation in the Stock Incentive Plan shall not be, or be
deemed to be, a fringe benefit or additional benefit for purposes of Section
4.5(b)(iv) of this Agreement, and the Executive's stock option rights shall be
governed strictly in accordance with the Stock Incentive Plan and the related
Stock Option Agreement. In the event of any conflict concerning the options
among this Agreement, the consultancy agreement, the Stock Incentive Plan and
the related Stock Option Agreement, or any ambiguity in any such agreements, the
Stock Incentive Plan and the related Stock Option Agreement shall control other
than with respect to severance provisions relating thereto for which this
Agreement shall control.
(b) The Executive shall receive one hundred thousand (100,000) shares
(the "Restricted Shares") of common stock, par value $.01 per share ("Common
Stock"), of the Company pursuant to the terms of the Stock Incentive Plan and
related Restricted Stock Agreement. The Restrictions (as defined in the
Restricted Stock Agreement) with respect to the Restricted Shares shall lapse as
to (a) twenty-five percent (25%) of the Restricted Shares on the second
anniversary of the Effective Date, (b) an additional twenty-five percent (25%)
on the third anniversary of the Effective Date, (c) an additional twenty-five
percent (25%) on the fourth anniversary of the Effective Date, and (d) an
additional twenty-five percent (25%) on the fifth anniversary of the Effective
Date, and the Restrictions shall lapse as to all of the Restricted Shares upon a
Third Party Change in Control (as defined in the Stock Incentive Plan);
provided, that, in the event that the Executive is receiving severance payments
under Section 4.5(b) of this Agreement, clause (a) above in this sentence shall
be replaced by the following: "(a) twenty-five percent (25%) of the Restricted
Shares in equal monthly increments commencing on the date that is thirteen (13)
months after the Effective Date with the entire twenty-five percent (25%) being
free from Restrictions on the second anniversary of the Effective Date". The
Executive's participation in the Stock Incentive Plan shall not be, or be deemed
to be, a fringe benefit or additional benefit for purposes of Section 4.5(b)(iv)
of this Agreement, and the rights with respect to the restricted stock shall be
governed strictly in accordance with the Stock Incentive Plan and the related
Restricted Stock Agreement. Until such time as the Restricted Stock Agreement is
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executed by Executive, the terms of this Agreement and this Schedule I shall
control the Restricted Stock. At such time as Executive executes the Restricted
Stock Agreement, in the event of any conflict among this Agreement, the Stock
Incentive Plan and the related Restricted Stock Agreement as to the Restricted
Shares, or any ambiguity in any such agreements, the Stock Incentive Plan and
the related Restricted Stock Agreement shall control other than with respect to
severance provisions relating thereto for which this Agreement shall control.
3. Directors and Officers Insurance. In the event that the Executive serves as
an officer or director of the Company or any subsidiary or affiliate of the
Company in accordance with Section 1.2 hereof, the Executive shall be covered by
the Company's directors' and officers' insurance policy(ies) in place at the
time.
4. COBRA Reimbursements. The Company shall reimburse the Executive for COBRA
health benefits paid for the period of the Term prior to the Executive's
eligibility for medical benefits pursuant to Section 3.5 of the Agreement.
5. Press Release. Executive shall have the right to review and comment in
advance on any press release relating to the execution of this Agreement or
Executive's services for the Company.
6. Section 1.2 Excluded Projects.
a. Member of the Board of Advisors of Xxxxxxxx.xxx;
x. Xxxxxx Broadway Productions, LLC ("MBP"); provided, that (i) MBP shall not
take on any new projects during the Term; (ii) the Executive shall not provide
any services to MBP on any project unless the Company is involved in that
project; and (iii) no MBP project shall present a conflict with the business
activities of the Company.
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