Employment Agreement
EMPLOYMENT AGREEMENT, dated as of October 21, 1996, between AGI
Management Corp., a Delaware corporation (the "Company") and Xxxxx X. Xxxxx
(the "Executive").
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.
Accordingly, the Company and the Executive hereby agree as follows:
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 as President and Chief Operating Officer of Xxxxxxx Group
Incorporated ("AGI"), and Chairman of the Board and Chief Executive Officer of
Marvel Entertainment Group, Inc. ("Marvel") or in such other executive
position as may be mutually agreed upon by the Company and the Executive which
decision shall be in Executive's absolute discretion to accept or reject if so
offered by the Company. The Executive shall report directly and solely to the
Chairman of the Board and Chief Executive Officer of AGI and the Board of
Directors and the Executive Committee of the Board of Directors of Marvel. If
during the Term Xxxxxxx X. Xxxxxx ceases to be Chief Executive Officer of AGI,
the Executive also shall be appointed to such position. The Executive also
shall be elected to the Marvel Board of Directors and the Executive Committee
of Marvel's Board of Directors. As Chairman and Chief Executive Officer of
Marvel, the Executive shall have the authority customarily accorded to
officers holding such title at New York Stock Exchange listed companies and no
other executive of Marvel shall have a title or job description which gives
such other executive equal or greater authority except Xxxxxx X. Xxxxxxxx. All
employees of Marvel shall report directly or indirectly to the Executive as
Executive shall designate.
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 Exec-
utive's ability, and, except as otherwise herein provided, to devote the
Executive's entire business time, energy and skill to such employment, and to
use the Executive's best
efforts, skill and ability to promote the Company's interests. Subject to
Section 1.1, 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 of the Company without any compensation therefor other
than that specified in this Agreement, if elected to any such position by the
shareholders or by the Board of Directors of the Company or of any subsidiary,
as the case may be. The Executive shall be permitted to serve as a director of
unaffiliated companies with the prior consent of the Chairman of the Board of
AGI which shall not be unreasonably withheld.
1.3 Location. The duties to be performed by the Executive
hereunder shall be performed primarily at the principal office of Marvel in
New York City, subject to reasonable travel requirements on behalf of the
Company. The Executive shall be provided with a suitable office commensurate
with his position at the corporate headquarters of Marvel.
2. Term of Employment; Certain Post-Term Benefits.
2.1 The Term. The term of the Executive's employment under
this Agreement (the "Term") shall commence on October 21, 1996 and shall end
on December 31, 1999.
2.2 Special Curtailment. The Term shall end earlier than the
original December 31, 1999 termination date provided in Section 2.1 if sooner
terminated pursuant to Section 4.
3. Compensation; Benefits.
3.1 Salary. As compensation for services to be rendered
pursuant to this Agreement, the Company agrees to pay the Executive during the
Term a base salary, payable semi-monthly in arrears, at the annual rate of not
less than $2,000,000, less such deductions or amounts to be withheld as
required by applicable law and regulations (the "Base Salary"). In the event
that the Company, in its sole discretion, from time to time determines to
increase the Base Salary, such increased amount shall, from and after the
effective date of the increase, constitute "Base Salary" for purposes of this
Agreement.
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3.2 Bonus. In addition to the amounts to be paid to the Executive
pursuant to Section 3.1, the Executive shall receive an annual bonus of
$1,000,000 payable on or about December 31, 1997, 1998 and 1999 and will be
eligible, upon the decision of the Board of Directors and in the Board's sole
discretion, to receive an additional discretionary bonus with respect to each
year of the Term in such amount as the Board in its sole discretion may
determine. Such bonus shall vest pro-rata over the course of each year of the
Term.
3.3 Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the
Executive during the Term in the performance of the Executive's services under
this Agreement (including, without limitation, travel and entertainment
expenses customary in the businesses of the Company, AGI and Marvel), upon
presentation of expense statements or vouchers or such other supporting
information as the Company customarily may require of its officers provided,
however, that the maximum amount available for such expenses during any period
may be fixed in advance by the Chairman of the Board of Directors or the Board
of Directors.
3.4 Vacation. During the Term, the Executive shall be entitled
to a vacation period or periods of four weeks 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 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 entitled to receive
all benefits available to senior executives of the Company, including any
qualified pension plan, 401(k) plan, group insurance or other so-called
"fringe" benefit plan which the Company provides to its senior executives or
employees generally, together with executive medical benefits for the
Executive, the Executive's spouse and the Executive's children as from time to
time in effect for officers of the Company generally. The Executive shall
receive all benefits which AGI or Marvel provide to any other senior executive
officer.
3.6 Additional Benefits. As a material provision of this
Agreement, during the Term, the Executive shall be entitled to such other
benefits as are specified in Appendix I to this Agreement.
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4. Termination.
4.1 Death. If the Executive shall die during the Term, the
Term shall terminate and no further amounts or benefits shall be payable
hereunder, except that the Executive's legal representatives shall be entitled
to receive all amounts earned prior to death, including Base Salary and
pro-rated bonus (and to any stock and options which by their terms vest upon
death) and to receive continued payments in an amount equal to 60% of the Base
Salary, in the manner specified in Section 3.1, until the end of the Term.
4.2 Disability. If during the Term the Executive shall become
physically or mentally disabled such that the Executive is unable to perform
the Executive's services hereunder for (i) a period of six consecutive months
or (ii) for shorter periods aggregating six months during any twelve month
period, the Company may at any time after the last day of the six consecutive
months of disability or the day on which the shorter periods of disability
shall have equalled an aggregate of six months, by written notice to the
Executive (but before the Executive has recovered from such disability),
terminate the Term and no further amounts or benefits shall be payable
hereunder, except that the Executive shall be entitled to receive (i) all
amounts earned prior to such termination, including Base Salary and pro-rated
bonus and to receive continued payments in an amount equal to 60% of the Base
Salary, in the manner specified in Section 3.1, until the end of the Term and
(ii) such amounts and benefits, if any, specified in Paragraph 6 of Appendix
I. If the Executive shall die before receiving all payments to be made by the
Company in accordance with the foregoing, such payments shall be made to a
beneficiary designated by the Executive on a form prescribed for such purpose
by the Company, or in the absence of such designation to the Executive's legal
representative.
4.3 Cause. In the event of conviction of the Executive of any
felony, conviction of the Executive of any lesser crime of taking the property
of the Company or any of its subsidiaries or affiliates (in each case after
appeals have been exhausted), breach by the Executive of any material
provision of this Agreement, the Company may at any time by written notice to
the Executive terminate the Term and, upon such termination, this Agreement
shall
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terminate and the Executive shall be entitled to receive no further
amounts or benefits hereunder, except any as shall have been earned and/or
vested to the date of such termination. In the case of a breach by the
Executive of any material provision of this Agreement, the Company may
terminate the Term only after providing the Executive with written notice of
the breach and an opportunity to cure such breach within five business days of
such notice. In the event that Executive timely cures within such five day
period, such notice of breach shall have no further force or effect.
4.4 Company Breach. In the event of (i) the breach of any material
provision of this Agreement by the Company or (ii) a Change in Control of AGI
or Marvel, the Executive shall be entitled to terminate the Term upon 60 days'
prior written notice to the Company. Upon such termination, or in the event
the Company terminates the Term or this Agreement other than pursuant to the
provisions of Section 4.2 or 4.3, the Company shall continue to provide the
Executive (i) payments of Base Salary and bonus, in the manner and amount
specified in Section 3.1 and Section 3.2, respectively, and (ii) fringe
benefits and additional benefits in the manner and amounts specified in
Sections 3.5 and 3.6 until the end of the Term (the "Damage Period"). For
purposes of this Agreement, a "Change in Control" shall be deemed to occur if,
during the Term, Xxxxxx X. Xxxxxxxx, individually, or his estate, heirs or
personal representatives or any trust created for the benefit of his wife or
children, or any corporation or other entity which such persons control
(collectively, "Permitted Holders"), directly or indirectly, cease to maintain
"beneficial ownership" (as defined in Rule 13d-3 of the Securities Exchange
Act of 1934, as amended), individually or in the aggregate, of securities of
AGI or the Company, as the case may be, representing a sufficient number of
shares effectively to designate a majority of the members of the Board of
Directors. Upon breach by the Company, the Executive shall have no duty to
mitigate damages and any amounts earned by the Executive in the Damage Period
shall not offset amounts due to the Executive hereunder.
4.5 Litigation Expenses. Except as provided for in Section
5.7, if the Company and the Executive become involved in any action, suit or
proceeding relating to the alleged breach of this Agreement by the Company or
the Executive, and if a judgment in such action, suit or
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proceeding is rendered in favor of the Executive or if said action is settled
in Executive's favor prior to judgement, the Company shall reimburse the
Executive for all expenses (including reasonable attorneys' fees) incurred by
the Executive in connection with such action, suit or proceeding. Such costs
shall be paid to the Executive promptly upon presentation of expense
statements or other supporting information evidencing the incurrence of such
expenses.
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, and plans for
future developments, 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, other
business affairs of the Company, and any personal or non-public business
related information concerning any director, officer, employee or agent of the
Company or their respective family members learned by the Executive hereafter,
and not to 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. The foregoing prohibitions shall include, without limitation,
directly or indirectly publishing (or causing, participating in, assisting or
providing any statement, opinion or information in connection with the
publication of) any diary, memoir, letter, story, photograph, interview,
article, essay, account or description (whether fictionalized or not)
concerning any of the foregoing, publication being deemed to include any
presentation or reproduction of any written, verbal or visual material in any
communication medium, including any book, magazine, newspaper, theatrical
production or movie, or television or radio programming or commercial; and
5.1.2 To deliver 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,
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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 During the Term, the Executive shall not, directly or
indirectly, enter the employ of, or render any services to, any person, firm
or corporation engaged in any business competitive with the business of the
Company or of any of its subsidiaries or affiliates except as otherwise
provided in Section 1.2; the Executive shall not engage in such business on
the Executive's own account; and the Executive shall not become financially
interested in any such business, directly or indirectly, 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 public corporation.
5.3 If the Executive commits a breach, or threatens to commit
a breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the following rights and remedies (it being acknowledged that the
fact that the Company seeks the remedies below in connection with a threatened
breach shall not constitute an admission by the Executive that Executive has
breached this Agreement):
5.3.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, 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") received by the
Executive as the result of any transactions constituting a breach of any of
the provisions of the preceding paragraph, and the Executive hereby agrees to
account for and pay over such Benefits to the Company.
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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 Sections 5.1 or 5.2,
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.
5.5 If any of the covenants contained in Sections 5.1 or 5.2,
or any part thereof, are held to be unenforceable because of the duration of
such provision or the area covered thereby, the parties 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 In the event that any action, suit or other proceeding in
law or in equity is brought to enforce the covenants contained in Sections 5.1
and 5.2 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. Inventions and Patents.
6.1 The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term 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 in any
manner to the business (commercial or experimental) of the Company or any of
its subsidiaries or affiliates or are conceived or
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made on the Company's time or with the use of the Company's facilities or
materials. The Executive shall further: (a) promptly disclose such Inventions
to the Company; (b) assign to the Company, without additional compensation,
all patent and other rights to such Inventions for the United States and
foreign countries; (c) sign all papers necessary to carry out the foregoing;
and (d) give testimony in support of the Executive's inventorship.
6.2 If any Invention is described in a patent application or
is disclosed to third parties, directly or indirectly, by the Executive within
two years after the termination of the Executive's employment by the Company,
it is to be presumed that the Invention was conceived or made during the Term.
6.3 The Executive agrees that the Executive will not assert
any rights to any Invention as having been made or acquired by the Executive
prior to the date of this Agreement, except for Inventions, if any, disclosed
to the Company in writing prior to the date hereof.
7. Intellectual Property.
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
the Term, 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.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred
or sustained by the Executive in connection with any action, suit or
proceeding to which the Executive may be made a party by reason of the
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Executive being an officer, director or employee of the Company or of any
subsidiary or affiliate of the Company. The provisions of this paragraph shall
survive the expiration or termination of the Term (for any reason).
9. 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 via facsimile transmission,
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:
AGI Management Corp.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Fax: 000-000-0000
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If to the Executive, to:
Xxxxx X. Xxxxx
Essex House
000 Xxxxxxx Xxxx Xxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
with an additional copy to the Executive at
his office address
with a copy to:
Gang, Tyre, Xxxxx & Xxxxx
000 Xxxxx Xxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx or Xxxxx Xxxxx
Fax: 000-000-0000
10. General.
10.1 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.
10.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
10.3 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.
10.4 This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive. Subject to
Section 4.4 and the other rights granted to the Executive hereunder, the
Company may assign its rights, together with its obligations, hereunder only
(i) to any affiliate or (ii) to third parties in connection with any sale,
transfer or other disposition of all or
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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. Upon any such assignment, the Company shall remain
secondarily liable to the Executive for all of the obligations under this
Agreement.
10.5 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. Subsidiaries and Affiliates.
11.1 As used herein, the term "subsidiary" shall mean any
corporation or other business entity controlled directly or indirectly by the
corporation 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
corporation or other business entity in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
AGI MANAGEMENT CORP.
By:
-------------------------------------------------
Xxxxxx Xxxxxx
Vice Chairman
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-------------------------------------------
Xxxxx X. Xxxxx
As a material inducement to Executive to sign this Agreement,
Xxxxxxx Group Incorporated, a Delaware corporation, hereby unconditionally
guarantees all of the obligations of AGI Management Corp. set forth in the
foregoing agreement. Notwithstanding any assignment of this Agreement pursuant
to Section 10.4, this guarantee shall continue in full force and effect.
Xxxxxxx Group Incorporated hereby waives presentment, demand for payment and
any requirement that the Executive exhaust any right to proceed against the
Company under the Agreement for the obligations guaranteed hereunder.
XXXXXXX GROUP INCORPORATED
By:
-------------------------------------------------
Xxxxxx Xxxxxx
Vice Chairman
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APPENDIX I
Additional Benefits:
1. Medical Examination. The Executive shall be
reimbursed by the Company for the reasonable cost of one
annual medical examination upon presentation of an expense
statement.
2. Automobile. The Company shall afford the Executive and his
family the exclusive right to use an automobile with a driver on a continuing
basis and shall provide garaging near the Executive's residence. The Company
shall pay all reasonable expenses associated with the operation of such
automobile. The automobile furnished by the Company shall be a late model
top-of-the-line vehicle comparable to other AGI executives to be reasonably
selected by the Executive. Upon the expiration of the Term, the Executive
promptly shall return the automobile to the Company.
3. Aircraft. The Executive shall be provided the use of a late
model Hawker 1000 or other executive jet for business and personal travel. To
the extent that the Executive uses the aircraft for personal use, he shall pay
$1,500 per hour of use; provided, that such charge to the Executive shall be
no higher than the charge for personal use to any other senior executive
officer of the Company or its affiliates.
4. Insurance. The Company agrees to provide the Executive with
additional term life insurance coverage with a face amount of twice the then
current Base Salary plus bonus, subject to the insurer's satisfaction with the
results of any required medical examination to which the Executive hereby
agrees to submit, on the following basis. The Executive may select a plan of
his choice and may designate the beneficiary of such plan. The Company shall
pay, upon presentation of an expense statement, the periodic standard
(non-rated) premiums relating to such additional term life insurance payable
during the Term.
5. Long Term Disability Insurance. The Company agrees to provide
the Executive with additional long term disability insurance coverage with a
monthly benefit of $35,000, subject to insurer's satisfaction with the results
of any required medical examination to which the Executive
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agrees to submit. Such coverage shall provide that, if the Executive is
permanently disabled during the Term, the Executive shall be entitled to a
benefit until age 65.
6. Disability. If the Company elects to terminate the Term pursuant
to Section 4.2 of the Agreement, in addition to the amounts payable under such
Section, for the shorter of the period the Executive remains disabled or until
the Executive has attained the age of 65, the Company shall continue to
provide benefits for the Executive under the corporate group life insurance
plan and for the Executive, his spouse and children under the corporate group
medical (including the executive medical plan) insurance plan, to the extent
permitted by such plans and to the extent such benefits continue to be
provided to the Company's employees or officers, as applicable, generally.
7. Tax Advisor. The Executive shall be reimbursed by the Company,
upon presentation of an expense statement, for the reasonable fees and
disbursements of a personal tax advisor to be selected by the Executive.
8. Club Membership. The Company shall reimburse the Executive,
upon presentation of an expense statement, for all reasonable initiation
fees and periodic dues for membership in a club of the Executive's choice.
9. Estate Planning. The Executive shall be reimbursed by the
Company, upon presentation of an expense statement, for the reasonable fees
and disbursements of an estate planning advisor to be selected by the
Executive.
10. Townhouse. The Company shall purchase an agreed upon townhouse
and shall make agreed upon improvements to the townhouse. The Company shall
provide such townhouse as a residence for the Executive and his family for the
Term at a monthly rate of $25,000. The Company hereby grants to the Executive
the option to purchase such townhouse at any time during the Term at a
purchase price equal to the Company's purchase price plus the cost of all
improvements.
11. Moving Expenses. The Executive shall be reimbursed or the
Company shall pay on the Executive's behalf the reasonable expenses of moving
the Executive and his family to New York City, including the expenses of a
temporary residence pending the availability of the townhouse to be leased to
the Executive and reasonable
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travel expenses for the Executive and his family to and from Atlanta, Georgia,
for a reasonable period after the commencement of the Term not to exceed six
months pending their permanent move to New York City.
12. Stock Grant. Upon the first to occur of (i) ten days after the
time that AGI or any of its affiliates (other than Marvel) acquire additional
shares of Marvel or (ii) eighteen months after the commencement of the Term,
Marvel shall issue to the Executive shares of Marvel common stock with a value
of $8,000,000 (such value to be based on the lesser of (a) the lowest price
paid for shares (if any) by AGI or its affiliates after the date hereof or (b)
the lower of the closing price per share as reported by The Wall Street
Journal on (i) the commencement of the Term or (ii) the day that the
Executive's appointment to Marvel is announced. Regardless of when issued,
such shares shall vest in accordance with a vesting schedule that provides
that 25% of such shares vest as of the commencement of the Term and an
additional 25% vest at the end of each year of the Term. In the event of the
death of the Executive during the Term or if the Term is terminated other than
pursuant to Section 4.3, all shares shall vest immediately, if the Term is
terminated pursuant to Section 4.3, unvested shares shall be forfeited. If
such Marvel common stock is not issued in accordance with the aforementioned
terms, the Company shall upon request at any time(s) during the Term after
such shares should have been issued hereunder provide the Executive with a
payment(s) equal to the economic benefit, if any, that would have inured to
him had said shares been timely issued on said terms.
If at any time(s) prior to the issuance of the shares hereunder the
Executive provides to the Company a written notice that, had such shares been
issued at the commencement of the Term, the Executive would have disposed of
such shares on such day and the Executive would otherwise have been able at
such time to sell such shares, the Company shall pay to the Executive an
amount which would hold the Executive harmless and reimburse the Executive for
any loss the Executive suffers due to the delay in the issuance of such
shares. For purposes of the preceding sentence, it shall be assumed that the
shares would have been issued at the commencement of the Term at the closing
price per share on such day as reported by The Wall Street Journal. The
payment to the Executive shall include the gain the Executive would have
realized on such sale and shall also include any federal, state and/or local
adverse
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tax consequences to the Executive as a result of the fact that the
shares were not issued at the commencement of the Term (e.g. such sum to be
grossed-up in accordance with paragraph 14 below to reimburse the Executive
for any loss due to his inability to qualify for long-term capital gains
treatment on account of the delayed issuance of the stock). Thereafter, upon
the issuance of shares pursuant to this paragraph the number of shares
issuable shall be reduced by the number of shares in respect of which the
Company has made payment hereunder.
In connection with the issuance of the stock hereunder, the Company
shall loan to the Executive an amount sufficient to pay the income taxes due
on account of such issuance, such loan shall be made at such times as
necessary for the Executive to make timely payments of the taxes due (e.g.
restrictions lapse and the taxes are payable). Such loan will have a term
coincident with the Term, will bear interest at the minimum statutory rate set
from time to time by the Internal Revenue Service and shall be secured on a
first priority perfected basis by the stock issued pursuant to this paragraph.
Such loan shall be nonrecourse to the Executive.
13. Stock Options. At or about the execution of this Agreement, the
Executive shall be granted options to purchase 250,000 shares of Marvel common
stock in accordance with Marvel's Stock Option Plan. The Executive shall be
granted an additional 250,000 options on or about each January 1 during the
Term. In the event of the death of the Executive during the Term, all options
theretofore granted shall be vested immediately and shall be exercis- able for
one year thereafter.
14. Gross-up. To the extent that the Executive is required to
include in income, for federal, state and local income taxes, amounts paid in
respect of benefits provided pursuant to paragraph 11, the Company shall, on
or about March 30 of each year, pay the Executive an amount such that the
payment made pursuant to such paragraph 11 shall be tax neutral. To accomplish
that result, Company shall pay Executive a sum equal to the amount included in
Executive's income for tax purposes due to such paragraph 11 multiplied by the
Executive's aggregate tax rate (federal, state and local) which product shall
then be divided by a number equal to 1.00 minus the Executive's aggregate tax
rate (as described above) stated as a decimal.
17
15. Press Announcements. The Company hereby agrees to provide to
the Executive advance notice of and an opportunity to comment upon the content
and timing of any press announcement concerning the Executive or his employ-
ment with the Company or its affiliates.
16. Legal Fees. The Company shall pay the rea- sonable fees of the
Executive's attorney in connection with this Agreement, not to exceed $30,000.
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